Praj Industries Director Discussions


To

The Members of Praj Industries Limited,

Your Directors present their 37th Report together with the Audited Financial Statements for the year ended 31st March, 2023.

Financial Results (Standalone)

During the year under review, your Company has recorded total income of Rs.32,032 Mn. (previous year Rs. 21,140 Mn.), registering increase of 51.52% in total income. Profit after Tax increased by 44.53% to 2,376 Mn. (Previous year Rs.1,644 Mn.). The performance summary (standalone) is presented herewith:

Particulars 2022-23 2021-22
Turnover 31,526 20,623
Other Income 506 517
Total Income 32,032 21,140
Total Expenses 28,940 19,001
PBT 3,092 2,139
PAT 2,376 1,644
Other Comprehensive Income (20) (8)
Total Comprehensive Income 2,356 1,636
(+) Balance in Profit & Loss account 6,345 5,045
(+) INDAS Adjustments (ESOPs) -
(-) IND AS Adjustment (Adjustment to opening Retained Earnings -
– IND AS 115: Revenue Recognition
Profit Available for Appropriations 8,701 6,681
Appropriations
- Dividend 770 397
Transfer to / (from) Special Economic zone Re-investment Reserve -160 -61
Balance in Statement of Profit & Loss 8,090 6,345

State of Companys Affairs

Please refer Management Discussion & Analysis annexed to this report dealing with the state of Companys affairs at length. (Refer Annexure 1).

Summary of Consolidated Results

During the year, the Total Income stood at Rs. 35,738 Mn which is 50.19% more overlastyear(Rs.23,795Mn).Profitafter tax was

Rs. 2,398 Mn previous years figure (Rs 1,502 Mn) registering an increase of 59.65 % over last year. The performance summary is presented herewith:

( Mn)
Particulars 2022-23 2021-22
Turnover 35,280 23,433
Other income 458 362
Total income 35,738 23,795
Total expenses 32,551 21,746
PBT 3,187 2,049
PAT (after Minority Interest) 2,398 1,502
(+) Other Comprehensive Income -16 -22
Total Comprehensive Income 2,382 1,480

Dividend

The Board of Directors at its meeting held on 25th May, 2023 has recommended Dividend of Rs. 4.50/- per share (225%) of Face value of Rs. 2/- for the financial year 2022-23.

The dividend is payable subject to shareholders approval at the ensuing Annual General meeting (AGM). The final dividend pay-out, if approved by the shareholders in the ensuing AGM, will be around Rs. 826.71 Mn. The dividend pay-out is in line with the Companys Dividend Distribution Policy.

Dividend Distribution Policy

In accordance with the Regulation 43A of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure 9. The Policy is also hosted on the website of the Company and can be viewed at www.praj.net

Investor Education and Protection Fund (IEPF)

Pursuant to the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016, the Company has transferred unclaimed/ unpaid dividend of Rs.12,21,883/- pertaining to the financial year 2014-15 & Interim Dividend of

Rs. 15,25,700/- for the financial year 2015-16 to IEPF, on 21st September 2022 & 12th May, 2023 respectively. Further, the Company has also transferred corresponding 17,044 shares pertaining to the financial year 2014-15 to IEPF on 14th October 2022. The transfer of 36,374 shares pertaining to unclaimed dividend for the financial year 2015-16 is under process.

Details of Nodal Officer

Mr. Dattatraya Nimbolkar, Chief Internal Auditor and Company Secretary has been appointed as Nodal Officer of the Company.

Details in this regard are available on the website of the Company at www.praj.net

Reserves

The Company is not proposing any transfer to the General Reserve for the year 2022-23.

Credit Rating a) CRISIL has re-affirmed"A1+" rating to the Companys short-term banking facilities which signifies that the degree of safety regarding timely payment of instruments is very strong. b) CRISIL has also re-affirmed its rating of the Companys long-term bank facilities to "AA/stable.

The "AA/Stable" rating signifies high safety with regard to timely payment of long-term financial obligations

Subsidiaries

Praj Engineering & Infra Ltd. India, Praj HiPurity Systems Ltd. India, Praj Americas Inc., U.S.A., Praj Far East Co. Ltd., Thailand, Praj Far East Philippines Ltd. Inc., The Philippines, continue to be subsidiaries of your Company.

During the year, Company has formed Wholly Owned Domestic Subsidiary, Praj GenX Ltd. India, on 15th March, 2023.

Consolidated Financial Statements of the Company, which include the results of the said Subsidiary Companies, except Praj GenX Ltd., are included in this Annual Report. Since Praj GenX Ltd. has not yet started its operations, consolidation of its Financial

Statements is not done. Further, a statement containing the details of performance, financial position for each of the Companys subsidiaries in the prescribed format AOC-1 is also enclosed (Please refer Annexure 6). Copies of Annual Accounts and related detailed information of all the subsidiaries can also be sought by any member of the Company or its Subsidiaries by making a written request to the Company Secretary at the Registered Office of the Company in Subsidiary Companies are also available for inspection at the Companys and/or the concerned Subsidiarys Registered Office.

The Company has formulated a policy for determining ‘material subsidiaries and such policy is hosted on the Companys website i.e. www.praj.net

Corporate Governance

Pursuant to the provisions of Regulation 34 (2) & (3) and 53(f), read with Schedule V to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report (Annexure 1), Report on Corporate Governance and Compliance Certificate on Corporate Governance (Annexure 3), Business Responsibility & Sustainability Report (BRSR) (Annexure 8), Dividend Distribution Policy (Annexure 9) are annexed to this report.

Directors

Ms. Parimal Chaudhari (DIN 00724911) retired at 36th Annual General Meeting held on 4th August, 2022 and was re-appointed as Director of the Company.

Ms. Parimal Chaudhari (DIN 00724911) will retire at 37th Annual General Meeting and being eligible, has offered herself for re-appointment as Director of the Company.

Members at 36th Annual General Meeting held on 4th August, 2022 had approved extension of tenure of Dr Pramod Chaudhari (DIN 00196415) as an Executive Chairman for a period of 29 months w.e.f 1st August, 2022 till 31st December, 2024.

Members at 36th Annual General Meeting held on 4th August, 2022 had approved extension of tenure of Mr. Sachin Raole (DIN 00431438) as CFO & Director-Resources for a period of 5 years w.e.f 1st August, 2022 till 31st July, 2027.

Based on the recommendation of Nomination & Remuneration Committee, Board at its meeting held on 3rd February, 2023, has approved re-appointment of Mr. Shishir Joshipura (DIN 00574970) as a CEO & Managing Director for a period of 27 months w.e.f 1st April, 2023 till 30th June, 2025, subject to approval of Shareholders at 37th Annual General Meeting.

Based on the recommendation of Nomination & Remuneration Committee, Board vide Circular Resolution No. CIR/BM/01/2023-24, has approved re-appointment of Dr Shridhar Shukla (DIN 00007607) as an Independent Director of the company for a further period of 5 years w.e.f 12th April, 2023 till 11th April. 2028, subject to approval of Shareholders at 37th Annual General Meeting by way of Special Resolution.

Composition of Key Managerial Personnel (KMP)

The Company has the following KMPs as on 31st March 2023;

Name of the KMP Designation Date of Appointment Date of Resignation
Dr Pramod Chaudhari Executive Chairman 08.11.1985 N.A.
Mr. Shishir Joshipura

Chief Executive Officer & Managing Director 02.04.2018 N.A.

Mr. Sachin Raole CFO & Director- Resources 13.07.2016 N.A.
Mr. Dattatraya Nimbolkar Chief Internal Auditor & Company Secretary 22.07.2011 N.A.

Composition of Audit, Nomination & Remuneration Committee

For details, kindly refer the Corporate Governance Report annexed to this Report (Annexure 3).

Declaration from Independent Directors

The Independent Directors have submitted their annual declaration to the Board confirmingthat they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 read with rules framed there under.

Auditors a) Statutory Auditors

Current tenure of P G BHAGWAT LLP, Chartered Accountants, Pune (Firm Regn. No. 101118W/W100682), Statutory Auditors of the Company will expire on the date of 39th Annual General Meeting to be held in the calendar year 2025.

b) Internal Auditors

The Internal Auditors, Khare Deshmukh & Co., Chartered Accountants, Pune have conducted internal audits periodically during Financial Year 2022/23 and submitted their reports to the Audit Committee. Their reports have been reviewed by the Statutory Auditors and the Audit Committee.

The Board has appointed Khare Deshmukh & Co., Chartered Accountants Pune, as Internal Auditors of the Company for the Financial Year 2023-24.

c) Cost Auditors

Your Company has appointed Dhananjay V. Joshi & Associates, Cost Accountants as Cost Auditors of the Company for the Financial Year 2023-24 at the remuneration as set out in item No. 5 of the explanatory statement which is subject to the ratification of members in the ensuing Annual General Meeting.

d) Secretarial Auditors

M/s KANJ & Co., LLP, Pune, were appointed to conduct the Secretarial Audit of the Company for the Financial Year 2022-23, as required under Section 204 of the Companies Act, 2013 read with rules framed thereunder. The Secretarial Audit Report (MR-3) for Financial Year 2022-23 forms part of the Annual Report as Annexure 5.

The Board has appointed M/s KANJ & Co. LLP, Pune, as Secretarial Auditors of the Company for the Financial Year 2023-24.

Material changes and commitments, if any, affecting the financial position of the Company those occurred between the end of the financial year to which these financial statements relate and the date of

There were no material changes and commitments, affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of

Statement concerning development and implementation of Risk Management Policy of the Company.

In accordance with the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, (LODR) the Board has amended Risk Management Policy and initiated necessary steps for framing, implementing and monitoring the risk management plan for the Company.

Based on market capitalization rank as on 31st March 2023, provisions of Regulation 21 of SEBI (LODR), Regulations 2015, as amended from time to time, are applicable to the Company for the Financial Year 2023-24. As per amended Regulation 21 of SEBI LODR Regulations, it is mandatory for the Company to constitute Risk Management Committee. However, Company had already constituted Risk Management Committee at its Board Meeting held on 16th May 2019. The main objective of Risk Management policy is to ensure sustainable business growth and to promote a pro-active approach in identifying, reporting, evaluating and mitigating risks associated with the business of the Company. The policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues.

In todays challenging and competitive environment, strategies for mitigating inherent risks associated with business and for accomplishing the growth plans of the Company are imperative. The common risks inter alia are risks emanating from; Regulations, Cyber Risks, Competition, Business, Technology obsolescence, Investments, Retention of talent, Finance, Politics and Fidelity etc. In todays complex business environment, Cyber risks have considerably increased. During the year, we continued our efforts to keep ourselves up to date with cyber security events globally to achieve higher compliance and its continued sustenance. As a matter of Risk Management Policy, these risks are assessed and steps, as appropriate, are taken to mitigate the same. The Amended Risk Management Policy is hosted on the Companys website i.e.www.praj.net The Company has instituted adequate Internal Controls and processes to have a cohesive view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities.

In the opinion of the Board, there are no risks which may threaten the existence of the Company.

Internal Financial Controls:

The Company has in place, adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Remuneration Policy for Directors and KMPs:

The Companys remuneration policy for Directors / KMPs is directed towards rewarding performance based on periodical review of achievements. The remuneration policy is in consonance with the existing industry practice.

The said policy is available on Companys website i.e. www.praj.net and is also attached as Annexure 7 to this report.

ESOP:

During the year, your Company allotted 40,000 shares on exercise of options under the Employee Stock Option Plan 2011. Consequent to the above, the Issued, Subscribed and Paid-up Share Capital of your Company increased from 183,673,088 (number of shares) (Value Rs.367.346 Mn.) as of 31st March, 2022 to 183,713,088 (number of shares) (Value Rs.367.426 Mn.) as of 31st March, 2023.

Please refer Annexure 4 to this report for the particulars required to be disclosed pursuant to Rule 12 (2) of the Companies (Share

Capital and Debentures) Rules, 2014 and Clause 14 of SEBI (Share Based Employee Benefits) Regulations, 2014.

Vigil Mechanism / Whistle Blower Policy:

To ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the Company has adopted a Vigil Mechanism/ Whistle Blower Policy. This policy is explained in Corporate Governance Report and is also hosted on the website of Company at www.praj.net.

Details of policy developed and implemented by the Company on its Corporate Social Responsibility initiatives:

Kindly refer Annexure 2 to this Report.

Particulars of loans, guarantees or investments made under section 186 of the Companies Act, 2013:

Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. (Please refer Note No 5 & 26 to the Standalone Financial Statements).

Contracts and arrangements with Related Parties:

All contracts / arrangements / transactions entered by the Company during the Financial Year 2022-23 with related parties were in the ordinary course of business and on an arms length basis. Such transactions form part of the notes to the financial provided in this Annual Report. (Please refer Note No 29 to the Standalone Financial Statements).

During the year, the Company has not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions which is available on the Companys website at www.praj.net