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Castrol India Ltd Directors Report

Jul 19, 2024|09:44:59 AM

Castrol India Ltd Share Price directors Report

To the Shareholders,

e Board of Directors ("Board") of your Company is pleased to present the Forty Sixth Annual Report of Castrol India Limited ("Castrol" or "Company") for the financial year ended 31 December 2023 ("year under review" or "year" or "FY23").

In compliance with the applicable provisions of Companies Act, 2013, (including any statutory modification(s) or re-enactment(s) thereof, for time being in force) ("Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the financial year ended 31 December 2023 and upto the date of the Board meeting held on 1 February 2024 to approve this report, in respect of Castrol India Limited.

1. Financial Results

e Companys financial performance for the financial year ended 31 December 2023 is summarized below:

Particulars For the year ended 31 December 2023 For the year ended 31 December 2022
(INR in Crores) (INR in Crores)
Sales (a) 5074.61 4774.49
Other income (b) 83.15 67.05
Total Revenue (a+b) 5157.76 4841.54
Profit before tax and depreciation 1273.53 1174.14
Depreciation and amortization 92.43 81.39
Profit before tax 1181.10 1092.75
Tax expense (including deferred tax) 316.97 277.60
Profit aƒer tax 864.13 815.15
Other Comprehensive income (net of tax) (2.96) (0.94)
Total Comprehensive income 861.17 814.21
Balance brought forward 1316.32 1095.58
Profit available for appropriation 861.17 814.21
Dividend (incl. tax) 642.93 593.47
Balance carried forward 1534.56 1316.32

2. Performance

Revenue from operations of your Company has increased by 6% mainly on account of volume increase and strategic price interventions. Costs of materials were higher by about 5% over the previous year mainly due to incremental volumes, rise in input costs for additives and adverse Forex. Operating and Other expenses increased by INR 91 Crores as compared to the previous year on account of investment in people, safety, brand and business growth opportunities. Profit before Tax increased by about 8% over previous year to INR 1181 Crores. Your Companys performance has been discussed in detail in the ‘Management Discussion and Analysis Report. Your Company does not have any subsidiary or associate or joint venture company. ere are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the year and date of this report. Further, there has been no change in the nature of business of the Company.


ere is no amount proposed to be transferred to the reserves.

Changes in Share Capital

During the year under review, there was no change in the paid-up share capital of the Company.

3. Returns to Investors (Dividend)

e Board of Directors of the Company has approved and adopted the Dividend Distribution Policy in line with Regulation 43A of the SEBI Listing Regulations. e policy is separately provided as Annexure I forming an integral part of this Report and is also uploaded on the website of the Company at https://www.castrol.com/ content/dam/castrol/country-sites-new/en_in/india/ home/documents/investors/dividend_distribution_ policy.pdf.

e Board has recommended a final dividend of INR 4.50 per equity share for the financial year ended

31 December 2023 (2022: Final dividend was INR 3.50 per equity share) subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.

e Board also declared interim dividend of INR 3.00 per equity share for the financial year ended

31 December 2023 on 31 July 2023. (2022: interim dividend was INR 3.00 per equity share) e dividend payout for the year under review is in accordance with your Companys policy to pay sustainable dividend linked to long-term growth objectives of your Company to be met by internal cash accruals.

4. Transfers to the Investor Education and Protection Fund

Pursuant to applicable provisions of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund ("IEPF" or "Fund") established by the Central Government, aƒer completion of seven years from the date the dividend is transferred to unpaid/unclaimed account. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority.

e Company had sent individual notices and also advertised in the newspapers seeking action from the shareholders who have not claimed their dividends for seven consecutive years or more. ereaƒer, the Company has transferred such unpaid or unclaimed dividends and corresponding shares to IEPF, up to and including the interim dividend for the financial year ended 31 December 2016.

Shareholders/claimants whose shares or unclaimed dividend, have been transferred to the IEPF demat Account or the Fund, as the case may be, may claim the shares or apply for refund by approaching the Company for issue of Entitlement Letter along with all the required documents before making an application to the IEPF Authority in Form IEPF – 5 (available on https://www.iepf.gov.in) along with requisite fee as decided by the IEPF Authority from time to time.

e member/claimant can file only one consolidated claim in a financial year as per the IEPF Rules.

e Company will be transferring the special and final dividend and corresponding shares in the year 2024, for the financial year ended 31 December 2016 and the interim dividend and corresponding shares for the financial year ended 31 December 2017 within statutory timelines. Shareholders are requested to ensure that they claim the dividends and shares referred above, before they are transferred to the said Fund. e due dates for transfer of unclaimed dividend to IEPF are provided in the report on Corporate Governance. Details of shares/shareholders in respect of which dividend has not been claimed, are provided on website oftheCompanyathttps://www.castrol.com/en_in/india/ home/investors/statement-of-unclaimed-dividend-and-shares.html. e shareholders are encouraged to verify their records and claim their dividends of all the earlier seven years, if not claimed.

5. Supply Chain

Your supply chain team continues to be customer focused, cost competitive and sustainable supply chain creating competitive advantage in the market. e key priorities for your supply chain have been

a) Enable topline growth – improve customer experience & resilience, supporting margin expansion

b) Contribute to bottom line - by reducing cost of operations & focusing on product cost competitiveness, improving productivity of people and assets and

c) Responsible – by reducing manufacturing energy intensity, emissions and virgin plastic footprint. e foundations of your supply chain continue to focus on compliant and safe operations supported by engaged, motivated and capable organization. Your supply chain team has transitioned to partner with the business to support the growth engine of 2023. Your supply chain has done things differently to support growth across rural, OEMs, B2B Channel and the new category of "Essential". A standout achievement has been the digitization efforts and the establishment of robust analytics in planning, empowering your organization with real time insights, allowing informed swiƒly and precise decision making. e integration of digital technologies has streamlined processes and excelled overall operational intelligence. e focus on S&OP process has improved forecasting and bias reduction. is has resulted in improved customer service levels and robust inventory management. Your demand team has been recognized by Institute of Supply Chain Management (ISCM) for outstanding contribution in Demand Planning.

Being a market leader, to fuel the volume growth and stay ahead of the competition, your Company has used new product launches for portfolio innovation. Your supply chain team has strengthened and digitized the New Product Introduction process this year resulting in agile and efficient new product launches in the market.

e year 2023 has been a safe year for your logistics operation with no recordable accidents. Cost competitiveness, digitisation and service have been the key priorities with successful and tangible outcome delivered on all fronts. is is the third consecutive year that your Logistics team has delivered significant cost savings, without compromising on safety and service. is has helped your business to keep costs flat in a highly inflationary environment.

e successful completion of the first phase of the Transport Management System enhanced customer experience by providing customers with status updates of their orders, improved efficiency through automation of the manual processes and cost reduction through more optimal utilisation of the resources. Warehouses have been right sized and made scalable to support future growth and more efficient use of ground space. Taking advantage of the improved road infrastructure in the country, your supply chain has also moved the transportation of products to larger trucks which has improved safety by reducing the number of trucks needed and delivered significant unit cost savings. Your supply chain will continue to strive to deliver on its promise of compliant and safe operations, with an aim to ensure that everyone goes home safe every day.

6. Directors and Key Managerial Personnel

e following changes took place in the Directors and Key Managerial Personnel during the financial year ended 31 December 2023: Ms. Sangeeta Talwar (DIN: 00062478) was re-appointed as an Independent Director on the Board of the Company for a period of five (5) years with effect from 23 July 2023 to 22 July 2028.

In accordance with the provisions of the Act, Mr. Udayan Sen (DIN: 02083527), Nominee Director and Mr. Saugata Basuray (DIN: 09522239), Wholetime Director of the Company, shall retire by rotation at the ensuing Annual General Meeting, and being eligible have offered themselves for re-appointment.

e tenure of Mr. Rakesh Makhija (DIN: 00117692) is due to expire on 30 September 2024, the Board of Directors at its meeting held on 1 February 2024, based on recommendation of Nomination and Remuneration Committee ("NRC") approved re-appointment of Mr. Rakesh Makhija as an Independent Director for a period of five (5) years with effect from 1 October 2024 to 30 September 2029 subject to approval of shareholders at 46th Annual General Meeting. Accordingly matter with respect to his re-appointment is proposed in the Notice of 46th Annual General Meeting.

Details of the Directors proposed to be re-appointed at the ensuing Annual General Meeting, as required by Regulation 36(3) of the SEBI Listing Regulations and SS - 2 (Secretarial Standards on General Meetings) are provided at the end of the Notice convening the 46th Annual General Meeting.

e Independent Directors of your Company have certified their independence to the Board, stating that they meet the criteria for independence as mentioned under Section 149(6) of the Act. ere was no change in the composition of the Board of Directors and Key Managerial Personnel during the year under review, except as stated.

e Board is of the opinion that the Independent Directors of the Company have fulfilled the conditions as specified in SEBI Listing Regulations, are independent of the management, possess requisite qualifications, experience, proficiency and expertise in the fields of finance, people management, strategy, auditing, tax and risk advisory services, banking, financial services, investments and they hold highest standards of integrity.

e Independent Directors of the Company have registered themselves with the Indian Institute of Corporate Affairs, Manesar (‘IICA) as required under Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014.

7. PolicyonNomination,Independence,Remuneration, Diversity and Evaluation

e Policy on Nomination, Independence, Remuneration, Diversity and Evaluation, approved by the Nomination and Remuneration Committee of your Company and which has been adopted by the Board of Directors, is annexed as Annexure II to this report of the Board to the shareholders. is policy is available on the website of the Company at https://www.castrol.com/content/ dam/castrol/country-sites-new/en_in/india/home/ documents/investors/nrc_policy_cil_2018.pdf.

8. Board Evaluation

e Policy on Nomination, Independence, Remuneration, Diversity and Evaluation ("Policy") adopted by the Board of Directors provides for evaluation of the Board, the Committees of the Board and individual Directors, including the Chairperson of the Board. e Policy provides that evaluation of the performance of the Board as a whole and the Board Committees and individual Directors shall be carried out annually. Your Company has appointed a reputed external agency that engages with the Chairperson of the Board and Chairperson of the Nomination and Remuneration Committee in respect of the evaluation process. e agency prepares an independent report which is used for giving feedback to the Board, Committees and Directors.

e evaluation conducted during the year included evaluation of the Board as a whole, Board Committees and individual Directors. e evaluation process focused on various aspects of the Board and Committees functioning such as composition of the Board and its Committees, experience and competencies, performance of specific duties, obligations and governance issues. A separate exercise was carried out to evaluate the performance of individual Directors on parameters such as attendance, contribution and exercise of independent judgement.

e results of evaluation of the Board and its Committees were shared with the Board and its respective Committees. e Chairperson of the Board had discussions with members of the Board to discuss the performance feedback based on self-appraisal and peer review. e Chairperson Nomination and Remuneration Committee discussed the performance review with the Chairperson of the Board.

e Independent Directors met on 30 October 2023 to review performance evaluation of Non-Independent Directors and the Board of Directors and also of the Chairperson taking into account views of Executive Directors and Non-Executive Directors.

Based on the outcome of the evaluation, the Board and its Committees have agreed on various action points, which would result in the Board, its Committees and each Director playing more meaningful roles to increase shareholder value.

9. Board and Committees

e Board met four times during the year, details of which are given in the Corporate Governance Report that forms part of this annual report. Additionally, there was a Strategy meeting held in July and October 2023 where the Board met and discussed the medium to long-term strategy of the Company and its preparedness to pursue the same. e intervening gap between the meetings was within the period prescribed under the Act and the SEBI Listing Regulations and as per the Circulars issued by the Ministry of Corporate Affairs and SEBI. During the year under review, the Board has accepted the recommendations of the Audit Committee. Details of all the Committees of the Board have been given in the Corporate Governance Report.

10. Corporate Governance

Your Company is a part of bp group which is known globally for best standards of governance and business ethics. Your Company has put in place governance practices as prevalent globally. e Corporate Governance Report and the Auditors Certificate regarding compliance of conditions of Corporate Governance are made part of the annual report.

11. Corporate Social Responsibility

At Castrol India Limited, we believe that we have a responsibility to bring enduring positive value to communities we work with. In line with our core theme to keep India moving, we have and will continue to build enduring and engaging relationships with key stakeholders in the mobility sector.

Truck drivers and mechanics are two key partners who play a significant role in keeping the wheels of this sector moving. Truck drivers carry the majority of freight traffic in the country while mechanics service one of the largest automotive markets in the world. However, their skills, livelihood opportunities and socio-economic conditions need more focus.

At Castrol India Limited, we are committed to making a positive impact in the lives of truck drivers and mechanics by preparing them to face todays reality and leverage tomorrows opportunity.

In line with this vision, Castrol India Limited now focusses on two key flagship CSR programmes:

• Programme for holistic development of truck drivers - Castrol Sarathi Mitra

• Programme for mechanics with an aim to strengthen skills development in automotive and industrial sectors, with a focus on technology – Castrol Eklavya Additionally, Castrol India Limited continues to support community development initiatives around areas of operations and presence. e Company, from time to time, supports humanitarian aid activities in India, by providing relief and rehabilitation to people impacted by natural disasters.

e Corporate Social Responsibility Policy is available on the website of the Company at https://www.castrol.com/ content/dam/castrol/country-sites-new/en_in/india/ home/documents/about-castrol/cil-csr-policy-2021.pdf

e annual report on CSR activities is annexed to this report as Annexure III.

12. Directors Responsibility Statement

Pursuant to the requirement under Sections 134(3)(c) and 134(5) of the Act, with respect to the Directors Responsibility Statement, it is hereby confirmed: a. In the preparation of the annual accounts for the year ended 31 December 2023, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b. e Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as on 31 December 2023 and of the profit of your Company for the year ended on that date; c. e Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; d. e Directors have prepared the annual accounts on a ‘going concern basis; e. e Directors have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively and f. e Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are efficient and operating effectively.

13. Risk Management and Adequacy of Internal Financial Controls

Your Company has set up a Risk Management Committee. Your Company has also adopted a Risk Management Policy, the details of which are given in the Corporate Governance Report that forms part of this Annual Report.

Your Company maintains an adequate and effective internal control system commensurate with its size and complexity. We believe that these internal control systems provide, among other things, a reasonable assurance that transactions are executed with management authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safe guarded against significant misuse or loss. An independent internal audit function is an important element of your Companys internal control system. e internal control system is supplemented through an extensive internal audit programme and periodic review by management and Audit Committee.

Your Company has in place, adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

14. Related Party Transactions

Your Company has adopted a Related Party Transactions Policy. e Audit Committee reviews this policy periodically and also reviews and approves all related party transactions, to ensure that the same are in line with the provisions of applicable law and the Related Party Transactions Policy.

e Committee approves the related party transactions and wherever it is not possible to estimate the value, approves limit for the financial year, based on best estimates. All related party transactions are reviewed by an independent accounting firm to establish compliance with policy and limits approved.

All related party transactions entered during the year were in the ordinary course of the business and on arms length basis. No material related party transactions were entered into during the year by your Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act, in Form AOC-2 is not applicable to your Company.

In conformity with the requirements of the Act, read with the SEBI Listing Regulations, the policy to deal with related party transactions is also available on Companys website athttps://www.castrol.com/content/ dam/castrol/country-sites-new/en_in/india/home/ documents/investors/rpt-policy-v4-01042022.pdf

15. Deposits

Your Company has not accepted any deposits under Chapter V of the Act during the financial year and as such, no amount on account of principal or interest on deposits from public is outstanding as on 31 December 2023.

16. Particulars of Loans Given, Investments Made, Guarantees Given and Securities Provided

Pursuant to Section 186 of the Companies Act, 2013 and Schedule V to the SEBI Listing Regulations, disclosure on particulars relating to Loans, Guarantees and Investments are provided as part of the financial statements in Note No. 4.6.

17. Conservation of Energy, Technology Absorption, Research & Development (R&D) and Foreign Exchange Earnings and Outgo

e particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided as Annexure IV.

18. Material Changes Occurred aƒer end of Financial Year

No material changes and commitments which could affect your Companys financial position have occurred between the end of the financial year of your Company and date of this report.

19. Auditors

Statutory Auditor

e shareholders at the 44th Annual General Meeting held on 8 June 2022, approved the appointment of Deloitte Haskins & Sells LLP, Chartered Accountants, for a second term of 5 (five) years to hold office till the conclusion of 49th Annual General Meeting of the Company.

e Statutory Auditors have confirmed their eligibility and submitted the certificate in writing that they are not disqualified to hold the office of the Statutory Auditor. e report given by the Statutory Auditor on the financial statements of the Company forms part of the Annual Report. ere is no qualification, reservation, adverse remark or disclaimer given by the statutory auditor in their report.

Cost Auditor

M/s. Kishore Bhatia & Associates, Cost Accountants, carried out the cost audit for the Company for the year under review. ey have been re-appointed as cost auditors for the financial year ending 31 December 2024. A remuneration of INR 4,10,000/- (Rupees Four Lac Ten ousand only) plus applicable taxes and out of pocket expenses has been fixed for the Cost Auditors subject to the ratification of such fees by the shareholders at the 46th AGM. Accordingly, the matter relating to ratification of the remuneration payable to the Cost Auditors for the financial year ending 31 December 2024 is placed at the 46th AGM. e Company has maintained cost records as specified under sub-section (1) of section 148 of the Companies Act, 2013 and the same shall be audited by the cost auditor i.e. M/s. Kishore Bhatia & Associates, Cost Accountants for the financial year 2024.

Secretarial Auditor

e Board had appointed M/s. S. N. Ananthasubramanian

& Co., Company Secretaries in Whole-time Practice, to carry out secretarial audit under the provisions of Section 204 of the Act, for the financial year ended

31 December 2023. e Secretarial Auditors report to the shareholders does not contain any qualification and is annexed to this report marked as Annexure V.

20. Compliance with Secretarial Standards on Board and General Meetings

During the financial year, your Company has complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

21. Particulars of Employees

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act, and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed to this report as Annexure VI. Details of employee remuneration as required under provisions of Section 197 of the Act, and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms a part of this report. As per the provisions of Section 136 of the Act, the Report and Financial Statements are being sent to the shareholders of your Company and others entitled thereto, excluding the statement on particulars of employees.

Copies of said statement are available at the registered office of the Company during the designated working hours from 21 days before the Annual General Meeting till date of the Annual General Meeting. Any shareholder interested in obtaining such details may write to the corporate secretarial department at the registered office of the Company.

22. Prevention of Sexual Harassment at Workplace

Your Company firmly believes in providing a safe, supportive and friendly workplace environment – a workplace where our values come to life through the supporting behaviors. Positive workplace environment and a great employee experience are integral part of our culture. Your Company continues to take various measures to ensure a workplace free from discrimination and harassment based on gender.

Your Company educates its employees as to what may constitute sexual harassment and in the event of any occurrence of an incident constituting sexual harassment. Your Company has created the framework for individuals to seek recourse and redressal to instances of sexual harassment.

Your Company has a Sexual Harassment Prevention and Grievance Handling at the Workplace Policy in place to provide clarity around the process to raise such a grievance and how the grievance will be investigated and resolved. An Internal Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ere are regular sessions offered to all employees (3 in 2023) to increase awareness on the topic and the Committee and other senior members have undergone a training session in December 2023 During the year there was zero complaint of sexual harassment that was reported.

23. Vigil Mechanism

Your Company has a very strong whistle blower policy viz. ‘Open Talk. e Whistle blowers also have access to the Chairperson of the Audit Committee in case they wish to report any concern. Your Company has provided a dedicated e-mail address for reporting such concerns. All cases registered under Whistle Blower Policy of your Company are reported to and are subject to the review by the Audit Committee. e Board has adopted the revised bp code of conduct at its meeting held on 13 February 2023.

24. Annual Return

e annual return of the Company as required under the Companies Act, 2013 will be available on the website of the Company at https://www.castrol.com/en_in/india/ home/investors/general-meeting.html.

25. General Disclosures

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no such transactions during the year under review:

1. Issue of Equity Shares with differential rights as to dividend, voting or otherwise.

2. Issue of Equity Shares (including Sweat Equity Shares) to employees of your Company, under any scheme.

3. Your Company has not resorted to any buy back of its Equity Shares during the year under review.

4. Your Company does not have any subsidiaries. Hence, neither the Managing Director nor the Wholetime Directors of your Company received any remuneration or commission during the year, from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Companys operations in future.

6. No fraud has been reported by auditors under subsection (12) of section 143.

7. e details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not Applicable.

8. e details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year - Not Applicable.

26. Awards and Recognitions

Your Company was recognized with many prestigious and diverse external accolades in 2023 which include:

1. e Silvassa plant won the ‘Platinum Award in Quality Excellence and ‘Gold Award in Occupational Health and Safety by Apex India;

2. e Patalganga plant won the ‘Golden Peacock Award and safety recognition from National Safety Council (Maharashtra chapter);

3. e Paharpur plant won the ‘Gold Award for Plant Efficiency by Apex India and ‘Safety Excellence Award from the Indian Chamber of Commerce;

4. Castrol Super Mechanic contest won the ‘Silver Award at the Indian Marketing Awards for ‘Use of

Consumer Insights and ‘B2B Sector. e initiative also won the ‘Gold Award in best of branded content category at the Festival of media Asia and ‘Silver Award in Best Media Strategy – Consumer Products (others) category at the EMVIES organized by the Advertising Club;

5. Castrol Anti-counterfeit Pail Pack was awarded the ‘INDIASTAR award, the highest recognition for excellence in packaging;

6. Castrol India was adjudged the ‘Top Ten Chemical Supply Chain Company of the Year by the Governing Council of the Institute of Supply Chain and Management Pvt. Ltd.;

7. Ford India commended Castrol India for its role in developing the 1,000,000th (one millionth) engine since the beginning of their strategic partnership;

8. Marking a 50-year partnership with Sriram Pistons Limited (SRPL) in 2023, the company received a memento symbolising their continued patronage and support.

27. Acknowledgement

e Board wishes to place on record its sincere appreciation of the efforts put in by your Companys employees for achieving encouraging results. e Board also wishes to thank the shareholders, distributors, vendors, customers, bankers, government and all other business associates for their support during the year.

On behalf of the Board of Directors
Sandeep Sangwan
Managing Director
DIN: 08617717
Deepesh Baxi
Chief Financial Officer & Wholetime Director
DIN: 02509800
Place: Mumbai
Date: 1 February 2024

Annexure I

Dividend Distribution Policy

1. Objective

e objective of this Policy document is to articulate Castrol India Limiteds Dividend Distribution Policy. is Policy applies to all types of Dividends declared or recommended by the Board of Directors of the Company and seeks to conform to the requirements of Section 123 of the Companies Act, 2013, the notified rules thereof and other such provisions.

2. Philosophy

At Castrol we respect, and are committed to, our role towards shareholders and meeting our obligations to the communities in which we do business. We believe that sustainable growth can be achieved by creating wealth and jobs, developing useful skills, and investing time and money in people.

Castrol aims to share its prosperity with the shareholders by way of declaring dividend subject to liquidity and growth requirement.

3. e Regulatory Framework

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, top 1000 Listed Companies in India as per Market Capitalization as on the preceding Financial Year shall formulate a dividend distribution policy.

4. Definitions

Unless repugnant to the context:

4.1 "Act" shall mean the Companies Act, 2013 including the Rules made thereunder.

4.2 "Company or Castrol" shall mean Castrol India Limited.

4.3 "Chairman" shall mean the Chairman of the Board of Directors of the Company.

4.4 "Board" or "Board of Directors" shall mean Board of Directors of the Company.

4.5 "Dividend" shall mean Dividend as defined under Companies Act, 2013 or SEBI Regulations.

4.6 "SEBI Regulations" shall mean the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 together with the circulars issued thereunder, including any statutory modifications or re-enactments thereof for the time being in force.

5. Policy

5.1 Frequency of payment of dividend:

5.1.1 Castrol believes in rewarding its shareholders as and when the funds are available for distribution as dividend and generally strive to declare Interim Dividend at least once in a year and to recommend Final Dividend to the Members at the Annual General Meeting of the Company.

5.1.2 If the frequency of Interim Dividend is more than once, Castrol may not recommend Final Dividend for that year.

5.2. Internal and external factors that would be considered for declaration of dividend:

5.2.1 Castrol considers several Internal and External Factors before deciding declaration or recommendation of dividend.

5.2.2 e Internal Factors are adequacy of profits for last year and likely profits for next year, allocation of capital towards capital expenditure, probable mergers and acquisitions, loan repayments and working capital requirements.

5.2.3 e External Factors that would impact dividend payout are interest rate on surplus funds, taxation on distribution of dividend including taxation on dividend received from subsidiaries and dividend payout ratios of comparable companies.

5.3. e financial parameters that will be considered while declaring dividends:

5.3.1 In order to maximize corporate value over the long term, internal capital resources will be secured for measures that will increase corporate value. ese measures include investments in R&D and Capital Investments, which are vital to future business expansion.

5.3.2 Aƒer taking into consideration the required investments for future growth and the level of free cash flow, surplus will be distributed to the shareholders to the maximum extent possible. 5.3.3 For dividends in each financial year, Castrols policy is to enhance stable, uninterrupted profit distributions by taking into account consolidated results as well as indicators including dividends on equity (DOE), which is return on equity (ROE) multiplied by the payout ratio, although this is subject to the level of internal capital resources necessary.

5.3.4 Other Financial Parameters like Net Free cash generation aƒer factoring internal parameters like Net Operating Profit aƒer Tax, working capital and capital expenditure requirements, loan repayments and payouts towards any probable merger and acquisition will be considered by the Company before declaring or recommending dividend.

5.4. e circumstances under which their shareholders can or cannot expect dividend:

In an event where Company has undertaken a significant project requiring higher allocation of capital or Merger or Acquisitions which demands higher capital allocation or in event where the Company profits are inadequate or company makes losses, the Company would like to use the Companys reserves judiciously and not declare dividend or declare dividend lower than its normal rate of dividend.

5.5. Policy as to how the retained earnings will be utilized:

5.5.1 e Company would like to retain the balances in Reserves and Surplus to give the required strength to the balance sheet for exploring leverage options for supporting growth.

5.5.2 e Company would be very cautious in declaring divided out of past profits and reserves.

5.6. Transfer of Profits to Reserves:

e Company will not transfer any amount to reserves unless otherwise statutory.

5.7. Provisions regarding class of shares:

Currently, the Company has issued only Equity Shares and this Policy shall be applicable to Equity Shares.

As and when the Company issues other kind of shares, the Board shall amend this Policy along with Rationale at the time or before issue of other class of shares.

6. Procedure

6.1 e Chief Financial Officer in consultation with the Managing Director of the Company shall recommend any amount to be declared as Dividend to the Board of Directors of the Company. 6.2 e Company Secretary & Compliance Officer of the Company shall ensure compliance of Insider Trading Rules of the Company and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

6.3 e Agenda of the Board of Directors where Dividend declaration is proposed shall contain the rationale of the proposal.

6.4 e Board of Directors shall approve the declaration or recommendation of Dividend aƒer ensuring compliance of Act, SEBI Regulations and this Policy.

6.5 e Company shall ensure compliance of provisions of Act, SEBI Regulations and this Policy in relation to dividend.

6.6 Item on Confirmation of Interim Dividend(s) declared by the Board of Directors of the Company shall form part of Notice of every Annual General Meeting of the Company.

7. General

7.1 is Policy would be subject to revision/amendment in accordance with the guidelines as may be issued by Ministry of Corporate Affairs and/or Securities Exchange Board of India from time to time, on the subject matter.

7.2 e Company reserves its right to alter, modify, add, delete or amend any of the provisions of this Policy.

7.3 In case of any amendment(s), clarification(s), circular(s) etc. issued by the relevant authorities, not being consistent with the provisions laid down under this Policy, then such amendment(s), clarification(s), circular(s) etc. shall prevail upon the provisions hereunder and this Policy shall stand amended accordingly from the effective date as laid down under such amendment(s), clarification(s), circular(s) etc.

Annexure II

Policy on Nomination, Remuneration, Diversity and Evaluation

(Consolidated Policy approved by the Board of Directors on 6 February 2018) is Policy of Castrol India Limited (the "Company") shall be referred to as "Policy on Nomination, Remuneration, Diversity and Evaluation (the "Policy"). is Policy shall act as a guideline for "Nomination and Remuneration Committee" (the "Committee") on matters relating to Appointment of Directors including Independent Directors, Remuneration of Directors, Key Managerial Personnel (KMPs) and Senior Management Personnel, Board evaluation and Board Diversity. is Policy has been prepared pursuant to the provisions of Section 178(3) of the Companies Act, 2013 (the "Act"), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "SEBI Listing Regulations, 2015") and is subject to the provisions of other applicable laws as amended from time to time.

1. Policy

e Committee is responsible for recommending this Policy to the Board including any amendments to be made in this Policy.

2. Review of the Policy

e Board of Directors (the "Board") is responsible for approving and overseeing implementation of this Policy and the same will be reviewed and reassessed by the Committee as and when required and appropriate. Recommendations shall be made to the Board to update this Policy for reasons that include but are not limited to regulatory changes.

Implementation of this Policy shall be the responsibility of the Company Secretary & Compliance Officer who shall advise the Board from time to time. All the terms like Director, Managing Director, KMP, Independent Director, Remuneration, Committee shall have the same meaning as assigned under the Act read with SEBI Listing Regulations, 2015.

e power to interpret and administer the Policy shall rest with the Chairperson of the Committee whose decision shall be final and binding. e Chairperson is also empowered to make any supplementary rules/ orders to ensure effective implementation of the Policy. ese will, however, be reported to or placed before the Committee, from time to time, to ensure the Committees oversight on these issues.

3. Policy on Appointment of Directors:

a. In accordance with Companys Articles of Association, the Board determines, from time to time, the size of the Board and may fill any vacancies that occur between annual general meetings. e Committee periodically evaluates and makes recommendations to the Board concerning the appropriate size of the Board based upon the needs of the Board.

b. Appointment of a Director will be based on the outcome of a proper planning. e Committee shall consider the standards of qualification, expertise and experience of the candidates for appointment as Director and accordingly recommend to the Board his/her appointment. e Committee will assess skill sets, the Board needs to have for the industry the Company operates in and also in view of Group corporate philosophy and governance standards.

c. e Committee shall request reference internally for a candidate having relevant experience or from external consultants or any other source as deemed appropriate by the Committee.

d. For inducting Directors, the Committee members shall personally meet the potential candidate and assess suitability of the candidate for the role in view of Castrol values and standards of governance.

e. e Committee shall recommend appointment of the shortlisted candidate for directorship to the Board for its consideration. e Committee shall also recommend compensation that can be paid to a Director, commensurate to the industry norms and position.

f. If position of a Director suddenly becomes vacant by unanticipated occurrence of any event, the Committee shall meet at the earliest opportunity to discuss succession and fill such vacancy.

g. Criteria for selection:

i. e Board candidate should be of the highest ethical character and share the values of Castrol as reflected in the Code of Conduct and Corporate Governance principles. Board candidate should have reputation, both personal and professional, consistent with the image and reputation of Castrol.

ii. e Board candidate should be of the highest moral and ethical character. e candidate must exhibit independence, objectivity and be capable of serving as a representative of the stockholder.

iii. e Board candidate should have the personal qualities to be able to make a substantial active contribution to Board deliberations. ese qualities include intelligence, self-assuredness, a high ethical standard, interpersonal skills, independence, courage, and willingness to ask the difficult questions, communication skills and commitment. iv. e Board candidate must be willing to commit, as well as have, sufficient time available to discharge the duties of Board membership and should not have any prohibited interlocking relationships or conflict of interest. v. Board Candidate should be highly accomplished in its respective field, with superior credentials and recognition. vi. In recognition of the fact that the foundation of the Company is in lubricants industry, the Board should prefer person who has relevant experience. A candidate should have extensive and relevant leadership experience including understanding of the complex challenges of enterprise leadership. International experience will in many cases be considered a significant positive characteristic in a Board candidates profile. An ideal Board candidate will have gained this experience in one or more of the settings outlined below:

• Business – e Board candidate is or has been the Chief Executive Officer, Chief Operating Officer or other major operating or officer of a major corporation, with a background in law / marketing / finance / business operations / strategic management.

• Industry – e Board candidate has experience in the fast-moving consumer goods (FMCG) industry/automobile industry or another complementary field.

• Information Technology – e Board candidate should have fair understandingofinformationtechnology, e-commerce or digital marketing and also of regulatory framework in which the industry operates.

• In considering candidates for election to the Board of Directors, the Board should constantly be striving to achieve the diversity of the communities in which the Company operates. e Committee shall work with the Board to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members with the objective of having a Board with diverse backgrounds and experience as per Diversity Policy of the Company.

4. Policy on Independence of Directors

For the Independent Directors, the Committee shall assess the independence of Directors at the time of appointment/re-appointment and the Board shall assess the same annually as per the ‘Policy on Independence of Directors. e Board shall re-assess determinations of independence when any new interests or relationships are disclosed by a Director.

e Independent Directors shall abide by the "Code for Independent Directors" as specified in Schedule IV to the Act. is policy is subject to the provisions of the Companies Act, 2013 and Listing Regulations issued by Securities and Exchange Board of India (SEBI) from time to time and that the Nomination and Remuneration Committee/Board to assess the Independence of Independent Directors of the Company according to the criteria of Independence laid down by the Companies Act, 2013 read with Listing Regulations.

5. Policy on Remuneration of Directors

While determining Remuneration, the Committee shall take into account – a. Salary level of new director/employee is competitive, relative to the peer group. b. Variable remuneration is awarded within the parameters and is subject to a requirement of continued service and corporate performance condition. c. Where an existing employee is promoted to the Board, the Company will honour all existing contractual commitments including any outstanding share awards or pension entitlements. d. Where an individual is relocating in order to take up the role, the Company may provide certain one-off benefits such as reasonable relocation expenses, accommodation for a period following appointment and assistance with visa applications or other immigration issues and ongoing arrangements such as tax equalization, annual flights home, and housing allowance. e. Where an individual would be forfeiting valuable remuneration in order to join the Company, the Committee may award appropriate compensation based on evidence.

In making/revising remuneration package, the Committee would balance shareholder expectations, current best practice and the requirements of any new recruit.

e Committee may recommend to the Board, changes in remuneration terms of Directors, Key Managerial Personnel or Senior Management Personnel subject to the provisions of the Act and applicable Group policies, regulations of Service, Code of Ethics and Principles of legal compliance framed and adopted by the Company from time to time. e Directors and Key Managerial Personnel/Senior Management Personnel shall superannuate as per the applicable provisions of the regulation and prevailing policy of the Company. e Board of Directors will have the discretion to retain the Whole-time Director, Key Managerial Personnel and Senior Management Personnel in the same position/remuneration or revised remuneration aƒer attaining the age of superannuation, for organizational development reasons.

e Committee will discuss succession plans for the Directors, Key Managerial Personnel and Senior Management Personnel in consonance with the Companys policies, as applicable from time to time.

(i) Remuneration for Independent Directors (IDs) and Non-Independent Non-Executive Directors (NED)

e remuneration should be sufficient to attract, motivate and retain world-class, non-executive talent. Remuneration practice should be consistent with recognized best practice standards for Chairman and NED remuneration. e aggregate annual remuneration payable to the NEDs is determined by shareholder resolution, subject to the limits of Law. e Non-Executive Directors nominated by Promoters are not entitled to receive any remuneration. a. Directors Sitting Fees – e NEDs are entitled to sitting fees as determined by the Board from time to time for attending Board/Committee meetings thereof in accordance with the provisions of Act. Sitting fees amount may be subject to review on a periodic basis, as required. Within the parameters prescribed by law, the payment of sitting fees will be recommended by the Committee and approved by the Board. b. Profit-linked Commission – e profit-linked commission shall be paid to the NEDs within the monetary limit approved by the shareholders of the Company subject to the same not exceeding 1% of the net profits of the Company computed as per the applicable provisions of the Act. Amount of Commission would be determined considering the overall performance of the Company, attendance at the meetings of Board/Committees, Membership/Chairmanship of Committees and contribution by the respective NEDs. e Committee will recommend to the Board, the quantum of commission for each Director based upon the outcome of the evaluation process. c. e IDs and NEDs are not entitled to any stock options of the Company.

NEDs are supported through the Company Secretarys office. is support includes assistance with travel and transport, security advice (when needed) and administrative services. NEDs shall be issued letters of appointment that recognize that, their service is at the discretion of shareholders. e quantum and structure of the Chairmans remuneration is set by the Board based upon a recommendation from the Nominations Committee. e Chairman is not involved in setting his own remuneration. e Chairmans office is not maintained by the Company however he is provided administrative support and all reasonable travelling, communication and other expenses incurred in carrying out his duties are reimbursed.

(ii) Remuneration for Managing Director (MD)/Whole-time Directors (WTDs)/Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) a. e remuneration policy for the Managing Director (MD)/Whole-time Directors (WTDs)/KMPs and Senior Management Personnel (SMPs) shall be guided by five key principles. i. Linked to strategy: A substantial proportion of remuneration is linked to success in implementing the Companys strategy. ii. Performance related: A major part of total remuneration varies with performance, with the largest elements being share based, further aligning with shareholders interests. iii. Long term: e structure of pay is designed to reflect the long-term nature of Castrols business and the significance of safety and environmental risks. iv. Informed judgement: ere are quantitative and qualitative assessments of performance with the Committee making informed judgement within a framework approved by shareholders. v. Fair treatment: Total overall pay takes account of both the external market and Company conditions to achieve a balanced, ‘fair outcome. b. e aim of this policy is to ensure that whole-time directors are remunerated in a way that reflects the Companys long-term strategy. Consistent with this, a high proportion of directors total potential remuneration has been, and will be, strongly linked to the Companys long-term performance. Salaries will normally be set in the home currency of the Director and reviewed annually. Remuneration shall comprise of two broad components; fixed and variable. Fixed portion comprises of Base pay and perquisites and variable pay termed as Performance Linked Bonus (PLB) comprises of a pre-determined maximum compensation that can be paid at the end of the performance year. Entire remuneration shall be paid as per the contract approved by the Board and terms approved by shareholders, as under: i. Fixed Component – is includes Salary and other perquisites/benefits. is provides base-level fixed remuneration to reflect the scale and dynamics of the business and to be competitive with the external market. Basic/ fixed salary is provided to all employees to ensure that there is a steady income in line with their skills and experience. In addition to the basic/fixed salary, the Company may provide employees with certain perquisites, allowances and benefits to enable a certain level of lifestyle and to offer scope for savings and tax optimization, where possible. e Company may also provide all employees with a social security net (subject to limits) by covering medical expenses and hospitalization through re-imbursements or insurance cover and accidental death and dismemberment through personal accident insurance. ii. Performance Linked Bonus (PLB) – e specific amount payable to the MD/EDs would be based on performance as evaluated by the Board. It provides a variable level of remuneration dependent on short-term performance against the annual plan. Total overall Bonus is based on performance relative to measures and targets reflected in the annual plan, which in turn reflects Companys strategy. iii. Retirals in the form of contribution to Provident Fund, Superannuation and Gratuity be paid as per statutory requirements. iv. Based on the organizational need for retaining high performing employees and also those who are playing critical roles, from time to time, certain retention features may be rolled out as part of the overall compensation package. ese may take form of Retention Bonuses, group Share Value Plan etc. v. Severance Pay may be awarded (under supervision and with approval of the Committee) to the eligible MD/WTDs/ KMPs/SMPs in case of major organizational structuring(s). vi. Long Term Incentives may be awarded (under supervision and with approval of the Committee) to the eligible MD/WTDs/ KMPs/SMPs based on their contribution to the performance of the Company, relative position in the organization, and length of service. c. Annual Compensation Review – e compensation review year will be financial year of the Company. e annual compensation review, as a part of the performance management system cycle, shall be guided by Industry/business outlook, employee differentiation based on individual performance rating achieved during the applicable performance year.

6. Board Evaluation a. e Board is committed to assessing its own performance as a Board in order to identify its strengths and areas in which it may improve its functioning. Towards this end, the Committee shall establish the criteria and processes for evaluation of performance of Individual Directors, Chairperson of the Board, the Board as a whole and the Committees of the Board and recommend the same to the Board. b. e Board is responsible for monitoring and reviewing of the Board Evaluation framework. c. e Committee shall i. formulate criteria for evaluation of performance of independent directors and the board of directors; ii. carry out evaluation of every directors performance; iii. determine whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors. d. e performance evaluation shall take place annually. It shall be the responsibility of the Chairperson of the Committee to organize the evaluation process. e. e appointment/re-appointment/continuation of Directors on the Board shall be subject to the outcome of the yearly evaluation process. f. e process and criteria for evaluation shall be guided by the "Guidance Note on Board Evaluation" issued by SEBI (No. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated January 5, 2017), applicable provisions of the SEBI Listing Regulations, 2015 and the Act and amendments/modifications thereto made from time to time.

7. Meeting of Independent Directors

e Independent Directors of the Company shall hold at least one meeting in a year, without the attendance of Non-Independent Directors and members of the management.

Such meeting shall: a. review the performance of Non-Independent Directors and the Board as a whole; b. review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; c. assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. e Independent Directors may call such meeting(s) at any point of time as desired.

8. Board Diversity Policy

1. e Board Diversity Policy aims to set out the approach to achieve diversity on the Board of Directors of the Company. Building a diverse and inclusive culture is integral to the success of Company. Ethnicity, age and gender diversity, underpinned by meritocracy are areas of strategic focus for the employee base and the same principle is applied to the composition of Board.

2. Policy Statement

e Board of Directors shall comprise of Directors having expertise in different areas/fields like StrategicPlanning,Finance,Law,Sales,Engineering or as may be considered appropriate. In designing the Boards composition, Board diversity shall not be limited to gender, age, cultural and educational background, ethnicity, professional experience, skills and knowledge. e Board shall have at least one Board member who has accounting or related financial management expertise and at least one-woman director.

e Board recognizes the benefits that diversity brings to the Board. In considering the composition of the Board, directors will be mindful of: a. Diversity: ensuring the Board and the Company reflects the global communities in which it works; b. Inclusiveness: creating an environment where all board members, employees and business partners are valued and can give of their best; c. Meritocracy: ensuring that Board appointments are made on the basis of merit alone.

e Board delegates the search and nomination of new directors to the Committee. When considering the nomination of new directors, the Committee will evaluate the balance of skills, knowledge and experience on the Board in order to identify the capabilities desirable for a particular appointment. Such evaluations will also consider the diversity the individual brings to the overall Board and will aim to ensure as diverse a mix as possible.

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