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KDDL Ltd Directors Report

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KDDL Ltd Share Price directors Report

Dear Members,

The Board of Directors are pleased to present 43rd Annual Report together with the Audited Accounts of the Company for the financial year ended on 31st March, 2023.

OPERATIONS AND PROSPECTS

Financial Results (Standalone and Consolidated)

The summary of operating results for the years 2022-23 and the previous 2 years is given below:

Particulars

Operations* Standalone Consolidated
2022-23 2022-23 2021-22 2020-21 2022-23 2021-22 2020-21
Total Income 3,139.1 3,636.1 2,233.7 1,494.1 11,387.6 8,315.8 5,672.4
Profit Before Interest, Depreciation and Exceptional Item 797.6 1,104.6 466.5 263.7 1,804.6 1,224.8 833.8
Less: Finance Cost 85.1 85.1 75.4 92.7 239.6 247.7 268.3

Gross Profit

712.5 1,019.5 391.1 171.1 1,565.0 977.1 565.4
Less: Depreciation and amortisation 127.1 127.1 117.1 119.5 493.9 453.8 460.4
Profit Before Share of Profit of an Associate 585.4 892.4 274.0 51.5 1,071.1 523.2 105.0
Share of Profit of an Associate 5.0 (0.4) 1.1
Profit Before tax 585.4 892.4 274.0 51.5 1,076.0 522.9 106.1
Less: Tax Expense 200.1 61.1 17.6 306.2 150.9 36.5

Net Profit / (Loss) for the Year

692.3 212.9 33.9 769.8 372.0 69.7
Other Comprehensive Income (OCI) / (Loss) (1.6) 1.0 1.9 (4.8) 7.1 -1.8
Total Comprehensive Income / (Loss) for the Period 690.7 213.9 35.8 765.0 379.1 67.8

* Excluding non-operational Income/(Expenses)

PERFORMANCE AND PROJECTIONS

The performance for the 2022-23 was remarkably better, all business and market segments, both domestic and export, witnessed a healthy recovery and better revenue and profitability as the economic activities and market conditions were continuously on the growth trajectory.

In the fiscal year, the Company achieved remarkable growth, with consolidated sales revenue reaching Rs. 11,388 Million, a substantial increase from Rs. 8,316 Million in the previous year. This represents a robust growth rate of 36.9%, although slightly lower than the growth rate of 46.6% recorded in the previous year, which was under normal economic conditions following the subsiding of the Covid-19 pandemic situation. The revenue growth of 36.9% in comparison to a normal previous year is a significant achievement for the Company, setting a new benchmark for performance.

Profit before tax also experienced substantial growth, rising from Rs. 522.9 Million to Rs. 1,076.0 Million, reflecting a remarkable increase of 105.8% compared to the previous year. On a standalone basis, sales revenue from manufacturing operations mproved by 62.8%, amounting to Rs. 3,636.1 Million, compared to Rs. 2,233.7 Million in the previous year. It is important to note that the revenue for the year was exceptionally increased by a onetime revenue of Rs. 390 Million from the sale of trademarks Ethos and Summit, as well as an income and gain of Rs. 107 Million from the sale of equity shares of Ethos Limited during its IPO.

The Company also reported a significant revenue growth of 40.5% over the previous year, even when excluding the aforementioned abnormal and exceptional one time revenues. This operational revenue growth is a record for the Company and demonstrates decent performance in comparison to industry parameters.

In terms of profitability, the Company recorded a profit before tax of Rs. 892.4 Million (operational profit before tax of Rs. 585.40 Million), a substantial increase compared to the profit before tax of Rs. 274 Million in the previous year. This represents an overall growth rate of 225.7% (operational growth of 113.60%) over the previous year. Furthermore, the Company achieved a net profit after tax of Rs. 692.3 Million, a significant improvement from Rs. 212.9 Million in the previous year.

To keep the momentum going, the Companys overarching strategy centres around two key objectives: firstly, to enhance the export of watch components and secondly, to expedite the growth of the precision engineering business by capturing both existing and new customers, particularly within the selected market segments. The Company plans to accomplish this through intensified marketing efforts, utilising both digital and physical channels, to effectively reach and engage with the target audience. Additionally, the Company is committed to continually improving internal efficiencies by reducing turnaround time and incorporating new capabilities. With this strategic focus, the Company aims to establish a streamlined and competitive operational framework.

Manufacturing Business Segments

The watch components represent the primary source of revenue for the manufacturing business segment of the Company. In 2022, the Swiss watch market, which serves as the primary destination for the Companys exports, registered a growth rate of 11.4% compared to the previous year. Significantly, it achieved a recordbreaking export figure of 24.8 Billion Swiss francs, the highest ever recorded. Further, the wristwatches represented over 95% of the export value and generated 23.7 Billion francs, witnessing a growth of 11.6% over 2021. The number of items rose to 15.8 Million, registering an increase of 50,000 units than the previous year, with a growth of 0.3%. Volume growth was split between the remarkable increase in other material category (+32.3%) and the steady decline in steel watches (-7.8%) and those made from other metals (-18.4%). Quartz watches supported the growth in volume, with an increase of 3,85,000 units, registering a growth of 4.1% compared to 2021. Conversely, mechanical watches fell by 3,35,000 items (-5.3%), but grew in value by 11.5%. With regard to price segments, the majority of price ranges witnessed an increase, except for the 200-500 francs range (export price). While the latter fell by 24%, its value represented less than 3% of the export turnover, and only accounted for one growth point in the overall result. Simultaneously, watches priced at less than 200 francs achieved 5.9% growth in value. The trend was comparable, with a 4.8% surge, for watches priced between 500 and 3,000 francs. In contrast, watches priced above 3,000 francs experienced a remarkable growth of 15.6%. Alongside, the domestic watch market remained robust compared to the previous year. All major domestic customers reported significantly improved performance and the demand continued to demonstrate strong momentum. The managements primary focus throughout the year was to prioritise the fulfilment of customers requirements by enhancing the productivity, capacity and capability of the units.

Further to this, the revenue (net sales) of the Company from the watch components business improved by 38.1% compared to the revious years growth. Sales in the domestic market improved by 15.3% during the year, while exports sales of watch components improved by 48.60% compared to a growth of 42.0% in the previous year. The growth in exports revenue was also supported partially by the favourable currency movement in the Swiss franc and rupee conversion. The growth trend of the watch component business clearly indicates that the Company is gaining market share in India and abroad with its consistent track record of high quality, innovative product range, speed of response and the strong customer relationship.

Another significant segment of revenue for the Company is derived from the precision stamping and tooling business. In the current year, the revenue for this segment experienced a remarkable improvement of 51.9%, surpassing the growth rate of 34.0% achieved in the previous year. The revenue from domestic market improved by 10%, while the revenue from exports improved by 95% (previous year growth rate 106.7%). The increase in exports during the year, on an already higher base of the previous year, clearly indicates the strong demand and improvement of market share in overseas segments.

During the year, direct exports showed continuous improvement, driven by the addition of new customers and an increase in business with existing customers. The share of exports within this business segment increased significantly from 49% in 2021-22 to 63% during the year. Additionally, the Company is also cautiously reducing its presence in the low margin and lower capability business segments in the domestic market to boost domestic revenue generation. It strives to gradually move up the value chain into preferred segments and customers by re-aligning the capability and capacity of the manufacturing unit.

The revenue from the ornamental packaging business of the Company improved by 29.3% compared to the previous year.

Prospects

For the current year, the revenue from the watch components business is expected to improve by 12-15% compared to 202223. Additionally, the precision engineering business is expected to achieve a revenue growth of over 25% by expanding its customer base and entering new segments and markets.

The Company currently maintains a strong order position and is expected to sustain its robust performance throughout the year, assuming that the market situation remains stable and the global impact of events such as the Russia-Ukraine war, geopolitical changes, and concerns regarding the re-emergence of Covid-19 pandemic remain limited. Further, the Company believes that the China-plus-one strategy of the major players is likely to continue, thus offering it the opportunity to enhance its market share in the coming quarters.

Furthermore, the Swiss watch market continues to exhibit moderate growth. The trend of declining volumes in low-priced watches, which was observed in the past few years, has been halted. The Company anticipates the market to stabilise at these levels with marginal improvement. Meanwhile, the higher price segments of watches continue to experience growth and demonstrate stronger performance, thus driving the momentum. The Company strives to maintain its focus on enhancing revenue by structured marketing efforts including stronger digital presence to showcase new products and features. The Companys key operational goals revolve around achieving manufacturing excellence, with a strong emphasis on world-class delivery compliance, quality, and turnaround time (TAT).

The Company has established its reputation as a quality supplier with the ability to meet sophisticated customer needs. By focussing on the vital levers of operational performance, augmenting key technical capabilities and showcasing its strength at leading international trade exhibitions, supported by its aggressive digital marketing endeavours, the Company is confident in attracting new customers, sustaining growth, and achieving improved returns.

Retail Business Segment

During 2022-23, the Companys strategic expansion efforts resulted in the successful opening of six new stores, bringing its total store count to 54. On an individual basis, its revenue from operations and other income demonstrated an impressive growth rate of 36.05%, reaching Rs. 80,373.04 Lacs. Similarly, on a consolidated basis, the Company achieved a growth rate of 36.1%, totaling Rs. 80,309.41 Lacs.

Recognising the increasing significance of online sales and consumer demand, the Company effectively leveraged its digital capabilities to cater to its customers. Significantly, 31% of its billings were generated through online channels, highlighting the growing comfort among customers to purchase luxury watches online. As a key player in the luxury and premium segments, Ethos is well- positioned to capitalise on this evolving trend. Notably, the luxury and high luxury watch segments provide higher profit margins, contributing strongly to the Companys overall profitability.

The Companys exceptional performance in 2022-23, driven by its strategic initiatives and adeptness in the digital realm, places it in a favourable position for sustained growth and continued success.

Estima AG

During 2022-23, the Company accomplished significant growth, achieving a revenue of CHF 3,017 K, which reflects a 18% increase compared to the previous 12-month period ending in March 2022, where revenue amounted to CHF 2,556 K. However, the Company experienced a rise in operating loss after tax, escalating from CHF 759 K to CHF 1,809 K. This increase can be attributed to the substantial surge in person-hours costs due to the Companys

expansion plans, as well as the absence of Government support for person-hours engagement in the post Covid-19 normalised market environment.

Nonetheless, the Company remains steadfast in its commitment to enhancing the teams capabilities and increasing the units capacity to cater to high-end brands. The management considers the losses incurred during the year as exceptional. Encouragingly, the Company has secured a favourable order position and has made progress with esteemed high-end customers for new features. The Company anticipates a swift and strong recovery, driven by market demands, the confidence shown by reputable customers, and the successful implementation of the managements initiatives. These initiatives include acquiring selective machinery and equipment to enhance product quality and incorporate complex features, recruiting competent team members for key roles, and leveraging technical support and guidance from the parent company. Collectively, these factors contribute to an optimistic outlook for the Companys recovery.

The Companys strategy and action plan is on the right track to revive operations, drive growth, and foster development. There is a confident outlook that the upcoming quarters will witness healthy revenue growth and improved profitability.

Pylania AG

The Company experienced a substantial improvement in revenue due to its diverse business, with figures rising from CHF 2,668 K to CHF 4,519 K, marking an impressive growth rate of 69% compared to the previous year. In terms of operating profit, the Company achieved CHF 510 K, displaying a remarkable growth rate of 85% when compared to the profit of CHF 276 K recorded in the 202122 period. Additionally, during the year, the Company extended additional loans, including subordinate loans, totaling CHF 675 K to Estima AG.

The management of Pylania remains committed to exploring opportunities that will enhance revenue and expand the scale of the business, simultaneously, working closely to monitoring costs to improve financial position and bolster liquidity. Furthermore, the Company continued to provide valuable consultancy and managerial advisory services to its customers.

Satva Jewellery and Design Limited

During the year under review, Honble National Company Law Tribunal, Chandigarh Bench vide its order dated 23rd November, 2022 approved the Scheme of Amalgamation of Satva Jewellery and Design Limited (SJDL), a wholly owned subsidiary Company with KDDL Limited (KDDL), holding Company. Upon filing the said order by the Company with the Registrar of Companies and compliance of other conditions of the Scheme, the same has been effective on 1st December, 2022 and has been given effect from the Appointed Date i.e 1st April 2019. Accordingly, SJDL stands dissolved without winding up.

CHANGE IN SUBSIDIARIES

(a) Kamla International Holdings SA (KIH): KIH, a wholly owned subsidiary of the Company has acquired 3,000 equity shares (15%) of Pylania, SA (a subsidiary of KDDL Limited) from its existing shareholder, which resulted in increase of KIH equity shareholding from 47.5% to 62.5%. Consequently, Pylania SA has become 100% subsidiary of the Company (directly and indirectly through its wholly owned subsidiary, Kamla International Holdings SA). By virtue of the present acquisition, the holding of the Company in Estima AG has increased from 95.50% to 100%.

(b) Kamla Tesio Dials Limited (KTDL): Kamla International Holdings SA, 100% subsidiary of the Company has acquired 3,00,000 (30%) equity shares of Rs. 10 each of Kamla Tesio Dials Limited (KTDL), a subsidiary of the Company. Consequently, KTDL has become wholly owned subsidiary of the Company.

DIVIDEND

The Board of Directors has recommended a dividend of Rs. 2 (Rs. Two only) per equity share of Rs. 10/- (Rs. Ten) each fully paid- up of the Company for the financial year ended on 31st March, 2023. Dividend is subject to approval of members at the ensuing Annual General Meeting and shall be subject to deduction of income tax at source. The book closure date for the payment of Final Dividend will be 23rd September, 2023. The dividend recommended is in accordance with the Companys Dividend Distribution Policy.

The Dividend Distribution Policy of the Company is available on the Companys website and can be accessed at: https://www. kddl.com/wp-content/uploads/PDF/Dividend%20Distribution%20 Policy.pdf

Apart from above, the Board of Directors of the Company, at its meeting held on 9th March, 2023, declared Interim Dividend of Rs. 2 (Rs. Two only) per equity share of Rs. 10/- (Rs. Ten) for each fully paid-up of the Company. It was paid within the prescribed timeline.

TRANSFER TO RESERVES

Your Board does not propose to transfer any amount to general reserve for the period under review.

BUYBACK OF SHARES

The Board of Directors at its meeting held on 18th January, 2023, approved the proposal of buyback of fully paid-up equity shares having a face value of Rs. 10/- (Rs. Ten only) each of the

Company at a price not exceeding Rs. 1200/- (Rs. One Thousand Two Hundred only) per equity share (Maximum Buyback Price) and for an aggregate amount not exceeding Rs. 2,100 Lacs (Rs. Twenty One Hundred Lacs only). (Maximum Buyback Size), from the shareholders of the Company (other than the promoters, the promoters group and persons in control of the Company) payable in cash via Open Market route through the Stock Exchange mechanism in accordance with the provisions of the Securities and Exchange Board of lndia (Buy-Back of Securities) Regulations, 2018 (as amended) (Buyback Regulations) and the Companies Act, 2013 and the rules made thereunder.

The buyback commenced on 25th January, 2023 and the Company bought back 1,99,947 equity shares at an average price of Rs. 1,050.28 (Rs. One Thousand and Fifty and Paisa Twenty Eight) per equity share and deployed an amount of Rs. 20,99,99,526.30 (Rs. Twenty Crores Ninety Nine Lacs Ninety Nine Thousand Five Hundred Twenty Six and Paise Thirty only) utilising 99.999774% of the maximum buyback size (excluding transaction costs). The Buyback Committee of the Company, at its meeting held on 9th February, 2023 approved the closure of the buyback with effect from closing of trading hours on 9th February, 2023, i.e. before the expiration of six months from the commencement date.

CHANGE IN CAPITAL STRUCTURE

(a) Authorised Share Capital

Consequent to the merger of Satva Jewellery and Design Limited (SJDL), a wholly owned subsidiary company with holding Company i.e KDDL Limited (KDDL), authorised share capital of SJDL amounting to Rs. 3,00,00,000/- (Rs. three Crores only) divided into 30,00,000 (Thirty Lacs only). Equity shares of Rs. 10/- each (Rs. Ten only) was merged with the authorised share capital of KDDL, resulting into increase of authorised share capital of KDDL from Rs. 25,00,00,000/- (Rs. twenty five Crores only) divided into 2,50,00,000 (Two Crores fifty Lacs only) Equity Shares of Rs.10/- each (Rs. Ten only) to Rs. 28,00,00,000/- (Rs. twenty eight Crores only) divided into 2,80,00,000 (Two Crores eighty Lacs only) Equity Shares of Rs.10/- each (Rs. Ten only).

(b) Subscribed and Paid-up Share Capital

Pursuant to buyback of 1,99,947 equity shares of Rs. 10 each, subscribed and paid-up capital of the Company stands reduced from Rs. 12,73,70,640/-consisting of 1,27,37,064 equity shares of Rs. 10 each to Rs. 12,53,71,170/- consisting of 1,25,37,117 equity shares of Rs. 10 each. Further, the Company has not issued shares with differential voting rights.

DEPOSITS

The details of deposits covered under Chapter V of the Companies Act, 2013 ("the act") is given hereunder:

1. Deposits Accepted/ renewed during the year : Rs. 25,45,87,000
2. Deposits outstanding at the end of the year : Rs. 36,43,48,000
3. Deposits remained unpaid or unclaimed as at the end of the year : NIL
4. Whether there has been any default in repayment of deposits or payment of interest thereon during the : year and if so, number of such cases and the total amount involved NIL
5. The details of deposits which are not in compliance with the requirements of Chapter : NIL

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of the Act, Regulation 33 of the Listing Regulations and applicable Accounting Standards, the Audited Consolidated Financial Statements (CFS) of the Company and all the subsidiaries, form a part of this Annual Report for the financial year 2022-23. In accordance with Section 136 of the Act, the Audited Financial Statements, including the CFS and related information of the Company and the separate financial statements of each of the subsidiary companies, are available on the Companys website at www.kddl.com

Pursuant to Section 129(3) of the Act, a statement containing salient features of the Financial Statements of each of the subsidiaries, associates and JV Companies in the prescribed Form AOC-1 as Annexure I forms part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THE FINANCIAL YEAR AND DATE OF REPORT

There have been no material changes and commitments for the likely impact affecting financial position between end of the financial year and the date of the report. Also, there has been no change in the nature of business of the Company.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

PARTICULARS OF LOAN, GUARANTEES AND INVESTMENTS UNDER SECTION 186

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Act, are given in the respective notes to the standalone financial statements of the Company.

RELATED PARTY TRANSACTIONS

All transactions with related parties were reviewed and approved by the Audit Committee and were in accordance with the Policy on

dealing with and materiality of related party transactions and the related party framework formulated and adopted by the Company. All contracts/arrangements/transactions entered into by the Company during the year under review with related parties were in the ordinary course of business and on arms length basis in terms of provisions of the Act. There are no material significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons and their relatives which may have a potential conflict with the interest of the Company at large.

The details of the related party transactions as per Indian Accounting Standards (IND AS) - 24 are set out in Notes to the standalone financial statements of the Company. Disclosures of related party transactions in terms of Regulation 23 of the Listing Regulations submitted to Stock Exchanges for the half year on a consolidated basis, in the specified format -are available on the website of the Company at www.kddl.com.

Form AOC-2 pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in Annexure II to this Report.

BOARD DIVERSITY

The Company recognises and embraces the importance of a diverse Board in its success. We believe that a truly diverse Board will leverage differences in thought, perspective, regional and industry experience, cultural and geographical background, age, ethnicity, race, gender, knowledge and skills including expertise in financial, global business, leadership, technology, mergers & acquisitions, Board service, strategy, sales, marketing and other domains, which will ensure that KDDL retains its competitive advantage. The Board Diversity Policy adopted by the Board forms an integral part of the Nomination & Remuneration Policy and is available on our website, at https://www.kddl.com/wp-content/ uploads/PDF/Nomination%20&%20Remuneration.pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(i) Appointment/Re-appointment of Independent Directors:

The shareholders of the Company at their 42nd AGM held

on 27th September, 2022 confirmed the appointment/re- appointment of the following Directors by way of a Special Resolution :

(a) Mr. Sanjiv Sachar (DIN: 02013812): Re-appointment of Mr. Sachar as an Independent Director of the Company not liable to retire by rotation, for a period of 5 (five) consecutive years w.e.f 7th March, 2022 to 6th March, 2027."

(b) Mr. Nagarajan Subramanian (DIN: 02406548):

Appointment of Mr. Subramanian as an Independent Director of the Company not liable to retire by rotation, for a period of 4 (four) consecutive years commencing w.e.f 28th July, 2022 to 27th July, 2026.

(c) Mrs. Neelima Tripathi (DIN: 07588695): Appointment of Mrs. Tripathi as an Independent Director of the Company not liable to retire by rotation, for a period of 5 (five) consecutive years commencing w.e.f 28th July, 2022 to 27th July, 2027.

(ii) Re-appointment of Mr. Jai Vardhan Saboo (DIN: 00025499) as Non-Executive Director who retired by rotation at 42nd Annual General Meeting and offered himself for reappointment.

(iii) Pursuant to the recommendations of Nomination and Remuneration Committee and Audit Committee at its meeting held on 28th March, 2023, the Board of Directors of the Company at its meeting held on 28th March, 2023 subject to the approval of the Shareholders, re-appointed Mr. Yashovardhan Saboo as Chairman & Managing Director of the Company for a period of 3 (three) years w.e.f 1st April, 2023 upto 31st March, 2026. The Company has sought approval from the Shareholders for the said re-appointment and remuneration of Mr. Saboo by way of Special Resolution though Postal Ballot Notice separately.

(iv) In accordance with the provisions of Companies Act, 2013, Mr. Sanjeev Kumar Masown (DIN: 03542390) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Necessary resolution for the re-appointment of Mr. Masown forms part of the Notice convening 4311 Annual General Meeting (AGM). The Board recommends his re-appointment for the approval of the members. Details, such as brief resumes, nature of expertise in specific functional areas, names of companies in which the above-named directors hold directorships, committee memberships/ chairpersonships, shareholding in your Company, etc. are furnished in the Notice of AGM.

(v) The Board of Directors at its meeting held on 12th August, 2023 appointed Mrs. Anuradha Saboo (DIN : 01812641) as an Additional Director (Non-Executive) of the Company w.e.f.

12th August, 2023 who shall hold office upto the date of ensuing Annual General Meeting of the Company. A separate resolution seeking approval from the Shareholders, for her appointment as Non -Executive Director, liable to retire by rotation has been incorporated in the Notice convening next Annual General Meeting.

The list of key skills, expertise and core competencies of the Board of Directors, is provided in the Report on Corporate Governance forming part of this report.

In the opinion of the Board, all the directors, as well as the directors proposed to be re-appointed, possess the requisite qualifications, experience and expertise and hold high standards of integrity.

During the year under review, the Non-Executive Directors (NEDs) of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees received by them for attending the meetings of the Board of Directors and Committee thereof and/or interest on deposits and dividen payment, if any.

Key Managerial Personnel

Mr. Yashovardhan Saboo, Chairman & Managing Director, Mr. Sanjeev Kumar Masown - Whole time Director cum Chief Financial Officer and Mr. Brahm Prakash Kumar Company Secretary, are the Key Managerial Personnel of the Company. During the year under review, there were no changes to the Key Managerial Personnel of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Act (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force), the Directors of the Company state that:—

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(iii) the directors had taken proper and sufficient care 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;

(iv) the directors had prepared the annual accounts on a going concern basis; and

(v) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

(vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION FROM DIRECTORS

The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:

• they meet the criteria of independence as prescribed under the provisions of the Act, read with the Schedule and Rules issued thereunder, and the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;

• they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and

• they have registered themselves with the Independent Directors Database maintained by the Indian Institute of Corporate Affairs.

None of the Directors of the Company are disqualified for being appointed as Directors as specified under Section 164(2) of the Act read with Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

BOARD MEETINGS

During the year under review, 9 (nine) meetings of the Board of Directors were held. The details of the meetings of the Board of Directors of the Company held and attended by the Directors during the financial year 2022-23 are given in the Corporate Governance Report which forms part of this Annual Report.

The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act and the Listing Regulations.

BOARD COMMITTEES

As on 31st March, 2023, the Board has 5 (five) Committees: Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee and Stakeholders Relationship Committee.

During the year, all recommendations of the Committees of the Board which were mandatorily required have been accepted by the Board. A detailed note on the composition of the Board and its Committees, including its terms of reference is provided in the Corporate Governance Report. The composition and terms of reference of all the Committees of the Board of Directors of the Company are in line with the provisions of the Act and the Listing Regulations. Details of the committees, along with their composition, charters and meetings held during the year, are provided in the Corporate Governance Report, forms a part of this Report.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act, 2013, Listing Regulations and in accordance with the manner of evaluation, the Board carried out an annual performance evaluation of its own performance, board committees and of the directors individually (including Independent Directors). A separate meeting of the Independent Directors was convened during the financial year under review, which, inter alia, reviewed the performance of the Board as a whole, the non-independent directors and the Chairman of the Company after taking into account the views of Executive and Non-executive Directors, assessed the quality, quantity and timeliness of flow of information between the Management and the Board of Directors that is necessary for the Board of Directors to effectively and reasonably perform their duties and expressed satisfaction over the same.

NOMINATION AND REMUNERATION POLICY

The Company has in place a policy for remuneration, nomination, selection and appointment of Directors, KMPs and Senior Management, approved by the Board of Directors. The Policy broadly lays down the guiding principles, criteria and the basis for payment of remuneration to the Executive and Non-Executive Directors, KMPs and Senior Management. The criteria for the selection of candidates for the above positions cover various factors and attributes, which are considered by the Nomination & Remuneration Committee and the Board of Directors while selecting candidates. The policy details are explained in Corporate Governance Report which forms part of the Annual Report. The policy can also be accessed at https://www.kddl.com/wp-content/ uploads/PDF/KDDL_Remuneration_Policies.pdf

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation programme are posted on the website of the Company and can be accessed at https://www.kddl.com/familiarisation-programme/

CREDIT RATING

During the year under review, ICRA Limited has upgraded credit rating of the Company as per below details:

Instrument

Rating Action

Long Term: Cash Credit Facilities, Term Loan and Unallocated Limits

[ICRA]A (Stable); upgraded from [ICRA]A-

Short Term: Non-fund based Facilities

[ICRA]A1; upgraded from [ICRA]A2+

Fixed Deposits

[ICRA]A; upgraded from [ICRA]A-

Total

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Companys CSR initiatives and activities towards supporting projects in the areas environmental sustainability, eradicating hunger, poverty and malnutrition, promoting education, enhancing vocational skills and promoting healthcare including preventive healthcare.

The details of CSR Committee are given in Corporate Governance Report, which forms a part of this report. The Companys CSR Policy is available on our website, at https://www.kddl.com/wp-content/ uploads/PDF/KDDL_CSR_Policy.pdf. The Companys CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 31st March, 2023, in accordance with Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 ""CSR Rule"") is set out in Annexure III to this Report.

ESTABLISHMENT OF VIGIL / WHISTLEBLOWER MECHANISM

The Company has established a robust Vigil Mechanism and a Whistleblower policy in accordance with the provisions of the Act and the Listing Regulations to deal with instances of fraud and mismanagement, if any. It also aims to safeguard the confidentiality and interest of such employees / other persons dealing with the Company against victimisation who avail the mechanism and allows direct access to the Chairperson of the Audit Committee or Managing Director of the Company. During the year, no person was denied access to the Audit Committee. The Whistleblower Policy is available on our website, at https://www.kddl.com/wp- content/uploads/PDF/Whisle%20Blower%20Policy.pdf

RISK MANAGEMENT

Risk management is integral to the Companys strategy and for the achievement of the long-term goals. Our success as an organisation depends on our ability to identify and leverage the opportunities while managing the risks.

During the financial year, the Board of the Directors has constituted a Risk Management Committee in compliance with the regulation 21 of the Listing Regulations. The Committee has been entrusted by the Board with the responsibility of reviewing the risk management process in the Company and other responsibilities as per Listing Regulations.

The Board of Directors of the Company on the recommendations of the Risk Management Committee has updated Risk Management Policy for the Company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company and which articulates the Companys approach to address the uncertainties in its endeavour to achieve its stated and implicit objectives. For more details, please refer Risk, Threats and Concerns section of the Management Discussion and Analysis Report, a part of this Report. The Risk Management Policy is available on our website, at https://www.kddl.com/wp-content/ uploads/PDF/policies/RCM-19-12-2022.pdf

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company is committed to providing a safe and conducive work environment to all of its employees and associates. In accordance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("POSH Act") and Rules made thereunder, the Company has in place a policy which mandates no tolerance against any conduct amounting to sexual harassment of women at workplace. The Company has constituted Internal Committee(s) (iCs) to redress and resolve any complaints arising under the POSH Act. Training / awareness programmes are conducted throughout the year to create sensitivity towards ensuring respectable workplace. During the year under review, the Company has not received any complaint related to sexual harassment and accordingly, no complaint was pending as on 31st March, 2023.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Business Responsibility and Sustainability Report of the Company is attached as Annexure - IV forming part of this report.

CORPORATE GOVERNANCE

Our corporate governance practices are a reflection of our value system encompassing our culture, policies, and relationships with our stakeholders. Integrity and transparency are key to our corporate governance practices to ensure that we gain and retain the trust of our stakeholders at all times. Corporate governance is about maximising shareholder value legally, ethically and sustainably. At KDDL, the Board exercises its fiduciary responsibilities in the widest sense of the term. Our disclosures seek to attain the best practices in international corporate governance. We also endeavor to enhance long-term shareholder value and respect minority rights in all our business decisions.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (3) (m) of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 are furnished in Annexure-IV to the Boards Report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report as Annexure V.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees is attached to this report as Annexure VI.

AUDITORS AND AUDITORS REPORT Statutory Auditors

S.R. Batliboi & Co. LLP, Chartered Accountants (Firm Registration No 301003E/E300005) were appointed as Statutory Auditor of the Company at 39th Annual General Meeting (AGM) for a term of five years to hold office from the conclusion of the 39th Annual General Meeting of the Company till the conclusion of the 44th Annual General Meeting of the Company.

The report of the Statutory Auditors forms part of Annual Financial Statements 2022-23 (Standalone and Consolidated). The said report does not contain any qualification, reservation or adverse remark. Information referred to in the Auditors Reports are selfexplanatory and do not call for any further comments.

Cost Auditor

During the year, the Company maintained cost records of its EIGEN unit, pertaining to electricals or electronic products and tools in

accordance with the provisions of Section 148 of the act, read with the Companies (Cost Records and Audits) Rules, 2014. M/s Khushwinder Kumar & Co., Cost Accountants (FRN.: 100123) the Cost Auditor of the Company conducted the audit of cost records of Companys EIGEN unit for financial year commencing from 1st April, 2022 to 31st March, 2023.

The Board of Directors of the Company, on the recommendations of the Audit Committee has reappointed M/s Khushwinder Kumar & Co. Cost Accountants (FRN: 100123) as the Cost Auditor of the committee to conduct the audit of cost records of Companys EIGEN unit for the financial year 2023-24. As required under the Act read with the Companies (Cost Records and Audit) Rules, 2014, the remuneration payable to Cost Auditors must be placed before the Members at a general meeting for ratification. Hence, a resolution for the same forms part of the notice of the ensuing AGM.

Secretarial Auditor

The Secretarial Audit Report for the financial year 2022-23 given by M/s A. Arora & Co., Practicing Company Secretaries (C.P. No.: 993) is attached herewith as Annexure VII. There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditors in their Report. Information referred to in the Secretarial Auditors Report are self-explanatory and do not call for any further comments.

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s A. Arora & Co., Practicing Company Secretaries (C.P. No.: 993), as the Secretarial Auditor for conducting Secretarial Audit of the Company for the financial year 2023-24.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Auditors did not report any matter under Section 143(12) of the Act, therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March, 2023 is available on the website of the Company at https://www.kddl.com .

CORPORATE INSOLVENCY RESOLUTION PROCESS INITIATED UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC)

There are no proceedings, initiated by any Financial Creditor or Operational Creditor or by the Company, under the Insolvency and Bankruptcy Code, 2016 as amended, before National Company Law Tribunal or other courts during the year 2022-2023.

INTERNAL FINANCIAL CONTROLS (IFC) AND THEIR ADEQUACY

The Company maintains adequate internal control systems, policies and procedures for ensuring orderly and efficient conduct of the business, including adherence to the Companys policies, safeguard of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures in all areas of its operations. The services of internal and external auditors are sought from time to time as well as in-house expertise and resources. The Company believes that it has sound internal control systems commensurate with the nature and size of its business. The Company continuously upgrades these systems in line with best-in-class practices.

These reports and deviations are regularly discussed internally and actions are taken, whenever necessary. The Audit Committee of

the Board periodically reviews the adequacy of the internal control systems.

LISTING OF SHARES

The shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited and the listing fee for the year 2023-24 has been duly paid.

ACKNOWLEDGEMENTS

The Board of Directors place on record sincere gratitude and appreciation for all the employees of the Company. Our consistent growth was made possible by their hard work, solidarity, cooperation, and dedication during the year. The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.

For and on behalf of the Board of Directors

Date :- 12th August, 2023

Yashovardhan Saboo

Place :- Chandigarh Chairman and Managing Director
DIN: 00012158

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