Patel Engineering Ltd Directors Report

To the Members of Patel Engineering Limited,

Your Directors hereby present the 75^th Boards Report on the business, operations and state of affairs of the Company together with the audited financial statements for the year ended March 31, 2024:

FINANCIAL PERFORMANCE

Standalone and Consolidated

(Rs. in million)

Particulars	Consolidated		Standalone
	2023-24	2022-23	2023-24	2022-23
Total Income	46,330.16	40,060.84	45,210.28	39,613.97
Revenue from Operations	45,441.08	38,911.47	44,120.39	38,171.26
Total Operating Expenses	38,538.14	33,295.82	37,919.34	32,766.48
Operating EBITDA	6,902.94	5,615.65	6,201.05	5,404.78
Depreciation and amortization expense	976.14	808.99	971.30	806.41
Finance Cost	3,620.94	4,122.22	3,567.88	3,997.30
Exceptional Item	(856.18)	8.14	(1,034.28)	60.78
Profit / (Loss) before tax	4,051.12	1,825.67	3,786.05	1,983.00
Tax expenses	1,035.11	388.63	930.09	427.36
Share in profit / (loss) in associates (net)	6.09	46.79	-	-
Net Profit / (Loss) after tax from continuing operations	3,022.10	1,483.83	2,855.96	1,555.64
Net Profit / (Loss) after tax from Discontinuing operations	(119.73)	351.05	-	-
Other Comprehensive Income (Net)	(56.90)	(123.96)	25.84	2.89
Total comprehensive income for the year	2,845.47	1,710.92	2,881.80	1,558.53
Non controlling interest	204.47	162.85	-	-
Net Profit for owners	2,641.00	1,548.07	2,881.80	1,558.53
Earnings per equity shares Rs. (face value Rs. 1 each)
- Basic	3.64	2.85	3.69	2.97
- Diluted	3.54	2.03	3.59	2.10

Consolidated:

The Consolidated total income for FY 2024 stood at Rs.Rs.46,330.16 million as against Rs. 40,060.84 million for the previous year.Rs.The Net profit for the year ended March 31, 2024 was at Rs. 2,641.00 million as against Net profit of Rs.Rs.1,548.07 million for the previous year.

Standalone:Rs.

On Standalone basis, the total income for FY 2024 stood at Rs. 45,210.28 million as against Rs. 39,613.97 million for the previous year. The Net Profit for the year ended March 31, 2024 was at Rs. 2,881.80 million as against Net profit of Rs.Rs.1,558.53 million for the previous year.

Dividend

To conserve funds, the Directors have not recommended payment of dividend for the financial year 2023-24. Pursuant to Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), the Dividend Distribution Policy is available on the website of the Company at the link: https://tinyurl.com/54cvkwz9

Share Capital

As on March 31, 2024, the total paid-up share capital of the Company stood at Rs. 77,36,17,228 divided into 77,36,17,228 Equity Shares of Rs. 1 each.

In April 2024, the Company allotted 7,07,58,889 equity shares to Qualified Institutional Buyers (QIBs), on account of which the paid up share capital of Company increased to 84,43,76,117 divided into 84,43,76,117 Equity shares of Rs. 1 each.

Information on state of affairs of the Company

Information on the operational and financial performance, among others, is given in the Management Discussion and Analysis Report, forming part of the Annual Report and is in accordance with the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations").

Borrowing

The total long-term borrowings stood at Rs. 17,321.61 million as on March 31, 2024 as against Rs. 15,421.76 million as on March 31, 2023.

Due to replacement of high interest bearing contractee advance of Rs. 2,520 million with a low interest bearing borrowing from financial institution which gives us a saving in interest cost, borrowing for the year has been increased.

Subsidiaries & Associates

As on March 31, 2024, the Company has 52 subsidiaries including the step-down subsidiaries.

Michigan Engineers Pvt. Ltd - As part of the strategy to monetize investments and non-core assets, the Company sold/transferred 41.01% of its equity stake out of 51% in its subsidiary Michigan Engineers Pvt Ltd (MEPL). Due to the above transaction, MEPL ceased to be a Subsidiary of the Company effective May 25, 2023.

Patel Surya (Singapore) Pte. Ltd., being non-operative, the Company made application to the Registrar for striking off the name and the struck off was effective from August 7, 2023, hence it ceased to be a Subsidiary of the Company.

Bellona Estate Developers Ltd (‘BEDL) was an associate company as on March 31, 2023. On account of one-time settlement of BEDL with the lenders, 2 out of 3 lenders have transferred their stake in BEDL to the Company. By virtue of above transfer, the Company holds 92.9% in BEDL and it became our Subsidiary. The transfer of shares (balance stake of 7.1%) of one lender to the Company is in process.

Highlights of performance of key subsidiaries/Associates: Dirang Energy Private Limited (Dirang), a Special Purpose Company for development of 144MW Gongri Hydroelectric Power Project in West Kameng District in Arunachal Pradesh. The project development activities are on halt due to delay in obtaining statutory clearance, untimely debt disbursement, resistance from local villagers, liquidity issues, etc. The State Government has issued the termination notice which has been challenged by the Company in Guwahati High Court. The Honble High Court of Guwahati has directed parties to initiate the Arbitration Proceedings for resolution of disputes. In accordance with the terms of the Memorandum of Agreement and amendment thereof the company has started the Arbitration proceedings in the matter against the Government of Arunachal Pradesh. The external debt in Dirang has been settled and there is NIL debt outstanding as on date.

Patel KNR Infrastructures Ltd and Patel KNR Heavy Infrastructures Limited continue to remain the same. The Company holds substantial stake in these road project companies. Both the NHAI annuity projects are under operation and the respective companies are receiving the annuity on semi-annual basis. The respective Companies are maintaining the assets as per the contract conditions.

PBSR Developers Private Limited, is developing the project consisting two residential towers (each tower having 20 floors) comprising of residential units of 2 BHK, 2.5 BHK and 3 BHK and one tower of serviced apartments (19 floors). The residential towers have 12 flats per floor and service apartment block have 11 units per floor. PBSR has applied for the Occupation Certificate (OC) for Smondo Gachibowli project to Greater Hyderabad Municipal Corporation (GHMC) and started handing over of the flats to buyers, by end of March 2024 the company has already handed over about 75% apartments out of the total sold apartments.

The Companys Mauritius subsidiary Les Salines Development Ltd ("LSDL") had lease Agreement for development of 24.6215 hectares of land for residential, commercial, leisure and shopping etc with Government of Mauritius (GOM) for a period of 99 years. In February 2015, suddenly GOM had terminated the lease without assigning any reason. After termination of the project, the Company had issued a notice of arbitration to GOM for expropriation of investment under bilateral treaty between India and Mauritius for promotion and protection of investment in both countries. The Arbitration process has been completed and the Company has received the partial award and expecting the final award in near future. The salient features of the financial statement of each of the subsidiaries and the associates as required under the Companies Act, 2013 is provided in Annexure I of the Boards Report. Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of the subsidiaries are available on the website of the Company at www.pateleng.com.

In terms of SEBI LODR Regulations, the Company has formulated a policy for determining ‘material subsidiaries and the same has been disclosed on Companys website at the following link: https://tinyurl.com/235xsrxw

Particulars of Loans given, Investment made, Guarantees given and Securities provided

The members may note that the Company is engaged in providing infrastructural facilities and hence, as per Section 186(11) of Companies Act, 2013, nothing in Section 186 shall apply to the Company except sub-section (1) of Section 186. Accordingly, a separate disclosure has not been given in the financial statements as required under

Section 186(4) with regard to particulars of loan given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security.

Related Party Transactions

All contracts/arrangement/transactions entered into by the Company during FY 24 with related parties were in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI LODR Regulations. All related party transactions entered into during FY 24 were on an arms length basis and in the ordinary course of business of the Company under the Act and not material under the SEBI LODR Regulations. None of the transactions required members prior approval under the Act or the LODR Regulations.

Details of transactions with related parties during FY 24 are provided in the notes to the financial statements. There were no transactions requiring disclosure under section 134(3) of the Companies Act, 2013. Hence, the prescribed Form AOC–2 does not form a part of this report.

In accordance with the provisions of SEBI LODR Regulations, the Company has formulated the Related Party Transactions policy and the same is uploaded on Companys website at the link: https://tinyurl.com/2p94jfyw.

Directors and Key Managerial Personnel

i. Independent Directors

The Board has appointed/re-appointed the below mentioned Directors as Independent Directors during the year under review:

1. Re-appointed Mr. Shambhu Singh (DIN: 01219193) for 2^nd term effective from March 01, 2024 for a period of 3 years. The re-appointment of Mr. Shambhu Singh was approved by Members of the Company on January 03, 2024.

2. Appointed Mr. Ashwin Parmar (DIN: 00055591) for 1^st term effective from April 20, 2023 for a period of 3 years. The appointment of Mr. Ashwin Parmar was approved by members on May 25, 2023.

The necessary declarations with respect to independence has been received from all the Independent Directors of the Company and that the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013. Further, Board confirms compliance with the Code of Conduct for Directors and senior management personnel as formulated by the Company. Further, Mr. Barendra Kumar Bhoi (DIN: 08197173) ceased to be an Independent Director of the Company effective from August 13, 2023 upon completion of his tenure of 5 (five) years. ii. Other Directors / Key Managerial Personnel Mr. Sunil Sapre (DIN: 05356483) resigned as Whole time Director of the Company with effect from October 13, 2023 due to personal reasons. The Board appreciates the valuable contribution of Mr. Sunil Sapre during his tenure as Director of the Company.

The Board appointed/elevated Mr. Tirth Nath Singh (DIN: 08760833) from Head – Special Projects to Whole Time Director of the Company with effect from November 03, 2023. The appointment of Mr.Rs.Tirth Nath Singh was approved by members on January 03, 2024. However, to pursue new avenues Mr. Singh resigned from the Company effective from closure of business hours of May 3, 2024.

Ms. Kavita Shirvaikar retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

Some of the KMPs of the Company are also the Directors/KMPs of the subsidiaries.

Number of Board Meetings

During the year ended March 31, 2024, the Board met 5 times. The meeting of the Board of Directors of the Company was held on April 20, 2023, May 15, 2023, August 10, 2023, November 03, 2023 and February 12, 2024.

Nomination and Remuneration Policy

The Company has formulated a Nomination and Remuneration Policy pursuant to Section 178 of the Companies Act, 2013 and SEBI LODR Regulations. The salient features of the Policy are enclosed as Annexure II to the Boards Report.

Evaluation of the performance of the Board

Based on Boards Evaluation Policy, the performance of the Board of Directors, its Committees, Chairman, Executive Directors and Independent Directors were evaluated pursuant to the Provisions of Companies Act, 2013 and SEBI LODR Regulations. A separate meeting of independent Directors was held during the year under review wherein, the Independent Directors evaluated the performance of the non-independent directors, the Board as a whole and the Chairman of the Company.

Internal Financial Controls and Risk Management

The Company has in place adequate internal financial control with reference to financial statement. The Company ensures operational efficiency, protection and conservation of resources, accuracy in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process. Pursuant to SEBI (Listing Obligation and Disclosure Requirements) (Second Amendment) Regulations, 2021, the Risk Management Committee was reconstituted to frame, implement and monitor the risk management policy for the Company. The Committee shall be responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The

Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions shall be systematically addressed through mitigating actions on a continuing basis.

Audit Committee

The Audit Committee presently comprises of: Mr. K. Ramasubramanian - Independent Director (Chairman of the Committee) Mr. Rupen Patel – Chairman & Managing Director Mr. Ashwin Parmar – Independent Director

Whistle Blower Policy

The Company has adopted a Whistle Blower Policy to comply with the principles of Business Responsibility and Sustainability Reporting (BRS reporting) as amended by SEBI. The Policy provides a formal mechanism for director(s) /stakeholder(s) to report concerns about unethical behavior, actual or suspected fraud or violation of the Companys Ethics and Code of Conduct. The Policy is uploaded on the Companys website at the link https:// tinyurl.com/2sxkrt7t.

This Policy provides for adequate safeguards against victimization of Director(s) /stakeholder(s) and provides opportunity to director(s)/ stakeholder(s) to access in good faith, to the ABMS (Anti Bribery Management System) Committee in case they observe Unethical and Improper Practices or any other wrongful conduct in the Company. The vigil mechanism is overseen by the Audit Committee. There are no complaints / grievances received from any Directors/stakeholders of the Company under this policy.

Corporate Social Responsibility

In accordance with the provisions of Section 135 of the Companies Act, 2013 (the Act), the Board of Directors of the Company has constituted the Corporate Social Responsibility Committee (CSR Committee) comprising of the following Directors as its members: Mr. K. Ramasubramanian - Independent Director Ms. Kavita Shirvaikar - Whole time Director & CFO Mr. Ashwin Parmar - Independent Director The Companys CSR Policy as uploaded on the Companys website at the link: https://tinyurl.com/ptvdfbs3 Pursuant to Clause (o) of Sub-Section (3) of Section 134 of the Companies Act, 2013 and Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014, the CSR Report forms part of the Board Report as Annexure III. The Company has initiated spending on CSR activities as detailed in the CSR Report.

Statutory Audit

M/s Vatsaraj & Co. (FRN: 111327W), the Statutory Auditors of the Company hold office until the conclusion of the 78th AGM to be held in the year 2027. Pursuant to Section 141 of the Act, the Auditors have represented that they are not disqualified and continue to be eligible to act as the Auditor of the Company.

The Notes on financial statement referred to in the

Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer.

Branch Audit

In accordance with the provisions of Section 139 and 143(8) of the Companies Act, 2013 M/s. N. H. Karnesh & Associates has been appointed as Branch Auditor for the Realty Division of the Company for a term of 5 years to hold office until the conclusion of the 77th AGM to be held in the year 2026.

The Company has appointed M/s. G & A Associates,

Chartered Accountants, as Branch Auditor of the Company for Arun 3 H.E. Project, Nepal for FY 2023-24.

Secretarial Audit

The Board of Directors appointed M/s. MMJB & Associates LLP, Company Secretaries to conduct Secretarial Audit of the Company for the financial year ended March 31, 2024. The Report of the Secretarial Auditor is provided as Annexure IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remarks or disclaimer except one with respect to delay of 3 days in conducting Risk Management Committee Meeting.

As per Regulation 21(3C) of the SEBI LODR Regulations, 2015, the meetings of the risk management committee shall be conducted in such a manner that on a continuous basis not more than 180 days shall elapse between any two consecutive meetings.

The Company received an administrative warning letter from SEBI for violations of provisions of Regulation 21(3C) of the SEBI LODR Regulations, with respect to a gap of 183 days between two consecutive meetings of Risk Management Committee. The members may note that the violation was inadvertent and it will be ensured no such delays in holding any further meetings.

Cost Audit

As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant. The Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of M/s. Rahul Jain & Associates., a firm of Cost Accountants in Practice (Registration No. 101515) as the Cost Auditors of the Company to conduct cost audits under the Companies (Cost Records and Audit) Rules, 2014 for the year ended March 31, 2024. The Board on recommendations of the Audit Committee have approved the remuneration payable to the Cost Auditor subject to ratification of their remuneration by the Members at the forthcoming AGM. M/s Rahul Jain & Associates have, under Section 139(1) of the Act and the Rules framed thereunder furnished a certificate of their eligibility and consent for appointment.

The cost accounts and records of the Company are duly prepared and maintained as required under Section 148(1) of Act.

Prevention of sexual harassment of Women at workplace

The Company has a Policy on Prevention of Sexual Harassment of Women at Workplace. No cases were reported during the year under review. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Conservation of Energy, Technology

Absorption and Foreign Exchange Earnings/ Outgo

The particulars prescribed under Section 134 of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings / Outgo is provided as Annexure V to this Report.

Annual Return

Pursuant to Section 92 and 134 of the Act, the Annual Return as at March 31, 2024 in Form MGT-7, is available on the website of the Company at the link https://tinyurl. com/2wecsw42

Disclosure under Section 197 of the Companies Act, 2013

In accordance with the provisions of Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the particulars of the employees are set out in the annexure to this Report. In terms of the provisions of Section 136 of the Act, the Report is being sent to the Members of the Company excluding the annexure. Any member interested in obtaining a copy of the annexure may write to the Company Secretary at the Registered Office of the Company.

Further, disclosures on managerial remuneration as required under Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as Annexure VI to this Report.

Corporate Governance

Pursuant to SEBI LODR Regulations, the Report on Corporate Governance together with the certificate issued by M/s. Vatsaraj & Co., the Statutory Auditors of the Company, on compliance in this regard forms part of the Annual Report.

Employee Stock Option / General Benefits Scheme

The Company currently has two Schemes for its employees viz Patel Engineering Employee Stock Option Plan 2007 and Patel Engineering General Employee Benefits Scheme 2015.

The applicable disclosure under SEBI (Share Based Employee Benefits) Regulations, 2014 ("the ESOP Regulations") as at March 31, 2024 is uploaded on the Companys website at the link https://tinyurl.com/6snnd7z3. A Certificate from the Secretarial Auditors of the Company in terms of Regulation 13 of ESOP Regulations would be available at the ensuing AGM.

Other Disclosures

i) There are noRs.material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the Boards report. ii) No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Companys operations in future during the year under review. iii) The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details relating to deposits covered under Chapter V of the said Act or the details of deposits which are not in compliance with the Chapter V of the said Act is not applicable. The Company has accepted unsecured loan from a Director. iv) The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India. v) No fraud has been reported by the Auditors, to the Audit Committee and the Board. vi) The Company has not initiated any proceeding under the Insolvency and Bankruptcy Code, 2016 (IBC). There were 6 proceedings pending before the NCLT Mumbai during the FY 2023-2024. Out of which three (3) proceedings are pending for hearing and final disposal against our Company under IBC which do not materially impact the business of the Company. During April 2023- March 2024,Rs.1Rs.proceeding is settled and withdrawn, 2 proceedings are dismissed on merits.

Directors Responsibility Statement

Pursuant to Section 134 of the Companies Act, 2013, the Directors confirm that: i. in preparation of the annual accounts, the applicable accounting standards have been followed; ii. such accounting policies have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended March 31, 2024; iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv. the annual accounts have been prepared on a going concern basis; v. internal financial controls were followed by the Company and the same are adequate and were operating effectively; and vi. proper systems has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Business Responsibility and Sustainability Report

In terms of regulation 34(2)(f) of the Listing Regulations, 2015 read with SEBI circular no. SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated 12 July 2023 (‘the SEBI circular), the Company has included a detailed BRSR for the FY 2023-24 in the updated format prescribed by the SEBI circular as part of this Annual Report.

As a green initiative, the same has been hosted on Companys website and can be accessed at https://tinyurl. com/bdz2y3tp

Acknowledgements

The Board of Directors wish to place on record their appreciation for continued support and co-operation by Shareholders, Financial Institutions, Banks, Government Authorities and other Stakeholders. Your Directors would also like to take this opportunity to express their appreciation for the dedicated efforts of the employees of the Company.