Talbros Engineering Ltd Directors Report.

To The Members,

The Directors have pleasure in presenting 34th Annual Report on the business and operations of the Company alongwith the audited Balance Sheet and Statement of Profit & Loss for the year ended on 31st March 2020.

FINANCIAL RESULTS: (Rs. in Lacs)
Particulars Year Ended 31st March, 2020 Year Ended 31st March, 2019
Revenue from Operations
- Sale of Products 20,732 25,797
- Other Operating revenues 891 1,128
Total Revenue from Operations 21,623 26,925
Other Income 112 146
Total Income 21,735 27,071
Profit before Interest, Depreciation & Tax 2,008 2,540
Less: Interest 720 682
Depreciation 783 652
Exceptional Items NIL 77
Profit Before Tax and After Exceptional Items 505 1,129
Less: Previous Year adjustments (26) 19
Provision for current year income-tax 77 290
Provision for Deferred Tax 52 100
Net Profit after tax 402 720
Net profit after tax and adjustments 402 720
Other Comprehensive Income
- Items that will not be classified to profit or loss (15) 11
- Items that will classified to profit or loss (3) NIL
Total Income 384 731
EPS (Basic) 7.57 14.41
EPS (Diluted) 7.57 14.41

REVIEW OF OPERATIONS:

The Company has achieved net revenue from operations of Rs. 21,623 Lakhs in this financial year ended on 31st March, 2020 as against 26,925 Lakhs for the previous financial year. The net profit after tax for this year is Rs. 402 Lakhs as compared to Rs. 720 Lakhs for the previous financial year. Reserves & Surplus as on 31st March, 2020 stand at

Rs. 5,554 Lakhs as against the paid-up capital of Rs. 508 Lakhs.

DIVIDEND:

Your Directors do not recommend any for the financial year 2019-20.

TRANSFER TO GENERAL RESERVE:

Your Directors do not propose transfer to the general reserves and it is proposed to be retained in the profit and loss account.

SHARE CAPITAL

The Paid up Equity Share Capital of the Company as on 31st March, 2020 was Rs. 507.65 Lakhs comprising of 50,76,504 Equity Shares of Rs. 10/- each. There is no change in Authorised, Subscribed, Issued and paid up capital of the Company during the year under review.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND:

Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all unpaid and unclaimed dividends are required to be transferred by the Company to IEPF established by the Government of India, after completion of seven years. Further, according to the Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to demat account of the IEPF Authority. Accordingly, the Company has transferred the unclaimed and unpaid dividends of Rs. 1,23,307/- pertaining to unclaimed and unpaid dividend for the financial year 2011-12. Further, 12,671 corresponding shares were transferred as per the requirements of IEPF Rules. The details are provided on our website www.talbrosaxles.com.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SUB-SECTION (12) OF SECTION 143 "OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT"

No matters of actual or alleged fraud has been reported by the auditors under sub-section 12 of Section 143 of Companies Act, 2013.

LISTING FEES

The annual listing fees for the year under review have been paid to BSE Limited where your Companys shares are listed.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a proper Internal Control System commensurate with the size, scale and complexity of its operations. The Company has appointed M/s Harshit Bansal & Associates, Chartered Accountants as Internal Auditors of the Company for financial year 2019-20. To maintain the objectivity and independence, the Internal Audit team reports to the Chairman of the Audit Committee of the Board and to the President/COO.

The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system in the company, accounting procedures and policies. Based on the internal audit report, the Company undertake corrective action in their respective areas and thereby strengthen the control.

MARKETING AND EXPORT:

The export sales of the Company during the financial year 2019-20 stands at Rs. 4,364 Lakhs as against Rs. 5,207 Lakhs in the previous fiscal.

BORROWINGS:

The Companys consolidated borrowings as on March 31, 2020 was Rs. 8,567 Lakhs as against Rs. 10,501 Lakhs as at March 31, 2019.

RATING:

Your Company has been assigned a rating of BBB+ (Stable outlook) for Long Term Bank Facilities (Term Loans) of

Rs. 11.72 Crores and rating of BBB+/A2 for Short Term Bank Facilities (Fund Based Limits) availed from DBS Bank Limited, Yes Bank Limited, HDFC Bank Limited, The Hongkong and Shanghai Banking Corp. Ltd. The rating is assigned by CARE Ratings Limited.

SUBSIDIARIES:

The Company is not having any subsidiary company.

DIRECTORS:

The Board of Directors consists of executive and non-executive directors including independent directors who have wide and varied experience in different disciplines of corporate functioning.

During the year, Mr. Sarabjeet Singh has been appointed as an Additional Independent Non Executive Director w.e.f. 15th November, 2019 pursuant to the provisions of section 161 of the Companies Act, 2013, who shall hold the office of Director upto the Ensuing General Meeting. However, the Nomination and Remuneration Committee has recommended for confirmation of his appointment in ensuing General Meeting. A resolution seeking shareholders approval for his appointment forms part of the Notice.

Mr. Sanjay Sharma, Executive Director is liable to retire by rotation and being eligible offers himself for re-appointment. Your Directors recommend for his re-appointment.

The first consecutive term of Mr. Kuldeep Singh Bhalla as an Independent Director will expire on 31st March, 2021. The Board of Directors, based on the performance evaluation and as per the recommendation of Nomination and Remuneration Committee has recommended his reappointment for second consecutive term of 5 (Five) years commencing from 01st April, 2021. A resolution seeking shareholders approval for his appointment forms part of the Notice.

The tenure of Mr. Vijay Kumar Sharma as an Executive Director of the Company will expire on 30th September, 2020. The Board of Directors, based on his overall performance and as per recommendations of Nomination and Remuneration Committee, recommended his reappointment as an Executive Director for a further period of 5(Five) Years commencing from 01st October, 2020. A resolution seeking shareholders approval for his appointment forms part of the Notice.

Pursuant to section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company during the year are Mr. Vijay Kumar Sharma, Executive Director, Mr. Sanjay Sharma, Executive Director, Mr. Kanwar Pal Pawar, Chief Financial Officer and Mr. Ankush Jindal, Company Secretary.

COMPOSITION OF COMMITTEES

The Composition of all Committees formed by the Board is provided in Corporate Governance Report.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company as required under Schedule IV of the Companies Act, 2013 and Listing Regulations has made arrangements to facilitate the Independent Directors to familiarize with the operations of the Company, their roles, rights, responsibilities as Directors of the Company considering the nature of the Industry in which the Company operates, business model of the Company, etc. The above aspect can be accessed on website www.talbrosaxles.com. During the year 2019-20, Mr. Sarabjeet Singh has been appointed as an Independent Director of the Company w.e.f. 15th November, 2019 for a first consecutive term of 5 (Five) years, subject to the approval of shareholders.

DIRECTORS RESPONSIBILITY STATEMENT:

The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on accrual basis. The Ind AS are prescribed under section 133 of Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 effective from April, 2016, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with applicable transition guidance.

The directors confirm that:

(i) In preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to material departures;

(ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that were 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;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis;

(v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS:

The Independent directors have submitted their disclosure to the Board that they fulfill all the requirements as to qualify for their appointment as an Independent Director under the provisions of section 149(6) of the Companies Act, 2013 and under regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Independent Directors have also confirmed that they have included their name in data bank in compliance with sub rules (1) and (2) of Rules 6 of Companies (Appointment and Qualification of Directors) Rules, 2014.

NUMBER OF MEETINGS OF THE BOARD:

The Board met 5 (Five) times during the financial year under review, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013.

BOARD EVALUATION:

Pursuant to the provisions of Companies Act, 2013 and Regulation 25(3) of SEBI (Listing Obligations & Disclosure Requirements), Regulations, 2015, and as per Guidance Notice issued by SEBI, the Board has carried out annual performance evaluation for Financial Year 2019-20.

Independent Directors at their meeting without the participation of the Non-Independent Directors and Management, considered / evaluated the Boards performance, assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Board subsequently evaluated its own performance, the working of its committees (Audit, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee) and Independent Directors (without participation of the relevant Director).

The criteria for performance evaluation have been detailed in the Corporate Governance Report attached to this report.

REGISTERED OFFICE

The Registered Office address of the Company is Plot No. 74-75-76, Sector 6, Faridabad, Haryana – 121 006.

POLICY OF DIRECTORS APPOINTMENT AND REMUNERATION:

The Companys policy on directors appointment and remuneration and other matters pursuant to section 178(3) of the Companies Act, 2013 has been disclosed in Corporate Governance Report, which forms part of this report.

CODE OF CONDUCT:

The Board of Directors has approved a code of conduct applicable to the members of the Board, principal executive officers, principal financial officers, principal accounting officers or controllers and all senior management of the Company. The code has been titled as "Code of Ethics for Designated Persons". The same has been posted on the website of the Company www.talbrosaxles.com.

The code lays down as standard procedure for efficient working of designated employees and to build a transparency between the management and stakeholders of the Company, compliance with governmental laws, rules and regulations.

The Designated employees have confirmed the compliance with the code of conduct.

AUDIT COMMITTEE:

The Audit Committee consists of 3 (Three) Directors with Independent Director as chairman. During the year 4 (Four) meetings of the committee were held. The responsibility and duties of Audit Committee have been detailed in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration committee consists of 3 (three) Non Executive Directors. During the year 2 (Two) meetings have been held. The key areas of Committee have been detailed in Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

The Company has not given any loan or guarantees covered under the provisions of section 186 of Companies Act, 2013. The detail of investments made by the Company is given in the notes to the financial statements.

CHANGE IN THE NATURE OF BUSINESS:

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

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There has been no material changes and commitments, which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this report except the impact arising out of COVID-10 pandemic situation.

The World Health Organisation (WHO) has declared COVID-19 outbreak as a pandemic on 11th March, 2020. Consequently, the Indian Government has taken several measures including imposing of multiple lockdowns w.e.f. 22nd March, 2020 which was extended in a phased manner till May 31, 2020. All businesses and services except essential services have been closed during the period of lockdown. However, in order to mitigate the economic and social hardship, the lockdown has been partially lifted in the month of May and June, 2020.

The Company has partially resumed its operations with minimum staff considering the safety precautions and after taking permissions from prescribed authorities.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS

There are no significant or material orders passed by the Regulators / Courts which would impact the future operations / going concern status of the Company.

RELATED PARTY TRANSACTIONS:

Pursuant to the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a policy on Related Party Transactions which can be accessed on Companys website www.talbrosaxles.com. The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties.

All Related Party Transactions have been placed before the Audit Committee for approval. A Statement containing the details of all Related Party Transactions has been placed before the Audit Committee for its review on a quarterly basis. Pursuant to Regulation 23(9) of SEBI (LODR) Regulations, 2015 related party transactions are reported to stock exchange on a half-yearly basis.

All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the company with promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Information on transaction with related parties pursuant to section 134(3)(h) of Companies Act, 2013 read with rule 8(2) of Companies (Accounts) Rules, 2014 are given in form AOC-2 and the same forms part of this report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The policy on Vigil Mechanism/Whistle Blower is hosted on the website of the Company.

The policy inter alia provided direct access to the Vice Chairman and CFO of the Company. The Vice Chairman and CFO can approach and discuss the matter with Chairman or Audit Committee as they deem fit.

Your Company affirms that no complaints have been received during the year under review.

STATUTORY AUDITORS:

M/s DSRV and Co. LLP, Chartered Accountants (Firm registration number 006993N) was appointed as Statutory Auditors of the Company to hold the office from the conclusion of 31st Annual General Meeting held on 28th September, 2017, till the conclusion of 36th Annual General Meeting to be held in year 2022, subject to the ratification by shareholders at every Annual General Meeting or as may be necessitated by the Act from time to time. The Ministry of Corporate Affairs vide their notification dated 7th May, 2018 has dispensed the requirement of ratification of Statutory Auditors and each Annual General Meeting.

The Statutory Auditors Report for Financial Year 2019-20 on the financial statement of the Company forms part of this Annual Report. There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their audit report on the financial statements for the year ended on 31st March, 2020. The observations of the Statutory Auditors are self-explanatory and therefore Directors dont have any further comments on the same.

SECRETARIAL AUDIT REPORT AND THE APPOINTMENT OF THE SECRETARIAL AUDITOR:

The Company has appointed M/s Anuj Gupta & Associates, Company Secretaries to hold the office of Secretarial Auditors and to conduct the Secretarial Audit pursuant to section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Secretarial Audit Report for the financial year ended on 31st March, 2020 is being attached with the

Directors Report as Annexure – B which is self explanatory and needs no comments.

Pursuant to recent amendments in Listing Regulations read with SEBI circular NO. LIST/COMP/14/2018 dated June 20, 2018, a certificate from M/s Anuj Gupta & Associates, Company Secretary in Practice that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of Companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority is annexed to Corporate Governance Report.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company complied with all applicable Secretarial Standards.

COST AUDITORS AND THEIR REPORT:

Cost Audit is not applicable on the product being manufactured by the Company.

INSURANCE AND RISK MANAGEMENT:

The assets of the Company are adequately insured against the loss of fire, burglary and other risks which are considered necessary by the management and suggested by the bankers of the Company.

PREVENTION OF INSIDER TRADING:

The Company has formulated and adopted code for prevention of insider trading. The same has also been published on the website of the Company.

The code inter alia contains the formalities / pre clearance required for dealing in companys shares and prohibits the sale or purchase by the Directors and designated employees while in possession of the unpublished price sensitive information and during the closure of trading window. The Board is responsible for implementation of the code.

All the directors and designated employees have confirmed compliance with the code.

DEPOSITS:

The Company has not accepted any deposits under Chapter V of the Companies Act, 2013 during the year.

CORPORATE GOVERNANCE:

Your Company is committed to good Corporate Governance Practices and following to the guidelines prescribed by the SEBI and Stock Exchanges from time to time. The Company has implemented all of its major stipulations as applicable to the Company. The Statutory Auditors Certificate dated 06th August, 2020 in accordance with SEBI (Listing

Regulations), 2015 and report on Corporate Governance is annexed to and forming part of the Directors Report.

Mr. Tarun Talwar, Chief Operating Officer and Mr. Kanwar Pal Pawar, Chief Financial Officer, have given a certificate to the Board as contemplated in Regulation 17(8) and Schedule V of SEBI (Listing Regulations), 2015.