Rane Holdings Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

1. Company Overview

Founded in 1929, Rane Holdings Limited, through its Group Companies is engaged in the manufacturing and marketing of automotive components for the transportation industry. The Group is a preferred supplier to major OEMs in India and abroad. The group Companies, manufacture Steering and Suspension systems, Friction materials, Valve train components, Occupant safety systems and Light metal casting products. The products serve a variety of industry segments including Passenger Vehicles, Commercial Vehicles, Farm Tractors, Two-wheelers, Railways and Stationary Engines. With modern manufacturing facilities across 25 locations in India and one in the USA, Rane Groups products are sold across 30+ countries.

2. Economic Review 2.1. Global Economy

The global economic growth is estimated to have slowed to 3.1% in 2023 mainly due to the negative impact of monetary policy tightening to curb inflationary pressures. The Eurozone grappled with diminished economic activity due to elevated interest rates aimed at curbing high inflation. China too witnessed economic headwinds due to stress in its real estate markets which exerted downward pressure on its growth trajectory. However, the emerging and developing economies as well as the US economy experienced better-than-expected growth led by resilient consumption, strong government spending and business investments. There was significant contraction in both manufacturing activity and international trade amidst sluggish global demand, largely influenced by tighter credit conditions that weighed on housing markets, investments, and overall economic activity. Despite these challenges, the concerted efforts to tighten policies led to steady decline in global inflation from its multi-decade peak in 2022.

Global economic activity is expected to improve in the second half of 2024 after stagnating in the first half of the year resulting in flattish growth of 3.1% for the full year. US economy is expected to remain resilient on the back of decline in inflation and possibility of rate cuts, while Europe could face a period of stagnant growth. China is also expected to witness slower growth in 2024 due to ongoing real estate crisis placing additional drag on global growth. Global inflation is expected to moderate further on the back of tighter monetary policy and lower commodity prices. Central bank policy rates appear to have peaked in all major economies and the focus has shifted to expected rate cuts during the year. Key downside risks include the possibility of persistence of high inflation led by resilient demand and upward pressure on wages due to labour shortages which could mean fewer interest rate cuts and continuance of tighter monetary policy. Moreover, risk of higher commodity prices emanating from geo-political conflict including continued attacks in the Red Sea could also weigh on growth prospects. As such, policymakers find themselves confronted with the dual challenge of bringing down inflation while simultaneously reviving growth. Nevertheless, the commitment of policymakers towards global economic stability through effective policy coordination, including monetary and fiscal measures is likely to accelerate growth prospects over the long term.

2.2. Indian Economy

The Indian economy has made notable strides over the past few years and in the process, it has overtaken the U.K. to become the worlds fifth-largest economy. The local economy displayed remarkable resilience despite tighter monetary policy and global headwinds and emerged as the fastest-growing large economy witnessing growth of 7.8% in FY24 on the back of strong domestic demand and pick up in fixed investment driven by increased capital spending by the central and state governments. The country has managed to emerge stronger from global shocks led by flourishing consumer base and burgeoning middle class. Moreover, demographic dividend, improved financial access and investment in physical and digital infrastructure acted as catalyst for its resilience. Inflation continued its downward trajectory allowing policymakers to hold on to interest rates. Manufacturing, mining, and construction activity remained buoyant amidst decline in input costs and robust demand environment. Despite elevated interest rates, leading indicators such as Goods and Service Tax (GST) collection, e-way bills, Index of Industrial Production (IIP), credit growth, electricity consumption, automobile sales, etc. pointed to robust economic activity. The Indian economy seems poised to continue its upward trajectory into the coming year, potentially maintaining its position as the fastest-growing major economy led by robust demand environment supported by strength in corporate and financial sector balance sheets, government spending in infrastructure, and the ongoing implementation of well-structured policy reforms. According to International Monetary Fund (IMF), growth rate in the Indian economy is expected to normalize at 6.8% in FY25 on the back of expectations of a normal monsoon and sustained momentum in manufacturing and services sector. Moreover, moderating inflation is likely to result in interest rate cuts providing further fillip to growth. Private consumption is expected to gather pace and private capex is likely to pick up in a sustained manner. India is also negotiating free trade agreements with the European Union, the UK, and the Gulf Cooperation Council which will enable the country to diversify its trade relations. However, persistent inflationary pressure resulting in higher interest rates, supply side disruptions due to geo-political tensions, higher oil prices, slowdown in public capex, and sluggishness in rural demand on the back of deficient monsoon could dampen growth prospects.

3. Industry Review

3.1. Global Automobile Industry

The U.S. auto industry rebounded in 2023 and witnessed strong pick up in sales with many car companies reporting double-digit sales gains, marking a return to normalcy for a sector that has been on a roller coaster since the start of the pandemic. New-light vehicle sales increased by 12.4% YoY to 15.5 million units despite higher borrowing costs on the back of improving supply levels and higher incentives. Crossovers were once again the most popular segment in 2023, representing 47.9% of all new light vehicles sold. In2023,BatteryElectricVehicle(BEV)salestopped 1.1 million units for the first time and made up 7.2% of all new light vehicles sold. The National Automobile Dealers Association (NADA) expects the U.S. new-vehicle sales to increase slightly to 15.9 million in 2024 as elevated interest rates and high price is expected to be offset somewhat by higher incentive spending by OEMs.

According to European Automobile Manufacturers Association (ACEA), the European Unions (EU) car market experienced a robust growth of 13.9% over the previous year, resulting in a total annual volume of 10.5 million units, with the majority of markets witnessing significant double-digit increases. Petrol vehicles maintained their dominance with a market share of 35.3%, while hybrid-electric cars secured the second position, accounting for 25.8% of the market, followed by electric cars with 14.6% market share. The EU car sales growth is expected to slow to 2.5% reaching 10.7 million units in 2024 as constraints on household budgets on the back of high interest rates and tapering EV subsidies is likely to curtail meaningful demand, according to ACEA.

The global automotive industry reflected a complex interplay of innovation, resilience, and adaptation to a changing world and witnessed strong growth led by resilient demand and improving supply chain conditions. While the industry continued to pivot towards electrification, traditional Internal Combustion Engine (ICE) vehicles witnessed strong growth across all major geographies. Traditional automakers continued to accelerate their transition towards electric and autonomous vehicles, investing heavily in research and development to stay competitive in a rapidly evolving landscape.

The global automotive industry could face minor challenges in the form of sluggish consumer spending amidst tighter credit conditions, high car prices and weak global economic growth. EV sales could experience muted growth despite supportive government policies relating to tightening of emission due to tapering government incentives, limited charging infrastructure and the saturation of early adopters. The growth of the sector is likely to be shaped by a multitude of factors, including the adoption of electric vehicles, advancements in the production of high-capacity batteries, ramp up in installation of fast and ultra-fast charging infrastructure, introduction of autonomous vehicles and deployment of 5G connectivity which is expected to unlock advanced connected car capabilities. Collaborations between Original Equipment Manufacturers (OEMs) and technology companies are poised to foster innovation and drive further growth in the automotive sector. However, ongoing geopolitical tensions, trade disputes, and environmental regulations could pose challenges, underscoring the industrys need for agility and adaptation in the face of evolving market dynamics.

3.2. Indian Automobile Industry

Despite external headwinds in the form of high interest rate environment, Indias automotive sector remained resilient and displayed positive momentum marked by growth across all the segments, offtake in EVs, safety trends and a shift towards digitalisation. Stabilization in commodity prices, improving chip availability, robust economic activity and new model launches resulted in robust growth in the industry.

The Passenger Vehicle (PV) segment witnessed steady resurgence and growth on the back improving supplies of semiconductors, new models launches and positive customer and economy sentiment. Robust demand, easing semiconductor supply issues and strong offtake in the festive season led to volume growth of 7% in the PV segment. Utility vehicle (UV) segment saw significant migration of demand from entry level segment on the back of changing consumer preferences and flurry of new launches and continued to power the overall UV segment resulting in volume growth of 23% whereas the Passenger Car (PC) segment volume fell by 9% despite high discounts. Electric passenger vehicles continued to scale new highs as a result of increased product availability and reducing price parity.

Commercial Vehicle (CV) segment witnessed sluggish volume growth of 3% despite elevated freight rates and sustained freight demand supported by strong economic activity and growth in the manufacturing and infrastructure sector. The Medium and Heavy Commercial Vehicles (M&HCV) segment registered a growth of 3% supported by continued government infrastructure push and growth in core sectors. The Light Commercial Vehicles (LCV) segment reported volume growth of 3% led by growth in e-commerce and strong capital inflow in other end-user industries to improve logistics and last-mile connectivity pushing need for last mile connectivity.

Two-wheelers segment witnessed robust volume growth of 10% driven by an improved rural demand, the availability of a wide range of models and variants, and attractive financing options. Tractors volume declined by 8% on last years high base due to erratic monsoon and weaker rural sentiment.

Industry Segment	Growth in %
(Production figures)	(YoY change)
Vehicles	FY24	FY23
Passenger Cars (PC)	(9)	18
Utility Vehicles (UV)	23	33
Multi-Purpose Vans (MPV)	3	23
Passenger Vehicles (PV)	7	25
Light Commercial Vehicles	3	23
(LCV)
Medium & Heavy Commercial	3	37
Vehicles (M & HCV)
Commercial Vehicles (CV)	3	28
Farm Tractors (FT)	(8)	11
Two Wheelers (2W)	10	10

Source: Society of Indian Automobile Manufacturers (SIAM)

3.3. Indian Automotive Aftermarket Industry

As per Global Automotive Aftermarket Research Report published by ACMA, Indian automotive aftermarket is expected to reach USD ~14 billion by 2028 from USD 10 Billion in 2023. Further, the global aftermarket export to 10 major markets presents over USD 35 billion exports opportunity. Rapidlygrowingeconomycoupledwithincreased purchasing power is driving vehicle sales creating significant growth opportunities for the aftermarket sector in the country. The increasing prevalence of online retail and e-commerce platforms in India has enabled better access to aftermarket products and helped in expanding market penetration and enhancing consumer reach. India has preferential access, economic cooperation and free trade agreements with more than 50 countries as of 2023, which will help in enhancing auto components exports. Overall, the aftermarket sector remains dynamic and adaptive offering ample opportunities for growth and innovation.

3.4. Indian Auto Component Industry

Indias automotive components sector maintained healthy growth in fiscal 2024 on the back of robust demand from domestic Original Equipment Manufacturers (OEMs) and increasing exports. Consumption of increased value-added components and the shift in market preference towards larger and more powerful vehicles continued to contribute to the increased turnover of the auto parts sector. Mitigation of supply side issues such as availability of semiconductors and stabilisation in input raw material costs supported the growth. The industry showcased resilience by leveraging technology and innovation to streamline processes and adapt to the evolving market demands. Almost all the leading players in the industry continued to focus on enhancing operational efficiency, optimizing supply chains, and investing in research and development to meet the changing needs of the automotive sector.

Long-term prospects for automotive component exports from India remain positive, mainly due to the changing preference of global automotive players to de-risk supply. Moreover, extension of PLI scheme for automobile and auto components by a year is likely to encourage investments in the automotive manufacturing value chain and increase domestic production of Advanced Automotive Technology (AAT) products thereby providing additional growth lever. As such the sector remains well-positioned for growth led by robust demand from domestic OEMs, increased indigenisation of components, growing exports opportunity and favourable government policies.

4. Business Review

4.1. Rane Holdings Limited (RHL) Operational Highlights

• The Group Companies registered a sale of 7,199 Crores.

• Continued to engage in various lean measures to improve productivity.

• Implemented strategic savings initiatives on power, sourcing etc., at the group level.

• RHL increased its shareholding in Rane Engine Valve Limited (REVL).

• During the financial year the RHL divested its entire shareholding in Rane t4u in exchange for 11.94% equity shares in eTrans Solutions Private Limited.

Financial Highlights

Standalone Financial Highlights

• Total Revenue was 150.47 Crores for FY24 as compared to 118.19 Crores for FY23, an increase of 27.31%.

• Operating revenue increased to 146.86 Crores in FY24 from 117.66 Crores in FY23 due to higher dividend income, Service fee and trademark fee from Group Companies.

• Other income increased to 3.61 Crores in FY24 from 0.53 Crores in FY23 due to gain on disposal of property plant and equipment.

• EBITDA stood at 98.79 Crores as compared to 71.93 Crores during FY23, an increase of 37.33%.

• EBITDA (after exceptional item) stood at 95.83 Crores as compared to 69.01 Crores during FY23, an increase of 38.87%.

• Net profit stood at 73.06 Crores for FY24 as compared to 48.30 Crores for FY23.

• An impairment provision of 2.96 Crores has been made on account of disinvestment of the subsidiary, Rane t4u.

Consolidated Financial Highlights

• Total revenue was 3,543.98 Crores for FY24 as compared to 3,537.46 Crores for FY23, an increase of 0.18%.

• EBITDA stood at 335.64 Crores for FY24 as compared to 348.61 Crores for FY23, recording a decline of 3.72%.

• Net profit stood at 149.61 Crores for FY24 as compared to a profit of 87.31 Crores for FY23.

Standalone

Sl. No.	Ratios	Unit of Measurement	March 31, 2024	March 31,2023	Significant change (_ 25%)	Reason for significant change in FY 24
1	Debtors Turnover	Days	9.80	12.29	NA	NA
2	Current Ratio	Times	3.17	1.02	211%	*
3	Interest Coverage ratio	Times	20.08	12.05	67%	**
4	Debt Equity Ratio	Times	-	0.10	(100%)	**
5	Operating Profit Margin	%	64%	57%	NA	NA
6	Net Profit Margin	%	50%	41%	NA	NA
7	Return on Net worth	%	13%	9%	41%	**
8	Return on Capital Employed	%	16%	11%	45%	**

*Increased on account of investment in mutual fund and repayment of borrowings in the current year.

** Increased dividend income has primarily resulted in increased profits for the current year and repayment of borrowings in the current year.

The other ratios as required under Schedule III are disclosed in Note no.32 to the Financial Statements.

Consolidated

Sl. No.	Ratios	Unit of Measurement	March 31, 2024	March 31,2023	Significant change (_ 25%)	Reason for significant change in FY 24
1	Debtors Turnover	Days	5.67	5.76	NA	NA
2	Inventory Turnover	Days	4.69	4.85	NA	NA
3	Current Ratio	Times	1.09	1.09	NA	NA
4	Interest Coverage ratio	Times	3.59	4.13	NA	NA
5	Debt Equity Ratio	Times	0.91	1.06	NA	NA
6	Operating Profit Margin	%	7%	6%	NA	NA
7	Net Profit Margin	%	4%	2%	70%	*
8	Return on Net worth	%	17%	11%	58%	*
9	Return on Capital Employed	%	9%	12%	NA	NA

*The improvement is on account of increase in consolidated sales volume which in turn resulted in higher profitability.

4.2. Subsidiary Companies 4.2.1. Rane (Madras) Limited (RML) Operational Highlights

• The Steering and Linkages business registered a negative growth of 3.1% during the year in the domestic market. This was due a market shift from Small passenger car segment, where the RML had a major market share, to Utility Vehicle segment. The Light Metal Castings Division also had a negative growth of 3.4% during the year

• Export sales of Steering Division continued the momentum with a growth of 11.5% over the previous year, with strong growth coming from the US and Mexico. Light Metal Castings division also registered a growth of 14.3% due to ramp up of volumes in new businesses.

• All plants continued to work on various productivity improvement and cost saving projects during the year. Industry 4.0 techniques with IoT sensors, AI cameras were added in the manufacturing process to capture the data towards smart manufacturing.

• The RMLs focus on new technologies continued during the year with good progress on the development of several new products which will pave the way for future growth aspirations.

• RML has won the following awards from customers:

- Supplier of excellence award from Polaris

- Quality Excellence award from Tata Motors Commercial Vehicle

- Quality Excellence award from Daimler

- Extra Mile award from Tata Motors Passenger Vehicle

- Kaizen awards from Tata Motors Limited

- External awards from ACMA, QCFI, CII & ABKAOTS

- "Great Place to Work" for the 6^th consecutive year

• Light Metal Casting business in India is in the process of launching several new programs to SOP in the FY 24-25 which will further improve its capacity utilization and revenue growth.

Rane Light Metal Castings Inc., USA (LMCA)

During the financial year, RML divested its entireholdings in M/s. Rane Light Metal Casting Inc., USA (LMCA) held through its wholly owned subsidiary viz., Rane (Madras) International Holdings B.V., The Netherlands (RMIH) for a consideration of USD 4.9 million. Accordingly, for the FY 24, the RML has recorded a fair value loss aggregating 121.56 crores in the standalone financial results and loss on sale of the aforesaid step down subsidiary aggregating 85.46 crores in the consolidated financial results as an exceptional item.

Rane Automotive Components Mexico S de R.L. de C.V. (RACM)

RACM is the newly incorporated company in Aguascalientes, Mexico. This company is incorporated in order to serve our customers who are present in the North America. Most of the North American customers require our presence in North America due to USMCA (United States, Mexico, Canada) rules, which provides exemption for the customs duty within USMCA region. RML has limited presence in NA region and a manufacturing facility here would help to grow the business in NA region.

Financial Highlights

Standalone Financial Highlights

• Total revenue was 2,144.84 crores for FY24 as compared to 2,135.50 crores for FY23, an increase of 0.44%.

• 2.7% degrowth in the Indian market.

• 5% degrowth in the Aftermarket business.

• 11.5% growth in the exports market due to increase in sales in both steering and linkage and casting products.

• EBITDA stood 182.75 crores as compared to 228.42 crores during FY23.

• Net profit was 14.88 crores for FY24 as compared to a loss of 126.54 crores for FY23.

Consolidated Financial Highlights

• Total revenue was 2,243.53 crores for FY24 as compared to 2,372.30 crores for FY23. LMCA sales recognized for the part of the year 95.22 crores till the divestment date 14^th Sep 23.

• EBITDA stood at 150.70 crores as compared to 200.36 crores during FY23.

• Net profit stood at 3.02 crores for FY24 as compared to Net profit of 30.02 crores for FY23.

4.2.2. Rane Engine Valve Limited (REVL) Operational Highlights

• To mitigate EV related risk, sales to non-automotive customers grew by 21%.

• R&D continues to proactively engage with customers to focus on EV-insulated segment.

• Automation and integration of valve testing equipment introduced on pilot basis.

• Working with OEMs for development of valves for Hydrogen engines.

• Mass production of sodium filled hollow valves commenced during the year.

• Two plants (Trichy & Tumkur) have manufacturing lines certified for VDA 6.3.

• REVL received Customer Awards from Toyota Industries Engine India and Daimler India Commercial Vehicles.

Financial Highlights

• Total revenue was 570.34 Crores for FY24 as compared to 499.63 Crores for FY23, recording an increase of 14.15%.

• Sales to Domestic OE customers grew by 14% due to improved demand across all segments.

• In the Exports market, OEM sales grew by 25% due to increase in off take by OEM customers.

• EBITDA stood at 50.31 Crores as compared to 36.22 Crores during FY23, an increase of 38.91%.

• Net profit stood at 11.46 Crores for FY24 as compared to loss of 0.06 Crores for FY23.

4.2.3. Rane Brake Lining Limited (RBL) Operational Highlights

• Robot application installed in finishing lines across all plants. AI based vision inspection system implemented to strengthen internal quality gates.

• Magneto strictive sensor installed to reduce crack rejections.

• Installed 1 MW Solar Plant at Trichy Plant which led to own generation of overall renewable energy of 5.6 MW.

• Overall, 44% of the energy requirement is met through Renewable energy (Solar & Wind).

• GPTW certified for 7^th year in a row.

• Received Customer Awards from Endurance Technologies in the "Capable Supplier" and "Excellence in Technology" categories as well as "Best Management" award from Telangana State Government.

Financial Highlights

• Total revenue was 662.97 Crores for FY24 as compared 607.07 Crores for FY23 recording an increase of 9.21%.

• Domestic OE sales registered a 15.65% increase. The sales growth was driven by increase in volumes across all major segments and entry into new models in Passenger Vehicle and Two-wheeler segments.

• Export touched all time high of 35.61 Crores, an increase of 33.47%. The breakthrough results are due to launching new products for CV segment and commencement of supplies for US market.

• EBITDA stood at 77.52 Crores as compared to at 64.63 Crores during FY23, an increase of 19.94%.

• Net profit stood at 40.28 Crores for FY24 as compared to 33.46 Crores for FY23.

4.3. Joint Ventures / Associate Companies

4.3.1. ZF Rane Automotive India Private Limited (ZRAI) Operational Highlights

• P1 (FIG), P2 (Pump) & P4 (Pump & FIG-Uttarakhand) have achieved record sales for the year.

• SGD division received the Award from VECV in Oct23 for Outstanding contribution in the Uptime Excellence Award.

• P1 team bagged the prestigious runner award in the National level Supplier SAMRAT competition conducted by Ashok Leyland having won the state level competition earlier.

• Milestone attainment- >1000cr sales at OSD, Exports contributed to 60% of the Divisions Sales while Domestic sales contributed to 40%.

• The ZRAI has undertaken Industry 4.0 initiative in order to digitize (AI based projects) and automate the manufacturing process and systems.

• Implementation of ZFs Operational system (Flex tool, Plant Performance Review, MR11 etc.).

• OSD received 41 different external awards from QCFI, CII & ACMA.

• Both the divisions realized highest ever material cost reduction for the year through rigorous VA/VE initiatives to stay competitive under volatile material cost situation throughout the year.

• The wholly-owned subsidiary ZF Rane Occupant Safety Systems Pvt. Ltd. (ZROS) started the webbing, Cushion & Module SOP during the year. SOP started from Q1 for domestic customers such as Mahindra,

Tata, PSA, Daimler & AL. Export to ZF Europe in Q1 2024-25

• IRS projects for Hyundai and cushion programs for the customers Volkswagen, BMW launched seamlessly by ZROS.

• During the year, ZRAI acquired the entire shareholding in TRW Sun Steering Wheels Private Limited on March 28, 2024.

Standalone Financial Highlights

• Total revenue was 2,102.31 crores for FY23-24 as compared to 1,858.63 crores for FY22-23, recording an increase of 13.0%.

• EBITDA stood at 233.87 crores as compared to 199.02 crores during FY22-23, an increase of 17.5%.

• Net profit (PAT) stood at 121.55 crores for FY23-24 as compared to 101.89 crores for FY22-23.

Consolidated Financial Highlights

• Total revenue was 2,153.37 crores for FY23-24 as compared to 1,857.12 crores for FY22-23, recording an increase of 15.95%.

• EBITDA stood at 233.25 crores as compared to 195.01 crores during FY22-23, an increase of 19.61%.

• Net profit (PAT) stood at 106.84 crores for FY23-24 as compared to 97.23 crores for FY22-23.

4.3.2. Rane NSK Steering Systems Private Limited (RNSS) Operational Highlights

• Electric Power Steering (EPS) business registered 15% growth in sales compared to previous year, on robust demand in PV Segment.

• Manual Steering Column (MSC) business registered 9% increase in sales on the backdrop of the growth in the Commercial Vehicle segment, however Q4 volumes were affected.

• RNSS continued to invest in R&D by upgrading the Test Lab to improve the testing capabilities in line with the industry trends.

• Recognised by Daimler Commercial Vehicles – for 100% on time Delivery performance.

Financial Highlights

• Total revenue was 1,727.80 Crores for FY 24 as compared to 1,520.39 Crores for FY 23, recording an increase of 13.64%.

• EBITDA stood at 70.59 Crores as compared to 99.28 Crores during FY 23, a decrease of 28.90%.

• Loss before exceptional items stood at 14.19 Crores during FY 24 as compared to Profit of 23.12 Crores during FY 23.

• Net Profit stood at 10.48 Crores for FY 24 as compared Loss of 99.11 Crores for FY 23. This includes an Exceptional Income of 9.07 Crores on realisation of disposal of warranty returned parts as against expense towards estimated warranty provision of 74 Crores in FY23.

4.4. Opportunities and Threats

The automotive industry in India is poised for significant growth, driven by a multitude of factors. Accessible, affordable, and transparent financing options, improving road infrastructure and increasing disposable income have been the major factors catapulting the growth of the auto industry in India. Indias increasing adoption of electric vehicles is set to enhance the industrys influence, further establishing the nation as a prominent global automotive centre. Shifting consumer preferences, increasing exports, and government support will be pivotal in shaping the future of the industry. The emerging trends and growing focus of automakers on integrating cutting-edge technologies in car manufacturing has opened up massive investment opportunities in the India auto sector. Significant technological strides in electric vehicles, autonomous driving, connectivity, the adoption of digital sales, and a strong emphasis on safety measures are anticipated to unlock vast opportunities for the industry.

Despite significant growth prospects, the industry is also confronted with a range of issues including logistics and supply chain disruptions, escalating energy costs, shortages in skilled labour, complex economic and political landscape and growing expectations of an increasingly discerning and demanding consumer base, among others. Persisting high interest rate environment could impact affordability to some extent for potential buyers. These economic challenges present formidable obstacles for the automotive industry, necessitating strategic adaptation and resilience to navigate through turbulent times.

4.5. Outlook

The automotive industry is poised for significant growth driven by several key factors. Foremost among these is the rapid adoption of new technologies, coupled with robust government support policies. With increasing awareness about environmental issues, theres a notable shift towards alternate fuel vehicles like CNG and EVs, which is expected to further boost sector growth. Moreover, factors such as rising per capita incomes, evolving demographic profiles, low vehicle penetration rates and favourable policy environments, including infrastructure development, are all contributing to a steady rise in industry demand. However, potential challenges such as a global economic slowdown and higher interest rates could temporarily impact demand. Yet, the industrys ability to innovate and adapt will be pivotal as it continues to evolve, ensuring its resilience and sustained growth in the long run.

4.6. Scheme of Amalgamation

The Board of Directors of the listed subsidiaries of RHL, viz., REVL, RBL and RML at their respective board meetings held on February 09, 2024 considered and approved the scheme of amalgamation ("Scheme") of RBL and REVL with and into RML with effect from April 01, 2024. As per the Scheme, 9 (Nine) equity shares of 10/- each of RML will be issued for every 20 (Twenty) equity shares of 10/- each held in REVL and 21 (Twenty-One) equity shares of 10/- each of RML will be issued for every 20 (Twenty) equity shares of 10/- each held in RBL. The Scheme is subject to the approval of shareholders and creditors of the respective companies, BSE Limited and The National Stock Exchange of India Limited, National Company Law Tribunal and such other approvals as may be required.

The proposed Scheme amalgamation aims to simplify the group structure, align shareholder interests, enhance operational efficiency and diversify product offerings. Consolidating under a single listed entity will facilitate coordinated business management, achieve synergies in revenue and costs, optimize resources, and improve access to capital for growth opportunities. Additionally, it will enable a unified approach in customer engagement, supply chain management and administration functions, while leveraging combined human capital for improved organizational capability and leadership.

5. Risk Management

The Company has laid down well-structured procedures for monitoring the risk management plan and implementing risk mitigation measures. The risks are broadly classified into strategic risks, operational risks, financial risks and statutory compliance risks. These risks are rated based on factors such as past year experience, probability of occurrence, probability of non-detection and their impact on the business. The top management reviews the strategic risks and the risks with high probability and high impact for every quarter and presents its report along with a risk mitigation plan to the Board of Directors on a half-yearly basis. The strategic risks are taken into consideration in the annual planning process with their mitigation plan. Other risks are covered as part of the internal audit process and presented to the Audit Committee every quarter. The business process risks and the related controls are subjected to internal audit and reviewed on a quarterly basis. The risk ratings are revalidated with the top management as part of the internal audit process every quarter. The overall re-assessment of risks at the Company level is carried out and presented to the Board of Directors once in two years for their review.

	Risk	Nature of Risk	Risk Mitigation Strategies
	Industry / Market Risk	76% of revenue is derived from the Indian automotive sector. Hence, any drop in vehicle production will have a significant impact on the Companys business.	The Company constantly strives to: (a) Increase revenue from international markets (outside of India). (b) Add new products to increase organic revenue and diversify customers across vehicle segments. (c) Improve presence in the Aftermarket segment, which presents an opportunity to compensate for any drop in the OE segment.
Strategic	Technology Obsolescence Risk	Auto industry and customer preference undergo changes, resulting in technology obsolescence.	The Company has consistently delivered cutting-edge technology products with enhanced R&D capabilities, localisation of testing and validation capabilities.
			Proactive engagement with customers at an early stage helps the Company to capture and work on the new technology development.
	Competition	Maintaining market share in the competitive market and availability of unorganised players pose further challenges.	The Companys long-standing relationship with OEMs, state-of-the-art facilities and best-in-class processes help deliver superior value to the customers. The Company periodically conducts customer surveys to understand customer feedback and work in furthering its relationship with the customers.
	Quality / Processes	Quality and delivery are sacrosanct for the safety-critical products supplied by the Group	Skilled workforce, imparting job skill enhancement training, enhancing supplier capabilities and robust manufacturing processes help the Company mitigate quality and delivery risks.
	People Risk	Attrition of key personnel could impact business operations and growth.	The Companys HR processes are constantly upgraded to attract, retain and develop talent. The policies are people-centric and industry accolades on HR practices help attract talent. The dedicated training centre supports in building functional capabilities and developing a strong leadership pipeline.
Operational			The performance management system and other employee engagement initiatives help develop and retain talent.
	Raw Material (Input) Price Risk	Material cost is a significant part of the cost and volatility in the price of raw material costs will erode margin.	The Company constantly strives to mitigate the input cost increases by:
			(a) Implementing a procurement function that will work on cost-reduction initiatives through alternate sourcing, localisation, etc.
			(b) Negotiating and passing through input cost, which increases suitably to the customers.
			(c) Working on process improvements, yield improvements, etc.
	Risk	Nature of Risk	Risk Mitigation Strategies
	Currency Risk	The Company is exposed to foreign currency exchange risk as it exports our products to various countries and import raw materials.	The Company uses a multi-pronged approach as suitable to the scenarios. This approach includes: (a) Optimally balancing the import and export to create natural hedge.
			(b) Working with customer-to-index prices to mitigate currency fluctuations.
Financial			(c) Taking simple forwards on a rolling basis to protect its export realisation.
	Interest Rate Risk	Use of borrowings to fund expansion exposes the Company to interest rate risk.	The Company manages interest rate risk on the following basis:
			(a) Maintaining optimal debt-equity levels.
			(b) Using internal accruals to fund expansion.
			(c) Constantly optimizing working capital to reduce interest costs.

6. Human Resource Development and Industrial relations 6.1. Talent Development Initiatives

In FY 2023-24, the Company focused on the following talent development initiatives: Leadership Development 6.1.1. Leadership Boot Camp (LBC)

Group level mandatory internship scheme was introduced wherein the identified entry level graduates were on-boarded as interns before joining as trainees in order to provide real work experiences. 60 entry level graduates (GET/MT/ PGET) joined us as part of our entry level talent hunt and underwent the LBC journey. LBC focuses on supporting the transition from campus to corporate and has a blend of technical and soft skills programs, plant visits, on-the-job training, cross functional exposures and interactions with business leaders.

6.1.2. Young Leadership Development (YLD)

The objective of YLD is to facilitate the development of leadership competencies of first time managers and to provide young leaders relevant exposures and high quality learning experiences thereby strengthening the leadership bandwidth at middle management. The seventh batch underwent 5 days of classroom sessions across 3 modules facilitated by Shri Dharmasthala Manjunatheshwara Institute for Management Development (SDMIMD). They also had interactive session with business leaders who shared their insights and experiences on leadership effectiveness.

As part of the ongoing learning engagement journey, YLD participants from earlier batches underwent a two-day workshop on strategy and finance facilitated by a reputed B school in Chennai. The workshop was curated with the objective of enhancing their business understanding through Rane specific case studies. Participants presented their solutions to the case studies by drawing insights from various modules to a panel of business leaders and interacted with them on the approach and strategy for the case study.

6.1.3. High Potential Leadership Development (HPLD)

The objective of HPLD is to build leadership competencies of high potential talent and strengthen the leadership pipeline. Participants underwent a customised residential program titled TOP GEAR (Transforming Organization and Profitability through Growth, Engagement, Actions, Results) at Great Lakes Institute of Management (GLIM), Chennai. TOP GEAR enables participants to understand their potential and the shifts required to be future ready. The participants showcased their action learning projects to Business Heads along with Dr. Suresh Srinivasan, GLIM, who shared their insights on the projects and felicitated the participants. As part of the HPLD design, the participants underwent an outbound experiential assessment and development centre at Pegasus Institute, Pondicherry. The outbound had continuous feedback assessments that helped them to have easy acceptance of feedback and concrete developmental takeaways.

6.1.4. Rane Manufacturing Systems Professionals (RMSP)

RMSP was originally launched in June 2017 to ‘Build Manufacturing Capability among junior & middle managers in Manufacturing, Manufacturing Engineering, Quality Assurance and Plant Engineering functions. RMSP 4.0 was refreshed and rolled out in June 2023 with the objective of "enhancing manufacturing capability through technical proficiency for significant improvement in plant performance". The enhanced version of the program has two streams, Basic stream and Advance stream and places emphasis on learners, enabling role-based development for significant improvement in plant performance.

6.2. Learning digital journey

To enable anytime anywhere access, the Learning Management System (LMS) was refreshed and transitioned to cloud and the Rane LMS app was rolled out. Some of the salient features of the app include workflows to self-enroll for programs, track and review Individual Learning and Development Plan progress and view real time dashboards. Further the L&D leaderboard was introduced to elevate learner engagement by recognising individuals as learning champion(s) and managers as enabling champion(s) based on milestones and metrics. The ‘Digital Library was enhanced with over 100 resources in the form of articles, E-books, podcasts, videos on self-leadership, people leadership, wellness, office productivity and technical processes. e-learning courses were rolled out in the mobile platform including course on governance and road safety awareness. Employees were also encouraged to pursue online courses through the SWAYAM platform, a ministry of HRD initiative with a sponsorship for certification for up to 3 courses in a year.

6.3. Great Place to Work (GPTW)

The Rane Group believes in continuous improvement in all aspects of its operations. Employee satisfaction and engagement are as key to its growth as business performance. Therefore, to give the employees a platform to express their views in a free and open manner, Rane has been conducting an Employee Opinion Survey for almost a decade. An external consultant would administer the survey, share the findings, and help in identifying the strengths and areas of opportunity. As the organisation grew, there was a need to find other models that accurately and efficiently captured employee views and helped to benchmark against the best in keeping the employees happy.

GPTW is a globally recognized body that helps businesses create a sustainable, high trust, high-performance culture. Rane Group has been participating in the survey for over 15 years and using the findings to elevate the employee engagement and experiences. RBL was proud to be GPTW certified for the 3^rd year in a row.

6.4. Wellness at Rane

Rane Group is committed to promoting a healthy and positive work environment for its employees. A wellness app was launched in partnership with The Wellness Corner which provides holistic wellness solutions to prioritize the health and well-being of the employees. Through this initiative, employees are encouraged to participate in multiple challenges and that help in adopting healthy habits like regular exercise and mindful eating. Through various initiatives such as wellness workshops, mental health support and financial wellness programs, we aim to empower our employees to lead balanced and fulfilling lives.

Wellbeing of our employees are prioritized through robust HSE (Health, Safety and Environment) practices, including ergonomic assessments, to ensure that the workspaces are optimized for comfort and productivity.

Rane Premier League (RPL) is one such event to celebrate the togetherness and also craft a workplace wellness. RPL, a cricket tournament was held among the group entities of Rane. Companies nominated best cricketers who were enthusiastic to bring home the trophy. RPL had a total of 9 teams who fought for winner and runner up awards.

Chennai Marathon is yet another event which saw good participation from Rane Group as part of wellness initiative. The Chennai Marathon is the largest sporting event in Chennai. This year, 144 employees from the Rane Group participated in the Chennai Marathon.

6.5. Women empowerment at Rane

Towards our commitment to empower women in the workplace, Rane Group launched Women at Work (W@W) Group. This group aims to build a community of "Engaged, Enthused and Empowered" women in supporting their career aspirations while effectively managing the demands of their evolving life circumstances. W@W group will be mentored by an executive coach. The format will be one-on-one and group sessions that will serve as a valuable platform for women within the organization to connect, share experiences, and access resources aimed at advancing their professional development.

6.6. Industrial Relations

The group level industrial relations council works towardstheobjectiveofcreatingahealthyworking environment by promoting peace and harmony amongst all segments of employees. The focus areas for the council includes interpretation and implementation of legislations, workforce mix planning for optimal deployment and sharing of best practices.

7. Corporate Social Responsibility (CSR)

Rane Foundation, a public charitable trust founded in the year 1967, is the lead for implementing Rane Groups CSR initiatives. The Companys CSR vision is ‘to be a socially and environmentally responsible corporate citizen. The Company continues to focus on four thrust areas for its CSR activities – Education, Healthcare, Environment and Community Development. In FY 2023-24, the Group implemented several projects by primarily focusing on Education, Healthcare and Community Development.

7.1. Education

The Rane Polytechnic, established at Trichy in the year 2011 under the aegis of Rane Foundation has stepped into its thirteenth academic year. The institution is accredited by the National Board of Accreditation (NBA) for its Diploma in Mechanical Engineering program. So far 1831 students have completed their diploma program and 137 students have completed the program in the academic year 2023-24. Out of 137 students, 105 opted for placements and 100% placement was achieved for the FY 2023-24 batch.

The Rane Vidyalaya, established at Trichy in the year 2018 under the aegis of Rane Foundation has stepped into its sixth academic year. Rane VidyalayawasrecognizedbyDirectorateofSchool Education, Tamil Nadu in 2018 and is affiliated to the Central Board of Secondary Education, New Delhi. In 2023-24, it reached a student strength of 841 in its sixth year of operations, operating from LKG to IX standard proving the need for a quality school in rural area.

Rane Foundation in association with various educational institutions carried out the following:

• Organized pre-vocational training with Maithree to support 10 special children in the age group between 14 and 18.

• Extended support to the Gopalapuram Educational Society towards running & maintenance of Boys & Girls Schools.

• Supported in setting up of 15 Single Teacher Schools in association with Swami Vivekananda Development Society.

• Provided 50 web-cameras to Ramakrishna Mission Students Home.

7.2. Healthcare

Rane Foundation through strategic partnerships with established organisations contributed medical equipment to not for profit hospitals of repute, making a significant impact on society across various specialties such as Ophthalmology, Dialysis, and Public Health Care at an affordable cost, as outlined below.

• Enhanced the infrastructure at Sringeri Sharada Equitas Cancer cum Multi speciality Hospital, a charitable hospital, with equipments such as 32 paramount 5 function motorized beds with mattress, 9 single nurse control motorized ICU beds with 5 functions and 43 semi fowler beds with mattress.

• Supported Apollo Hospitals Enterprise Limited in conducting Tele-Ophthalmology

Camp at Trichy including delivery of spectacles.

• Donated Photo Slit Lamp equipment to Sankara Nethralaya to enhance the ophthalmic care.

• Supported Voluntary Health Services, a multi-speciality hospital with drager fabius plus anaesthesia work station and vamos plus.

• Supported Tamil Nadu Kidney Research Foundation (TANKER Foundation), a non-profit charitable trust with 8 automatic external defibrillators.

7.3. Community Development:

Rane Foundation in association with Swami Vivekananda Rural Development Society supported in providing skill training for motor car driving for 25 women including obtaining license and facilitating employment opportunities.

8. Internal Control Systems

The Company has put in place a robust internal control system to prevent operational risks through a framework of internal controls and processes. These controls ensure that the business transactions are recorded in a timely and complete manner in the financial records, resources are utilised effectively and the assets are safeguarded.

The internal audit function is carried through a professional firm of independent assurance service providers. The Audit Committee and the Board in consultation with the internal auditors, statutory auditors and operating management approve the annual internal audit plan. The scope also covers the internal financial controls and internal controls over financial reporting. The internal audit findings are placed before the Audit Committee at each of its quarterly meetings for review. The managements responses and counter measures are discussed in the Audit Committee meetings. This process ensures robustness of the internal control system and compliance with laws and regulations including resource utilization and system efficacy.

9. Cautionary statement

The information and opinion expressed in this Report may contain certain forward-looking statements, which the management believe are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report.

		For and on behalf of the Board
	Harish Lakshman	Ganesh Lakshminarayan
	Vice-Chairman &	Chairman &
Place: Chennai	Joint Managing Director	Managing Director
Date: May 15, 2024	DIN:00012602	DIN:00012583