Enkei Wheels Director Discussions


To,

The Members of

ENKEI WHEELS (INDIA) LIMITED

The Directors take pleasure in presenting the fifteenth Annual Report together with the Audited Financial Statements, for the financial year ended December 31, 2023:

(The Annual Report for FY 2023 can be accessed by web link www.enkei.in)

FINANCIAL HIGHLIGHTS:

The Companys financial performance during the financial year 2023, as compared to the previous year 2022 is summarized below:

( In million)

Particulars

For the Year ended December 31, 2023 For the Year ended December 31, 2022

Total Revenue

7,242.02 6,719.12

Earnings before exceptional items, extraordinary items, interest, tax, depreciation and amortisation (EBITDA)

682.95 532.52

Less: Depreciation

415.47 283.96

Less: Financial Expenses

106.96 152.84

Profit / (Loss) before exceptional and extraordinary items and tax

160.52 95.72

Less: Exceptional and Extraordinary items

- -

Profit/(Loss) before Tax

160.52 95.72

Less: Provisions for Taxes

43.57 58.61

Profit/(Loss) after Tax

116.95 37.11

REVIEW OF OPERATIONS:

The Indian automobile industry has historically been a good indicator of how well the economy is doing, as the automobile sector plays a key role in both macroeconomic expansion and technological advancement. The two-wheelers segment dominates the market in terms of volume. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector. The rising logistics and passenger transportation industries are driving up demand for commercial vehicles. Future market growth is anticipated to be fueled by new trends including the electrification of vehicles.

During the Financial Year under review total standalone revenue of the Company increased to 7,242.02 million from 6,719.12 million for previous year. Profit before Interest, Depreciation, Exceptional Items and Tax increased to 682.95 million as against 532.52 million for the previous year. The profit before exceptional items & tax for the Financial Year increased to 160.52 million in Financial Year 2023 from profit of 95.72 million in Financial Year 2022 due to increased sale volume. Moreover, your company landed with the sales of total

7,066.66 million (Jan-Dec 2023) combined for 2W and 4W as against previous year 6,537.40 million.

Your Company had posted 8 percent of overall growth in terms of sales volume which is amounting to 529 million though there is significant increase in depreciation cost during the year under review as compared to the last year 12 months period.

The Company remains optimistic about growth in the next financial year, as a credible recovery in the Indian economy and a positive inducement towards increasing alloy wheels demand in near future.

CAPITAL

During the year under review, there were no changes in the structure of share capital of the company compared with previous year.

PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013 provides for protection

against sexual harassment of women at workplace and for the prevention and Redressal of complaints of sexual harassment and for matters connected therewith or incidental thereto.

The Company has framed a Policy on Prevention of Sexual Harassment at Workplace as per the provisions of this Act. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.

There were no cases reported during the year under review under the said Policy.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 "OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT"

No matters of actual or alleged fraud has been reported by the auditors under sub-section (12) of Section 143 of the Companies Act, 2013.

LISTING FEES:

The annual listing fees for the year under review have been paid to BSE Limited where your Companys shares are listed.

BOARD MEETINGS:

During the year under review, Four Board Meetings were convened and held. The intervening gap between the two consecutive Meetings here within the period prescribed under the Companies Act, 2013 and as per the SEBI (Listing Obligation & Disclosure) Regulations, 2015. Following are the details of the Board Meeting held during the year:

2023 to consider the following business as required under the Companies Act, 2013:

I. review the performance of non-independent directors and the Board as a whole;

II. review the performance of the Chairperson of various committees of the Company, taking into account the views of executive directors and non-executive directors;

III. assess the quality, quantity and timeliness of flow of information between the Companys Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

All the independent directors were present at the meeting.

COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARD 1 AND SECRETARIAL STANDARD 2.

The Company have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review the Company was in compliance with the Secretarial Standards, i.e., SS-1 and SS- 2, relating to "Meetings of the Board of Directors" and "General Meetings" respectively.

FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS

The company as required under Schedule IV of the Companies Act, 2013 and Listing Regulations has made arrangement to facilitate the independent directors to familiarize with the operations of the company, their roles, rights, responsibilities as Directors of the company considering the nature of the industry in which the company operates, business model of the company, etc. The above aspect can be accessed by web link www.enkei.in. During the F.Y. 2023.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Companies Act 2013, with respect to Directors responsibility Statement, it is hereby confirmed as under:

a. that, in the preparation of the annual accounts for the year ending on December 31, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. that, the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that year;

c. that, the directors had taken proper and sufficient care for the maintenance of adequate accounting records in

Name of Director

No. of Board Meetings Attended (Total Meetings held: 4)

Mr. Kazuo Suzuki

4/4

Mr. Junichi Suzuki

1/4

Mr. Shailendrajit Rai

3/4

Dr. Haresh Shah

4/4

Mr. Satyavara P. Garimella

4/4

Ms. Smita Subhash Patti

4/4

Mr. Makoto Miura (Alternate Director)

1/1

SEPARATE MEETING OF INDEPENDENT DIRECTORS:

Pursuant to schedule IV of the Companies Act, 2013, the independent directors of the Company shall hold at least one meeting in a year without attendance of non-independent directors and members of the Management. Accordingly, independent directors of the Company met on December 29,

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 directors had prepared the annual accounts for the year ended on December 31, 2023 on a going concern basis;

e. proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f. proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

DIVIDEND

Your Directors do not recommended payment of dividend for the financial year 2023 in view of capital retention for future business expansion diversification plan.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The provisions of Section 125(2) of the Companies Act, 2013 does not apply as there was no dividend declared and paid in last year. Further there is no unclaimed dividend or outstanding dividend, standing in the books of the Company.

A STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and in 16 (1) (b) of Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 and pursuant to Regulation 16(1)(b) of the Listing Regulations, each Independent Director confirmed that he/she is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his/her ability to discharge his/ her duties with an objective independent judgment and without any external influence and that he/she is independent of the management.

COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:

The Board had on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration.

The Company policy on Directors & KMP remuneration is available on the Companys website at http://www.enkei.in/ download/others/Nomination_Remuneration_Policy.pdf

AUDITORS:

A. Statutory Auditors

M/s. Kirtane & Pandit LLP, Chartered Accountants (Firm Registration No. 105215W / W100057 were appointed as Statutory Auditor of the Company at the Tenth Annual General Meeting (AGM) of the Company held on July 9, 2019, appointed), to hold office from the conclusion of the Tenth AGM till the conclusion of the Fifteenth AGM of the Company held in the year 2024.

After evaluating and considering various factors such as industry experience, competency of the audit team, efficiency in conduct of audit, independence, etc., Audit Committee recommend the reappointment of M/s. Kirtane & Pandit LLP, Chartered Accountants (Firm Registration No. 105215W / W100057), as the Statutory Auditors of the Company, for the second consecutive term of five years from the conclusion of Fifteenth AGM till the conclusion of Twentieth AGM of the Company to be held in the year 2029, at a remuneration as may be decided by the Committee and Board subject to the approval of shareholders. M/s. Kirtane & Pandit LLP, Chartered Accountants (Firm Registration No. 105215W / W100057) has consented to their appointment as the Statutory Auditors and have confirmed that the appointment, if made, would be within the limits specified under Section 141(3)(g) of the Act and that they are not disqualified to be appointed as the Statutory Auditors in terms of the provisions of Section 139 and 141 of the Act and the Rules framed thereunder.

Pursuant to the provisions of section 139 of Companies Act

2013, read with the Companies (Audit and Auditors) Rules,

2014, and based on the recommendations of the Audit Committee, it is proposed to reappoint M/s. Kirtane & Pandit LLP, Chartered Accountants (Firm Registration No. 105215W / W100057) for a second term of five years as the Statutory Auditors from the conclusion of 15th AGM till the conclusion of 20th AGM of the Company to be held in the year 2029.

B. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Shailesh Indapurkar and Associates, Practicing Company Secretary (Membership No. ACS 17306 CP No. 5701), to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure II to this Report.

M/s. Shailesh Indapurkar and Associates, Practicing Company Secretary have also issued Secretarial Compliance Report as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder, same is annexed herewith as Annexure III to this Report.

EXPLANATION ON COMMENTS ON STATUTORY AUDITORS, SECRETARIAL COMPLIANCE REPORT AND SECRETARIAL AUDITORS REPORTS:

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Kirtane & Pandit LLP, Statutory Auditors, in their Audit Report and by Mr. Shailesh Indapurkar, Practicing Company Secretary, in his Secretarial Audit Report and Annual Secretarial Compliance Report.

COST AUDIT REPORT AND MAINTENANCE OF COST RECORDS:

The Cost audit under provisions of Section 148 of the Companies Act, 2013 is not applicable to the Company. Hence the Company has not conducted the cost audit for the financial year 2023.

Maintenance of cost records has not been specified by the Central Government under sub section (1) of section 148 (1) of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014 for the business activities carried out by the Company.

RISK MANAGEMENT

The management is accountable for the integration of risk management practice into the day to-day activities. The risk assessment and minimization procedures being followed by the management and steps taken by it to mitigate these risks are periodically placed before the Board and Audit Committee along with findings of the internal auditors. All the assets of the Company are adequately insured. No major elements of the risk exist, which in the opinion of the Board may threaten the existence of the company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loans, guarantees and investments under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, as on December 31, 2023, are set out in Notes to the Financial Statements of the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013:

All contract/arrangement/transactions entered by the Company during the Financial Year 2023 with the related parties were in the ordinary course of business and on arms length basis. Hence, no particulars are being provided in Form AOC-2.

Further, we draw your attention to Note no 31(j) of the Financial Statements of the Company.

STATE OF COMPANYS AFFAIRS:

Discussion on state of Companys affairs has been covered in the Management Discussion and Analysis Report.

AMOUNTS PROPOSED TO BE CARRIED TO RESERVES:

Particulars of the amounts proposed to be carried to reserves have been covered as part of the financial performance of the Company.

MATERIAL CHANGES AND COMMITMENTS BETWEEN THE DATE OF THE BALANCE SHEET AND THE DATE OF REPORT:

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial year of the Company to which the Financial Statement relate and the date of the report.

EMPLOYEES REMUNERATION:

The statement of disclosure of remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ("Rules") is provided in Annexure-I forming part of this Report. The information as per Rule 5(2) and Rule 5(3) of the Rules, forms part of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT FOREIGN EXCHANGE EARNINGS AND OUTGO: CONSERVATION OF ENERGY:

Since, energy conservation plays a significant role in maintaining pollution free environment, your company is committed towards environmental sustainability by conserving energy and resources. The Company gives highest priority to ensure environmental friendly practices at all factories and offices. These include reduction in power consumption & Water wastage and eliminating excess use of paper and using ecofriendly products etc.

Under energy saving drive company installed LED lights in different locations of plant, office light automation system and purchase electric forklift and electric vehicle for interunit shifting of manufactured Wheels to reduce the consumption of diesel. under water saving drive, water usage target was set for each plant for ensuring optimal use of water.

Within the Company, there are continuous efforts towards improving operational efficiencies, minimizing consumption of natural resources, energy & CO2 emissions while maximizing production volumes.

TECHNOLOGY ABSORPTION:

During the year under review, the company has installed paintshop at factory 2 location. The paintshop is fully automated which will increase the productivity with less rejection. The Company has changed layout at casting inspection which helps to improve PTR (Pass Through Ratio) and Also company has changed layout at machining inspection area for easy material flow and reducing operation fatigue. Company has reduced cycle time of GDC (Gravity Die Casting) & CNC (Computer Numerical Control) process to improve productivity. Your company is continuously using MAT (Most Advanced Technology) process for new models. MAT process helps to improve material properties. Safety measure is greatly improved due to MAT (Flow foaming technology) process. The Company has installed MAC (Most Advanced Concept) which will reduce the production time and increase the productivity around 1.5 time of the existing capacity.

RESEARCH AND DEVELOPMENT:

Enkei is initiating towards obtaining laser marking facility. As per BIS (Bureau of Indian Standards) regulation company has started doing ISI marking inside the wheel as per the customer requirement.

FOREIGN EXCHANGE EARNINGS & OUTGO (CASH BASIS)

During the year, total inflows (on cash basis) in foreign exchange were 256.91 million and total outflows (on cash basis) in foreign exchange were 4,022.27 million

CORPORATE SOCIAL RESPONSIABLITY (CSR)

For the year under review the provisions of Section 135 of the Companies Act, 2013 are applicable to the company. Further, the Board of Directors has formed the CSR Committee & approved CSR Policy.

The detailed constitution of CSR Committee is provided in Corporate Governance Report & CSR Policy is available on the website of the Company.

There was no CSR Expenditure incurred by the company during the financial year 2023 being not eligible as per the provision of Section 135 of Companies Act, for FY 2023.

PERFORMANCE EVALUATION OF BOARD AND ITS COMMITTEES

In compliance with the provisions of the Companies Act, 2013, the SEBI Listing Regulations and Guidance note on Board evaluation issued by SEBI, the Nomination and Remuneration Committee of the Board of Directors of the Company has carried out a formal annual evaluation of the Board, its committees and individual directors. Further, the Board of Directors have also carried out the evaluation of the Board as a whole, its committees, Chairman of thereof and all the Individual and Independent Directors on the Board.

The performance evaluation of the Board and its committees was made after seeking inputs from all the directors of the Company on the basis of effectiveness of board processes, information and functioning, degree of fulfillment of key responsibilities towards stakeholders, governance issues, effectiveness of control system in identifying material risks and reporting of material violations of policies and law, Board/Committees structure, composition and role clarity, experience and competencies, establishment and delineation of responsibilities to committees, frequency of meetings, circulation of agenda of the meetings, recording of minutes, adherence to law, Board/Committee culture and dynamics, quality of relationship between Board members and the Management, efficacy of communication with external stakeholders, etc.

The Board and the Nomination and Remuneration Committee (NRC) of the Company evaluated the performance of individual directors (including independent directors) based on criteria such as qualifications, experience, knowledge and competency, fulfillment of functions and integrity including adherence to Code of Conduct and Code of Independent Directors of the Company, safeguarding of the Confidential information and of interest of Whistle Blowers under Vigil Mechanism, compliance with policies and disclosures of interest and fulfillment of other obligations imposed by the law, contribution and initiative, availability, attendance, participation and ability to function as a team, commitment, independence, independent views and judgement and guidance/support to management outside board, etc.

A separate meeting of the Independent Directors ("Annual ID meeting") was convened on December 29, 2023, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman of the Committees and 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. Post the Annual ID meeting, the collective feedback of each of the Independent Directors was discussed by the Chairman of the Nomination and Remuneration Committee with the Boards covering performance of the Board as a whole; performance of the Non-Independent Directors.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR:

DIRECTORS AND KMPS APPOINTED / RESIGNED DURING THE YEAR:

During the financial year under review,

- Mr. Makoto Miura (DIN: 10269792), was appointed as alternate Director in the place of Mr. Junichi Suzuki, at the Board meeting held on August 3, 2023 with effect from August 7, 2023.

Thereupon, the intimation of relevant appointment of Alternate Director and required e-forms including necessary documents were filed with the registrar of companies (ROC) and Bombay stock exchange (BSE) in due course of time by the company.

There was no other change in composition of board, key managerial persons during Financial Year except above.

DIRECTORS PROPOSED TO BE RE-APPOINTED AT THE ENSUING ANNUAL GENERAL MEETING:

Mr. Junichi Suzuki, Non- Executive Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

DETAILS OF DEPOSITS WHICH ARE NOT IN COMPLIANCE WITH THE REQUIREMENTS OF CHAPTER V OF THE COMPANIES ACT, 2013:

During the financial year under review, Company did not accept any deposits which are not in compliance with the requirements of Chapter V of The Companies Act, 2013.

CHANGE IN THE NATURE OF BUSINESS, IF ANY:

There has been no change in the nature of business during the Financial Year under review.

SUBSIDIARY COMPANIES, JOINT VENTURE OR ASSOCIATE COMPANIES:

During the year under review, there are no companies which has become/ ceased to become a Subsidiary/ Joint Ventures/ Associate Companies.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:

The Company has neither received nor is aware of any such order from Regulators, Courts or Tribunals during the year.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has developed a strong two tier internal control framework comprising entity level controls and process level controls. The entity level controls of the Company include elements such as defined code of conduct, whistle blower policy, rigorous management review, MIS and strong internal audit mechanism. The process level controls have been ensured by implementing appropriate checks and balances to ensure adherence to Company policies and procedures, efficiency in operations and also reduce the risk of frauds.

Regular management oversight and rigorous periodic testing of internal controls makes the internal controls environment strong at the Company. The Audit Committee along with Management overseas results of the internal audit and reviews implementation on a regular basis.

COMPOSITION OF COMMITTEES:

The composition of all committees formed by board is provided in Corporate Governance Report.

VIGIL MECHANISM:

The Company has formulated and implemented the Whistle Blower Policy / Vigil Mechanism. This has provided a mechanism for directors and employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of unethical behavior, actual or suspected fraud or violation of the Companys code of conduct. The aforesaid policy has also been uploaded on the Companys website.

CASH FLOW:

A Cash Flow Statement for the year ended December 31, 2023 is attached to the Balance Sheet.

CORPORATE GOVERNANCE:

Corporate Governance report for the year under review is annexed herewith.

OTHER DISCLOSURE:

In compliance with Section 134(3)(a) and 92(3) of the Act, the Annual Return is being uploaded on the website of the Company at www.enkei.in.

ACKNOWLEDGEMENT:

Your Directors wish to convey their appreciation to all the employees for their collective contribution to the Companys performance. Directors also wish to thank Enkei Corporation, our promoters, banks, financial institutions, and customers for their unstinted support and shareholders for their confidence reposed in the management.

For & On Behalf of the Board of Directors

Kenjiro Hama

Haresh Shah

Managing Director

Director

(DIN: 10516270)

(DIN: 00228471)

 

Place: Pune
Date: February 23, 2024