the hi tech gears ltd share price Directors report


Dear Members,

Your Directors have great pleasure in presenting the 37th Annual Report of your Company, together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2023. Further, the consolidated performance of the Company and its subsidiaries have been referred to wherever required.

Financial Results

The highlights of the Standalone and Consolidated financial performance of the Company are as under:

(Rs in million except EPS)

Particulars Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
1 Income
a) Revenue from operations 7554.20 6240.31 11403.18 9449.36
b) Other operating revenues 263.94 205.70 289.06 256.99
c) Other income 87.91 71.48 79.32 78.74
Total Income 7906.05 6517.49 11771.55 9785.09
2 Expenses
a) Cost of material consumed 3977.25 3296.36 5748.92 4879.33
b) Purchases of stock-in-trade 168.93 221.74 168.93 221.74
c) Changes in inventories of finished goods and work in progress 49.86 -234.91 74.69 -281.63
d) Employee benefits expense 1,104.39 1008.32 2184.12 2150.60
e) Finance costs 170.83 179.20 331.66 264.47
f) Depreciation and Amortization expense 316.10 303.61 821.51 522.87
g) Other expenses 1,424.74 1206.54 2102.30 1918.61
Total expenses 7,212.10 5980.86 11432.13 9675.99
3 Profit before tax (1-2) 693.95 536.63 339.42 109.10
4 Total Tax Expense 190.55 151.44 108.28 120.12
5 Net Profit for the Year (3-4) 503.40 385.19 231.14 -11.02
6 Other Comprehensive Income 3.85 67.68 29.50 148.64
7 Total Comprehensive Income for The Year (5+6) 507.25 452.87 260.64 137.62
8 Other equity as per statement of assets and liabilities 3788.52 3305.08 3356.28 3119.75
9 Paid-up equity share capital (Face value of Rs 10/- per equity share) 187.68 187.68 187.68 187.68
10 Earnings per equity share (Face value of Rs 10/- per equity share)
(a) Basic (in Rs) 26.82 20.52 12.32 -0.59
(b) Diluted (in Rs) 26.79 20.52 12.30 -0.59

General Information

The Company s unwavering commitment to meeting the aspirations of our esteemed customers, along with our continuous efforts to foster a conducive and innovative culture, has been instrumental in driving improved financial performance. By embracing innovation, leveraging technology, and integrating sustainability into our core business practices, we have achieved notable success in various aspects. This includes increased sales volumes, and effective cost-saving initiatives. Through these strategic endeavors, we have not only achieved sustainable growth but also strengthened our position in the market, reinforcing our dedication to delivering value and excellence to our stakeholders.

The Indian automotive industry holds a prominent position as a vital pillar of the country s economy. Its substantial backward and forward linkages contribute significantly to overall economic growth. Through liberalization and strategic policy interventions, the industry has flourished, giving rise to a vibrant and competitive market landscape. This has facilitated the entry of numerous new players, leading to the expansion of the automobile sector s capacity and generating substantial employment opportunities across the nation. As a major driver of economic progress, the automotive industry plays a pivotal role in shaping India s industrial landscape and contributing to its continued development and prosperity.

According to the data released by SIAM for the Financial Year 2022-23, the automotive industry achieved significant growth. Total vehicle production during April 2022 to March 2023 reached 2,59,31,867 units, marking an increase from 2,30,40,066 units in the previous year (April 2021 to March 2022). The domestic sales for the same period also showed substantial progress, reaching 2,12,04,162 units, compared to 1,76,17,606 units in the previous year. However, exports witnessed a decline, with 47,61,487 units in the current year, down from 56,17,359 units in the previous year. Notably, the sales of Three Wheelers and Two Wheelers experienced remarkable growth in Financial Year 2022-23. Three Wheelers sales rose from 2,61,385 units to 4,88,768 units, and Two Wheelers sales increased from 1,35,70,008 units to 1,58,62,087 units, compared to the previous year.

Regarding exports, there was a mixed trend. While Passenger Vehicle Exports saw a rise from 5,77,875 units to 6,62,891 units in FY-2022-23, Commercial Vehicle, Three-Wheeler, and Two Wheelers exports decreased from 92,297 to 78,645 units, from 4,99,730 to 3,65,549 units, and from 44,43,131 to 36,52,122 units, respectively, compared to the previous year. Your Company demonstrated remarkable agility and foresight in swiftly implementing strategic actions to tackle the challenges arising from high inflation and escalating input costs. By proactively adapting to the changing economic landscape, the Company effectively mitigated potential risks and maintained its competitive edge. This proactive approach exemplifies the Company s dedication to achieving sustainable growth and its capacity to adeptly navigate dynamic market conditions with precision and resilience.

State of Company Affairs

Your Company is one of the few industrial enterprises which have become a world-class Indian brand with a green and sustainable strategy of growth, despite an increasing volatile economic and business environment. Besides being cost competitive, delivering to strict schedules and adhering to high quality standards are the main keys of success for auto component manufacturers, especially to enter into and grow export markets.

Detailed information on the operations and on the state of affairs of the Company are majorly covered in the Management Discussion and Analysis Report, forming part of this report. Despite the challenges the performance of the Company was far better than the overall performance of Auto Industry. During the financial year 2022-23, the total income stood at, Rs. 7,906.05 million as compared to Rs. 6,517.49 million in the last financial year 2021-22, registering a significant growth of 21.29 %. The Profit Before Tax has increased to Rs. 693.95 million as compared to Rs. 536.63 Million in previous year due to the operational excellency. Similarly, the Net Profit After Tax of the Company is also on the upside at Rs. 503.40 million as comparison to Rs. 385.19 million in previous year.

On a consolidated basis, the total Income is Rs. 11,771.55 million in F.Y. 2022- 23 as compared to Rs. 9,785.09 million in the previous F.Y. 2021-22. Similarly, the Net Profit Before Tax is Rs. 339.42 million as compared to Rs. 109.10 millions in previous F.Y. 2021-22. Similarly, the Net Profit After Tax of the Company is also on the upside at Rs. 231.14 Million as comparison to Rs. -11.02 million in previous year.

On the export front, on standalone basis, the Company recorded an export turnover of Rs. 2262.22 million as compared to Rs. 1872.67 million in the previous year, thereby recorded significant growth of 20.80% as compared to the export during previous year. The share of total export turnover stood at 28.94% of the total turnover of the Company.

We have taken proactive steps to correct the position of the Company in export market. We will approach our goals with discipline and focus to tap more customers and markets.

Your Company expects to continue to benefit in future with above strategy and operating efficiencies. In view of this, barring unforeseen events and circumstances, the long-term prospects of your Company are bright.

Consolidated Financial Statements

In accordance with the provisions of the Companies Act, 2013 ( the Act ) and IND AS-110 on Consolidated Financial Statements, read with IND AS-28 on Investments in subsidiaries outside India, the Audited Consolidated Financial Statements for the F.Y. ended March 31, 2023, are provided in this Annual Report.

Share Capital

The paid-up Equity Share Capital as on March 31, 2023, stood at Rs. 187.68 million. During the year under review, the Company has Granted stock options to the employees as recommended by the Nomination and Renumeration Committee of the Company under The Hi-Tech Gears Limited Stock Incentive Plan, 2021 .

Stock Incentive Plan, 2021

Your Company has implemented an employee stock option plan namely The Hi-Tech Gears Limited Stock Incentive Plan, 2021 ("THGL SIP 2021" / "Plan") covering the Employees of the Company and its existing or future Subsidiary Companies. The scheme was approved by the shareholders in the Annual General Meeting of the Company held on Wednesday, September 29, 2021 by special resolution.

The Nomination and Remuneration Committee has granted 95,220 options in two tranches to the eligible employee in their meeting held on November 05, 2022 and November 21, 2022. As on March 31, 2023, out of 95,220 stock options so granted, Nil Stock option have been vested and exercised and 13,333 Stock options have been lapsed.

In line with Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a statement giving complete details, as on March 31, 2023, is available on the website of the Company: https:/ /www.thehitechgears.com/investors.php.

Dividend

During the year under review and based on the performance of the Company, the Board of Directors, at its meeting held on May 27, 2023, recommended a final dividend @ 25% i.e. Rs. 2.50/- per equity share amounting to Rs. 46.92 million subject to the approval of the shareholders at the forthcoming Annual General Meeting.

Pursuant to the Indian Finance Act, 2020 read with Income Tax Act, 1961 dividend declared/recommended and paid by the Company after April 1,2020, is taxable in the hands of shareholders and the Company is required to deduct the tax at source ( TDS ) on the distribution of dividend income to its shareholders at the prescribed applicable rates. In view of this, the Company has sent the communication to shareholders to inform their status, PAN, and other details, so that Company can comply the provisions accordingly.

Transfer to Reserves

During the F.Y. under review, no amount has been transferred to Reserves of the Company.

Change in the nature of business

There was no change in the nature of the business of the Company during the financial year 2022-23.

Compliance with Secretarial Standards

The Company has complied with all applicable Secretarial Standards on Meeting of the Board of Directors and on General Meeting issued by the Institute of Company Secretaries of India (ICSI).

Directors Responsibility Statement

In terms of section 134(3)(c) and 134(5) of the Companies Act, 2013, and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements: (a) that in preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any; (b) that such accounting policies have been selected and applied them consistently and made judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2023 and of the profit and loss of the Company for the year ended on that date; (c) that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities; (d) that the annual financial statements have been prepared on going concern basis; (e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and (f) that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Details of Internal Financial Controls with reference to the Financial Statement

In view of the requirement of the Companies Act, 2013, the Company has successfully documented and implemented its Internal Financial Controls (IFC). This ensures orderly and efficient conduct of its business, including adherence to Company policies, safeguarding of its assets, accuracy, prevention of errors and completeness of the accounting records and the timely preparation of reliable financial information. The Internal Financial Controls with reference to the Financial Statements were adequate and operating effectively.

Further, the Audit Committee monitors the adequacy and effectiveness of your Company s internal control framework.

Details of Subsidiary/Joint Ventures/Associate Companies

As on March 31, 2023, the Company had Nine (9) Wholly-owned Subsidiaries consisting of three (3) wholly owned subsidiaries viz., 2545887 Ontario Inc., Neo-Tech Smart Solutions Inc. & Neo-Tech Auto Systemz Inc., and six (6) wholly-owned step down subsidiaries viz., 2504584 Ontario Inc., 2323532 Ontario Inc., The Hi-Tech Gears Canada Inc., Teutech Holdings Co., Teutech Leasing Co. and Teutech LLC. However, two (2) Wholly-owned Step-Down Subsidiaries i.e., 2323532 Ontario Inc. and 2504584 Ontario Inc. have been Amalgamated with The Hi-Tech Gears Canada Inc. (Wholly-owned Step down Subsidiary of the Company) w.e.f. June 15, 2023 and both the aforesaid Wholly-owned Step-Down Subsidiaries, viz., 2323532 Ontario Inc. and 2504584 Ontario Inc now ceased to exist from June 15, 2023 (IST).

The Board has duly reviewed the affairs of the subsidiary companies, from time to time wherein, 2545887 Ontario Inc., The Hi-Tech Gears Canada Inc. and Teutech Holding Co. are considered to be Material Subsidiary companies, pursuant to provisions of Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Further, there is no material change in the business of subsidiary companies and the Company has taken note of all the significant transactions and arrangements entered into by its subsidiaries. The other financial and vital details related to subsidiaries are provided in attached AOC-1 form as Annexure I (Statement containing salient features of the financial statement of subsidiaries), pursuant to section 129 and section 136 of the Companies Act, 2013 and rules made thereunder.

In accordance with the provisions of the Companies Act, 2013 and applicable accounting standards the standalone and consolidated financials together with the reports of Statutory Auditors are provided in the Annual Report. Further, the Company s policy for determining material subsidiaries in terms of applicable listing regulations and other applicable laws is available at https://www.thehitechgears.com/investors.php.

Directors, Key Managerial Personnels and Evaluation

The Board is duly constituted with proper balance of Executive and Non-Executive Directors, Independent Directors, Woman Independent Director and Whole Time Directors. The composition of the Board is in conformity with Regulation 17 of the Securities and Exchange Board of India (LODR) Regulations, 2015 read with Section 149 of the Companies Act, 2013. During the financial year 2022-2023, Mr. Ramesh Chandra Jain resigned as Non-Executive and Non-Independent Director of the Company with effect from 23rd March 2023. The Board places on record their deep appreciation for the invaluable contributions made by Mr. Ramesh Chandra Jain during his association with the Company.

During the financial year 2022-23, the Board of Directors on recommendation of the Nomination and Remuneration Committee appointed Mr. Subir Kumar Chowdhury as a Whole Time Director designated as "Executive Director and President" of the Company in their meeting held on February 08, 2023 with effect from 01st April, 2023, Subsequently, the approval of members was also obtained through Postal Ballot for appointment of Mr. Subir Kumar Chowdhury as a Whole Time Director designated as Executive Director and President of the Company in terms of the Regulation 44 of the Securities and Exchange Board of India (LODR) Regulations, 2015, as amended and pursuant to the provisions of Sections 108 and 110 of the Act read with the rules framed thereunder and the MCA Circulars.

Pursuant to the provisions of Companies Act, 2013 and Article of Association of the Company, Mr. Anant Jaivant Talaulicar (DIN: 00031051) and Mr. Anuj Kapuria, (DIN: 00006366) are liable to retire by rotation at the ensuing Annual General Meeting, and being eligible offer themselves for reappointment. Brief profile of Mr. Anant Jaivant Talaulicar and Mr. Anuj Kapuria is provided in the Notice convening the Annual General Meeting.

Except as stated above, there was no change in the Directors or Key Managerial Personnel of the Company, during the year. a. Key Managerial Personnels

All the Whole Time Directors i.e. Mr. Deep Kapuria, Executive Chairman, Mr. Pranav Kapuria, Managing Director, Mr. Anuj Kapuria, Executive Director and Mr. Subir Kumar Chaudhury, Executive Director and President are regarded as KMPs, in addition to Chief Financial Officer (C.F.O.) and Company Secretary (CS).

During the Financial Year 2022-2023 Mr. Vijay Mathur has resigned from the post of Chief Financial Officer of the Company with effect from 08th February, 2023 and Mr. Sumeet Kumar was appointed as a Chief Financial Officer of the Company with effect from 09th February, 2023. b. Independent Directors

The Board has 6 (Six) Independent Directors including (1) one Woman Independent Director as on March 31, 2023, representing diversified fields and expertise. Details are provided in the appropriate section of the Corporate Governance Report.

The Independent Directors have submitted their declaration of independence, as required pursuant to provisions of section 149 (7) of the Companies Act, 2013,the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16 of SEBI (LODR) Regulations, 2015, as amended from time to time, stating that they meet the criteria of Independence as provided in sub-section (6) of section 149 of Companies Act, 2013 and the SEBI (LODR) Regulations, 2015.

Over the years, your Company has developed a robust familiarisation process for the Independent Directors with respect to their roles and responsibilities, way ahead of the prescription of the regulatory provisions. The process has been aligned with the requirements under the Act and other related regulations. This process inter-alia includes providing an overview of the Corporate Profile, Organizational structure, details of associate/ subsidiary companies, details of other Directors on Board, Code of Conduct for Non-Executive Directors, Code of Conduct on Insider Trading applicable to Non-Executive Directors, Mandates of various Committees of which the Director is inducted etc.

Details of the familiarisation programme are explained in the Corporate Governance Report and are also available on your Company s website and can be accessed at Company website https:// www.thehitechgears.com/investors.php. c. Meetings of the Board

The Board met 4 (Four) times during the financial year 2022-23 to conduct the operations of the Company. The details of the Meetings are given in the Corporate Governance Report, which forms part of this Annual Report. It is confirmed that the gap between two consecutive meetings was not more than (120) One Hundred and Twenty Days as provided in section 173 of the Act. d. Annual Evaluation of the Board, its committees and of Individual Directors

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, the Board carried out a formal annual performance evaluation of its own performance, the Chairman, individual Directors and the working of the different committees. Such evaluation was done through the established evaluation framework and the SEBI Guidance Note. The framework included different tools such as individual questionnaires, covering various information required to have the evaluation. All the layers of the Board, such as Board, Committees and the Independent Directors performed their part by evaluating the performances of the other Directors as mandated.

The Company has also devised a policy for performance evaluation of Independent Directors, Board, Committees, and other individual Directors which forms part of the NRC policy and is also available on https://www.thehitechgears.com/investors.php

Auditors and their Reports a) Statutory Auditors

M/s YAPL and Co., Chartered Accountants (Firm Registration No. 017800N) the Statutory Auditors of the Company, were appointed in the 36h Annual General Meeting for a term of five consecutive years, till the conclusion of 41st Annual General Meeting of the Company to be held in the year 2027.

The Auditors Report does not contain any qualification, reservation or adverse remark and do not call for any further explanation/ clarification by the Board of Directors as provided under Section 134 of the Act. With respect to the point no. (vii)(b) in Annexure A to Auditors Report relating to non-deposit of disputed taxes, the Board wishes to inform that those matters are related to regular tax matters for which the Company has preferred appeal to Appellate Authorities. The necessary explanations are also provided in Note 38 to the Standalone Financial Statements. The rest of report by the Statutory Auditors is self-explanatory. Please refer to the Notes to Accounts, wherever necessary. Further, there were no frauds reported by the Statutory Auditors to the Audit Committee or the Board under Section 143(12) of the Act. b) Cost Auditors

The provisions relating to section 148 read with rules are applicable, accordingly cost accounts and records are made and maintained. The cost audit for the Financial Year 2022-23 was undertaken by M/s Kabra and Associates, Cost Accountants. Their report does not contain any qualifications, reservations or adverse remarks and do not call for any further explanations.

Further, as per Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Board of Directors has approved the re-appointment of M/s. Kabra and Associates, Cost Accountants, as the Cost Auditors of the Company for the F.Y. 2023-2024, upon the recommendation of the Audit Committee. The remuneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your approval for payment of remuneration to Cost Auditors is being sought at the ensuing Annual General Meeting. c) Secretarial Auditor

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by ICSI.

Section 204 of the Companies Act, 2013, inter-alia requires every listed Company to annex with its Board s Report, a Secretarial Audit Report provided by a Company Secretary in Practice, in the prescribed format. The Board of Directors appointed M/s Grover Ahuja and Associates, Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Company and their report is annexed to this Board Report (Annexure-II). The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Additionally, pursuant to Regulation 24(A) of the SEBI (LODR) Regulations, 2015, read with SEBI circular CIR/CFD/CMD1/ 27/2019 dated February 08, 2019, the Company has undertaken and received an Annual Secretarial Compliance Report from M/s Grover Ahuja and Associates, Practicing Company Secretaries and submitted the same to the stock exchanges within the specified time period.

Internal Control Systems and its Adequacy

The Company has internal control systems commensurate with the size, scale and complexity of its business operations. The scope and functions of Internal Auditors are defined and reviewed by the Audit committee. M/s. Grant Thornton Bharat LLP is the continuing Internal Auditors, who regularly presents their quarterly report to the Audit Committee, highlighting various observations, system and procedure related lapses, if any and corrective actions being taken to address them.

Investor Education and Protection Fund (‘IEPF)

Pursuant to section 124, 125 and applicable provisions of the Companies Act, 2013 and Rules made there under, all unpaid or unclaimed dividends are required to be transferred by the Company to IEPF after the completion of seven years from the date of transfer of dividend amount in Unpaid Dividend Account.

Similarly, the MCA has notified Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 effective from 7th September 2016 which provide that, the shares in respect of which dividend has not been claimed or unpaid by the shareholders for seven consecutive years or more shall also be transferred to the demat account(s) to be prescribed by the IEPF Authority.

The details of such dividend and shares transferred pursuant to the aforesaid provisions are provided in General Shareholder information section at point No.13 of Section XIII of Corporate Governance Report. A list of such cases is also available at the website of the Company at https:/ /www.thehitechgears.com/investors.php.

In terms of the said Rules and the amendment thereof vide notification dated 28th February 2017 and 13th October, 2017, the necessary communications have been made to the respective shareholders whose shares were required to be transferred to the IEPF so as to enable them to claim their dividend attached to such shares before such dividend and shares are transferred to IEPF Authority and further, the necessary information in this regard is available on the website of the Company https:/ /www.thehitechgears.com/investors.php for the convenience of the shareholders.

In view of this, those shareholders whose dividend is unpaid or unclaimed must claim it at the earliest. The equity shares once transferred into IEPF A/c can only be claimed by the concerned shareholder from IEPF Authority after complying with the procedure prescribed under the Rules and any amendment thereof.

Accordingly, during the financial year 2022-23, the Company has transferred 242 equity shares to the IEPF Authority, in respect of which the amount of dividend has not been claimed or unpaid for the consecutive seven years to the concerned shareholders from the date of declaration respectively.

Annual Return

As required pursuant to Section 92(3) and 134(3)(a) of the Companies Act, 2013 and rules made thereunder, the Annual Return of the Company for the F.Y. 2022-23 shall be filed within 60 days from the ensuing AGM or within such extended time as may be provided by the MCA through notification and same shall be uploaded on the Company s website at https://www.thehitechgears.com/investors.php. The Annual Return for the FY-2021-22 filed with the Ministry of Corporate Affairs after the 36th AGM held in the year 2022 is available on the Company s website at https:// www.thehitechgears.com/investors.php.

The Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo

Details of Energy Conservation, Technology Absorption, Research and Development activities undertaken by the Company and foreign exchange earnings and outgo of the Company and other information in accordance with the provisions of Section 134(3) (m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, are given in Annexure-III, to this Report.

Report on Corporate Governance

In terms of SEBI (LODR) Regulations, 2015, a report on Corporate Governance is given separately and forming part of this report and a certificate from the M/s Grover Ahuja and Associates, Practicing Company Secretaries confirming compliance with the provisions of Corporate Governance is also annexed to the report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report is given separately and forming part of this report together with its contents.

Risk Management Policy

Although, pursuant to Regulation 21 of SEBI (LODR) Regulations, 2015, provisions of constituting Risk Management Committee are not applicable to the Company. The Company has adopted an enterprise Risk Management Policy and established a Risk Management Framework with an objective of timely identification, mitigation and control of the risks, which may threaten the existence of the Company, in accordance with the provisions of the Companies Act, 2013.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 and other applicable provisions of the Companies Act, 2013 and Rules made thereunder the Company has adopted and developed a Policy covering the activities mentioned in Schedule VII of Companies Act, 2013, upon the recommendation of CSR Committee. Implementation of the policy is undertaken under the guidance of CSR Committee and a brief of the Corporate Social Responsibility activities are provided in Annexure-IV.

The CSR policy lays down CSR activities to be undertaken by your Company. The CSR activities undertaken by your Company are based of the approved CSR policy, which is available on the Company s website https://www.thehitechgears.com/investors.php.

Particulars of contracts or arrangements with related parties

All transactions entered by the Company with the parties, which may be regarded as related parties, were considered to be in the ordinary course of business and on the arm s length basis. As provided under section 134(3)(h) of the Act and Rules made thereunder, disclosure of particulars of material transactions with related parties entered into by the Company with related parties in the prescribed format is annexed to this report as Annexure-V. Disclosures on related party transactions are also set out in Note No. 36 to the Standalone Financial Statements and Note No. 37 to the Consolidated Financial Statements.

The Policy on materiality of related party transactions pursuant to Regulation 23 of SEBI (LODR) Regulations, 2015, as approved by the Board can be accessed on the Company s website https:// www.thehitechgears.com/investors.php.

Pursuant to provisions of Section 188 of the Companies Act, 2013 read with Regulation 23 of the SEBI (LODR) Regulations, 2015, all Material Related Party Transactions ( RPT ) / Contracts shall require prior approval of the shareholders by means of an Ordinary Resolution, even if such transaction(s) are in the ordinary course of business and at an arm s length pricing basis. The approval of the Audit Committee and Board were sought for all material RPTs. The approval of Shareholders was also obtained by means of ordinary resolution whenever required.

Electronic Clearing Services (ECS)

As per the circular issued by Securities and Exchange Board of India (SEBI), companies should mandatorily use the facility of Electronic Clearing Services (ECS), for distribution of dividends to its members. This facility provides to the members an opportunity to receive dividend amount directly in their bank accounts. For availing this facility, members holding shares in physical form may send their duly filled ECS mandate form to the Company s Registrar and Share Transfer Agent (RTA). Members holding shares in dematerialized form, may kindly note that their bank account details as furnished to their depositories will be taken for the purpose of ECS by the Company.

Postal Ballot

During the financial year 2022-23, no resolution was passed by way of Postal Ballot.

However, Mr. Subir Kumar Chowdhury was appointed as Executive Director & President of the Company effective from April 01, 2023 by passing the Special resolution through Postal Ballot. The Postal Ballot was conducted by Practicing Company Secretary, Ms. Akarshika Goyal, Scrutinizer who submitted her report with Voting results viz. duly signed Scrutinizer s Report dated May 08,2023.

Code of Conduct of Insider Trading

The Company has adopted a Code of Conduct to regulate, monitor and report trading by insiders. This Code of Conduct is intended to prevent misuse of Unpublished Price Sensitive Information ( UPSI ) by designated persons. The same has been placed on the Company s website https:// www.thehitechgears.com/investors.php.

In accordance with such Code of Conduct, the Company closes its trading window for Designated Persons from time to time. The trading window is also closed during and after the occurrence of price sensitive events as per the said Code of Conduct.

Code of Conduct

Your Company has adopted the Code of Conduct for its Board Members and Senior Management personnel pursuant to SEBI (LODR) Regulations, 2015. The code of conduct is also placed on the website of the Company https://www.thehitechgears.com/investors.php.

The Declaration by the Managing Director of the Company regarding compliance with the Code of Conduct for Board Members and Senior Management is annexed with the Corporate Governance Report.

Share Capital Audit

M/s Grover Ahuja and Associates, practicing Company Secretaries carried out the Share Capital Audit on quarterly basis to reconcile the total issued and listed share capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The Board of Directors confirms that the total issued and paid up capital as on 31st March, 2023 is reconciled with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. The Reconciliation of Share Capital Audit Certificates were submitted to the Stock Exchanges on quarter basis and were also placed before the Board Meetings.

Listing of Shares

With a view to provide easy liquidity in the shares of the Company, the equity shares of your Company are presently listed on the premier stock exchanges of the Country viz., the National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE). Pursuant to Regulation 14 of SEBI (LODR) Regulations, 2015, the annual listing fees for the year 2023-24 have been paid within the prescribed time period.

Deposits

During the year under review your Company neither invited nor accepted any deposit within the meaning of Section 73 of the Companies Act, 2013, and rules made there under.

Dematerialization of the equity shares

99.65% of the total equity shares of the Company are held in dematerialized form with the participants of National Securities Depository Limited (NSDL) and Central Depository Securities (India) Limited as on March 31, 2023. Further, as per SEBI vide its Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/ P/CIR/2022/8 dated January 25, 2022 and SEBI vide Gazette Notification no. SEBI/LAD-NRO/GN/2022/66 dated January 24, 2022 has mandated the listed companies to issue securities in dematerialized form only while processing service requests, viz., Issue of duplicate securities certificate; claim from unclaimed suspense account; renewal/ exchange of securities certificate; endorsement; sub-division/splitting of securities certificate; consolidation of securities certificates/folios; transmission and transposition. The RTA shall verify and process the service requests and thereafter issue a Letter of confirmation in lieu of physical securities certificate(s), to the securities holder/claimant within 30 days of its receipt of such request after removing objections, if any.

In view of the above SEBI Circular, the validity of the Letter of Confirmation only for a period of 120 days from the date of its issue within which you have to raise demat request with the DP as above. Any request for processing demat after the expiry of aforesaid 120 days will not be entertained and as per the operating guidelines issued by SEBI, the subject shares shall be transferred to a Suspense Unclaimed Escrow Demat Account of the Company.

Keeping in view the benefits of dematerialization, the shareholders holding shares in physical form requested to get their shares dematerialized.

Particulars of Employees

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to the Report as Annexure-VI. Statement containing particulars of top 10 employees and the employees drawing remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as a separate Annexure forming part of this Report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members, excluding the aforesaid Annexure. The said Statement is also open for inspection by the Members through electronic mode. Any member interested in obtaining a copy of the same may write to the Company Secretary.

Remuneration Policy

In terms of provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of the Listing Regulations, a policy relating to remuneration for the Directors, Key Managerial Personnel and other senior employees has been adopted by the Board of Directors of the Company in pursuance of its formulation an recommendation by the Nomination and Remuneration Committee thereby analyzing the criteria for determining qualifications, positive attributes and independence of a Director. The said policy is available on the website of the Company at www.thehitechgears.com. The salient features of the policy are provided in attached Corporate Governance Report.

Audit Committee

The Company has duly constituted Audit Committee, which meets on regular intervals for the business required to be transacted thereat. The recommendations made by the Committee are accepted by the Board. The details of Audit Committee are given in the Corporate Governance Report.

Vigil Mechanism Policy

The Company has a vigil mechanism policy to deal with any instance of fraud and mismanagement. The employees of the Company are free to report violations of any laws, rules, regulations, and concerns about unethical conduct to the Audit Committee under this policy. The policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination with any person for a genuinely raised concern. The policy may be accessed on the Company s website at https:/ /www.thehitechgears.com/investors.php.

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

The Company has implemented the policy as Policy on Prevention and Redressal of Sexual Harassment of Women at Workplace which is available at the website of the Company at https://www.thehitechgears.com/ investors.php The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year, the Company has not received any complaint of sexual harassment.

Particulars of Loans given, Investments made, Guarantees given and Securities provided.

During the year, the Company has not extended any Loans to its Wholly owned Subsidiaries. In year 2021-22 the Company has extended Rs. 77.69 Million to 2545887 Ontario Inc. Wholly Owned Subsidiary after complying with the provisions of section 186 of the Companies Act, 2013. Other than this the Company has not provided any guarantee or Securities under the provisions of section 186 of the Companies Act, 2013 The details of the investments made by the Company are mentioned in notes no. 8 of the Financial Statements for the year ended 31st March, 2023.

Material changes and Commitments

There is no material changes and commitments affecting 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 the report.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future

There is no significant and/or material order passed by the regulators or courts or tribunals impacting the going concern status of the Company.

Details of Proceedings pending under the Insolvency and Bankruptcy Code, 2016

Following are the details of proceedings and their status thereof at the end of the F.Y. 2022-23:

Sl. Name of the Applicant Status
1. Amrop India Pvt. Ltd. Amrop India Pvt. Ltd. filed an Company Petition (CP) in financial year 2019. After hearing final argument from both the parties, Hon ble NCLT, Jaipur Bench, vide its order dated June 16, 2023 has dismissed/rejected the said CP.
2. Happy Forgings Ltd. Happy Forgings Pvt. Ltd. filed an application in F.Y. 2020-21. However, this was preferred as withdrawn by Applicant. The Hon ble NCLT, Chandigarh Bench, rejected accordingly. Applicant filed another CP (Company Petition) before Hon ble NCLT against which the notice was issued to the Company. The application is pending before Hon ble NCLT for argument.

Detail of difference between amount of valuation done at the time of one-time settlement and the valuation done while taking loan from the Bank or Financial Institutions along with the reasons thereof:

Not Applicable

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTING

As per Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Business Responsibility & Sustainability Reporting is not applicable to the Company.

Personnel

The Board of Directors places on record their appreciation of the untiring efforts of the employees of the organization at every level. The efforts to create a family like atmosphere continued throughout the year. Like the many years gone-by, this year also witnessed increased cohesion among all levels of employees, which is evident from the performance of the Company. Training and Development of employees provided further impetus and have contributed towards the all-round improved performance of your Company. The Company encourages by rewarding and recognizing employees for their long term commitment as and when the opportunity arise.

Trade Relations

The Board of Directors place on record the appreciation for the co-operation and valuable support extended by the customers, the suppliers and all other persons directly or indirectly associated with the Company. Your Company regards them as partners and shares with them a common vision of growth in the future.

Acknowledgement

The Board of Directors places on record their sincere appreciation for the assistance, cooperation and valuable support provided to the Company by Customers, Vendors, Banks and Financial Institutions and hope to continue to receive the same in future. Your Directors also record their appreciation for the commitment and dedication of the employees of the Company at all levels.

The Board of Directors also place on record their gratitude to the shareholders of the Company for their continued support to and confidence in the management of the Company.

By Order of the Board
For The Hi -Tech Gears Limited
Sd/- Sd/-
Place: New Delhi Pranav Kapuria Anuj Kapuria
Dated: August 14, 2023 Managing Director Executive Director