Paramount Speciality Forgings Ltd Directors Report

During the financial year under review, there was no alteration in the Authorised Share Capital ofthe Company. As on March 31, 2025, the Authorised Share Capital ofthe Company stood at:

During the financial year under review, the Company successfully completed its Initial Public Offering (IPO) under the SME Platform of NSE. Pursuantto the public issue, the Company issued and allotted 48,02,000 (Forty-Eight Lakh Two Thousand) equity shares of face value ^10/- each, aggregating to ^4,80,20,000 (Rupees Four Crore Eighty Lakh Twenty Thousand only).

*The details ofthe paid-up share capital before and after the IPO are as under:

Accordingly, as on March 31,2025, the Issued, Subscribed and Paid-up Share Capital ofthe Company stood at ^19,68,20,000 (Rupees Nineteen Crore Sixty-Eight Lakh Twenty Thousand only) divided into 1,96,82,000 (One Crore Ninety-Six Lakh Eighty-Two Thousand) equity shares of face value ^10/- each.

Further, during the financial year under review:

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

ii. The Company has not issued any sweat equity shares to its directors or employees.

iii. The Company has not issued any securities on a rights basis.

iv. The Company does not have any employee stock option scheme (ESOP) or any scheme for purchase of its shares by employees or by

trustees for the benefit of employees under any plan.

The capital structure of the Company remains compliant with the applicable provisions of the Companies Act, 2013, the rules made thereunder, and the SEBI (Issue of Capital and Disclosure Requirements] Regulations, 2018, as amended.

During the period under review, the status of your Company was converted from ‘Unlisted to ‘Listed as Company got listed on SME Emerge Platform of National Stock Exchange w.e.f. 25^th September, 2024. Paramount Speciality Forgings Limited successfully completed its Initial Public Offering [IPO] · a significant milestone in the Companys growth trajectory. The IPO was conducted as a 100% Book Built Issue in accordance with Chapter IX of the SEBI (Issue of Capital and Disclosure Requirements] Regulations, 2018, applicable to Small and Medium Enterprises (SMEs].

In accordance with Regulation 32 ofthe SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015, it is hereby confirmed that there was no deviation or variation in the utilisation of proceeds from the Initial Public Offering (IPO] of the Company during the financial year ended March 31,2025, as compared to the objects stated in the offer document.

As certified by the Statutory Auditors, M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants, the unutilised amount of ^1,963.59 lakhs has been deployed as follows as of March 31,2025:

i. ^1,850.00 lakhs - invested in Fixed Deposits;

ii. ^71.57 lakhs - paid towards taxes;

iii. ^1.53 lakhs - lying in the Public Issue Account maintained with Axis Bank;

iv. Balance amount - maintained in HDFC Bank, pending deployment as per the stated objects.

The Board and Audit Committee shall continue to monitor the utilisation and deployment of the IPO proceeds and ensure that the funds are used only for the purposes stated in the offer document.

The Company is committed to ensuring a balanced and effective Board structure with an appropriate mix of Executive, Non-Executive, and Independent Directors, aligned with the principles of sound corporate governance and the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015.

As on the close of the financial year, the Board of Directors of Paramount Speciality Forgings Limited comprised six Directors, classified as under:

• The composition of the Board and its Committees is in conformity with the statutoiy requirements applicable to SME-listed companies.

During the financial year under review, there were no appointments, resignations, or cessations of any Director or Key Managerial Personnel.

• None ofthe Directors are disqualified under Section 164(1] or 164(2] ofthe Companies Act, 2013.

• Further, no Director is debarred or disqualified from being appointed or continuing as a director by the Securities and Exchange Board of India (SEBI], Ministry of Corporate Affairs (MCA], or any other regulatory/statutory authority.

• A certificate to this effect, issued by a Practising Company Secretary, has been obtained and is annexed to this Annual Report as required under Regulation 34(3] and Schedule V, Part C, Clause 10(i] ofthe SEBI LODR Regulations.

The Board has reviewed and confirmed that all Directors possess the necessaiy skills, qualifications, financial and operational expertise, and professional experience for effective governance ofthe Company. Their integrity, commitment, and contribution to strategic decision-making are in the best interest ofthe stakeholders.

Pursuant to the provisions of Section 152(6] ofthe Companies Act, 2013 and the applicable provisions ofthe Articles of Association ofthe Company, Mr. Aliasgar Abdulla Bhagat (DIN: 00335869], Executive Director, is liable to retire by rotation at the ensuing Annual General Meeting (AGM] and being eligible, has offered himself for re-appointment.

The brief profile and other requisite disclosures pursuant to Secretarial Standard-2 (SS-2] and the Companies Act, 2013, are provided in the Notice convening the AGM.

Further, during the financial year under review, no changes occurred in the composition ofthe Board of Directors ofthe Company.

In accordance with the provisions of Sections 2(51] and 203 ofthe Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014, the following individuals were designated as Key Managerial Personnel (KMP] ofthe Company

All the above KMPs were duly appointed and are in office as of the end of the financial year. The Company is in compliance with the statutoiy requirement of having the necessaiy KMPs in place under the applicable legal framework.

Pursuant to the provisions of Section 149(7] of the Companies Act, 2013 ("the Act”] and Regulations 16(l](b] and 25(8] of the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015 ("Listing Regulations”], all Independent Directors ofthe Company have submitted declarations confirming that:

i. They meet the criteria of independence as prescribed under Section 149(6] ofthe Act and Regulation 16(l](b] ofthe Listing Regul ations;

ii. There has been no change in their circumstances which could affect their status as Independent Directors; and

iii. They possess integrity, expertise, and experience necessary for acting as Independent Directors on the Board.

The Board of Directors, after undertaking due assessment, is ofthe opinion that all Independent Directors ofthe Company continue to fulfill the conditions specified for independence and are independent ofthe management.

Further, all Independent Directors have:

i. Complied with the provisions ofthe Code for Independent Directors as prescribed under Schedule IV ofthe Companies Act, 2013;

ii. Affirmed compliance with the Code of Conduct for Directors and Senior Management Personnel ofthe Company, as adopted pursuant to the Listing Regulations;

iii. Confirmed compliance with the Code of Conduct under the SEBI (Prohibition of Insider Trading] Regulations, 2015.

During the year under review, the Non-Executive Directors, including Independent Directors, did not have any pecuniaiy relationship or transactions with the Company other than:

i. Receipt of sitting fees for attending Board and Committee meetings;

ii. Reimbursement of expenses incurred in connection with the performance of their duties, if any; and

iii. Commission, if any, in accordance with the provisions approved by the shareholders and the Board.

The Company has adopted a comprehensive Nomination and Remuneration Policy in accordance with the provisions of Section 178 ofthe Companies Act, 2013 and Regulation 19 ofthe SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015. This policy provides a framework for the appointment, evaluation, and remuneration of Directors, Key Managerial Personnel (KMP], Senior Management, and other employees ofthe Company.

The policy lays down well-defined criteria for identifying individuals eligible for appointment to the Board and Senior Management positions, taking into account factors such as qualifications, professional experience, integrity, and alignment with the Companys values, vision, and strategic objectives. It aims to ensure that the remuneration structure is fair, performance-oriented, competitive, and in line with industiy standards, while also promoting long-term shareholder value.

In terms of remuneration structure:

i. Executive Directors are paid a fixed remuneration along with performance-linked incentives and admissible perquisites, if any, as approved by the Board and shareholders, subject to regulatory limits.

ii. Non-Executive Directors, including Independent Directors, are entitled to receive sitting fees and commission, if any, in accordance with the provisions of the Act and within the limits approved by shareholders.

iii. At present, the Company does not have any employee stock option scheme (ESOP] or other equity-linked incentive plans.

The policy also establishes a structured mechanism for annual performance evaluation of the Board, its Committees, individual Directors, KMPs, and Senior Management. The remuneration paid during the year under review is in compliance with this policy.

The Board of Directors ofthe Company meets at regular intervals to deliberate on key business strategies, policy matters, financial performance, and governance issues. During the Financial Year 2024-25, the Board met seven (7] times in accordance with the provisions ofthe Companies Act, 2013 and applicable Secretarial Standards. The time gap between any two consecutive meetings did not exceed the statutoiy limit of 120 days. In addition to in-person meetings, certain matters of urgent nature were transacted by way of circular resolutions.

The details of meetings held and attendance of Directors at the Board and Committee meetings are as follows:

The details of Directors attendance are as mentioned below:

In accordance with the provisions of the Companies Act, 2013, the relevant rules made thereunder, and to the extent applicable, the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015 ("SEBI LODR”], the Board of Directors ofthe Company has constituted the following Committees to facilitate focused oversight on specific areas and to ensure effective governance practices:

i. Audit Committee

ii. Nomination and Remuneration Committee

iii. Stakeholders Relationship Committee

iv. Corporate Social Responsibility (CSR) Committee

These Committees operate within defined terms of reference and play a vital role in ensuring that the Boards supervisory role is well executed across critical functional areas.

It is further confirmed that during the year under review, there were no instances where the Board did not accept any recommendation of the Audit Committee.

The following are the Composition of the Committees of the Board formed:

Pursuantto a Circular Resolution passed by the Board of Directors on May 10,2025, the Audit Committee was reconstituted in order to maintain continuous compliance with the provisions of the Companies Act, 2013 and the applicable requirements under SEBI LODR Regulations.

Ms. Apurva Pradeep Joshi voluntarily stepped down from her position as Member of the Audit Committee. On her recommendation and with the approval ofthe Board, Mr. Nimesh Mukerji (Non-Executive Independent Director] was inducted as a Member ofthe Committee in her place.

Pursuantto the provisions ofthe Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015, the Board of Directors conducted the annual performance evaluation of the Board as a whole, its Committees, individual Directors, and the Chairperson.

The evaluation was undertaken through a structured mechanism designed to assess the effectiveness ofthe Boards functioning, the adequacy of its composition, and the performance of its members. The process involved assessment against pre-defined criteria including, inter alia, the structure and diversity ofthe Board, effectiveness of Board and Committee meetings, quality and timeliness of information flow, contribution

and participation levels of Directors, and the leadership of the Chairperson.

A separate meeting of Independent Directors was also held, wherein the performance of the Non-Independent Directors and the Board as a whole, including that of the Chairperson, was reviewed. Further, the performance of individual Directors was evaluated by the Board and the Nomination and Remuneration Committee, based on their preparedness, contribution to Board deliberations, and value addition to governance and strategic matters.

The outcome of the evaluation confirmed that the Board and its Committees are functioning effectively and collectively possess an appropriate mix of skills, experience, and expertise necessaiy for the Companys governance and strategic direction.

In accordance with the provisions of the Companies Act, 2013 and Schedule IV thereto, a separate meeting of the Independent Directors of the Company was convened on March 29,2025, withoutthe presence of Non-Independent Directors and members of the management.

Atthe said meeting, the Independent Directors, inter alia, reviewed the performance ofthe Non-Independent Directors, the overall performance of the Board as a whole, and the Chairperson ofthe Company. The meeting also involved an evaluation ofthe quality, quantity, and timeliness of information flow between the Management and the Board, which is crucial for the Boards effective functioning and informed decision-making.

The observations and feedback from this meeting were duly considered by the Board during its subsequent evaluation process.

Pursuant to the provisions of Section 134(5] ofthe Companies Act, 2013, the Board of Directors, to the best of their knowledge and belief and based on the information and explanations obtained, confirm that:

i. In the preparation ofthe annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. 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 a true and fair view ofthe state of affairs ofthe Company as at the end ofthe financial year and ofthe profit ofthe Company for that period;

iii. The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;

iv. The annual financial statements have been prepared on a going concern basis;

v. The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi. The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

As an SME listed entity, the Company is not mandatorily required to constitute a Risk Management Committee under Regulation 21 ofthe SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015. However, the Board of Directors acknowledges the importance of effective risk governance in safeguarding stakeholder value and ensuring sustainable operations.

The Company has adopted a proportionate yet structured risk management framework, integrated into its strategic, operational, and compliance functions. This framework enables timely identification, assessment and mitigation of key risks that may impact the Companys performance and continuity.

Key risk areas identified by the management include:

A. Operational risks, such as plant utilization inefficiencies, underuse of machining capacity and process failures;

B. Financial risks, including interest rate exposure, working capital needs and customer credit cycles;

C. Market-related risks, like order volatility due to short-term purchase contracts and raw material price fluctuations;

D. Environmental, Health and Safety (EHS) risks, given the nature of forging operations;

E. Compliance and reputational risks, especially with evolving industiy standards and legal regulations.

To manage these risks effectively, the Company operates under an established Integrated Management System (IMS] supported by internationally recognized certifications, including:

ISO 9001:2015 - Quality Management System, ensuring consistent product quality and reducing the risk of non-conformities, product returns or reputational harm;

ISO 14001:2015 - Environmental Management System, guiding responsible resource use, pollution control and compliance with environmental regulations;

ISO 45001:2018 - Occupational Health and Safety Management System, which addresses inherent operational risks such as die-grinding, forging and heat treatment through well-documented safety protocols and regular hazard assessments.

In addition, the Company enhances risk control through:

ASNT Level II - certified technicians conducting Non-Destructive Testing (Ultrasonic, Magnetic Particle, and Liquid Penetrant], minimizing risks of undetected defects in critical components.

Periodic reviews are conducted at the operational and Board levels, with improvement actions implemented as necessary. The Board is of the opinion that there are no material threats at present that could affect the Companys going concern status. Nonetheless, it remains vigilant to potential risks arising from economic volatility, customer concentration, regulatory changes or geopolitical factors that could impact supply chains or margins.

The Company remains committed to enhancing its internal controls, certifications, and governance systems to proactively address risks and support long-term value creation.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutoiy auditors and the reviews performed by management and the relevant board committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2025.

The internal financial controls include well-documented policies and procedures, clearly defined roles and responsibilities, standard operating procedures, risk control matrices, and robust IT systems. These are tested periodically for design and operating effectiveness through internal audits conducted by a reputed firm of internal auditors. The Company has established and maintained adequate internal financial controls with reference to the financial statements, commensurate with the size, scale, and complexity of its operations. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with applicable laws.

The Audit Committee actively oversees and reviews the adequacy and effectiveness of the internal control systems and suggests improvements as needed. The Companys internal control systems are routinely tested and certified by Statutoiy as well as Internal Auditors.

The Company believes that strengthening of internal controls is an ongoing process and there will be continuous efforts to keep pace with changing business needs and environment. Necessaiy certification by the Statutoiy Auditors in relation to Internal Financial Control u/s 143(3](i] of the Act forms part of the Audit Report.

During the financial year 2024-25, the Company undertook CSR initiatives through registered implementing agency, Raginiben Bipinchandra Seva Karya Trust, and contributed a sum of ^15,50,000 (Rupees Fifteen Lakh Fifty Thousand only]. The Trust primarily focuses on medical and healthcare services, in line with the Companys CSR objectives.

A detailed annual report on CSR activities undertaken by the Company during the year, in the prescribed format under Rule 8 of the Companies (CSR Policy] Rules, 2014, is annexed to this Report as Annexure I.

The Company remains deeply committed to its social responsibility and believes that sustainable corporate growth must be complemented by meaningful contributions to society. Its CSR vision encompasses focus areas such as healthcare, education, environmental sustainability, and community development. All initiatives are undertaken with a strong emphasis on integrity, transparency, and impact-driven outcomes.

During the financial year under review, all related party transactions entered into by the Company were in the ordinary course of business and on an arms length basis, in accordance with the provisions of Section 188(1] of the Companies Act, 2013, read with Rule 15 of the Companies (Meetings of Board and its Powers] Rules, 2014, and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015 ("Listing Regulations”].

There were no material related party transactions during the year, as defined under the Companys Policy on Related Party Transactions and Regulation 23 ofthe Listing Regulations. Accordingly, no shareholder approval was required under Regulation 23(4].

All related party transactions were placed before the Audit Committee and, where required, the Board of Directors, for prior approval. Omnibus approvals were obtained for repetitive transactions in the ordinary course of business. These transactions were also reviewed on a quarterly/ half yearly basis to ensure compliance and transparency.

The Audit Committee has confirmed that all related party transactions undertaken during the year were in the best interest ofthe Company, and were conducted in a fair, transparent, and compliant manner.

During the financial year under review, the Company has not provided any loan or made any investment or given any guarantee or provided any security in respect of any loan to any person as mentioned in Section 186 ofthe Companies Act, 2013.

During the financial year under review, the Company has not accepted or renewed any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits] Rules, 2014.

During the financial year under review, the Company has not accepted or renewed any deposits which are not in compliance with Chapter V ofthe Companies Act, 2013.

A. Statutory Auditors

Pursuanttothe provisions of Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors] Rules, 2014, the Members of the Company, at the First Annual General Meeting, approved the re-appointment of M/s. Kalyaniwalla & Mistiy LLP, Chartered Accountants (Firm Registration No. 104607W/W100166],as the Statutoiy Auditors of the Company to hold office for a term of five consecutive years, from the conclusion of the First Annual General Meeting until the conclusion of the Sixth Annual General Meeting, to be held in the year 2029.

The Company has received a certificate from the said Auditors confirming that they continue to satisfy the eligibility criteria prescribed under Section 141 of the Companies Act, 2013 and have not incurred any disqualifications, thereby being eligible to continue as Statutoiy Auditors of the Company.

The audit firm is also registered with the Peer Review Board of the Institute of Chartered Accountants of India (ICAI] and holds a valid peer review certificate.

The Statutoiy Auditors Report for the financial year under review does not contain any qualification, reservation, adverse remark or disclaimer except of the following.

i. Title Deed: According to the information and explanations given to us and based on the audit procedures performed by us, the Company is still in process of transferring the title deeds ofthe immovable properties (other than immovable properties where the Company is the lessee] disclosed in the financial statements, the details of same are as mentioned below:

- Freehold Land having value of 42.87 (In Lakhs] held in the name of Paramount Speciality Forgings LLP

- Building (Factory, Office and Residential Building] having value of 1125.52 (In Lakhs] held in the name of Paramount Speciality Forgings LLP

- Leasehold property having value of 10.26 (In Lakhs] held in the name of Paramount Speciality Forgings LLP

Reply: The Company have initiated the title transfer process and taken the following steps:

a] . For the Society Property - at Jawahar Industrial Estate Kamothe - Plot No. 260/263:

We have intimated JCIEL regarding the conversions of our firm from LLP to Limited requesting them to update their records. We have also initiated the processes Industrial Development Authority / District Industries Centre for updating the conversion process. All related documentation is currently in process, and we are making every effort to complete this process by the end of December 2025.

b] The Khalapur Property:

The respective Gram Panchayat & Talathi Offices have already been contacted and the entire process will be completed before December 2025.

ii. Internal Financial Control: According to the information and explanations given to us and based on our audit we are ofthe view that the Company needs to strengthen its documentation over standardisation of its key processes and also introduce a maker checker concept over Payroll and Financial Closing Process. We have been informed that the Company is in the process of strengthening its overall control on the aforesaid processes.

Reply: Appropriate steps to strengthen internal controls over the payroll and financial closure processes. The actions will include:

a] Documentation of all key workflows, roles, and responsibilities related to payroll processing and financial quarter end/year-end closures.

b] Standard Operating Procedures for payroll and financial closures will be finalized and approved by management by the end of HI Implementation of Maker-Checker Controls

a] A formal maker-checker system is being introduced across both functions to ensure clear segregation of duties.

b] In the payroll process, input preparation, validation, and final approval will be assigned to different personnel with system based controls, wherever feasible.

c] For financial closure, all key entries and reconciliations will undergo a review and approval process, supported by documented checklists and sign-offs.

The ERP accounting systems are being implemented to support automated controls, audittrails, and approval workflows to further strengthen the control environment. The aim is to implement the above actions in a phased manner and expect to have the revised internal control framework in place by end of HI, with periodic reviews thereafter to ensure ongoing compliance and effectiveness.

iii. Undisputed Statutory Dues: According to the information and explanation given to us and based on records of the Company examined by us, the Company is generally regular in depositing undisputed statutory dues, including dues pertaining to Goods and Services tax (GST], Provident fund. Employeess State Insurance, Income-Tax, Duty of Customs, Profession Tax and other statutoiy dues with the appropriate authorities, wherever applicable and there are no undisputed dues which remained outstanding at March 31,2025 fora period of more than six months from the date they became payable except as mentioned in audit report.

Reply: The delay in remittance of these statutoiy dues pertains mainly to few employees where underlying issue was due to discrepancies and mismatches in PF and ESIC, PAN and Aadhaar details of certain employees, resulting in, the system rejection of payments. In order to avoid such situations new employees onboarded on a 6-month probation period, are required to ensure all statutoiy documents such as PAN and Aadhaar are properly submitted All pending payments have now been cleared, except for 2-3 employees whose documentation is still under rectification. The concerned employees have assured that the required documentation will be submitted by 15thSeptember 2025, following which the remaining dues will be cleared promptly.

iv. Disputed Statutory Dues: According to the information and explanation given to us and on the basis of our examination of the records of the Company, there are no dues outstanding as on March 31, 2025, of income-tax on account of any dispute, except as mentioned in audit report.

a] We confirm that appeals have been duly filed against all disputed income tax demands as per the provisions of the Income Tax Act, 1961.

b] The current status of the appeals is that they are pending before the appropriate appellate authorities, and further responses or hearing schedule from the Income Tax Department is awaited

c] The grounds of dispute primarily relate to disallowances

d] At this stage, no specific timeline for resolution can be confirmed, as it is subject to the proceedings and timelines of the income tax authorities.

v. Audit Trail: With respect to reporting under Rule 11 (g] of the Companies (Audit and Auditors] Rules, 2014 on preservation of audit trail, the Company has retained audit trail logs for Tally EL Gold from January 20th, 2024, and for Cloud9 ERP from its implementation date, i.e., October 1st, 2024.

Reply: There was migration process to new Cloud9 ERP system, unlike Tally which was fully operational we just had to configure it. The Cloud9 rollout followed department wise migration plan to ensure smooth transition and accurate data transfer. There were user training sessions to all department to get trained with the new system features and compliance requirements. The entire process took additional time for initiating audit trail logging.

Pursuant to the provisions of Section 204 of the Companies Act, 2013, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014, and in accordance with Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015, the Board of Directors of the Company had appointed M/s. Amit Dharmani & Associates, Practising Company Secretaries (Peer Reviewed Firm, CP No. 18179], to undertake the Secretarial Audit of the Company for the Financial Year 2024-25. The said appointment was made based on the recommendation of the Audit Committee and was duly approved at the Board Meeting held on November 14,2024.

The Secretarial Audit was conducted in accordance with the applicable provisions of the Companies Act, 2013, SEBI Regulations, and other

relevant laws and Secretarial Standards. The Secretarial Audit Report in Form MR-3, as issued by M/s. Amit Dharmani & Associates, for the year ended March 31, 2025, is annexed to this Boards Report as Annexure-II. The Report confirms that the Company has complied with the applicable statutory provisions and does not contain any qualification, reservation, or adverse remark.

In line with the recent amendment to Regulation 24A of the SEBI (LODR] Regulations, 2015, notified by SEBI circular, which mandates that the Secretarial Auditor of a listed entity shall be appointed for a continuous term of five years, the Audit Committee and Board of Directors, at their meeting held on May 29, 2025, have approved the re-appointment of M/s. Amit Dharmani & Associates as the Secretarial Auditor of the Company for a fixed term of five consecutive financial years commencing from FY 2025-26 to FY 2029-30, subject to the approval of the shareholders at the ensuing Annual General Meeting.

The Board recommends the said appointment for the consideration and approval of the members. This long-term appointment is expected to ensure continuity, independence, and consistency in the secretarial oversight of the Companys compliance functions.

In compliance with the provisions of Section 138 ofthe Companies Act, 2013, read with Rule 13 ofthe Companies (Accounts] Rules, 2014, and other applicable regulatory requirements, the Board of Directors ofthe Company, based on the recommendation ofthe Audit Committee, at its meeting held on May 31,2024, approved the re-appointment of M/s. Pipalia Singhal & Associates, Chartered Accountants (FRN: 114665W], as the Internal Auditors ofthe Company for the Financial Year 2024-25.

The Internal Auditors function independently and report directly to the Chairman ofthe Audit Committee, in line with the principles of good governance and the Companys internal control framework. Their scope of work includes reviewing and assessing the adequacy and effectiveness of internal controls, risk management systems, operational processes, and compliance with applicable laws and internal policies.

During the year, the Internal Auditors conducted periodic reviews and submitted their reports to the Audit Committee. Their observations and recommendations were duly considered and acted upon, thereby contributing to the continuous improvement of operational and financial controls within the Company.

The Company continues to maintain a robust internal audit mechanism to ensure high standards of accountability, transparency, and risk mitigation in all functional areas.

Pursuantto Section 148(1] ofthe Companies Act, 2013 the Company is required to maintain cost records as specified by the Central Government and accordingly such accounts and records are made and maintained. Pursuantto Section 148(2] ofthe Companies Act, 2013 read with the Companies (Cost Records and Audit] Amendment Rules, 2014, the Company is also required to get its cost accounting records audited by a Cost Auditor.

In compliance with section 148 (3] ofthe Companies Act, 2013 and rule 6 (2] ofthe Companies (Cost records and Audit Rules] 2014, the Board at its meeting held on May 31, 2024, based on recommendation ofthe Audit Committee, has approved the reappointment of M/s. Jitendrakumar & Associates, (Firm Registration No. 101561], as Cost Auditors ofthe Company for FY 2024-25.

The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 ofthe Companies (Audit and Auditors] Rules, 2014 and is being accordingly placed before the Members for ratification. The cost audit report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3] ofthe Companies Act, 2013.

The Company has received consent from M/s. Jitendrakumar & Associates, for appointment as Cost Auditors ofthe Company for FY 2025-26 which was approved by the Board of Directors in their meeting held on May 29,2025.

During the year under review, none of the auditors have reported any instances of fraud committed against the Company by its officers or employees to the Audit Committee as required to be reported under Section 143 (12] ofthe Act.

Energy efficiency and environmental responsibility form an integral part of the Companys operational priorities. Recognizing that forging is an energy-intensive industiy, PSFL has initiated several measures to reduce energy consumption and emissions.

Key measures during the year included:

1. Commissioning of automated CNC machines and low-emission furnaces equipped with automated heat-treatment systems.

2. Initiation of a 1,050 kWp solar power project at the Khalapur facility, designed to meet 30-35% of internal energy requirements upon commissioning, with additional capacity expansion of 300-400 kW planned.

3. Ongoing implementation of waste heat recovery systems to harness residual thermal energy from furnace operations.

4. A portion of IPO proceeds earmarked for energy-efficient billet saws, compressors, and renewable-linked upgrades, aligning expansion with ESG goals.

5. These measures are projected to achieve an estimated C0₂ reduction of 787,500 kg per year, equivalent to planting ·36,750 trees annually.

Through these initiatives, the Company is progressively lowering its carbon footprint, improving energy utilisation, and aligning with global sustainability practices, thereby strengthening its long-term competitiveness.

During the year, the Company undertook a series of technology upgradation and absorption measures aimed at improving manufacturing precision, operational efficiency, and sectoral competitiveness.

Key initiatives included:

1. Installation of multi-axis CNC machining centres, vertical lathes, billet saws, and semi-automatic systems to enhance throughput, accuracy, and productivity.

2. Adoption of press forging for smaller jobs in place of hammer forging, enabling improved geometry, consistency, and reduced material wastage.

3. Setting up a laboratory for mechanical, chemical, and corrosion testing, reducing dependence on third parties and ensuring faster turnaround. R&D efforts were directed toward evaluating new alloys, heat treatment techniques, and customer-specific product development.

4. Rollout of real-time monitoring systems, predictive maintenance tools, and data-driven quality management practices, gradually aligning operations with Industry 4.0 standards.

5. Planned installation of a mechanical forging press plant and continuous billet induction furnace, along with expansion of the Khalapur facility, to support entiy into high-value segments like aerospace, defence, and marine.

These initiatives have strengthened the Companys technological capabilities, product reliability, and ability to serve critical industries with higher-value, complex forgings.

The Following are the total foreign exchange outflow and inflow during the FY 2024-25:

i. FOB Value of Exports: 27,05,27,420/-

ii. Expenditure in Foreign Currency: 1,17,64,706/-

iii. Foreign Exchange earned: 28,99,112/-

iv. Value of Import on CIF basis: 48,71,833/-

The Company is committed to maintaining the highest standards of transparency, accountability, professionalism, and ethical conduct in all its dealings. In accordance with the provisions of Section 177(9] and 177(10] ofthe Companies Act, 2013, read with Rule 7 ofthe Companies (Meetings of Board and its Powers] Rules, 2014, and Regulation 22 ofthe SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015, the Company has formulated a robust Vigil Mechanism / Whistle Blower Policy.

This Policy enables Directors, employees, and stakeholders to report genuine concerns or grievances regarding unethical behaviour, actual or suspected fraud, or violation ofthe Companys Code of Conduct or applicable laws. The Vigil Mechanism provides for adequate safeguards against victimization of persons who avail the mechanism and also ensures direct access to the Chairperson of the Audit Committee, in appropriate or exceptional cases.

During the financial year under review, no complaints were received under the said mechanism. The Company continues to maintain and periodically review the effectiveness of the Policy to ensure a secure and responsive platform for all stakeholders to report concerns without fear of retaliation.

As per Regulation 34(2](f] of the SEBI (Listing Obligations and Disclosure Requirements] Regulations, 2015, the Management Discussion and Analysis Report forms an integral part of the Boards Report and is annexed separately.

Pursuant to Regulation 15(2] of the SEBI Listing Regulations, the compliance with the provisions of Corporate Governance as specified in Regulations 17 to 27, clauses (b] to (i] of sub-regulation (2] of Regulation 46, and Paras C,Dand E of Schedule V, is not mandatoiy for companies listed on the SME Exchange. Accordingly, the said provisions are not applicable to the Company, which is listed on the NSE EMERGE platform.

Further, under Regulation 34(2](f] read with the SEBI circular SEBI/HO/CFD/CFD-PoD-2/P/CIR/2023/120 dated July 11, 2023, the requirement to submit a Business Responsibility and Sustainability Report (BRSR] is applicable only to the top 1,000 listed entities by market capitalization (as on the last day of the financial year]. Since the Company does not fall within this threshold, BRSR reporting is not applicable to the Company for the financial year ended March 31,2025.

However, the Company continues to uphold principles of good governance and sustainability through its internal practices.

The Company has devised proper systems to ensure compliance with all applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI] and confirms that such systems are adequate and operating effectively.

The Company has zero tolerance towards sexual harassment at workplace and is committed to provide a safe and secure working environment for all employees and therefore, your Company has put in place a policy for prevention, prohibition and redressal against sexual harassment of women at the work place, to protect women employees and enable them to report sexual harassment at the workplace in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal] Act, 2013.

During the year under review, no cases were filed under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal] Act, 2013.

All eligible women employees have the statutory benefits prescribed under the Act, including paid maternity leave, continuity of salary and service during the leave period, and post-maternity support such as nursing breaks and flexible return-to-work options, as applicable. The Company remains committed to fostering an inclusive and supportive work environment that upholds the rights and welfare of its women

employees in accordance with applicable laws.

However, duringthe financial year 2024-25, no female employees availed maternity leave, and no formal requests for maternity benefits were received. The majority of female employees are under ESIC for which they are entitled to maternity benefits as per the Act. The Company is prepared to provide the required benefits either directly or via ESIC as and when applicable.

Duringthe Financial Year 2024-25, the Company has complied with the applicable provisions of the Secretarial Standards on Meetings of the Board of Directors (SS-1] and General Meetings (SS-2],as issued by the Institute of Company Secretaries of India (ICSI] and notified by the Ministry of Corporate Affairs under Section 118(10] ofthe Companies Act, 2013. The Company has established systems and processes to ensure ongoing and effective compliance with these mandatory Secretarial Standards.

In compliance with the provisions ofthe Securities and Exchange Board of India (Prohibition of Insider Trading] Regulations, 2015, as amended from time to time ("PIT Regulations”], the Company has adopted a comprehensive Code of Conduct for Prevention of Insider Trading ("Code”].

The objective ofthe Code is to preserve the confidentiality of Unpublished Price Sensitive Information (UPSI] and to ensure that no insider derives any undue benefit or advantage by dealing in the securities ofthe Company while in possession of UPSI. The Code is applicable to all Designated Persons, their immediate relatives, and connected persons who are expected to have access to UPSI.

The Company has also implemented a system for maintaining a Structural Digital Database (SDD] containing the names of such persons or entities with whom UPSI is shared and ensuring compliance with Regulations 3(5] and 3(6] ofthe PIT Regulations.

Ms. Ankita Patankar, Company Secretary ofthe Company, is designated as the Compliance Officer for the purpose ofthe PIT Regulations and is responsible for monitoring compliance and ensuring effective implementation ofthe Code.

Pursuant to the provisions of Section 197(12] ofthe Companies Act, 2013 read with Rule 5(1] ofthe Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014 (as amended], the requisite disclosures relating to the remuneration of Directors and Key Managerial Personnel, including the ratio ofthe remuneration of each Director to the median remuneration ofthe employees, are annexed to this Report as Annexure-III.

Further, the statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12] ofthe Act read with Rule 5(2] and 5(3] ofthe Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014, is not applicable to the Company.

These disclosures are in compliance with the applicable provisions and reflect the Companys commitment to fairness, accountability, and transparency in managerial and employee remuneration practices.

B. The Directors ofthe Company state that:

i. Duringthe financial year under review, there was no change in the nature of business ofthe Company.

ii. No application is made and no proceedings are pending against the Company, under the Insolvency and Bankruptcy Code, 2016.

iii. There are no material changes affecting the financial position or the current affairs ofthe Company occurred since the end ofthe financial year and up to the date of this report.

iv. No One-Time settlements] was carried out by the Company with any Banks or Institutions. Hence, no details of valuation are required to be given.

v. There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on Companys operations in future.

vi. The annual Listing and custodian fees for the Financial Year has been paid to NSE, CDSL and NSDL.

Statements in the Boards Report and the Management Discussion & Analysis Report describing your Companys objectives, expectations or forecasts may be forward- looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence your Companys operations include global and domestic market conditions affecting cost as well as the selling prices of the services, changes in government regulations, tax laws, economic developments within the countiy and other factors such as litigation and industrial relations.

The Board of Directors places on record its sincere appreciation for the continued support, trust, and cooperation extended to the Company by its esteemed shareholders, customers, vendors, investors, business associates, and other stakeholders. The Board also acknowledges the valuable guidanceandassistancereceivedfromvariousdepartmentsoftheCentralandStateGovernments,regulatoryauthorities,andotherstatutorybodies.

The Directors further express their deep appreciation for the commitment, dedication, and hard work demonstrated by employees across all levels, which has significantly contributed to the sustained performance and progress of the Company.

The Board looks forward to the continued support and goodwill of all stakeholders in the Companys future growth and strategic initiatives.

1. Brief outline on CSR Policy of the Company:

Paramount Specialty Forgings CSR Policy intends to:

• Strive for economic development that positively impacts society at large with minimal resource footprint.

• Embrace responsibility for the Companys actions and encourage a positive impact through its activities to alleviate hunger, poverty and malnutrition; to protect the environment; and to support communities, stakeholders and society.

2. Composition of CSR Committee:

4. Provide the executive summary along with web-link(s) of Impact Assessment of CSR Projects carried out in pursuance of sub-rule (3] of rule 8, if applicable: Not Applicable

5. (a] Average net profit of the company as per sub-section (5] of section 135: Rs. 7,58,32,041/-

(b) Two percent of average net profit ofthe company as per sub-section (5] of section 135: Rs. 15,16,641/-

(c) Surplus arising out ofthe CSR projects or programmes or activities ofthe previous financial years: None

(d) Amount required to be set off for the financial year, if any: None

(e) Total CSR obligation for the financial year (b+c-d): Rs. 15,16,641/-

6. (a] Amount spent on CSR Projects (both Ongoing Project and other than Ongoing Project]: Rs. 15,50,000/-

(b] Amount spent in Administrative Overheads: None

(c] Amount spent on Impact Assessment, if applicable: None

(d] Total amount spent for the Financial Year [(a]+(b]+(c]j: Rs. 15,50,000/-

(e] CSR amount spent or unspent forthe Financial Year: Rs. 15,50,000/-

(f) Excess amount for set-off, if any

7. (a] Details of Unspent Corporate Social Responsibility amount for the preceding three financial years:

8. Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the Financial Year: No If yes, enter the number of Capital assets created/ acquired: Not Applicable

Furnish the details relating to such asset(s) so created or acquired through Corporate Social Responsibility amount spent in the Financial Year:

(All the fields should be captured as appearing in the revenue record, flat no, house no. Municipal Office/Municipal Corporation/ Gram panchayat are to be specified and also the area of the immovable property as well as boundaries]

9. Specify the reason(s), if the company has failed to spend two per cent of the average net profit as per section 135(5]: Not Applicable