Precision Camshafts Ltd Directors Report.

To

The Members of

PRECISION CAMSHAFTS LIMITED

Your Directors are pleased to present the TWENTY EIGHTH ANNUAL REPORT and the Audited Standalone and Consolidated Financial Statements for the year ended 31st March, 2020.

1. FINANCIAL RESULTS

The Companys financial performance for the year under review along with previous years figures is given hereunder:

(Rs. in Lakhs)

Financial Results

Standalone

Consolidated

For the Year ended 31st March, 2020 For the Year ended 31st March, 2019 For the Year ended 31st March, 2020 For the Year ended 31st March, 2019
Total Revenue (I) 45,836.37 43,154.07 76,365.48 70,472.76
Total Expenses (II) 34,324.12 32,506.40 63,415.25 56,910.18
Earnings before interest, tax, depreciation and amortisation (EBITDA) 11,512.75 10,647.67 12,950.23 13,562.58
Profit Before Tax & Exceptional Items 66,97.48 65,71.45 3,801.96 5,672.07
Exceptional items 18,67.66 0.00 (215.63) (2,734.59)
Profit before tax 8,565.14 6,571.45 3,586.33 2,937.48
Total Tax Expenses 1,359.82 2,280.16 984.47 2,117.05
Profit for the year 7,205.32 4,291.30 2,563.33 707.39
EPS (Basic) 7.59 4.52 3.68 1.21
EPS (Diluted) 7.58 4.52 3.68 1.21

The above-mentioned figures are extracted from financial statements prepared in accordance with the Indian accounting Standards (IND AS).

2. COMPANYS FINANCIAL PERFORMANCE

During the Financial Year under review, on Standalone basis, your Company registered a total revenue of 45,836.37 Lakhs as against 43,154.07 Lakhs in the previous year. The profit after tax for the year stood at 7,205.32 Lakhs as against 4,291.29 Lakhs in the previous year. Your Company reported increase in top-line by 6.22 % over the previous year.

On Consolidated basis, total revenue was 76,365.48 Lakhs as against 70,472.76 Lakhs in the previous year. The profit after tax for the year stood at 2,563.33 Lakhs as against 707.39 Lakhs in the previous year. Your Company reported increase in top-line by approx 8.36 % over the previous year.

During the period ended 31st March, 2019, the Directors of the Company confirmed their intention to sell the shares of investment in its Joint Ventures, Ningbo Shenglong PCL Camshafts Co. Ltd. and PCL Shenglong (Huzhou) Specialised Casting Co. Ltd., collectively referred to as the "Disposal Group" as a result, the Company had classified the "Disposal Group" as held for sale in accordance with Ind AS 105 – Non Current Assets held for sale and discontinued operations. The sale is completed for above mentioned entities and the proceeds are realised on 18th June, 2020.

There was no change in the nature of the Business of Company or any of its subsidiary Companies.

3. TRANSFER TO RESERVES

TheclosingbalanceoftheretainedearningsoftheholdingCompanyforFY2019-20,after all appropriation and adjustments was 33,229.62 Lakhs

4. DIVIDEND

The Board of Directors has declared Interim Dividend of 0.95/- (9.5%) per Equity Share of Face Value of 10/- each in the board meeting held on the 5th March, 2020. Interim Dividend Payment was paid online on 26th March,2020

Based on Companys performance and Due to Covid 19 pandemic, the Directors recommend Interim Dividend as Final Dividend for the Financial year ended 31st March 2020.

In accordance with Regulation 43A of the SEBI (LODR) Regulations 2015 the Company has formulated a Dividend Distribution Policy. The Dividend Distribution Policy of the Company is also hosted on the website of the Company and can be viewed at www.pclindia.in.

5. SHARE CAPITAL

During the year under review, your Company has not allotted any Equity Shares under the exercise of stock options under Precision Camshafts Limited Employee Stock Option Scheme 2015 ("PCL ESOS 2015"). Therefore there was no change in the Capital Structure of the Company. Consequently, the issued, subscribed and paid-up equity share capital of the Company is 9498.58 Lakhs divided into 9,49,85,835 Equity Shares of 10/- each.

6. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Changes in the Composition of Board of Directors of the Company:

As per Regulation 17(1)(a) of SEBI (LODR) Regulations, 2015, the Board of Directors of the top 1,000 listed entities shall have at least one Independent Woman Director by April 1, 2020. Mrs. Savani A. Laddha (DIN: 03258295) was appointed as Independent Woman Director (Additional Director) w.e.f. 10th February 2020 in compliance with SEBI (LODR) Regulations, 2015, Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel (KMP) of your Company as on 31st March, 2020 are as mentioned below:-

Mr. Yatin S. Shah Chairman and Managing Director
Mr. Ravindra R. Joshi Whole-time Director and Chief Financial Officer
Mr. Karan Y. Shah Whole-time Director – Business Development
Mrs. Mayuri I. Kulkarni Company Secretary & Compliance Officer

As on 31stMarch, 2020 Non- Executive Directors on the Board are as mentioned below: -

Dr. Suhasini Y. Shah Non- Executive Non-Independent Woman Director
Mr. Sarvesh N. Joshi Independent Director
Mr. Pramod H. Mehendale Independent Director
Mr. Vedant V. Pujari Independent Director
Mr. Vaibhav S. Mahajani Independent Director
Mrs. Savani A. Laddha Independent Woman Director

7. DECLARATION FROM INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criterion of Independence as prescribed under Section 149 (6) of the Companies Act, 2013 and Regulation 16 of SEBI (LODR) Regulations, 2015.

The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act as well as the Code of Conduct for Directors and Senior Management Personnel.

During the year, Independent Directors of the Company had no pecuniary relationship or transactions with the Company, other than commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board of

Director and its Committees. The details of remunerations and/or other benefits of the Independent Directors are mentioned in the Corporate Governance Report.

8. BOARD MEETINGS

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. The notice of Board meeting is given well in advance to all the Directors. The Agenda of the Board / Committee meetings is set by the Company Secretary in consultation with the Chairman and Managing Director and Chief Financial Officer of the Company. The Agenda for the Board and Committee meetings covers items set out as per the regulations in SEBI (LODR) Regulation, 2015 and companies Act, 2013 to the extent it is relevant and applicable. The Agenda for the Board and Committee meetings include detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision. During the year, 5 (Five) Board Meetings were convened and held on 27th May 2019, 13th August 2019, 5th November 2019, 10th February 2020 and 5th March 2020.

The maximum interval between any two meetings was well within the maximum allowed gap of 120 days.

9. MEETING OF INDEPENDENT DIRECTORS

In compliance with the provisions of Schedule IV of the Companies Act, 2013 and Regulation 25(3) of SEBI (LODR) regulation 2020, a meeting of Independent Directors was held on 10th February, 2020 to review the performance as per Regulation 25(4) of SEBI (LODR) regulation 2015 and Schedule IV of the Companies Act, 2013. The Independent Directors of the Company at their meeting held on 10th February, 2020 expressed satisfaction on the quality, quantity and timeliness of flow of information between the Company Management and the Board. All other Independent Directors were present at the meeting.

Note: Mrs. Savani Arvind Laddha, was appointed at the Board Meeting held on 10th February, 2020 Board Meeting, after Independent Director Meeting was held at the same Day hence she was not entitled to attend Independent Directors Meeting.

10. CONTRIBUTION OF INDEPENDENT DIRECTORS TO THE GROWTH OF THE COMPANY

The Board of Directors of the Company strategically comprises of Independent Directors from different domains which adds value to the Company. Every Independent Director with his expertise and integrity has earned a vast experience and reputation in the industry. Our Independent Directors are experts in Finance, Company Laws, Information Technology, Commercial Laws and Audit. These domains are integral part of every business and therefore the collective expertise of these board members ensure that we are up to the mark with the global leaders in terms of ethics, corporate governance, best industry practices, transparency and technology.

The online proficiency self-assessment test of Independent Directors conducted by Indian Institute of Corporate Affairs ensures that the skills and knowledge is appropriate and beneficial to the Company. Few of our Independent Directors have successfully passed the test. Others are yet to appear for the test since the time limit for the online proficiency self- assessment test is one year from the date of inclusion of name in Independent Director Databank.

11. SUBSIDIARIES AND ACQUISITIONS

The Company has 2 (Two) subsidiaries, 2 (Two) step down subsidiaries as on 31st March,2020.

(a) PCL (INTERNATIONAL) HOLDINGS B.V. ("PCL Netherlands") – Wholly Owned Subsidiary

PCL (International) Holdings B.V. is a Wholly Owned Subsidiary of the Company in Netherlands. The existing customer base of the Company is predominantly located in Europe to facilitate and coordinate between company and customers, PCL (International) Holdings B.V. was formed. Other objective of having PCL (International) Holding B.V. is to monitor the performance and reporting of subsidiaries centrally.

(b) MEMCO ENGINEERING PRIVATE LIMITED ("MEMCO") – Wholly Owned Subsidiary

MEMCO Engineering Private Limited is a Wholly Owned Subsidiary of the Company. It is engaged in the business of manufacturing fuel injection components for conventional CRDi diesel engines, brake components, high pressure diesel injector connectors for naval ships and high precision instrumentation components. MEMCO enjoys long term relationships with marquee global customers like Bosch, Delphi, Endress Hauser and Giro. For the financial year ended 31st March, 2020 the revenue from operations stood at 4,071 Lakhs as against 4,722 Lakhs for previous year. The profit after tax stood at 160 Lakhs as against 347 Lakhs for previous year.

(c) MFT MOTOREN UND FAHRZEUGTECHNIK GMBH ("MFT") – Step Down Subsidiary

Your Company through its Wholly Owned Subsidiary, [PCL (International) Holdings B.V. Netherlands ("PCL, Netherlands")] acquired 76% Shares in M/s MFT Motoren und Fahrzeugtechnik GmbH, Germany ("MFT") on 23rd March, 2018 for 2,500 Lakhs ( EUR 31,26,018). Further, the Board at its Board Meeting held on 5th March, 2020 has approved the fund infusion in PCL, Netherlands to acquire the balance 24% of MFT. Post acquisition MFT shall become the Wholly OwnedStep-Down Subsidiary of PCL (Precision Camshafts Limited).

MFT is engaged in the business of manufacturing Balancer Shafts (i.e. Fully Machined, hardened and balanced vertical and horizontal Balancer shafts), Camshafts, Bearing Caps, Engine Brackets and Prismatic Components (i.e. brake and chassis components, machining of all casting materials). MFT enjoys long term relationship with marquee global customers like Volkswagen, Audi, Opel, Westphalia, Hatz, Suzuki etc.

(d) EMOSS MOBILE SYSTEMS B.V. ("EMOSS") – Step Down Subsidiary

Your Company through its Wholly Owned Subsidiary PCL (International) Holdings B.V. acquired 51% Shares of EMOSS Mobile Systems B.V., Netherlands ("EMOSS") on 18th May, 2018 for "EUR 7,358,000 (Circa Rs. 5,878.37 Lakhs").

Further, the Board at its Board Meeting held on 23rd June,2020 has approved the fund infusion in PCL, Netherlands to acquire the balance 49 % of EMOSS. Post acquisition MFT shall become the Wholly Owned Step-Down Subsidiary.

EMOSS is a one-of-a-kind business that designs, develops, produces and supplies complete electric powertrains for trucks, busses, military vehicles and heavy equipment. EMOSS business model includes conversion of diesel trucks into ready to use electric trucks. The company also manufactures "ready to assemble modular kits" which are assembled onto the chassis. EMOSS provides an end to end solution to its customers which includes research and development, engineering, production, testing,certification,delivery and post-sale service. EMOSS also provides real time power management and tracking via an integrated cockpit setup. The trucks powered with Electric Drivelines can carry a maximum payload of 50 tons with a mobility of up to 350 km which may be extended beyond 500 km with long range extenders developed by EMOSS. Acquisition has paved access to electrical mobility markets such as Europe, North America, Australia and New Zealand. EMOSS enjoys customer base of Heineken, Meyer & Meyer, TEDI, etc. Soon, your Company envisages to launch EV in India using Emoss Technology on Trial Basis.

The Company has formulated a policy for determining "material" subsidiaries and such policy is also hosted on the website of the Company and can be viewed at www.pclindia.in.

Further a statement containing salient features of the financial statements of subsidiaries in the prescribed format AOC-1 is appended as Annexure-A to this Report. The statement also provides details of performance, financial position of each of its subsidiaries.

12. Disinvestment/ liquidation in joint ventures, subsidiaries and step-down subsidiaries

(a) Disinvestment from NINGBO SHENGLONG PCL CAMSHAFTS CO. LTD. "SLPCL"

Precision Camshafts Limited ("PCL India"), as a part of its global expansion and assured business of CFMA China had entered into joint venture agreement dated 11th February, 2012 with Ningbo Shenglong Powertrain Co. Ltd. ("Shenglong") to set up machining facility. During the same time, ZMM Technology Ltd ("ZMM") was introduced into the JV and the capital contribution was restructured as Shenglong (75%), PCL India (22.5%) and ZMM (2.5%). The Company served customers like Geely and CFMA China.

SLPCL supplied Fox, Sigma and GTDI type camshafts to CFMA China. These specific types of camshafts have been phased out from the China market and gradually it has impacted our business. It had started giving negative impact on PCL India Consolidated Balance Sheet due to losses incurred in the Joint venture. It was a strategic business decision to exit from the aforesaid Joint Venture Company and china market. The sale is completed for above mentioned entity and the proceeds are realised on 18th June, 2020.

As on 31st March,2020 Company has exited from aforesaid associate Company by selling entire stake in the Company.

(b) Disinvestment From PCL SHENGLONG (HUZHOU) SPECIALISED CASTING CO. LTD (PCLSL)

In 2013, PCL India entered into joint venture agreement with Ningbo Shenglong Powertrain Co. Ltd. ("Shenglong") and ZMM Technology Ltd ("ZMM") to set up foundry for manufacturing camshafts. The Company supplied camshaft castings to Ningbo Shenglong PCL Camshafts Co. Ltd. PCLSL is solely dependent on orders of SLPCL and therefore the cascading effect of slowdown of business of SLPCL has adversely impacted PCLSL. The operating expenses of the plant were on a higher side and adversely affecting the cash flows. It had started giving negative impact on PCL India Consolidated Balance Sheet due to losses incurred in Joint Venture. It was a strategic business decision to exit from the aforesaid Joint Venture company and china market. The sale is completed for above mentioned entity and the proceeds are realised on 18th June, 2020.

As on 31st March, 2020 Company has exited from aforesaid associate Company by selling entire stake in the Company

(c) Liquidation PCL (SHANGHAI) CO. LTD

PCL (Shanghai) Co. Ltd., a wholly owned subsidiary was incorporated in February 2011 with the purpose of expanding business to the growing OEM base in China. For the first few years, PCL (Shanghai) was able to onboard new clients and Ford Motor Company was one of its major customers. The company was supplying camshaft castings, to Ford in China. Over the last few years, the particular camshafts got phased out in China which impacted the operations of PCL (Shanghai) along with its profitability. Coupled with the phase out of these Camshafts, the overall auto industry faced challenging times in China making it unsustainable for the company to continue with its operations. As a results the Board, by means of the Circular Resolution No. 1/2019-20 dated April,2019 had passed resolution to initiate liquidation proceedings of PCL (Shanghai) Co. Ltd, a wholly owned subsidiary, which was completed on the 24th day of December 2019.

(d) Liquidation of PCL BRASIL AUTOMOTIVE LTDA

In 2018, PCL Brasil Automotive LTDA was incorporated as a wholly owned subsidiary of PCL (International) Holding B.V. Netherlands. PCL Brasil Automotive LTDA is step down subsidiary of PCL India.

PCL Brasil Automotive LTDA has not commenced any business, since its incorporation due to the Economic Conditions, Labor Factor, Complex Tax Structure due to which it is not viable to have business in Brasil. As on 31st March, 2020 PCL BRASIL AUTOMOTIVE LTDA stands liquidated.

13. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements are prepared in accordance with the Companies Act, 2013 and applicable Indian Accounting Standards. The performance of the Company on consolidated basis is discussed at length in the Management Discussion and Analysis.

14. CREDIT RATING

Credit ratings on standalone basis is:-

Facilities Amount ( Crores) Previous Rating Rating action
Long-term Bank Facilities 2.05 CARE A; STABLE Reaffirmed
Short-term Bank Facilities 79.50 CARE A1 Reaffirmed
Long-term/ Short term Bank Facilities 10.00 CARE A; Stable/ Reaffirmed
CARE A1
Total Facilities

91.55

15. UTILISATION OF IPO PROCEEDS

The proceeds of the IPO have been used for setting up of machine shop for machining of camshafts and offer related expenses and general corporate purposes of Rs. 240 Cr. There is no deviation in use of proceeds from objects stated in the offer documents.

The summary of utilisation of IPO proceeds as on 31st March, 2020 is stated in Note No. 41 of Notes to Accounts. Since Company has utilised IPO Proceed, Last Statement of Deviation is submitted to Stock Exchange on 7th June, 2019, the same statement is also posted on the website of the Company.

16. STATEMENT ON FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND DIRECTORS

The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors, pursuant to the provisions of the Companies Act, 2013 and Regulation 19 read with Schedule II, Part D of the SEBI (LODR) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

A structured questionnaire was prepared after taking into consideration the various aspects of the Boards functioning, composition of the Board and its Committees, culture, execution and performance of specificduties, obligations and governance, disclosures to Stakeholder at various aspects. The Board of Directors expressed their satisfaction with the evaluation process.

17. PCL ESOS 2015 – INFORMATION REGARDING ALLOTMENTS DURING THE YEAR

During the year under review, in terms of PCL ESOS 2015, the Company has not allotted any Equity Shares on exercise of vested options. During the year under review, no fresh grant was made by the Company.

The disclosures in compliance with Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014, and SEBI (Share Based Employee Benefits) Regulations, 2014 are as follows:

Total No. of Shares covered by ESOS Scheme approved by the Shareholders 6,00,000 (Six Lakhs) equity Shares
Grant I II Total
Options granted Nil Nil Nil
Options vested Nil Nil Nil
Options exercised Nil Nil Nil
The total number of shares arising as a result of exercise of option Nil Nil Nil
Options forfeited Nil Nil Nil
Options lapsed 3,350 43,650 47,000
Extinguishment or modification of options Nil Nil Nil
The exercise price 10/- 10/- 10/-
Pricing formula As per the ESOS Scheme approved by the members of the Company.
Variation of terms of options NA NA NA
Money realised by exercise of options Nil Nil Nil
Total number of options in force (PCL ESOS 2015) 21,090
Employee wise details of options granted to:
- Key Managerial Personnel & Senior Managerial Personnel NA NA NA
- Any other employee who receives a grant of options in any one year of option amounting to 5% or more of options granted during that year Identified employees who were granted option, during NA NA any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. NA NA NA
Issued Capital (excluding outstanding warrants and conversions of the Company at the time of grant. (Only in case of Listed Companies) NA NA NA
Diluted EPS calculated in accordance with International Accounting Standard (IAS) 33 NA NA

NA

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

a) The Company has given loans of € 60,50,197 (Rs. 4,961.16 Lakhs) to Loan to PCL (International) Holdings B.V. ( 100% Subsidiary)

b) The Company had given Corporate Guarantee of Rs. 14,900 Lakhs to Bank of Baroda, London in respect of Term Loan given by Bank of Baroda to its Wholly Owned Subsidiary Company PCL (International) Holdings, B.V. Netherlands for strategic acquisitions in FY 2017-18. During the year PCL (International) Holdings B.V. has requested Bank of Baroda London to cancel the limits sanctioned for Brazil Project and accordingly, the sanctioned limits were reduced by € 4.71 Mn. PCL (International) Holding B.V., in FY 2019-20, repaid part of the Term Loan. Because of the two reasons, the amount of Corporate Guarantee reduced to Rs. 6,197.09 Lakhs as at 31st March, 2020 (Rs. 14,900 Lakhs in FY 2018-19). Please refer Note No. 33 of notes forming part of the financial statements to the Standalone Financial Statements.

c) Company has increased its equity shareholding by Rs. 373.69 Lakhs in PCL (International) Holding B V ( 100% Subsidiary) during the year to the total equity of Rs. 3,471.34 Lakhs (€ 43,24,800) through infusion of Funds, Board resolution for same was passed on 8th December, 2017 & 5th March ,2020.

d) The Company has given Corporate Guarantee of 20 Crores to Citi Bank NA for Credit Facilities availed by Memco Engineering Private Limited, during the year.

e) Please refer Note No. 5 of notes forming part of the financial statements to the Standalone Financial Statements for investments under Section 186 of the Companies Act, 2013.

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts/ arrangements/ transactions entered by the Company during the Current financial year 19-20 with related parties were on an arms length basis and were in the ordinary course of business. Such transactions form part of the notes to the financial statements provided in this Annual Report. (Please refer Note No. 34 to the Standalone Financial Statements.) The details of material transactions entered with related parties during the year 2019-20 in Form AOC-2 are enclosed herewith as Annexure B

20. STATEMENT ON RISK MANAGEMENT POLICY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to the Company. The Companys future growth is linked with general economic conditions prevailing in the market. Management has taken appropriate measures for identificationof risk elements related to the Industry, in which the Company is engaged, and is always trying to reduce the impact of such risks. The Company has also formulated Risk Management Policy and Risk Management Systems are evaluated by the Audit Committee. The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 21 of the SEBI (LODR) Regulation 2015. Risk Management Policy is hosted on website of the Company (www.pclindia.in). COVID-19 is an unforeseen risk faced by all the industries of the Country, Company has been impacted due to Covid-19, Management has taken necessary steps for resuming operations of the Company with safety of its employees and abiding by Government Directives.

21. EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Extract of Annual Return in the prescribed form i.e. Form MGT-9 is annexed herewith as Annexure C, which forms part of this Report and also hosted on website of the Company (www.pclindia.in)

22. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure D and is attached to this report.

23. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Companys guiding principle for CSR is to build its relationship with stakeholders and the community at large, and to contribute to their long term social good and welfare. Your company, as a matter of duty, has been carrying out the CSR activities since long even when there were no statutory requirements in this regard.

In compliance of Section 135 of the Companies Act, 2013, your Company has constituted a Corporate Social Responsibility (CSR) Committee comprising of:

Mr. Yatin S. Shah Chairman
Dr. Suhasini Y. Shah Member
Mr. Vedant V. Pujari Member
Mr. Vaibhav Mahajani Member

Detailed Annual Report on CSR Activities during the year is given as Annexure E and CSR Policy is also disclosed on the website of the Company (www.pclindia.in).

Company has paid 50 Lakhs towards Prime Minister Cares Fund for COVID-19 in April, 2020.

24. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy (Vigil Mechanism) to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud, irregularities or violation of the Companys Code of Conduct The Policy provides for adequate safeguards against victimisation of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee.

The detailed policy on Vigil mechanism is also disclosed on the website of the Company (www.pclindia.in). The Vigil Mechanism is overseen by the Audit Committee and provides a mechanism for Directors and Employees of the Company to report to the Chairman of the Audit Committee or Chairman of the Company. During the year, there have been no complaints alleging child labour, forced labour, involuntary labour and discriminatory employment.

25. PARTICULARS OF EMPLOYEES

Disclosures with respect to the Remuneration of Directors, KMPs and employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure F to this Report.

There were no employee(s) in receipt of remuneration of 1.02 Crores or more per annum or in receipt of remuneration of 8.50 Lakhs per month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, except employees mentioned in Annexure F of the Annual Report. Industrial relations continued to be cordial during the year.

26. Internal complaints committee (Anti- sexual harassment policy)

The Company has in place a policy for prevention of sexual harassment at workplace. This inter alia provides a mechanism for the resolution, settlement or prosecution of acts or instances of Sexual Harassment at work and ensures that all employees are treated with respect and dignity. The Company has also 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.

The composition of the Internal Complaints Committee is as follows

Internal Complaints Committee at MIDC Chincholi, Solapur

Internal Complaints Committee Name of Members Designation
1 Presiding Officer Dr. Suhasini Shah Non- Executive Director
2 Member Mrs. Aarohi Deosthali Finance Manager
3 Member Mrs. Maithili Deshmukh Manager – R & D
4 Member Mr. Rajkumar Kashid HR- General Manager
5 Member Mr. Sanjeev Malvadkar HR- Senior Manager
6 External Member Dr. Sanjeevani Kelkar -

internal Complaints Committee at Pune Corporate Office

Internal Complaints Committee Name of Members Designation
1 Presiding Officer Dr. Suhasini Shah Non- Executive Director
2 Member Mrs. Aarohi Deosthali Finance Manager
3 Member Mrs. Mayuri Kulkarni Company Secretary & Compliance Officer
4 Member Mr. Rajkumar Kashid HR- General Manager
5 Member Mr. Sanjeev Malvadkar HR- Senior Manager
6 External Member Dr. Sanjeevani Kelkar -

During the year under review no complaint was reported to the Committee in connection with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

PoSH Policy is available on website of the Company (www.pclindia.in).

27. DEPOSITS

The Company has not accepted any deposits during the year under review.

28. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

During the year,therewerenosignificantand material orders passed by regulators or courts or tribunals impacting the going concern status and Companys operations in future.

29. COMMISSION OR REMUNERATION FROM SUBSIDIARY

Mr. Karan Y. Shah, Whole –time Director of the Company has received Remuneration from Wholly Owned Subsidiary MEMCO Engineering Private Limited Rs. 30,00,000/- p.a.

30. AUDITORS

(a) STATUTORY AUDITORS

The Board of Directors of the Company at its Board Meeting held on 13th August, 2019 recommended to appoint M/s MSKA & Associates, Chartered Accountants (Firm Reg. No: 105047W) as Statutory Auditors of the Company after taking note of consent letter of the M/s MSKA & Associates to act as Statutory Auditors. Considering the Compliance requirements and expansion of Business in Europe, Board was of the view that it would be convenient to appoint Auditors with Global Presence. It is recommend to appoint M/s MSKA & Associates, Chartered Accountants (Firm Reg No: 105047W) one of the Renowned Audit Firms as Statutory Auditors.

The recommendation for the appointment of Statutory Auditor was approved in the Annual General Meeting held for the Financial Year 2018-19 held on 25th September, 2019 for holding office till the FY 2023-24.

(b) SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s J. B. Bhave & Co. Company Secretaries, Pune, to undertake Secretarial Audit of the Company for Financial Year 2019-2020. The Report of the Secretarial Audit for Financial Year 2019-2020 in MR-3 is annexed herewith as an Annexure i to the Annual Report.

(c) COST AUDITORS

The Board of Directors, on the recommendation of Audit Committee, had appointed M/s. S. V. Vhatte and Associates, Cost Accountants, Solapur, [Firm Registration No.: 100280] as Cost Auditors to audit the cost accounts of the Company for the Financial Year 2019-20. As required under the Companies Act, 2013, a resolution seeking Members approval for the remuneration payable to the Cost Auditors forms part of the notice convening the 28th Annual General Meeting. The Cost Audit report for the Financial Year 2019-20 will be filed with the Ministry of Corporate Affairs on or before the due date. The Company pursuant to the provisions of Section 148 of the Companies Act, 2013 and applicable rules made thereunder, makes and maintains cost records.

(d) INTERNAL AUDITORS

The Company had appointed M/s M. P. Chitale & Co., Chartered Accountants, as Internal Auditor of the Company for FY 19-20 in the Board meeting held on the 7th February, 2019. The scope and authority of the Internal Auditor is as per the terms of reference approved by Audit Committee. The Internal Auditors monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of theCompany.Significantaudit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

31. REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report as required under SEBI (LODR) Regulations, 2018 forms part of this Annual Report.

32. CORPORATE GOVERNANCE REPORT

Report on Corporate Governance is about maximising shareholder value legally, ethically and sustainably. Corporate Governance Report is set out in this Annual Report as Annexure G

A certificate from M/s J. B. Bhave & Co. Practicing Company Secretaries, Pune, regarding compliance with conditions of corporate governance as required under SEBI (LODR) Regulations, 2018 also forms part of this Annual Report as Annexure H. A certificate from M/s J. B. Bhave & Co. Practicing Company Secretaries, Pune regarding compliance with Sub Regulation 10(i) of Regulation 34(3) of Schedule V of SEBI (LODR) Regulations, 2018 also forms part of this Annual Report as Annexure J

33. ANNUAL SECRETARIAL COMPLIANCE REPORT

Pursuant to SEBI Circular CIR/CFD1/27/2019 dated 8th February, 2019 all listed entities shall, additionally, on annual basis, submit a report to the stock exchange(s) on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder within 60 days of end of financial year. Such report shall be submitted by Company Secretary in practice to the Company in the prescribed format.

The Company has received such report from M/s J.B. Bhave & Co., Practicing Company Secretaries, Pune for the financial year ended 31st March 2020 and it has been submitted to the stock exchange(s) within the stipulated time as per SEBI Relaxation.

34. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board of Directors hereby submits its Responsibility Statement:—

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

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

3. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. the Directors had prepared the annual accounts on a going concern basis;

5. the Directors had laid down internal financial controls to be followed by the Company and such internal controls are adequate and were operating effectively; and

6. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

35. MATERIAL CHANGES AFTER CLOSE OF FINANCIAL YEAR OUTBREAK OF COVID-19

In the last month of FY 2019-20, the COVID-19 pandemic developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity. For the Company, the focus immediately shifted to ensuring the health and well-being of all employees, and on minimising disruption to services for all our customers globally.

The Company consistently taking all proactive steps, precautionary and pre-emptive measures at their corporate offices at Pune District and manufacturing plants at Solapur District to ensure safety of all employees since February 2020 due to COVID - 19 outbreak in Maharashtra. The Company has also been closely monitoring all advisories from the Central and State Government followed by respective District Collectors.

Honble Prime Minister had ordered National Lock Down since 25th March, 2020. All the offices and manufacturing plants of the Company had suspended their operations to contain the spread of COVID - 19 based on Government directives. All employees were requested to continue working from home wherever possible. This was being done to ensure safety and well-being of all our employees. The Company has kept its operations closed as during the lockdown period and the closure period was dependent on the Government policy.

In accordance with the permission/guidelines issued by the Central/State Government and Local Authorities, the manufacturing operations of plants situated at Solapur resumed with effect from 17th May, 2020 in phased manner.

Initially Business team with limited number of members had returned to work in order to manage production cycle of the Company with less number of workers at foundry and workshops. The same has been in line with latest guidelines issued by the Government of India.

Also Human Resource department with limited number of members has returned to work in order to manage all essential activities including but not limited to sanitization of Companys office and plants and to manage and administer all other arrangements suitable for employees and workers during this period.

The Finance Department of the Company also with limited strength has resumed office at Solapur facility for carrying out accounting and statutory audit work. However, majority team members of finance team and corporate secretarial team members continue working from home.

Further, the Company has taken all the necessary steps as recommended/stated in the guidelines/advisories issued by the Central/State Government and Local Authorities for prevention and containment of COVID-19 Due to COVID-19 Business and Financials of the Company had also been impacted, Management is trying its best to cope up with Business and Financial Losses and get back into operations as soon as possible, and various steps are being taken by the Management Team.

36. STATEMENT CONTAINING THE SALIENT FEATURES OF THE FINANCIAL STATEMENTS OF SUBSIDARIES / ASSOCIATE COMPANIES / JOINT VENTURES

The details of Subsidiary, Joint Ventures and Associate Companies is given in Form AOC - 1 as Annexure A

There has not been any material change in the nature of the business of the Subsidiary and Joint Ventures. As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013, the consolidated your Company and Subsidiary and Joint Ventures are provided in this annual report.financials

37. CODE OF CONDUCT FOR BOARD AND SENIOR MANAGEMENT

The Company has adopted the Code of Conduct for the Directors and Senior Management and the same is available on the

Companys website www.pclindia.in. All Directors and Senior Management personnel have affirmed their compliance with the said Code. A declaration pursuant to the Regulation 26 (3) read with part D of the Schedule V of the SEBI LODR, 2015 signed by Managing Director to this effect is annexed as a part of Directors Report as Annexure M

38. COMMITTEES OF BOARD

Details of all the Committees along with their charters, compositions and meetings held during the year are provided in the report on Corporate Governance which forms part of this Annual Report and shall also be available on the website of the Company (www.pclindia.in).

39. COMPANYS POLICY ON DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT PERSONNEL APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration. The Company pays remuneration by way of salary, perquisites, allowances, commission and retirement benefits to its executive Directors. The remuneration to the Executive Director(s) is in accordance with the provisions of the Companies Act, 2013 and Rules made thereunder and is within the ceiling limits as provided thereunder and approved by the shareholders.

The Companys policy of remuneration of the senior management is structured to attract and retain the talent and is in turn dependent on following key parameters:

1. Complexities and criticality of the jobs

2. Profile of the employee in terms of his / her qualification and experience

3. General trends in the industry and market for a similar talent

4. Incorporation of an element of motivation by way of remuneration linked to specific performances wherever applicable.

As a policy of the Company, the non-executive Directors are paid commission profit based on the percentage performance evaluation for that financial year under review.

40. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to the financial statements. The Audit Committee periodically reviews the internal control systems with the Management, Internal Auditors and Statutory Auditors test the adequacy of internal audit functions. During the year under review, these controls were tested and the observations of the Auditors were addressed by the Company after taking necessary steps to strengthen the financial controls and improve the systems. Statutory Auditors have also certified adequacy of internal financial controls systems over financial reporting based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control, as stated in the Guidance Note on Audit of Internal Financial Controls over financial reporting issued by the Institute of Chartered Accountants of India.

41. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE STATUTORY AUDITORS, SECRETARIAL AUDITORS AND COST AUDITORS IN THEIR REPORTS

There were no qualifications, reservations or adverse remarks made by the Statutory Auditors in the Audit Report on the Standalone and Consolidated Financial Statements for the year ended 31st March, 2020.

The Reports of Secretarial Auditors and Cost Auditors for the year ended 31st March, 2020 are also unmodified.

42. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OF THE COMPANIES ACT, 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

During the year under review, no instances of frauds were reported by the Statutory Auditors of the Company.

43. BUSINESS RESPONSIBILITY REPORT

A detailed Business Responsibility Report in terms of the provisions of Regulation 34 of the Listing Regulations is available as a separate section in the Annual Report.

44. COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

The Company is in compliance of applicable secretarial standards issued by the Institute of Company Secretaries of India

45. INVESTOR EDUCATION AND PROTECTION FUND

In accordance with the provisions of Sections 124 and 125 of the Act and Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), dividends of a company which remain unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account shall be transferred by the Company to the Investor Education and Protection Fund ("IEPF"). In terms of the foregoing provisions of the Act, no dividend amount or shares were required to be transferred to the IEPF by the Company during the year ended 31st March, 2020.

46. CAUTIONARY STATEMENTS

Statements in this report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, estimates and expectations may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

47. ACKNOWLEDGEMENTS

The Directors would like to place on record their deep appreciation to employees/ workers at all levels for their hard work, dedication and commitment. The Board places on record its appreciation for the support and co-operation your Company has been receiving from its Shareholders, Customers, Business Associates, Bankers, Suppliers and all other stakeholders for their continued support and their confidence in its management.

The Directors also thank the Government of India, Governments of various states in India, for their co-operation.

The Directors regret the loss of life due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety to fight this pandemic.

Statement containing the salient features of the Financial Statements of Subsidiaries / Associate Companies / Joint Ventures

Pursuant to Section 129(3) of the Companies Act 2013, read with Rules of the Companies (Accounts) Rules 2014