schaeffler india ltd share price Directors report


Dear Shareholders,

Your Directors are pleased to present the 59th Annual Report of the Company together with the audited financial statements of the Company for the year ended December 31, 2021.

Financial Highlights

(Rs in million)

Particulars 2021 2020
Net revenue 55,605 37,619
EBITDA* 9,950 5,402
Less: Depreciation/Amortisation 1,971 1,940
Less: Finance cost 37 53
Add: Interest income 489 563
Profit before tax 8,431 3,972
Provision for tax 2,140 1,062
Profit after tax 6,291 2,910

* Earnings before Interest, Tax, Depreciation and Amortisation

Financial and Operational Performance

Performance of the Company and State of Companys Affairs

Your Companys Revenues was Rs 55,605.1 million in year 2021 (Year 2020: Rs 37,618.4 million) which is higher by 47.8%.

Profit before tax was placed at Rs 8,431.4 million (Year 2020: Rs 3,972.1 million) representing a growth of 112.3%. Your Company recorded profit after tax of Rs 6,291.2 million (Year 2020: Rs 2,909.7 million) which represent a growth of 116.2%.

Global Outlook

After a long period, the global growth reached to an estimated 5.5 percent in 2021 owing to the pent-up demand. The continued COVID-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks makes for a bleak outlook for 2022. Persistent labour market challenges, frail supply-chain and inflation concerns were already softening the growth outlook, which further deepened with recent geopolitical crisis. Soaring energy and commodity prices are likely to derail the momentum and create divergent growth trajectories for countries. This may lead to tightening of fiscal and monetary policies which will further decelerate the growth momentum, particularly in emerging and fragile markets.

India Outlook

India continues to remain among the fastest-growing economies in the world. The pandemic caused disruptions in the economic and healthcare activities, but we see the economy recovering gradually. Growth is projected at 9.5% for FY 22 and at 8.5% for FY 23. The economic outlook remains clouded due to pandemic related uncertainties on investments, human capital and other growth drivers.

This could have a medium-term impact on the growth rate. However, the announcement of the Union Budget highlights that rapid pace of vaccination and long-term benefits of supply side reforms could aid growth. Major policy changes with a thrust on clean mobility, green energy and investment offer long-term growth opportunities. Successful implementation of the announced wide-ranging structural reforms could increase Indias growth potential.

Share Capital Structure

There has been no increase / decrease in the Authorised Share Capital of your Company during the year under review.

To encourage wider participation of investors and improve the liquidity of the Equity Shares in the stock market, the Board of Directors at its meeting held on October 28, 2021 had considered and recommended the Sub-division / Stock split of 1 (One) Equity Share of the Company of face value of Rs 10/- (Rupees Ten Only) each into 5 (Five) Equity Shares of the Company of face value of Rs 2/- (Rupees Two only) each fully paid up subject to approval of the Members and other statutory and regulatory approvals, as applicable.

Subsequently, the Shareholders of the Company approved the Sub-division / Stock split of 1 (One) Equity Share of face value of Rs 10/- (Rupees Ten Only) each in to 5 (Five) Equity Shares of face value of Rs 2/- (Rupees Two only) each on December 19, 2021 through remote e-voting Postal Ballot process. Old ISIN of the Company has been deactivated and in place new ISIN: INE513A01022 was activated by the depositories for the equity shares of the Company. Equity Shares have been successfully credited into the respective demat accounts of Shareholders holding shares as on record date (February 9, 2022) and Shareholders holding shares in physical form were issued fresh share certificates with new distinctive numbers with their old share certificates duly cancelled.

Alteration of ‘Capital Clause of Memorandum of Association

Pursuant to the Sub- division / Stock split of face value of equity shares of your Company, as mentioned above, the Capital Clause of the Memorandum of Association of the Company was altered and substituted with a new Clause V to reflect the corresponding changes in the Authorised Share Capital. Members of the Company had approved such alteration in the Capital Clause of Memorandum of Association through remote e-voting Postal Ballot on December 19, 2021.

Material Changes and Commitments and Change in Nature of Business

There have been no material changes and commitments affecting the financial position of your Company from the end of the Financial Year 2021 up to the date of this report.

There has been no change in the nature of business of your Company.

Dividend and Transfer to Reserves

Your Company has a steady dividend payment history and considering the financial performance of the year 2021, your Directors recommend dividend for the year ended December 31, 2021 at the rate of Rs 16/- per share of Rs 2/- (2020: Rs 38/- dividend per share of Rs 10/-) per equity share amounting to Rs 2,500.8 million (2020: Rs 1,187.9 million). Considering sufficiency of balance, your Directors do not propose to transfer any amount to General Reserves for the year under review.

The details of the Dividend for the Financial Years 2021 and 2020 are as follows:

Dividend 2021 2020
Month and Year of Declaration April 2022 April 2021
Amount of Dividend Per Equity Share of Rs 2 each (in Rs)* 16 NA
Amount of Dividend Per Equity Share of Rs 10 each (in Rs)* NA 38
% of Dividend 800 380
Total Dividend (Amt. in million) 2,500.8 1,187.9

* Sub-division / Stock split of 1 (One) Equity Share of the Company of face value of Rs 10/- (Rupees Ten Only) each into 5 (Five) Equity Shares of the Company of face value of Rs 2/- (Rupees Two only) each.

Dividend Distribution Policy

Your Company has adopted the Dividend Distribution Policy to determine the distribution of dividends in accordance with the provisions of applicable laws and has been uploaded on the website at

https://www.schaeffler.co.in/remotemedien/media/shared_media_rwd/03_worldwide_1/websites_worldwide/india_3/_investor_relations/corporate_governance_1/codes_and_policies/Annexure_8b_Dividend_Distribution_Policy.pdf

The Dividend Distribution Policy also forms part of this Annual Report 2021.

Dividend Payout Ratio

To meet Shareholders expectations and as a good governance practice, the Board of Directors of your Company has approved the target dividend payout ratio of 30% to 50% of the annual standalone profits after tax (PAT) as announced by the Company from time to time, subject to the applicable rules and regulations and amended the Dividend Distribution Policy accordingly.

Your Company has adopted a progressive Dividend Policy, intending to sustain or raise the dividend each year, in conjunction with the financial performance and free cash profit generation each year.

Corporate Governance

A separate section on Corporate Governance forms integral part of the Annual Report and a compliance certificate from M/s. Samdani Kabra & Associates, Company Secretaries, the Companys Secretarial Auditors confirming the compliance of conditions of Corporate Governance is annexed thereto.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations), detailed review of operations, performance and future outlook of the Company is covered under Management Discussion & Analysis section of the Annual Report.

Business Responsibility Report

Pursuant to Regulation 34 read with Schedule V of the SEBI Listing Regulations, detailed initiatives taken by the Management from an environmental, social and governance perspective is covered under Business Responsibility Report section of the Annual Report.

Board of Directors

Boards Composition and Independence

Board Composition

Your Companys Board consists of leaders and visionaries who provide strategic direction and guidance to the Company. As on December 31, 2021, the Board comprised of 2 (Two) Executive Directors, 5 (Five) Non-Executive Independent Directors and 3 (Three) Non-Executive Non-Independent Directors. At present, your Company has 8 (Eight) Non-Executive Directors out of which 5 (Five) are Independent Directors. Pursuant to the provision of Regulation 17(1)(a) of the SEBI Listing Regulations, the Board of Directors of the top 1,000 listed entities are required to have at least one Independent Woman Director. The Company has 3 (Three) Women Directors comprising of 2 (Two) Independent Women Directors and 1 (One) Non-Executive Non-Independent Woman Director. Further, as per the Regulation 17(1)(b) of the SEBI Listing Regulations, every listed company is required to have at least one-third of its total strength of the Board of Directors as Independent Directors where Chairman is a Non-Executive Director. Your Company complies with these requirements.

Independent Directors Declaration

Definition of ‘Independence of Directors is derived from Regulation 16 of the SEBI Listing Regulations and Section 149(6) of the Companies Act, 2013. The Company has received necessary declarations under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI Listing Regulations, from the Independent Directors stating that they meet the prescribed criteria for independence.

All Independent Directors have affirmed compliance to the code of conduct for Independent Directors as prescribed in Schedule IV to the Companies Act, 2013. List of key skills, expertise and core competencies of the Board forms part of this Annual Report.

Based on the declarations received from the Independent Directors, your Board of Directors confirm the independence, integrity, expertise and experience (including the proficiency) of the Independent Directors of the Company.

As per regulatory requirements, all the Independent Directors have registered their names in the Independent Directors Databank, pursuant to provisions of the Companies Act, 2013 and rules made thereunder. Further, they are exempted from the requirement of passing the online proficiency self assessment test.

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Satish Patel [DIN: 00690869] and Mr. Dharmesh Arora [DIN: 05350121] will retire by rotation at the ensuing Annual General Meeting (‘AGM) and being eligible offer themselves for reappointment. Mr. Patel and Mr. Arora have confirmed their eligibility and willingness to accept the office of the Director of your Company, if confirmed by the Members at the ensuing AGM. In the opinion of your Directors, Mr. Patel and Mr. Arora possess requisite qualifications and experience and therefore, your Directors recommend that the proposed resolutions relating to the re-appointment of Mr. Patel and Mr. Arora be passed with the requisite majority.

During the year under report, the Members of your Company in 58th Annual General Meeting confirmed the appointment/ re-appointment as follows:

a. Confirmation of appointment of Ms. Eranti V. Sumithasri [DIN: 07087197] as an Independent Director for a term of five consecutive years up to July 14, 2025.

b. Reappointment of Mr. Satish Patel [DIN: 00690869], who was liable to retire by rotation and being eligible had offered himself for re-appointment.

c. Reappointment of Mr. Dharmesh Arora [DIN: 05350121], who was liable to retire by rotation and being eligible had offered himself for re-appointment.

Pursuant to Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014, the following changes occurred in the Directors during the year ended December 31, 2021 -

Mr. Jurgen Ziegler [DIN: 07092477] resigned from the Directorship effective July 22, 2021 and Mr. Klaus Rosenfeld [DIN: 07087975 ] resigned from the Directorship effective October 29, 2021. Your Directors express their gratitude for the contribution made by Mr. Ziegler and Mr. Rosenfeld during their tenure as Director.

During the year under report and till the date of this report, the Board has appointed Ms. Corinna Schittenhelm effective from September 12, 2021 and Mr. Andreas Schick effective from October 28, 2021 as Non-Executive Non-Independent Director, liable to retire by rotation.

A brief resume of the Directors seeking appointment or reappointment at the ensuing Annual General Meeting, nature of their expertise in specific functional areas and details regarding the companies in which they hold Directorship, Membership/Chairmanship of Committees of the Board is annexed to the Notice convening 59th Annual General Meeting of the Company.

There is no inter-se relationship between the Directors.

In terms of the SEBI Listing Regulations, your Company conducts the Familiarisation Program for Independent Directors about their roles, rights and responsibilities in your Company, nature of the industry in which your Company operates, business model of your Company etc., through various initiatives. The details of the same can be found at

https://www.schaeffler.co.in/remotemedien/media/shared_media_rwd/03_worldwide1/websites_worldwide/india_3/_investor_relations/corporate_governance_1/Familiarisation_Programs-2021.pdf

Key Managerial Personnel (KMP)

Pursuant to provisions of Sections 2(51) and 203 of Companies Act, 2013 read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following persons are acting as Key Managerial Personnel (KMP) of the Company:

1. Managing Director & Chief Executive Officer:

Mr. Harsha Kadam

2. Director-Finance & Chief Financial Officer:

Mr. Satish Patel

3. Company Secretary: Mr. Ashish Tiwari

Pursuant to Rule 8(5)(iii) of the Companies (Accounts) Rules, 2014, no change occurred in KMP during the year ended December 31, 2021.

Meetings of Board of Directors

During the year under review, 4 (Four) meetings of the Board of Directors were held in compliance with the Companies Act, 2013 and SEBI Listing Regulations on -

Sr. No. Quarter ended Date of Meeting
1. December 2020 February 16, 2021
2. March 2021 April 26, 2021
3. June 2021 July 21, 2021
4. September 2021 October 28, 2021

The details of attendance of each Director at these meetings are provided in the Corporate Governance Report.

Policy on Nomination and Remuneration

The Companys Policy on Nomination and Remuneration is framed with the objectives as under:

1. To formulate criteria and advise the Board in matters of determining qualifications, competencies, positive attributes and independence of Directors and policies relating to their appointment and removal;

2. To review corporate goals and objectives, to set norms of performance evaluation and to lay out remuneration principles for Directors, KMP and Senior Management linked to their effort, performance and contribution towards achievement of organisational goals;

3. To evaluate performance and give recommendations to the Board on remuneration payable to the Directors, KMP and Senior Management; and

4. To review and recommend to the Board measures to retain and motivate talent including KMP and Senior Management Personnel with a view to ensuring long-term sustainability and competitiveness of the organisation.

In addition to above, the Nomination and Remuneration Committee (NRC) may take up any other matters related to talent management in general upon the advice of the Board.

Nomination and Appointment of Directors and Senior

Management

Criteria and Qualification

A person to be appointed as Director, KMP or at Senior Management level should possess adequate relevant qualification, expertise and experience for the position that he / she is being considered. The NRC evaluates whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position and makes appropriate recommendations to the Board of Directors.

Policy on Remuneration

1. The remuneration (including revisions) of Directors is recommended by NRC to the Board for its approval. The remuneration (including revisions) of the Directors, so recommended by NRC to the Board, should be within the limits specified under the Companies Act, 2013 read with the Rules thereunder and as approved by the Shareholders of the Company.

2. None of the Directors (including Independent Directors) shall be entitled to any stock option of the Company.

3. The remuneration to be paid to KMP and Senior Management is recommended by NRC to the Board for its approval.

The Nomination and Remuneration Policy of the Company is disclosed on the website at

https://www.schaeffler.co.in/remotemedien/media/shared_media_rwd/03_worldwide_1/websites_worldwide/india_3/_investor_relations/corporate_governance_1/codes_and_policies/nomination_and_remuneration_policy_schaeffler_india.pdf

Formal Annual Performance Evaluation

Your Company believes that systematic evaluation contributes significantly to improved performance at 3 (Three) levels; Organisational, Board and Individual Board Member.

It encourages the leadership, teamwork, accountability, decision-making, communication and efficiency of the Board. Evaluation also ensures teamwork by creating better understanding of Board dynamics, Board-management relations and thinking as a group within the Board.

Methodology

The evaluation is done as per the process and criteria of annual performance evaluation recommended by the NRC and approved by the Board of Directors. Separate evaluation questionnaire for each category of evaluation viz. the Board, Committees of the Board and Directors (including Executive Directors, Non-Executive Non-Independent Directors and Non-Executive Independent Directors) have been prepared as per the process and criteria approved by the Board.

Process

Separate sets of questions (questionnaire) for each of the evaluations i.e., for evaluation of (a) Board; (b) Each of the Committees of the Board; (c) Independent Director;

(d) Non-Independent Director and (e) Chairman of the Board, are defined in the Policy for Annual Performance Evaluation.

The questionnaire for each category of evaluation is circulated to all the Directors. Each question has four rating options i.e., 1 to 4. 1 denotes ‘Need Improvement, 2: ‘Fair, 3: ‘Good and 4: ‘Excellent.

The ratings of every question are averaged (‘averaged ratings) based on feedbacks received from each Director. Further, average of all ‘averaged ratings are considered as the rating for a particular questionnaire. Based on the outcomes of questionnaire, the NRC carries out evaluation of all the Directors including Independent Directors and the Board carries out the evaluation of its own performance, each of the Committees and that of all Directors.

For the year 2021, the Board has carried out an annual performance evaluation of its own and that of each of the Committees and all Directors including the Chairman of the Company. The NRC has also carried out evaluation of all the Directors including Independent Directors.

Qualitative comments received during the Board evaluation were as follows:

• The Company is transparent, follows good corporate governance practices,

• All significant issues are brought to the Board. Agenda and proceedings are well structured and focused,

• The Board is balanced, forward looking and heterogeneous, diverse views are expressed freely,

• Each Board member brings a different skill set and competence to the discussions,

• Appreciation to the management team for their knowledge, maturity, diligence and sincerity,

• Appreciation for the quality, quantity and timeliness of the flow of information between the management and the Board. The management responds to all queries and requests speedily,

• Increased frequency of the RMC meetings helped to bring rightful attention to the important topics of risk,

• Appreciation for the working of CSR, Audit and NRC Committees. Excellent job done by Company Secretary.

Conclusion

The evaluation for the year 2021 of Directors, each of the Committees and that of the Board have received ratings near excellent.

The Board has taken note of the feedback received from Directors to further improve the performance of the Directors, the Board itself and Committees of the Board.

Meeting of Independent Directors

As per provisions of Schedule IV to the Companies Act,

2013, the Independent Directors are required to hold at least one meeting in a financial year, without the attendance of Non-independent Directors and members of management. During the financial year 2021, the Independent Directors have held one separate meeting on October 29, 2021.

Audit Committee

The Audit Committee consists of 7 (Seven) Directors including 5 (Five) Independent Directors. Mrs. Renu Challu is the Chairperson of the Committee. The other members of the Audit Committee are Mr. Avinash Gandhi, Mr. Arvind Balaji,

Mr. Amit Kalyani, Ms. Eranti V. Sumithasri, Mr. Andreas Schick and Mr. Satish Patel. The Committee met 4 (Four) times during the year. The terms of reference of the Audit Committee, details of meetings held during the year and attendance of members are disclosed in the Report on Corporate Governance.

There was no instance where the recommendation by the Committee was not accepted by the Board.

Whistle-Blower Policy / Vigil Mechanism

Your Company has a well-defined ‘Whistle-Blower Policy and established vigil mechanism to provide for adequate safeguard against victimisation of Directors and employees who use the mechanism. The mechanism also provides for direct access to the Chairperson of Audit Committee in appropriate cases.

The Whistle-Blower/Vigil Mechanism Policy can be accessed on the Companys Website at

https://www.schaeffler.co.in/remotemedien/media/_shared_media_rwd/03_worldwide_1/websites_worldwide/india_3/_investor_relations/corporate_governance_1/codes_and_policies/vigil_mechanism_or_whistle_blower_policy_schaeffler_india_2019.pdf

Risk Management

Your Company has established comprehensive Risk Management System to ensure that risks to the Companys continued existence as a going concern and to its development are identified and addressed on timely basis. Report on Risk Management forms an integral part of this Annual Report.

Constitution of Risk Management Committee

The Board of Directors of the Company has constituted the Risk Management Committee which comprises of 5 (Five) Directors and 2 (Two) Senior Management employees of the Company. Mr. Dharmesh Arora is the Chairman of the Committee. The other members of the Committee are Ms. Eranti V. Sumithasri, Mr. Andreas Schick, Mr. Harsha Kadam, Mr. Satish Patel, Mr. Sameer Mathur (Chief Operating Officer) and Mr. Santanu Ghoshal (Head of Human Resources).

Auditors Statutory Auditors

The Statutory Auditors, M/s. Walker Chandiok & Co LLP, Chartered Accountants, (Firm Registration Number: 001076N/ N500013) were appointed as Statutory Auditors of the Company at the 58th Annual General Meeting (‘AGM) of the Company held on April 27, 2021 for a period of 5 (Five) consecutive years from the conclusion of the 58th AGM till the conclusion of the 63rd AGM of the Company.

There is no qualification, reservation, adverse remark or disclaimer by the Statutory Auditors in their Report.

The observations made in the Auditors Report, read together with relevant notes thereon, are self-explanatory and hence do not call for any comments.

Reporting of Fraud

The Auditor of the Company have not reported any instances of fraud against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.

Secretarial Auditors

M/s. Samdani Kabra & Associates, a firm of Company Secretaries in Practice was appointed as ‘Secretarial Auditors to carry out Secretarial Audit of the Company.

In terms of provisions of Section 204 of the Companies Act, 2013, and in terms of regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBIs circular CIR/CFD/CMD1/27/2019 dated February 8, 2019, a Secretarial Audit Report has been annexed to this Report. (Annexure - A)

There is no qualification, reservation, adverse remark or disclaimer by the Secretarial Auditors in their Secretarial Audit Report.

Cost Records and Cost Audit Maintenance of Cost Records

The Company is required to maintain cost records under Companies (Cost Records and Audit) Rules, 2014. Accordingly cost records have been maintained by the Company.

Cost Audit

M/s. Y. S. Thakar & Co., Cost Accountants, as Cost Auditors were appointed to conduct the audit of the cost records of the Company for the financial year ended December 31, 2021. Based upon the declaration on their eligibility, consent and terms of engagement, your Directors have reappointed M/s. Y. S. Thakar & Co., Cost Accountants to conduct Audit of Cost records for the financial year 2022.

As required under the provisions of the Companies Act, 2013, the remuneration of Cost Auditors as approved by the Board of Directors is subject to ratification by the Shareholders at the ensuing Annual General Meeting.

Corporate Social Responsibility (CSR)

Being a responsible Corporate Citizen, your Company is committed in fulfilling its social responsibilities. Guided by the prevailing regulatory requirements, the Company has constituted a ‘Corporate Social Responsibility (CSR) Committee and framed a Policy on CSR. The policy is available on the website of the Company at

https://www.schaeffler.co.in/remotemedien/media/_shared_media_rwd/03_worldwide_1/websites_worldwide/india_3/_investor_relations/corporate_governance_1/codes_and_policies/Annexure_14_-_CSR_Policv.pdf

Your Company was required to make CSR expenditure of Rs 107.1 million i.e., 2% of the Average Net Profits of your Company made during 3 (Three) immediately preceding financial years. Your Company CSR expenditure was Rs 88.3 million and Rs 13.6 million was transferred to Unspent CSR Bank Account on February 14, 2022 for the ongoing CSR projects to be spent in the next 3 years and Rs 5.2 million is the unspent amount in relation to other than ongoing CSR projects which will be transferred to PM CARES Fund by June 30, 2022. A summary of CSR Policy together with details of CSR activities undertaken by the Company during the year 2021 have been covered in the Annual Report on CSR activities, which is annexed to this Report. (Annexure - B)

Contracts and Arrangements with Related Parties

During the year, all the transactions with the Related Parties have been carried out in normal course of business and based upon well set principles of arms length.

Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. The details of all transactions executed with Related Parties are placed before the Audit Committee on a quarterly basis for its review or ratification as the case may be and are also placed before the Board for its information.

The Related Party Transaction Policy of the Company is available on the website of the Company at

https://www.schaeffler.co.in/remotemedien/media/_shared_media_rwd/03_worldwide_1/websites_worldwide/india_3/_investor_relations/corporate_governance_1/codes_and_policies/Amended_RPT_Policy_SIL_01-04-2022pdf.pdf

A separate Report containing details of Material Related Party Transactions carried out during the year is annexed to this Report in prescribed form AOC-2. (Annexure - C)

Particulars of Employees and Related Disclosures

The disclosures pertaining to remuneration and other details of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, have been annexed to this report. (Annexure - D)

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 have been annexed to this report. (Annexure - E)

Annual Return

As per provisions of Section 92(3) of the Companies Act, 2013, a copy of draft Annual Return of the Company for the financial year 2021 in the prescribed form MGT-7 has been placed on the website of the Company at https://www.schaeffler.co.in/remotemedien/media/shared_media_rwd/03_worldwide_1/websites_worldwide/india_3/_investor_relations/shareholders_information/annual_return/1.pdf

Particulars of Loans, Investments, Guarantees and Securities

The particulars of loans and investments have been disclosed in notes to the Financial Statements. The Company did not give any guarantee or provide any security in connection with any loan and did not acquire any securities during the financial year.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has in place a Policy against Sexual Harassment for Women at workplace in line with the requirement of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company at

https://www.schaeffler.co.in/remotemedien/media/shared_media_rwd/03_worldwide_1/websites_worldwide/india3/investorrelations/corporategovernance1/codes_and_policies/policy_against_sexual_harrasment.pdf

Internal Complaints Committee (ICC) has been constituted to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy.

Status of complaints during the year 2021

There were no complaints pending at the beginning of the year 2021 and the Company received no complaint during the year 2021.

Directors Responsibility Statement

Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state that:

a) In preparation of the annual accounts, the applicable Indian Accounting Standards (Ind AS) have been followed and there are no material departures from the same;

b) The accounting policies have been selected and these have been applied consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at December 31, 2021 and of the profit of the Company for that period;

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) Annual accounts of the Company have been prepared on a ‘going concern basis;

e) Internal financial controls have been laid down and being followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and were operating effectively.

Adequacy of Internal Financial Controls

The Board of your Company has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively. Your Company has also implemented FACTS (Financial Accounting and Controlling Tools) project for integrating accounting and controlling system. The Risk Management framework recognises the Internal Financial Controls as an integral part of its framework and has policies and procedures for addressing the financial reporting risks and ensures orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the Audit Committee, the Board is of the opinion that during the financial year ended December 31, 2021 had sound internal financial controls. These controls placed by the Company commensurate with the nature and size of the business operations and are adequate and operating effectively with no material weakness.

The key internal financial controls and compliance systems have been documented, automated wherever possible and embedded in the respective business processes.

Compliance of Secretarial Standards

Your Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2).

Investor Education and Protection Fund (IEPF)

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Pursuant to the applicable provisions of the Act, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules) as amended, all unpaid or unclaimed dividends which were required to be transferred by the Company to the IEPF were transferred to IEPF Authority.

The Company has also transferred shares in respect of which dividend amount remained unpaid/unclaimed for a consecutive period of 7 (Seven) years or more to IEPF Authority within stipulated time.

The details of unpaid/unclaimed dividend and the shares transferred to IEPF Authority are available on the Companys website at https://www.schaeffler.co.in/content.schaeffler.co.in/en/_investor-relations/shareholders-information/unclaimed-unpaid-dividend/index.jsp

Deposit

During the year, the Company has not accepted any deposits under the Companies Act, 2013.

Subsidiaries, Joint Ventures and Associates

The Company does not have any Subsidiary Company, Joint Venture or Associate Companies as defined in the Companies Act, 2013.

Orders Passed by the Regulators or the Courts or the Tribunals

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations.

Acknowledgements

Your Directors express their gratitude for the continued cooperation and support extended by Schaeffler Group, all the Shareholders, Customers, Suppliers, Distributors, Bankers and all Stakeholders. Your Directors also place on record their appreciation for the employees for their dedication, hard work and efforts.

For and on behalf of the Board
Avinash Gandhi
Chairman
DIN: 00161107
New Delhi: February 16, 2022