PPAP Automotive Ltd Directors Report.

Dear Members,

PPAP Automotive Limited

Your directors have pleasure in presenting the Twenty Seventh Annual Report of PPAP Automotive Limited ("Company") along with the audited financial statements and the auditors report thereon for the year ended 31st March, 2022.

Financial highlights and state of Companys affairs

The financial performance of the Company for the year ended 31st March, 2022, on a standalone and consolidated basis, is summarized below:

(Rs. in lacs)

Particulars For the year ended
Standalone Consolidated
31st March, 2022 31st March, 2021 31st March, 2022 31st March, 2021
Revenue from Operations (net of excise) 40,907.21 32,118.27 42,191.73 32,219.75
Other Income 199.65 264.93 99.78 209.51
Profit / loss before Depreciation, Finance Costs, Exceptional items and Tax Expense 4,104.59 3,635.65 3,610.31 3,347.98
Less: Depreciation / Amortization / Impairment 2,895.09 2,632.44 2,946.85 2,646.67
Profit / loss before Finance Costs, Exceptional items and Tax Expense 1,209.50 1,003.21 663.46 701.31
Less: Finance Costs 598.30 369.35 650.53 378.30
Profit / loss before Tax Expense 611.20 633.86 12.93 323.01
Less: Tax Expense (Current & Deferred) 152.38 150.25 91.77 113.26
Profit / loss for the year 458.82 483.61 (78.84) 209.75
Other Comprehensive Income / loss (11.58) 73.69 (11.01) 78.10
Total 447.24 557.30 (89.85) 287.85

Dividend

The Board of Directors of the Company are pleased to recommend a final dividend of 1.5 per equity share (15%) of face value of 10 (Rupees ten) each subject to the approval of shareholders at the ensuing Annual General Meeting ("AGM").

In terms of the provisions of the Income Tax Act, 1961, as amended by the Finance Act, 2020, dividend paid or distributed by a company on or after 1st April, 2020 is taxable in the hands of the shareholders. The tax shall be deducted at the rates prescribed under the Income Tax Act, 1961, as amended, which varies based upon the category and residential status of the shareholder. Shareholders are requested to update their residential status, KYC including PAN with their depository participants, in case of shares held in demat mode and with the Registrar and Share Transfer Agent of the Company, in case the shares are held in physical mode for determining the applicable rate of tax deducted at source.

Transfer to reserves

During the year under review, no amount has been transferred to general reserve of the Company.

Change in the nature of business

During the year under review, there was no change in the nature of business of the Company.

Share capital

The authorized share capital of the Company is 20,00,00,000 ( Twenty Crores) comprising of 2,00,00,000 (Two Crores) equity shares of 10 each. The issued, subscribed and paid-up share capital of the Company is 14,00,00,000 ( Fourteen Crores) comprising of 1,40,00,000 ( One Crore Fourty Lakhs) equity shares of 10 each. During the year under review, there is no change in share capital of the Company.

Deposits

Your Company has not accepted any deposit within the meaning of provisions of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 for the year ended 31st March, 2022.

Technical collaboration

The Company has technical collaborations with Tokai Kogyo Co. Limited, Japan; Nissen Chemitec Corporation, Japan; and Tokai Kogyo Seiki Co. Limited, Japan.

The technology partners of your Company have extended their continuous support in terms of new product development, innovations, design, latest technology, quality, productivity, safety, etc. as per the needs of your Company.

Annual return

The annual return of your Company as on 31st March, 2022, in accordance with section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is available on your Companys website at https://www. ppapco.in/assets/pdf/annual_reports/Annual_return_MGT-7.pdf.

Meetings of the Board of Directors

The Board of Directors met five times during the financial year 2021-22, the details of which are given in the corporate governance report that forms part of this annual report. The intervening gap between every two meetings during the year under review were in compliance with the period prescribed under the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

Audit committee

The purpose of audit committee is to oversee the quality and integrity of accounting, auditing and financial reporting processes including reviewing of the Companys statutory and internal audit reports. The audit committee is provided with all the necessary documents and information to carry out its function effectively. All the members of the audit committee have the requisite financial, legal and management expertise.

The details of composition of the audit committee, its terms of reference and the number of meetings held during the year under review, are given in the corporate governance report that forms part of this annual report.

Directors and key managerial personnel

In accordance with the provisions of the Companies Act, 2013 and in terms of Articles of Association of the Company, Mrs. Vinay Kumari Jain (DIN: 00228718), Director of the Company retires by rotation and being eligible, offer herself for re-appointment at the 27th Annual General Meeting.

Mr. Abhishek Jain (DIN: 00137651), Chief Executive Officer and Managing Director of the Company was reppointed by the shareholders in the last AGM w.e.f. 1st April, 2022.

Mrs. Celine George, Independent Direction was reappointed by the shareholders in the last AGM for second term of five consecutive year w.e.f. 16th April, 2022 upto 15th April, 2027.

Mrs. Sonia Bhandari, Company Secretary of the Company has resigned w.e.f. 18th September, 2021.

The Board of Directors upon recommendation of Nomination and Remuneration Committee appointed Mrs. Shivani Sehgal as Company Secretary of the Company w.e.f. 12th November, 2021.

Mrs. Shivani Sehgal, Company Secretary of the Company has resigned w.e.f. 25th April, 2022.

The Board of Directors upon recommendation of Nomination and

Remuneration Committee appointed Ms. Pankhuri Agarwal as Company Secretary of the Company w.e.f. 13th May, 2022.

The disclosure as required under the provisions of the Companies Act, 2013, read with Secretarial Standards issued by Institute of Company Secretaries of India and Listing Regulations forms part of the Notice convening AGM.

Declaration by independent directors

The Company has received declarations from all the independent directors of the Company confirming that they meet with criteria of independence as prescribed under section 149(6) of the Companies Act, 2013 and the Listing Regulations. Further, all the Independent Directors have registered their names in the data bank maintained and managed by Indian Institute of Corporate Affairs.

During the year, the Independent Directors of your Company had no pecuniary relationship or transactions with your Company other than sitting fees accrued to them for attending meetings of the Board and its committee(s).

The terms and conditions of appointment of the Independent Directors are placed on the website of the Company under the link: https://www.ppapco.in/assets/pdf/policies/Template_for_ appointment_ofJndependent_Director.pdf

Directors responsibility statement

In terms of and pursuant to section 134(3)(c) of the Companies Act, 2013, as amended from time to time, in relation to the financial statements for the year ended 31st March, 2022, to the best of their knowledge and belief your Directors confirm the following:

i. that in the preparation of annual accounts for the financial year ended 31st March, 2022, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

ii. that the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a "true and fair view" of the state of affairs of the Company as at 31st March, 2022 and of the profit and loss of the Company for the financial year ended 31st March, 2022;

iii. that the 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. that the annual accounts for the financial year ended 31st March, 2022 have been prepared on a "going concern basis";

v. that the internal financial controls are adequate and are operating effectively; and

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

Compliance with secretarial standards

Your Company has complied with the applicable secretarial standards issued by the Institute of Companies Secretaries of India (SS-1 and SS-2) respectively relating to meetings of the Board and its committees and general meetings.

Evaluation of the Boards performance

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board of Directors has carried out annual evaluation of its own performance, Directors, Chairman and its committees. The manner in which the evaluation has been carried out is given in the corporate governance report that forms part of this annual report

Nomination and remuneration policy

The remuneration paid to the Directors is in accordance with the nomination and remuneration policy formulated in accordance with section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re- enactment(s) thereof for the time being in force).

The nomination and remuneration policy is available on the website of the Company at https://www.ppapco.in/assets/pdf/policies/ Nomination_Remuneration_Policy.pdf.

The salient aspects covered in the nomination and remuneration policy have been given hereunder:

In accordance with the nomination and remuneration policy, the nomination and remuneration committee has, inter alia, the following responsibilities:

1. Ensure appropriate induction and training program: The committee shall ensure that there is an appropriate induction and training program in place for new Directors, Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) and review its effectiveness.

2. Formulating the criteria for appointment as a Director: The committee shall formulate criteria and review it on an ongoing basis, for determining qualifications, skills, experience, expertise, qualities, attributes, etc. required to be a Director of the Company.

3. Identify persons who are qualified to be Directors / Independent Directors / KMPs / SMPs: The committee shall identify persons who are qualified to become Directors / Independent Directors / KMPs / SMPs and who satisfy the criteria laid down under the provisions of the Companies Act, 2013, Rules made thereunder, the Listing Regulations or any other enactment, for the time being in force.

4. Nominate candidates for Directorships subject to the approval of the Board: The committee shall recommend to the Board the appointment of potential candidates as Non-Executive Director or Independent Director or Executive Director, as the case may be.

5. Evaluate the performance of the Board: The committee shall determine a process for evaluating the performance of the Board, Director, Chairman and Committees of the Board, on an annual basis.

6. Remuneration of Managing Director / Directors: The committee shall ensure that the tenure of Executive Directors and their compensation packages are in accordance with applicable laws and in line with the Companys objectives, shareholders interests and benchmarked with the industry.

7. Review performance and compensation of Independent Directors: The committee shall review the performance of Independent Directors of the Company. The committee shall ensure that the Independent Directors may receive remuneration by way of sitting fees for attending the meetings of Board or committee(s), thereof provided that the amount of such fees shall be subject to ceiling / limits as provided under the Companies Act, 2013 and Rules made thereunder or any other enactment, for the time being, in force.

8. Review performance and compensation of KMPs / SMPs: The committee shall ensure that the remuneration to be paid to KMPs / SMPs shall be based on their experience, qualifications and expertise and governed by the limits, if any, prescribed under the Companies Act, 2013 and Rules made thereunder or any other enactment, for the time being, in force.

9. Directors and Officers Insurance: The committee shall ensure that the insurance taken by the Company on behalf of its Directors, KMPs / SMPs either for indemnifying them against any liability or any other matter as may be deemed fit, the premium paid on such insurance, shall not be treated as part of the remuneration payable, to any such personnel.

10. Succession plans: The committee shall address and review sufficiently in advance the succession plans in order to ensure smooth transition and maintain an ideal balance of skills, experience and expertise on the Board.

11. Evaluation of Independent Director: For every appointment of an independent director, the Nomination and Remuneration Committee shall evaluate for the balancing the holistic set of skills, knowledge, wisdom, and experience on the Board. Based on such evaluation, prepare the role and responsibilities, qualifications, and capabilities required of an incoming independent director. The person recommended to the Board for appointment as an independent director shall have the capabilities identified in such description. To identify suitable candidates, the Committee may:

a) use the services of an external agencies,

b) consider candidates from a wide range of backgrounds having due regard to diversity and,

c) consider the time commitments of the candidates.

Particulars of employees

The information required under section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) in respect of Directors / employees of the Company, annexed as ‘Annexure-D to this report.

Subsidiary, joint venture and associate companies

During the year 2021-22 no company has become or ceased to be subsidiary, joint venture or associate of the Company.

The Company has two subsidiary companies and a joint venture company. Elpis Components Distributors Private Limited and PPAP Technology Limited (formerly PPAP Technology Private Limited) are wholly owned subsidiary companies of the Company. PPAP Tokai India Rubber Private Limited is a joint venture company of the Company.

A statement containing the salient features of the financial statements of subsidiary / associate / joint venture company, as per section 129(3) of the Companies Act, 2013, is part of the consolidated financial statements. The audited financial statements of the wholly owned subsidiary companies have been placed on the website of the Company.

Corporate governance report

Your Company is committed to maintain high standards of corporate governance and adhere to the corporate governance requirements set out under the Listing Regulations. The Company constantly strive to evolve and follow up on the corporate governance guidelines and its best practices.

The compliance report on corporate governance and a certificate from M/s NKJ & Associates, Company Secretaries, regarding the compliance of the conditions of corporate governance, as stipulated under Chapter IV of the Listing Regulations, is annexed to this annual report.

Management discussion and analysis report

As required under Regulation 34(2) of the Listing Regulations, a detailed management discussion and analysis report is annexed to this annual report.

Business responsibility and sustainability report

The Company has provided Business responsibility and sustainability report (BRSR) based on the National Guidelines on Responsible Business Conduct describing initiatives undertaken from an environmental, social and governance perspective.

Material changes and commitments affecting financial position between end of the financial year and date of report

There has been no material change and commitment, affecting the financial performance of the Company which occurred between the end of the financial year of the Company to which the financial statements relate and the date of this report

Particulars of loans, guarantees and investments

During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of section 186 of the Companies Act, 2013. However, details of investments made during the year, are given under Note no. 7 of the standalone financial statements of the Company.

Related party transactions

During financial year 2021-22, all contracts / transactions entered by your Company with related parties under section 188(1) of the Companies Act, 2013 were in the ordinary course of business and on an arms length basis. During financial year 2021-22, your Company has not entered into any contracts / arrangements / transactions with related parties which could be considered ‘material in accordance with its policy on materiality of related party transactions. Thus, there are no transactions required to be reported in Form AOC-2.

The details of the related party transactions as per Ind AS-24 are set out in Note no. 40 to the standalone financial statements of the Company.

Auditors and Auditors report

• Statutory auditors

O P Bagla & Co. LLP (Registration No. 000018N / N500091), Chartered Accountants, New Delhi, has been reappointed as the statutory auditors of the Company at the 23rd AGM held on 23rd August, 2018, for the period of five years i.e. up to the conclusion of the 28th AGM to be held in the year 2023. Pursuant to section 139 and 141 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules 2014, O P Bagla & Co. LLP has furnished a certificate of their eligibility and consent as the Auditors of the Company.

Statutory auditors report

The Auditors report does not contain any qualification, reservation(s) or adverse remark(s). The notes on financial statements referred to in the auditors report are selfexplanatory and do not call for further comments.

• Secretarial auditors

Pursuant to the provisions of section 204 of the Companies Act, 2013 and rules framed thereunder, M/s NKJ & Associates, Practicing Company Secretaries were appointed as secretarial auditors of the Company for the financial year 2021-22.

The secretarial audit report for the financial year 31st March, 2022 in form MR-3 is attached as ‘Annexure- B to this report.

Further, in terms of the provisions of the Circular No. CIR/CFD/ CMD1/27/2019 dated 8th February, 2019 issued by Securities and Exchange Board of India ("SEBI"), the Company has obtained the annual secretarial compliance report for the year ended 31st March, 2022, thereby confirming compliance of the applicable SEBI Regulations and circulars / guidelines issued thereunder, on behalf of the Company.

Secretarial auditors report

The report of secretarial auditors, part of this annual report does not contain any qualification(s), reservation(s) or adverse remark(s) or disclaimer in the said report.

• Cost auditors

The Board of Directors, on recommendation of the audit committee, appointed M/s Rakesh Singh & Co., Cost Accountants, (Registration No. 000247) as cost auditors to audit the cost accounts of the Company for the financial year 2022-23 pursuant to the provisions of section 148 of the Companies Act, 2013. The remuneration payable to the cost auditors is required to be ratified by the shareholders at the AGM. Accordingly, resolution ratifying the remuneration payable to M/s Rakesh Singh & Co., Cost Accountants, (Registration No. 000247) shall be placed for the approval of the shareholders at the 27th AGM.

The Company has maintained the necessary accounts and records as specified by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013.

The Company had filed the cost audit report for financial year 2020-21 on 1st September, 2021, in compliance under the Companies (Cost Records and Audit) Amendment Rules, 2014.

Reporting of frauds by auditors

During the year under review, the auditors of the Company have not reported to the audit committee, under section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers and employees.

Corporate social responsibility

Your Company has been taking initiatives under Corporate Social Responsibility (CSR) for the society at large. The Company has a well-defined policy on CSR as per the requirement of section 135 of the Companies Act, 2013.

During the year, your Company thrives to constantly contribute towards the betterment of the local community in which it operates and the upliftment of the marginalised section of our society, through "Vinay and Ajay Jain Foundation", a registered trust for focused implementation of CSR activities of the Company majorly in the field of environment, education and health.

The CSR Policy is also available on the website of the Company and can be accessed by web link https://www.ppapco.in/assets/ pdf/policies/Corporate_Social_Responsibility_Policy.pdf CSR report, pursuant to section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014, annexed as ‘Annexure- C to this report.

Risk management

The Company has established risk management framework that enables regular and active monitoring of business activities for identification, assessment and mitigation of potential internal or external risks. The respective functional / business head(s) are entrusted with the responsibility of identifying, mitigating and monitoring of risk in their respective areas. Risk management forms an integral part of the management and is an ongoing process integrated with the operations.

The Company has a risk management policy for identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company. The Companys risk management processes focus on ensuring that risks are identified promptly, and mitigation action plan is formulated and executed timely.

Policy on sexual harassment of women at workplace

The Company values the dignity of individuals and strives to provide a safe and respectable work environment to all its employees. The Company is committed to providing an environment, which is free of discrimination, intimidation, and abuse.

Your Company has in place a policy on prevention of sexual harassment at workplace. This policy is in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Company has constituted Internal Complaints Committees at various locations as per requirement of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 for redressal of complaints relating to sexual harassment against woman at workplace.

During the year under review, the Company has not received any complaint on sexual harassment.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future

No significant and material orders have been passed during the year under review by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

Details on internal financial controls related to financial statements

Your Company has a robust and well embedded system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and all financial transactions are authorized, recorded and reported correctly.

The internal auditors evaluate the efficacy and adequacy of the internal control system, its compliance with operating systems and policies of the Company at all the locations of the Company. Based on the report of internal audit function, the process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions, thereon, are reported to the audit committee.

The Company has an effective and reliable internal financial control system commensurate with the nature of its business, size and complexity of its operations.

This also identifies opportunities for improvement and ensures good practices imbibed in the processes that develop and strengthen the internal financial control systems and enhance the reliability of Companys financial statements.

The audit committee reviews the internal audit plan, adequacy and effectiveness of the internal control system.

Whistle blower policy

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated whistle blower policy which is in compliance with the provisions of section 177(9) of the Companies Act, 2013 and Regulation 22 of the Listing Regulations.

The whistle blower policy provides a vigil mechanism for the Director / employee to report, without fear of victimization, any unethical behavior, suspected or actual fraud, violation of the code of conduct of the Company, etc. which are detrimental to the organizations interest and reputation. The mechanism protects whistle blower from any kind of discrimination, harassment, victimization or any other unfair employment practice.

The Directors and employees in appropriate or exceptional cases have direct access to the Chairman of the audit committee.

The said policy is placed on the website of the Company at www.ppapco.in.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The information as required under section 134(3)(m) of the the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, annexed as ‘Annexure- D to this report.

Acknowledgements

The Directors place on record their appreciation for the hard work and valuable contribution made by every member of PPAP family.

Your Directors are thankful to your technology partners, suppliers, as well as vendors, our shareholders, business associates, banks, financial institutions for their continued support and for the confidence reposed in the Company.