CG Power & Industrial Solutions Ltd Directors Report.

TO

THE MEMBERS

Your Directors are pleased to present their Eighty-fourth Annual Report on the business and operations of your Company along with the revised audited financial statements, both standalone and consolidated, for the financial year ended 31 March 2021.

MATERIAL DEVELOPMENTS:

As your Company was under severe financial stress, the consortium of lenders of the Company (‘Lenders) led by State Bank of India, initiated steps for resolution of stressed asset (resolution plan) under the Reserve Bank of Indias circular dated 7 June 2019 on Prudential Framework for Resolution of Stressed Assets (as amended or modified) (‘Prudential Framework). A series of actions were initiated by the Company and the Lenders, leading to Tube Investments of India Limited (‘TII), a listed company and part of the Murugappa Group, acquiring a controlling stake in the Company on 26 November 2020. The chronology of events relating to the above is given below:

7 August 2020 TII submitted a binding bid to the Lenders to acquire majority stake in the Company.
TII entered into Securities Subscription Agreement with the Company for acquiring a controlling stake in the Company through a combination of investment in equity shares (64,25,23,365 shares) and warrants (17,52,33,645 warrants) aggregating to Rs. 700 crores subject to compliance of certain conditions and receipt of certain approvals.
11 August 2020 Based on TII‘s offer, the Lenders initiated a Swiss Challenge Process inviting competing bids
28 August 2020 After the completion of the Swiss Challenge Process, TII was declared as the successful bidder to acquire controlling stake in the Company.
The Lead Bank i.e. State Bank of India issued a Letter of Intent (‘LOI) to TII detailing the terms and conditions to be fulfilled by TII to complete the acquisition of controlling stake in the Company.
2 September 2020 The then Board of Directors of your Company approved further issue of 6,87,28,522 equity shares in the Company by way of a preferential issue, aggregating to Rs. 100 crores.
13 October 2020 The Competition Commission of India accorded its approval to the acquisition proposal of TII.
28 October 2020 TII conveyed its acceptance to the Letter of Intent issued by State Bank India, the Lead Bank.
20 November 2020 TII, the Company and the Lenders executed binding agreements for one time settlement of funded facilities that were outstanding and restructuring of the non funded facilities extended to and availed by the Company. The salient terms of the agreements were:
a) Compromise settlement by making an upfront payment of Rs. 650 crores to Lenders
b) Conversion of Rs. 200 crores out of the balance funded facilities into unrated unsecured unlisted non-convertible debentures having a tenure of 5 years to be issued to the Lenders
c) Payment of around Rs. 150 crores to the Lenders out of the proceeds from the sale of "CG House" within a period of 5 years
d) Replacement / substitution of non fund based facilities extended by the members of the Lenders consortium
26 November 2020 TII subscribed to the equity shares and warrants issued to them on private placement basis and remitted Rs. 587.50 crores towards subscription amount for the Equity / Warrants, and accordingly TII was allotted 64,25,23,365 Equity Shares and 17,52,33,645 warrants thus becoming the majority shareholder of the Company with a controlling stake of 50.62%, which subsequently got enhanced to 53.16% when further capital of Rs. 100 crore was infused by TII in December 2020.
On the same day, the Board of the Company was re-constituted with the then Directors resigning from the Board and appointment of Mr. Vellayan Subbiah, Mr. M A M Arunachalam, Mr. Natarajan Srinivasan, Mr. P S Jayakumar, Mr. Shailendra N Roy and Ms. Sasikala Varadachari as new Directors on the Board. Mr. Natarajan Srinivasan was appointed as the Managing Director of the Company.
Settlements were entered into with the Lenders who had lent monies to overseas subsidiaries of the Company on the strength of the Corporate Guarantees extended by the Company. The Company initiated the process of settling these guarantee liabilities as per the agreed settlement.
Post the acquisition
Post acquisition of the controlling interest, the new Board / Management initiated several steps to complete the conditions in the LOI and also took steps to revive the business operations and addressed several issues that were haunting the Company. The key steps initiated were:
26 November 2020 TII was classified as the new Promoter of the Company in the place of the erstwhile Promoters. Prior to this, the erstwhile promoters were de-classified and ceased to be Promoters of the Company on 19 November 2020.
26 November 2020 to 31 December 2020 Made payments aggregating to approximately Rs. 650 crores to Lenders during the period. Based on the steps taken by the Company, the Company was classified as a STANDARD ASSET and ceased to be a Non-Performing Asset.

Recasting of Accounts

5 March 2020 Based on the application made by Ministry of Corporate Affairs, Union of India, the Honble National Company Law Tribunal, Mumbai Bench (‘NCLT) had ordered the re-opening of books of accounts of the Company and its subsidiaries for the past five years (2014-15 to 2018-19), to recast them and also get the recast accounts audited by Independent Auditors.
1 February 2021 The following two CA firms were appointed by Ministry of Corporate Affairs:
a) M/s. Kalyaniwalla & Mistry LLP - for recasting of the Accounts of the Company and its subsidiaries for five years i.e. from 2014-15 to 2018-19
b) M/s. CNK & Associates LLP - to audit the recast accounts and issue their Report thereof.

Post Balance Sheet Events:

While at the end of the financial year, the recasting of accounts and audit of such recast accounts of the past period, as stated above, were in progress, subsequently in the current financial year i.e. 2021-22, the exercise was completed. The recast accounts so audited were placed before the Board on 9 September 2021 and the Board approved its submission to Regional Director (West), Ministry of Corporate Affairs. The Regional Director submitted the re-cast accounts to Honble NCLT and the same were taken on record by the Honble NCLT vide its order dated 26 October 2021.

The Company had applied to Honble NCLT seeking its approval for voluntary revision of the financial statements of the Company for the financial years 2019-20 and 2020-21, to give effect to the consequential changes that arose on account of the said recast accounts for the preceding year ended 31 March 2019. The Honble NCLT accorded its approval for the voluntary revision on 22 December 2021. Based on the said approval, the Company has given consequential effect of the recast accounts of the financial year 2018-19 (closing balances and other items) in the financial statements of the financial years 2019-20 and 2020-21.

The revised financial statements of the Company for the financial years 2019-20 and 2020-21, giving effect to the recast accounts were approved by the Board in its meeting held on 31 December 2021 and the same are being circulated and placed before the shareholders for their approval / adoption at the ensuing Annual General Meeting (‘AGM) of the Company.

COMPANY PERFORMANCE

Your Companys standalone net revenue from operations was Rs. 2526 crore during the year under review, compared to Rs. 3169 crore in the previous year, and the consolidated net revenue from continuing operations during the year under review was Rs. 2964 crore compared to Rs. 5110 crore in the previous year.

Details of consolidated segment-wise revenue and profit before interest and tax (‘PBIT) of the two key business units - Power Systems and Industrial Systems - and how these compare with the previous financial year are given in Table 1. Your Companys financial performance for the year ended 31 March 2021 as compared to the previous year is given in Table 2.

01 CONSOLIDATED NET SALES AND PROFIT BEFORE INTEREST AND TAX (PBIT) OF THE BUSINESS UNITS

(in Rs. crore)

2020-21 2019-20
Consolidated Net Sales
Power Systems 862 2736
Industrial Systems 2092 2361
Consolidated PBIT
Power Systems (82) (266)
Industrial Systems 201 246

02 COMPANY FINANCIAL HIGHLIGHTS

(in Rs. crore)

Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Net Sales and Services 2526 3169 2964 5110
EBIDTA 156 160 219 44
Less: Finance cost 166 248 197 324
Less: Depreciation 81 91 138 211
Loss before Exceptional Items & Tax (91) (179) (116) (491)
Exceptional items (net) 915 (1369) 1543 (909)
Profit / (loss) Before Tax 824 (1548) 1427 (1400)
Less: Tax Expense 135 (68) 147 (76)
Profit / (loss) from continuing operations 689 (1480) 1280 (1324)
Less: Minority Interest NA NA 16 7
Profit / (loss) after minority interest 689 (1480) 1296 (1317)
Profit / (loss) before tax from discontinued operations - - 0 (7)
Tax expense on discontinued operations - - - 0
Profit / (loss) from discontinued operations - - 0 (7)
Total Profit / (loss) for the year 689 (1480) 1296 (1324)

Drop in standalone revenue was due to the financial constraints for working capital faced by the Company. Further, the bankruptcy / voluntary liquidation / divestment of some of the overseas subsidiaries of the Company contributed to drop in consolidated revenue during the year.

A detailed review of the operations and financial performance of your Company and each of its business units is contained in the ‘Management Discussion and Analysis of this Annual Report.

RECLASSIFICATION OF PROMOTERS/ PROMOTER GROUP

Tube Investments of India Limited (TII) was classified as Promoter on 26 November 2020. Prior to this, the entities belonging to Avantha group promoted by Mr. Gautam Thapar, which were classified as the Promoter and Promoter Group of the Company, holding 8,574 equity shares of your Company (i.e. <0.002% shareholding) were reclassified to public category pursuant to approvals received from BSE Limited (‘BSE) and the National Stock Exchange of India Limited (‘NSE) on 19 November 2020.

GLOBAL HEALTH PANDEMIC FROM COVID-19 AND ITS IMPACT ON THE COMPANY

As the global COVID-19 pandemic rapidly developed into an Indian health crisis, the Government of India announced a nationwide lockdown with effect from 25 March 2020. In view of the Government directive and considering the health and safety of employees, your Company suspended operations in all its factories and offices in India till 28 April 2020. However, non-operational activities relating to the factories, sales offices and the corporate office of the Company continued to be performed by such employees who were provided work from home facility.

All manufacturing plants resumed with limited and restricted operations on 29 April 2020, in terms of approvals received from respective authorities, and after implementing Standard Operating Practices in the interest of health and safety of the employees. Gradually, operations at the factories were scaled up. Moreover, based on the relaxations allowed, your Company commenced operations at its sales, regional and corporate offices, while strictly adhering to the terms and conditions of such relaxations and taking all necessary precautions for the health and safety of its employees.

Your Company partnered with local private hospitals and accelerated the vaccination of employees / workmen and has also taken up steps to ensure vaccination for all employees.

With the economic activity gaining momentum post the COVID-19 lockdown, several measures announced by the government and rollout of the vaccines resulted in an uptick in economic sentiments, but the resurgent COVID-19 second wave had put break in the growth momentum. However, from June 2021 onwards the economic activities have resumed and continued without any disruption.

Despite the pandemic situation and the severe financial stress that was faced till TII infused the funds, the Company had continued its operations and remained a going concern.

DIVESTMENTS AND OTHER DEVELOPMENTS

Due to financial stress and unviable operations, decisions were taken to prune / close down certain subsidiaries of the Company as given under:

a) Divestment of stake in CG Service Systems France SAS

During the year under review, CG International BV (‘CGIBV), a subsidiary of the Company, divested its entire shareholding in CG Service Systems France SAS (‘SEFR), subsidiary of CGIBV, along with its liabilities, for a net consideration of €30,000 to AK Group France, pursuant to a Share Purchase Agreement dated 23 June 2020. Upon completion of the divestment, SEFR has ceased to be a subsidiary of the Company with effect from 20 July 2020.

b) Bankruptcy of Belgium entities

As stated in the Annual Report for the financial year 2019-20, CG Holdings Belgium NV and CG Power Systems Belgium NV, step down subsidiaries of the Company, were declared as bankrupt by the Commercial Court in Belgium on 3 February 2020. The Commercial Court has appointed Receivers who are in the process of auctioning the assets of CG Holdings Belgium NV and CG Power Systems Belgium NV including investments in their subsidairies.

c) Bankruptcy of CG Electric Systems Hungary Zrt. (ESHU)

On 7 July 2020, the Metropolitan Court in Budapest, Hungary, declared CG Electric Systems Hungary Zrt. (‘ESHU), a step-down subsidiary of the Company in Hungary, as bankrupt and commenced liquidation proceedings. The Court has appointed a liquidator who has now taken control of ESHU. However, the Company has settled its guarantee obligations towards MFB Bank, which had given loan facility to ESHU.

d) Liquidation of subsidiaries

CG - GANZ GENERTOR- S MOTORGYRT Korltolt Felelssg Trsasg, a step down subsidiary of the Company in Hungary has got liquidated post the year under review.

Further, the following subsidiaries of the Company are in the process of being liquidated, subject to receipt of statutory and regulatory approvals:

- CG Power Solutions UK Limited;

- CG Power & Industrial Solutions Middle East FZCO;

- CG Sales Networks Malaysia sdn. bhd.; Further, the Board of Directors of the Company has also approved proposal for voluntary winding of CG International (Holdings) Singapore Pte. Ltd. and CG Middle East FZE.

e) Initiation of corporate insolvency proceedings against CG Power Solutions Limited under the Insolvency and Bankruptcy Code, 2016

On 18 August 2021, your Board has approved a proposal to initiate Corporate Insolvency Proceedings against one of its non-operating subsidiaries i.e. CG Power Solutions Limited, under the provisions of the Insolvency and Bankruptcy Code, 2016.

DIVIDEND

Your Board does not recommend any dividend for the financial year ended 31 March 2021.

RESERVES

The Reserves, on standalone basis, at the beginning of the year amounted to (442) Crore and at the end of the year stood at Rs. 776 Crore

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

As on 31 March 2021, your Company had 3 Indian and 11 foreign subsidiaries (excluding 2 subsidiaries in Belgium along with their subsidiaries declared as bankrupt; 4 subsidiaries in voluntary liquidation and 1 subsidiary declared insolvent). During the year under review, your Company has not incorporated or acquired any company.

Pursuant to the Companies (Indian Accounting Standards) Rules, 2015 and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI LODR) the financial statements reflect the consolidation of accounts of your Company and its subsidiaries, associates and joint venture companies.

Pursuant to Section 136 of the Companies Act, 2013 ( ‘Act ), the audited financial statements, including the consolidated financial statements and related information of your Company and audited/ unaudited annual accounts of each of its subsidiaries are placed on the website of your Company.

Highlight of performance of operational subsidiaries of the Company is given below:

1. CG-PPI Adhesive Products Limited [CG PPI]:

CG PPI is the Companys subsidiary in Goa. Your Company holds 81.42% of CG PPIs equity capital. The Company manufactures and deals in speciality adhesive tapes and speciality adhesive labels.

During the year under review, CG PPI recorded revenue of Rs. 15.30 crores. (Previous year: Rs. 15.32 crores) and registered profit before tax of Rs. 0.82 crores. (Previous year loss before tax: Rs. 1.01 crores).

2. QEI, LLC:

QEI, LLC is the subsidiary of CG Power Americas, LLC (Formerly Bravin, LLC) and a wholly owned step-down subsidiary of your Company in US, operating in multiple markets and business sectors within and relating to distribution control, load management control and supervisory control and data acquisition systems.

During the year under review, QEI, LLC recorded revenue of $9.17 Mn i.e. equivalent to Rs. 67.06 crores (Previous year: $10.38 Mn i.e. equivalent to Rs. 75.57 crores). It registered profit before tax of $2.45 Mn i.e. equivalent to Rs. 17.89 crores (previous year: profit before tax of $1.39 Mn i.e. equivalent to Rs. 10.10 crores).

3. CG Drives & Automation Sweden AB:

CG Drives & Automation Sweden AB is a subsidiary of CG Industrial Holdings Sweden AB and a wholly owned step-down subsidiary of your Company in Sweden. It is a technology partner for energy efficient products and solutions. It develops, manufactures and markets the equipment for control and protection of industrial processes.

During the year under review, CG Drives & Automation Sweden AB recorded revenue of SEK 241.12 Mn i.e. equivalent to Rs. 208.52 crores (Previous year: SEK 312.81 Mn i.e. equivalent to Rs. 234.68 crores) and registered profit before tax of SEK 2.58 Mn i.e. equivalent to Rs. 2.23 crores. (Previous year profit before tax: SEK 5.50 Mn i.e. equivalent to Rs. 4.12 crores).

4. CG Drives & Automation Germany GmbH:

CG Drives & Automation Germany GmbH is a subsidiary of CG International BV, Netherlands and a wholly owned step-down subsidiary of your Company in Germany. The Company is into manufacture, sale, maintenance and repair of electronic devices and facilities in the area of drive technology.

During the year under review, CG Drives & Automation Germany GmbH recorded revenue of €15.64 Mn i.e. equivalent to Rs. 137.18 crores (previous year: €17.18 Mn i.e. equivalent to Rs. 138.00 crores). It registered profit before tax of €0.22 Mn i.e. equivalent to Rs. 1.96 crores (previous year loss before tax: €0.07 Mn i.e. equivalent to Rs. 0.54 crores).

5. CG Drives & Automation Netherlands BV:

CG Drives & Automation Netherlands BV is a subsidiary of CG International BV, Netherlands and a wholly owned step-down subsidiary of your Company in Netherlands. It is into development, production and marketing of inverter products including electrical motor drives, and the trade of related products.

During the year under review, CG Drives & Automation Netherlands BV recorded revenue of € 6.80 Mn i.e. equivalent to Rs. 59.59 crores. (Previous year: €6.59 Mn equivalent to Rs. 52.90 crores) and registered profit before tax of €0.34 Mn i.e. equivalent to Rs. 2.99 crores. (Previous year profit before tax: € 0.27 Mn i.e. equivalent to Rs. 2.16 crores).

Other than above, the remaining subsidiaries of the Company do not have any business operations. In terms of Section 129 of the Act, statement containing salient features of the financial statements of your Companys subsidiaries/ associates/ joint ventures companies in Form AOC-1 is given in the notes to the financial statements in this Annual Report.

Pursuant to Regulation 16 of the SEBI LODR, a policy for determining material subsidiary of your Company as approved by the Board of Directors is made available on the website under http://www.cgglobal.com/pdfs/policies/Policy-determining-Mat-Subsidiaries.pdf

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF YOUR COMPANY MATERIAL ORDERS OF REGULATORS / COURTS / TRIBUNALS

a) Re-opening of the books of accounts by the Ministry of Corporate Affairs

Pursuant to a petition filed by the Ministry of Corporate Affairs (‘MCA) under Section 130 of the Companies Act, 2013, the National Company Law Tribunal, Mumbai Bench ‘Honble( NCLT), through its order dated

5 March 2020, allowed the re-opening of books of accounts of your Company and its subsidiary companies for the past five financial years up to 31 March 2019. Accordingly, the MCA, vide its letter dated 1 February 2021, appointed

(a) Kalyaniwalla & Mistry LLP ‘KMLLP ( ), Chartered Accountants, for the purpose of re-opening the books of accounts and re-casting the financial statements of the Company and its subsidiaries for the said five financial years and

(b) C N K & Associates LLP (‘CNK), Chartered Accountants, for the purpose of auditing the re-opened and recast accounts.

KMLLP and CNK completed the assignments of re-opening of books of accounts and recasting the financial statements and the audit of recast financial statements and furnished the duly audited re-stated financial statements to your Company and the same were submitted to the Regional Director (Western Region), Ministry of Corporate Affairs.

Pursuant to the recasting of financial statements as mentioned above, there was a negative impact on the net-worth of the Company, on a consolidated basis, for the financial year ended 31 March 2019 and the quantum of the negative impact was approximately Rs. 2,647 crores which resulted in Net worth turning negative (Rs. 462 crores) for the financial year ended 31 March 2019 as per the recast financial statements. This impact was mainly due to provisions made as re-casting adjustments in the financial year 2018-19 in respect of the funds transferred to the erstwhile promoters and its group entities.

The said recast financial statements were submitted by the MCA to Honble NCLT, and the same were taken on record by the Honble NCLT vide its order dated 26 October 2021.

b) Voluntary revision of financial statements

The financial statements of the Company for the financial year ended 2019-20 were approved and adopted by the shareholders of the Company at the 83rd Annual General Meeting of the Company held on 19 October 2020. Further, the financial statements of the Company for the financial year ended 2020-21 were approved by your Board on 11 June 2021 and the financial results were disclosed to the stock exchanges.

However, considering that closing balances in the recast financial statements of the Company for the financial year ended 31 March 2019 will have to be carried forward as opening balances for the financial year 2019-20, the financial statements of the Company for the financial year 2019-20 and 2020-21 were required to be revised to give effect as stated above. In view of the above, your Company made an application to Honble NCLT on 17 June 2021 for voluntary revision in financial statements of the Company for the financial years 2019-20 and 2020-21 in order to maintain consistency with the recast books of accounts.

The Honble NCLT vide its order dated 22 December 2021 approved the said application filed by the Company and allowed the voluntary revision of financial statements of the Company for financial years 2019-20 and 2020-21. The order of Honble NCLT was received by the Company on 24 December 2021. Considering the time constraints for holding the AGM of the Company on or before 31 December 2021, your Company had applied to Honble NCLT seeking extension of time for holding the AGM of the Company. Honble NCLT vide its order dated 3 December 2021, granted extension of time to hold the AGM on or before 31 March 2022.

M/s. CNK & Associates LLP, Chartered Accountants (‘CNK), was appointed to carry out the audit of revised financial statements of the Company for the financial year 2019-20. CNK has issued an unmodified opinion on the revised financial statements of the Company for the financial year 2019-20. The revised financial statements for financial year 2019-20 is given in a separate section which forms part of this Annual Report. Further, revised financial statements for financial years 2019-20 and 2020-21 have been approved by your Board and the same is being placed before the shareholders for their approval. A statement showing the summary impact of the recast books of accounts of the Company as at 31 March, 2019 considered in voluntary revision of financial statements of the Company for the year ended 31 March, 2020 and necessary consequential changes made therein are given in Note 3B of the Notes to the Accounts.

INVESTIGATIONS BY THE COMPANY:

During the year under review, the Final Report on the Investigation initiated by the Company in the previous year was received. Honble Justice Mr. T. S. Thakur (Retd.) (former Chief Justice of India), who was appointed to oversee / monitor the said Investigation, also provided his report. Your Company has shared the Final Report with relevant authorities, including SEBI and Serious Fraud Investigation Office (‘SFIO). Your Company is extending full co-operation to the investigating agencies and information and documents as sought by them are being provided.

BY INVESTIGATION AGENCIES

a) Investigation by the Serious Fraud Investigation Office (SFIO)

Based on a recommendation of the Ministry of Corporate Affairs, the SFIO has initiated an investigation into the affairs of your Company and its subsidiaries. Your Company is extending full co-operation to the SFIO, and information and documents as sought by them are being provided. The investigation is in progress.

b) Investigations by Central Bureau of Investigations (‘CBI)

Based on a complaint filed by State Bank of India (‘SBI) on behalf of all the former lenders of the Company with respect to certain transactions that took place in the past, details of which have already been furnished by the Company in the disclosures made to the stock exchanges on 19 August 2019, the Central Bureau of Investigations (‘CBI) registered an FIR against the Company, its erstwhile promoters and some of the past directors/ officials of the Company. On 24 June 2021, officials of CBI visited the registered office of the Company at Mumbai, seeking information on certain transactions involving erstwhile promoters, management and their associates, which are also subject matter of existing investigation by SFIO and SEBI.

Your Company has represented to SBI requesting for exclusion of the Company from the list of the accused named in the FIR, as the Company itself is a victim of the fraud committed by other accused named in the FIR. Further, full co-operation is being extended to CBI, and information and documents as sought by them are being provided.

c) Investigations by Enforcement Directorate

Enforcement Directorate has sought information from your Company in connection with investigations being carried out by them under Prevention of Money Laundering Act against the erstwhile promoter and the previous management. Full co-operation is being extended by your Company and information and documents as sought by the Enforcement Directorate are being provided.

AUDITORS AND AUDIT REPORTS STATUTORY AUDITORS

At the 81st Annual General Meeting of your Company, M/s S R B C & CO LLP, Chartered Accountants (Firm Registration No. 324982E/E300003) (‘SRBC) and M/s K K Mankeshwar & Co., Chartered Accountants (Firm Registration No.106009W) (‘KKM) were appointed as Joint Statutory Auditors of the Company, for a term of five years up to the conclusion of 86th Annual General Meeting of your Company.

Cessation of KKM as Auditor

In the 83rd Annual Report for the financial year ended 2019-20, the Members were informed regarding the decision of the Board to remove KKM as the Joint Statutory Auditors of the Company and the subsequent resignation by KKM as the Joint Statutory Auditors vide their email dated 25 January 2020 upon communication of this decision.

Since the resignation tendered by KKM was not in accordance with applicable laws and was after the decision of the then Board to seek approval of the Central Government for removal of KKM, your Company filed an application with the MCA for removal of KKM as Joint Statutory Auditors of the Company. After hearing both the parties in the matter, the Regional Director, Western Region, Mumbai, vide its order dated 27 August 2020, disposed off the said application as infructuous since KKM had already resigned as the statutory auditors of the Company. Accordingly, your Company took on record the resignation tendered by KKM vide their email dated 25 January 2020 in terms of the order passed by the Regional Director in the matter.

Qualified Opinion by the Auditors and Board Responses

Shareholders may note that pursuant to restatement of the financial statements of the Company for five financial years i.e. from 2014-15 to 2018-19 and the consequential revision in financial statements of the Company for the subsequent years, the Disclaimer of Opinion given by Statutory Auditors in the past have now been dropped by them from their Audit Report on the revised Financial Statements of the Company for the financial year 2020-21. In respect of the revised Standalone Financial Statements, the Statutory Auditors have furnished an unmodified opinion and in respect of the Consolidated Financial Statements, they have furnished a qualified opinion. Further, the Statutory Auditors have also included certain matters in the "Emphasis of Matter" paragraph in the Auditors Reports for the year 2020-21.

The qualified opinion furnished by the Statutory Auditors on the revised Consolidated Financial Statements of the Company, is mentioned below along with your Boards response to these observations given in italics.

1. The Group has not made provision towards the corporate guarantee amounting to Rs. 41.56 crores invoked by a bank as at March 31, 2021. Consequently, we are unable to comment on the impact of the above matter on these Revised Consolidated Financial Statements.

Board Response

CGIBV, a wholly owned subsidiary of the Company, has given a corporate guarantee against loan taken by Belgium Entities, which has been secured against the assets of Belgium Entities (ceased to be subsidiaries from the assumed date of January 1, 2020). The lender has invoked the corporate guarantee amounting to Rs. 41.56 crore due to bankruptcy proceedings initiated of Belgium Entities. The Company has not made provision towards this invocation of corporate guarantee on the assumption that the estimated recoverable value of assets of Belgium entities to be realised by Receivers shall be sufficient to meet this liability.

2. We draw attention to note 3A(f) of the Revised Consolidated Financial Statements, which indicate that the accompanying Revised Consolidated Financial Statements include unaudited financial statements and other unaudited financial information in respect of;

(a) 5 subsidiaries, part of continued operations of the Group, whose financial statements and other financial information reflect total assets of Rs. 173.88 crores as at March 31, 2021, total revenues of Rs. 57.61 crores, total net loss after tax Rs. 22.09 crores and total comprehensive loss (net) of Rs. 22.09 crores for year ended March 31, 2021 and net cash outflows of Rs. 3.03 crores for the year ended March 31, 2021;

(b) 1 subsidiary, part of discontinued operations of the Group, whose financial statements and other financial information reflect total assets of Rs. 5.98 crores as at March 31, 2021, total revenues of Rs. Nil, total net profit after tax Rs. 0.06 crores and total comprehensive income (net) of Rs. 0.06 crores for the year ended March 31, 2021 and net cash inflows of Rs. 0.22 crores for the year ended March 31, 2021;

Our report, in so far as it relates to amounts and disclosures included in respect of these subsidiaries is based solely on such financial statements and other financial information as available and considered by the management. We are unable to determine the impact on total revenues, assets and loss for the year had these entities been subjected to an audit.

Board Response

The Company has complied with the regulation 33(3)(h) of the SEBI LODR with respect to coverage of audit of the Companys operations by Auditors and the total revenue of remaining unaudited entities constitutes approx. 2% of the consolidated revenue of the Company.

COST AUDITOR

As per the requirement of Section 148(1) of the Act read with rules made thereunder, your Company is required to maintain cost accounts and records. Accordingly, your Company has maintained cost accounts and records for financial year 2020-21 as applicable for its product range.

During the year under review, the Company filed the Cost Audit Report for the financial year 2019-20 with the Registrar of Companies, Mumbai within the prescribed statutory deadline. Cost Audit Report for the financial year 2020-21 has also been filed with the Registrar of Companies, Mumbai within the prescribed time.

Upon recommendation of the Audit Committee, the Board has re-appointed M/s R. Nanabhoy & Co, as Cost Auditor of your Company for financial year 2021-22 at a remuneration of Rs. 7,00,000/- (Rupees Seven Lakhs only) per annum plus out-of-pocket expenses and taxes, as applicable. The Act mandates that the remuneration payable to the Cost Auditor is ratified by the shareholders. Accordingly, a resolution seeking the shareholders ratification of the remuneration payable to the Cost Auditors for the financial year 2021-22 is included in the Notice convening the ensuing Annual General Meeting.

SECRETARIAL AUDITOR

Your Company had appointed M/s. Parikh & Associates, Practising Company Secretaries, Mumbai (Firm Registration Number: P1988MH009800), to undertake the Secretarial Audit of the Company for financial year 2020-21.

Your Company has generally complied with the Secretarial Standards and the Secretarial Audit Report is annexed in Form MR-3 for financial year 2020-21 as Annexure 4 to this Report.

The Boards response in relation to the observations made by the Secretarial Auditor in the Secretarial Audit Report is provided below:

01. The Company has appointed Chief Financial Officer as required under Section 203 of the Companies Act, 2013 only on 5 February, 2021.

Boards Response:

 

The delay in appointment of Chief Financial Officer of the Company was due to the extra-ordinary situation faced by the Company and the transition in the Management of the Company. The Chief Financial Officer was appointed after the new management took control of the affairs of the Company.

02. The requirement under Regulation 33(3)(h) of SEBI Listing Regulations, subject to at least eighty percent of each of the consolidated revenue, assets and profits, respectively for quarters ended June 2020, September 2020, December 2020 and March, 2021 have not been subject to limited review by the Auditors.

Boards Response:

Financial information of certain entities of the Company was unaudited due to either removal or resignation of officers or directors or due to loss of control or on account of bankruptcy or voluntary liquidation. For the quarter ended March 2021, the requirement under Regulation 33(3)(h) of SEBI LODR had not been met only in terms of the profitability criteria in respect of the original Financial Statements / Results of the Company for the year ended 31 March 2021, published in June 2021. However, in respect of the Revised Financial Statements of the Company for the year ended 31 March 2021, 96% of consolidated assets, 98% of consolidated revenue and 88% of the consolidated profit have been subject to audit, thus complying with the requirement under Regulation 33(3)(h) of SEBI LODR.

03. Submission of the outcome of meeting of the Board of Directors held on June 27, 2020, has been delayed beyond the statutory timelines under Regulation 30 read with Part A of Schedule III of SEBI Listing Regulations.

Boards Response: In view of the pandemic situation which was prevailing in June 2020, the meetings of the Audit Committee and Board were held by video conferencing and the participants of the meeting including Directors, Statutory Auditors and other officials of the Company participated remotely from different locations in Mumbai and outside Mumbai. As a result, there was a delay in co-ordinating and obtaining all the signatures from the signatories. In view of the above, there was delay in submission of outcome of Board meeting held on 27 June 2020 beyond statutory timelines.

04. The amount of unclaimed dividend due to be transferred to Investor Education and Protection Fund (IEPF) as on 7 December, 2020 and 28 February, 2021 and the corresponding shares could not be credited to IEPF Account due to technical glitches. As a result, the said amount remained due and outstanding as on 31 March 2021. The Company has since transferred the amounts to IEPF.

Boards Response: The amounts could not be credited to IEPF Account due to technical glitches. The Company has since transferred the amounts to IEPF Account.

INTERNAL FINANCIAL CONTROLS

The Company has adequate internal controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statutes, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) BOARD OF DIRECTORS

Composition

As on the date of this report, your Companys Board of Directors consists of eight Directors comprising

(i) Three Non-Executive Non-Independent Directors which includes the Non-Executive Chairman of the Board

(ii) Four Non-Executive Independent Directors, and

(iii) a Managing Director.

Mr. Vellayan Subbiah, Non-Executive Director, is the Chairman of your Board, and Mr. M A M Arunachalam and Mr. Kalyan Kumar Paul are Non-Executive Non-Independent Directors on your Board. Mr. P S Jayakumar, Mr. Shailendra Roy, Ms. Sasikala Varadachari and Mr. Sriram Sivaram are Independent Directors in terms of Regulation 16 of the SEBI LODR and Section 149 of the Act.

Mr. Natarajan Srinivasan is the Managing Director on your Board.

Your Board consists of professionals with diverse functional expertise, industry experience, educational qualifications and gender mix relevant to fulfilling your Companys objectives and strategic goals.

Change in Composition of the Board

a) Appointments and Cessation

At the beginning of the year, your Companys Board of Directors consisted of eight Directors comprising of

(i) a Whole-Time Executive Director, and

(ii) seven Independent Non-Executive Directors as follows:

Name of Director Category
1. Mr. Ashish Guha Non-Executive Independent Director and Chairman of the Board
2. Mr. Jitender Balakrishnan Non-Executive Independent Director
3. Mr. Narayan K. Seshadri Non-Executive Independent Director
4. Mrs. Ramni Nirula Non-Executive Independent Director
5. Mr. Pradeep Mathur Non-Executive Independent Director
6. Dr. Aditi Raja Non-Executive Independent Director
7. Dr. Rathin Roy Non-Executive Independent Director
8. Mr. Sudhir Mathur Whole Time Executive Director

In terms of the Securities Subscription Agreement executed between the Company and TII, TII acquired a controlling stake in the Company on 26 November 2020 and consequently, all the above erstwhile Board members of your Company resigned and the Board of Directors of the Company was reconstituted by appointment of six new Directors – (i) three new Independent Directors and (ii) three persons nominated by TII as directors, on the Board of Directors of the Company with effect from 26 November 2020 as follows:

Name Category
1. Mr. Vellayan Subbiah Non-Executive Non-Independent Director and Chairman of the Board
2. Mr. M A M Arunachalam Non-Executive Non-Independent Director
3. Mr. P S Jayakumar Non-Executive Independent Director
4. Mr. Shailendra Narain Roy Non-Executive Independent Director
5. Ms. Sasikala Varadachari Non-Executive Independent Director
6. Mr. Natarajan Srinivasan Managing Director

Mr. Natarajan Srinivasan was appointed as the Managing Director of the Company initially for a period of three years but subsequently your Board revised his tenure to two years i.e. from 26 November 2020 to 25 November 2022. Mr. Srinivasan does not receive any remuneration or commission from any of the Companys subsidiaries.

The shareholders of the Company, at their extra-ordinary general meeting held on 7 June 2021 regularized the appointment of above Additional Directors in their respective capacity as Non-Executive Non-Independent Directors, Non-Executive Independent Directors and the Managing Director. The shareholders have also approved waiver of recovery of excess remuneration paid, if any, to managing director during the financial year 2020-21 in the event of loss or inadequate profits during the said year.

Further, based on the recommendations of the Nomination and Remuneration Committee, your Board had appointed Mr. Sriram Sivaram and Mr. Kalyan Kumar Paul as Additional Directors in the capacity of Non-Executive Independent Director and Non-Executive Non-Independent Director of the Company respectively, with effect from 11 June 2021. In accordance with Section 161 of the Act, they can hold office up to the date of the Annual General Meeting of the Company held after their appointment or the last date on which the Annual General Meeting should have been held, and are eligible for being appointed as Directors. Accordingly, your Company has obtained approval of the Members for their appointment as Directors through Postal Ballot on 30 December 2021.

b) Retirement by rotation

In terms of the provisions of Section 152 of the Act and the Rules made thereunder and Article 114 of the Articles of Association of the Company, Mr. Vellayan Subbiah retires by rotation at the ensuing Annual General Meeting of the Company and is eligible for re-appointment.

As per Regulation 36 of the SEBI LODR and Secretarial Standard-2 on General Meetings issued by the Institute of Company Secretaries of India (SS-2), a brief profile and other relevant details regarding re-appointment of Mr. Vellayan Subbiah are contained in the Annexure accompanying the explanatory statement to the Notice of the ensuing Annual General Meeting.

INDEPENDENT DIRECTORS DECLARATION

Your Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence as laid down under Section 149 of the Act and Regulation 16 of the SEBI LODR.

In the opinion of the Board, all the Independent Directors of your Company fulfil the conditions of independence as specified in the Act and SEBI LODR and are independent of the management and have the integrity, expertise and experience including the proficiency as required to effectively discharge their roles and responsibilities in directing and guiding the affairs of the Company.

The Company has received a certificate from M/s Parikh & Associates, Practising Company Secretaries, confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the SEBI, Ministry of Corporate Affairs, or any such other statutory authority.

BOARD MEETINGS

During the financial year 2020-21, your Board of Directors met 23 times, inter alia, to resolve the financial stress faced by the Company, and to guide and navigate the Company during the challenging and difficult situation faced during the year, in addition to dealing with other matters to be dealt with by the Board in accordance with the provisions of the Act, SEBI LODR and other statutory provisions.

Details of Board Meetings held and the attendance of Directors are given in the Section titled "Report on Corporate Governance", which forms part of this Annual Report.

COMMITTEES OF THE BOARD

Your Board has established following committees in compliance with the requirements of the Act and SEBI LODR:

(i) Audit Committee,

(ii) Nomination and Remuneration Committee,

(iii) Corporate Social Responsibility Committee,

(iv) Risk Management Committee, and

(v) Stakeholders Relationship Committee.

Details of composition of the statutory committees, number of meetings held and attendance of Committee members thereof during the financial year is given in the Section titled "Report on Corporate Governance" forming part of this Annual Report.

As mentioned earlier in this Directors Report, the Board of Directors of your Company was reconstituted with effect from 26 November 2020 with the resignation of all the erstwhile Board members and appointment of new directors. Consequently, the composition of committees was also changed with effect from 26 November 2020 to induct the new Board members in the above committees. The change in composition of the committees is given in the Section titled "Report on Corporate Governance" forming part of this Annual Report.

All recommendations of the Audit Committee have been accepted by the Board.

The Special Situation Committee and the Capital Restructuring Committee constituted in the financial year 2019-20 were dissolved on 26 November 2020. Your Board has constituted a Finance Committee comprising of Mr. Vellayan Subbiah, Chairman of the Board and Mr. Natarajan Srinivasan, Managing Director, to inter alia take decisions relating to borrowings, investments and lending from time to time within such limits / sub-limits as may be decided by the Board.

KEY MANAGERIAL PERSONNEL (‘KMP)

Mr. Sudhir Mathur, who was the Whole Time Executive Director and a KMP of the Company since 10 May 2019 had resigned with effect from close of business hours on 26 November 2020.

Mr. Natarajan Srinivasan was appointed as the Managing Director and a KMP of the Company with effect from 26 November 2020.

Mr. Susheel Todi was appointed as the Chief Financial Officer of the Company effective from 5 February 2021.

Mr. Alen Ferns was the Company Secretary and Compliance Officer of the Company till the closure of business hours on 5 February 2021 and thereafter he was re-designated as the Deputy General Manager – Secretarial of the Company.

Mr. K. R. Viswanarayan who was appointed as the Company Secretary and Compliance officer of the Company with effect from 6 February 2021, resigned from the services of the Company effective from close of business hours on 31 March 2021.

Mr. P. Varadarajan was appointed as the Company Secretary and Compliance Officer of the Company with effect from 1 April 2021.

REMUNERATION POLICY AND CRITERIA FOR DETERMINING THE ATTRIBUTES, QUALIFICATION, INDEPENDENCE AND APPOINTMENT OF DIRECTORS

Your Company has formulated a Remuneration Policy governing the appointment and remuneration of Directors, KMP, Senior Management and other employees. The Remuneration Policy of the Company provides a performance driven and market-oriented framework to ensure that the Company attracts, retains and motivates high quality executives who can achieve the Companys goals, while aligning the interests of employees, shareholders and all stakeholders in accordance with the groups values and beliefs. The terms of reference of the Nomination and Remuneration Committee includes formulation of criteria for determining qualifications, positive attributes and independence of Directors.

The Companys Remuneration Policy is available on the website of the Company under: http://www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=

Your Company has adopted a Board Diversity Policy to reap the benefits of a broader experience in decision making.

PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS

In line with the requirements of the Act and the SEBI LODR, an annual evaluation of performance of the Board, its Committees and individual Directors was carried out during the year under review. Pursuant to the provisions of Schedule IV of the Act and Regulation 25 of the SEBI LODR, the Independent Directors of your Company at a meeting held on 25 March 2021, evaluated the performance of Non-Independent Directors, the Board as a whole, performance of the Chairman; and also assessed the quality, quantity and timeliness of flow of information between the Management and the Board.

Since the Board of the Company was re-constituted w.e.f. 26 November 2020, board evaluation was conducted by the new board members.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to Regulation 25 of the SEBI LODR, your Company familiarizes its Independent Directors with their roles, rights, responsibilities as well as the Companys business and operations. Moreover, Directors are regularly updated on the business strategies and performance, management structure and key initiatives of businesses at every Board Meeting. Details of the programme can be viewed under the following link available on the Companys website: http://www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year under review were on arms length basis and were in the ordinary course of business. Hence disclosure of particulars of contracts/arrangements entered into by your Company with related parties in Form AOC-2 is not applicable for the year under review. There were no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. The Audit Committee grants omnibus approval for transactions which are of repetitive nature with related parties.

Related party transactions entered during the year under review are disclosed in the notes to the Financial Statements.

None of the Directors had any pecuniary relationship or transactions with the Company, except the payments made to them in the form of remuneration / sitting fee.

The Companys Related Party Transactions Policy is made available on the website of the Company under: http://www.cgglobal.com/pdfs/policies/India%20 Related%20Party%20Transactions%20Policy.pdf

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Pursuant to the provisions of Section 186 of the Act and Schedule V of the SEBI LODR, particulars of loans, guarantees given and investments made by your Company during financial year 2020-21 are given in the notes to the Financial Statements.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34 of the SEBI LODR, the Business Responsibility Report for the year 2020-21 highlighting the initiatives taken by the Company in the areas of environment, social, economic and governance is given in the Section titled "Business Responsibility Report", which forms part of this Report and is also available on the website of your Company under: http://www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=Nu/tTrrPlMI=

ENTERPRISE RISK MANAGEMENT (ERM) FRAMEWORK

CGs comprehensive Risk Management Framework involves a three-tiered approach, taking into account the Enterprise Risks, Process Risks and Compliance Risks.

Enterprise risk identification and mitigation initiatives are handled through an on-going process for each of the businesses, as well as for CG as a whole. The coverage extends to all key business exposures. After getting a measure of each such enterprise risk, the mitigation actions are tracked.

The Risk Management Committee of the Board reviews the key risks associated with the businesses of your Company and their mitigation measures.

RESEARCH AND DEVELOPMENT (R&D)

During the year under review, your Companys R&D activities continued to focus on development of indigenous and energy efficient products.

Motors

Developed Permanent Magnet AC Motors (PMAC) for Electric Vehicle application. These motors, developed with special rare earth magnet and low watt loss steel, are compact in size and gives very high efficiency for the given power weight ratio.

• Developed ultra premium energy efficient motors (IE5), meeting international standards, and became the first Indian company to do so in induction technology along with permanent magnet.

• Developed pressurized enclosure motor for use in hazardous area Zone1 applications. The Motor is equipped with fully automated dry air purge system to ensure safety aspect through critical interlocks. This is mainly used in oil and gas sector.

Drives and Automation

• Developed new control platform CB2.1 which offered Modbus RTU and standby supply option as standard. The new platform offers a strong foundation for future with much higher communication speeds, possibilities for CAN communication and also wireless connection with PC control software EmoSoftCom through PPU.

• Designed the Next Gen E frames 2.1 for 75 and 90kW drives with 21% reduction in size with better competitiveness. The unique design makes it possible to convert a drive from IP20 to IP54 and vice-versa at any place giving much greater flexibility to the customers.

• Developed and introduced Advanced EmoDrive application software, a mobile phone application, for monitoring and control of the drives. This application can work through Bluetooth or Wifi enabled keypad of the Drive and does not require any hardwired connection which helps in not only monitoring the runtime status of the Drive but can also be used to control it in real time.

• Developed Next Generation VSS single phasedrive with advance features like, Compact design, high starting torque, detachable display, MPPT (Maximum power point tracking) support, torque control that can deal with up to 50C ambient support.

Railways

• Developed a low voltage high current brushless single bearing Traction Alternator C1019B for Tata Steel Project. The efficiency of 2 X 700 HP Shunting locomotive is improved with this new Alternator when compared to existing system of 1400 HP Single Engine Alternator system.

• Indigenously developed Filter Cubicle Panels and Auxiliary Circuit Cubicle Panels and received approvals from authorities of Indian Railways.

• Developed an electric point machine with arrangement of Secondary Drive replacing spring setting device for thick web switch which would ensure full butting of tongue rail with stock rail from crossing point to Junction Over Head (JOH) location.

Power

• Developed a new Transformer Monitoring System through Internet of Things (IoT) cloud based, named as Smart Controller, designed to effectively monitor and manage the AT&C (Aggregate Technical & Commercial) loss which is a challenge to the Indian Power Sector. Further, to support the Government of India (GOI) initiative and build Railway Infrastructure in the country, indigenously developed and successfully conducted short circuit test of Trackside Transformer of 21.6/30.24 MVA, 132/27 kV for Indian Railways.

• Expanded product range by introducing three phase shunt reactors with stringent requirements of very low vibration and noise for domestic and export markets. Also developed software for optimising thermal characteristics of products by making least use of cooling equipment and electrical grade steels which will help in reduced use of commodities.

• Worked on development of new core materials, new electrode formation, new constructional designs for current transformers and new passive ferro-resonance circuit and electrode configuration for capacitor voltage transformers for higher reliability and performance. Developed 800 kV Bushing for 800 kV Transformers and reactors. Also established manufacturing process for UHV Instrument Transformers.

• Indigenous development of 145 kV and 245 kV Hybrid Gas Insulated Switchgear (GIS) with objective of economical design with reduced Greenhouse gas and enhanced reliability.

• Successfully launched indigenously developed 40.5kV SF6 Gas Circuit Breaker. These Breakers are compact with latest Arc Assist technology deploying low energy mechanism. Further, developed 12kV Ring Main Unit (RMU) – Arista-S for Smart Distribution application to strengthen the Power Distribution networks in utilities for reliability and continuity of power supply.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details, as required under Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are given in the prescribed format as Annexure 1 to this Report.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

A detailed review of the Environment, Health and Safety (EHS) measures undertaken by your Company is given in the Section titled "Management Discussion and Analysis", which forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of the operations, performance and future outlook of your Company and its businesses is given in the Section titled "Management Discussion and Analysis", which forms part of this Report.

CORPORATE GOVERNANCE

A section on Corporate Governance standards followed by your Company, as stipulated under Schedule V of SEBI LODR, is enclosed separately.

A certificate from M/s Parikh & Associates, Practising Company Secretaries, regarding compliance with the conditions of Corporate Governance, as stipulated under SEBI LODR, is annexed to the Report on Corporate Governance.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is now a part of the Murugappa Group, which is known for its tradition of philanthropy and community service.

Owing to the financial stress faced by the Company, coupled with COVID-19 induced lockdown and its impact on business operations, your Company could not incur any CSR expenditure during the year under review. It may be noted that during the year under review, there was no statutory requirement to incur any CSR expenditure, in view of the average net profits of the Company for past three financial years being negative.

However, your Company is committed towards inclusive growth and based on the recommendation of the Board-level CSR Committee, your Company will be identifying focus areas / CSR initiatives to be carried out in the coming financial years in order to have a maximum impact.

Details of the composition of the CSR Committee and CSR Policy of the Company are given in the Section titled ‘Annual Report on CSR initiatives in Annexure 2 of this Report.

REGISTRAR AND SHARE TRANSFER AGENT

Your Company has appointed Datamatics Business Solutions Limited (‘DBSL), an entity which is registered with SEBI, as its Registrar and Share Transfer Agent. Contact details of DBSL are mentioned in the section titled "Report on Corporate Governance" of this Annual Report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure 3 to this Report. In accordance with the provisions of Section 197(12) of the Act read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of the employees covered under the said rule shall be made available to any Member on a specific request made in this regard, by him or her in writing.

EMPLOYEE STOCK OPTION PLAN 2021

The shareholders of the Company had, through special resolution passed by Postal Ballot on 23 September 2021, approved the introduction and implementation of Employee Stock Option Plan 2021 ( ‘ESOP 2021 / ‘Scheme ) and authorised the Board / Nomination and Remuneration Committee to issue to the eligible employees, such number of Options under the ESOP 2021, as would be exercisable into, not exceeding 2,70,00,000 (Two Crore Seventy Lakhs) fully paid-up equity shares of Rs. 2 each in the Company.

The Nomination and Remuneration Committee shall act as the Compensation Committee and is empowered to formulate detailed terms and conditions of the ESOP 2021, administer and supervise the same.

The maximum number of Options under ESOP 2021 that may be granted to each eligible employee shall vary depending upon the grade, however the same shall not exceed 20,00,000 (Twenty Lakhs) in number, per eligible Employee in any year and in aggregate. The specific employees to whom the Options would be granted and their eligibility criteria would be determined by the Nomination and Remuneration Committee at its sole discretion.

Options granted under ESOP 2021 would vest on or after 1 (one) year from the date of grant but not later than 4 (four) years from the date of grant of such Options or any other terms as decided by the Nomination and Remuneration Committee.

As on the date of this report, your Company has granted 18,34,100 options to the eligible employees under ESOP 2021. Since the ESOP Scheme of the Company was introduced and implemented in financial year 2021-22, the disclosure as required under the relevant SEBI Regulations is not applicable for financial year ended 31 March 2021.

COMPLAINTS RELATING TO SEXUAL HARASSMENT

Your Company has adopted a Prevention of Sexual Harassment Policy and has also constituted an Internal Complaint Committee in compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal

Complaint Committee has been constituted region-wise, presided by a woman employee and comprising five to seven Company employees with an external member to whom employees can address their complaints.

During the year under review, no incident of sexual harassment was reported.

VIGIL MECHANISM

Your Company has set up a vigil mechanism, viz. a Whistle Blower Policy, as per the provisions of Section 177 of the Act and Regulation 22 of the SEBI LODR to enable its employees to report violations, genuine concerns, unethical behaviour and irregularities, if any, which could adversely affect the Companys operations. None of the Whistle Blowers was denied access to the Audit Committee of the Board.

The Ombudsperson appointed by your Board deals with the complaints received by or against employees, customers and vendors of the Company and supervises the investigation, ensures appropriate action and submits a report to the Chairman of the Audit Committee on a quarterly basis.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the SEBI LODR, your Company has formulated a Dividend Distribution Policy. It is available on the website of the Company under: http://www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=yrnPqECUvhk=

PUBLIC DEPOSITS

Your Company has not accepted any deposits from public or its members under Chapter V of the Act and no deposits were outstanding as on 31 March 2021.

SHARE CAPITAL

During the year under review, your Company allotted equity shares and warrants to Tube Investments of India Limited (‘TII) on preferential allotment / private placement basis as follows:

- 642,523,365 equity shares aggregating to approx. Rs. 550 Crore and 175,233,645 warrants aggregating to approx. Rs. 150 Crore were allotted on 26 November 2020.

- 68,728,522 equity shares aggregating to approx. Rs. 100 Crore were allotted on 19 December 2020.

The issue proceeds were utilized by the Company for the purposes/objects as stated in the Offer document and explanatory statement to the notice of the Extraordinary General Meeting wherein the shareholders approval was given for the said issue.

In case of warrants, TII has paid 25% of warrant consideration aggregating to Rs. 37.50 Crore at the time of warrants subscription. The balance warrant subscription money is payable by TII upon exercising the option to convert the warrants into equity shares. The warrants can be exercised by TII, in one or more tranches, at any time on or before expiry of 18 months from the date of allotment of warrants.

As on 31 March 2021:

• The authorised share capital of your Company was Rs. 407,60,00,000/- (Rupees Four Hundred Seven Crore And Sixty Lakh) divided into 203,80,00,000 equity shares of Rs. 2/-(Rupees two) each.

• The subscribed and paid-up share capital of your Company stood at Rs. 267,59,96,058/-(Rupees Two Hundred And Sixty Seven Crore Fifty Nine Lakhs Ninety Six Thousand and Fifty Eight only) consisting of 133,79,98,029 equity shares of Rs. 2/- (Rupees two) each.

Post 31 March 2021, your Company issued and allotted 1,38,45,000 equity shares to Standard Chartered Bank (Singapore) Limited on preferential allotment basis for settlement of obligations under the Guarantee Obligations (SCB) Settlement Agreement. Consequently, as on date, the subscribed and paid-up share capital of your Company is Rs. 270,36,86,058/-(Rupees Two Hundred And Seventy Crore Thirty Six Lakhs Eighty Six Thousand and Fifty Eight only) consisting of 135,18,43,029 equity shares of Rs. 2/- (Rupees two) each.

Your Companys equity shares are listed and traded on BSE Limited and National Stock Exchange of India Limited.

Your Company had issued Global Depository Receipts ( ‘GDRs ) in 1996 and the underlying shares for each GDR were issued in the name of The Bank of New York, or the Depository. Each GDR is equivalent to five equity shares. On 5 February 2021, your Board approved the proposal for termination of GDR program of the Company and delisting of GDRs, which were outstanding and listed on the London Stock Exchange, subject to compliance with the applicable laws. Accordingly the GDRs got delisted from the London Stock Exchange effective from 24 May 2021.

As on 31 March 2021, 104,462 GDRs were outstanding.

ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Act, a copy of the Annual Return of the Company as on 31 March 2021 is placed on the website of the Company and the same is available on the following link: http://www.cgglobal.com/frontend/finalnonproduct. aspx?cnl2=Nu/tTrrPlMI=

REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Statutory Auditors of the Company had not reported any matter under Section 143(12) of the Act. Therefore disclosure is not applicable in terms of Section 134(3)(ca) of the Act.

OTHER DISCLOSURES / REPORTING

The Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors confirm that the Company has in place a framework of internal financial controls and compliance system, which is monitored and reviewed by the Audit Committee and the Board besides the statutory, internal and secretarial auditors. To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) the annual Financial Statements for the year ended 31 March 2021 have been prepared in conformity with the applicable accounting standards along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2021 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the annual Financial Statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

The Board of Directors wishes to convey its gratitude and appreciation to all employees for their tremendous efforts as well as their exemplary dedication and contribution to your Companys performance. The Directors would also like to thank the Central and State Governments, Shareholders, State Bank of India and other Bankers who were part of the SBI Consortium, Ministry of Corporate Affairs Customers, Suppliers, Dealers, Employees and Employee Unions, SBI Capital Markets Ltd., and all other business associates for their continued support extended to your Company.

On behalf of the Board of Directors
Vellayan Subbiah
Chairman
(DIN: 01138759)
Mumbai, 31 December 2021