Timken India Ltd Directors Report.

To the Members,

The Board of Directors has pleasure in presenting 35th Annual Report of the Company for the year ended 31 March, 2022.

Financial Summary

(Rs in million)

Particulars Financial Year ended 31 March, 2022 Financial Year ended 31 March, 2021
Revenue from Operations 22,032.44 14,105.20
Add: Other Income 142.89 196.04
Total Income 22,175.33 14,301.24
Less: Total Expenses 17,793.49 12,350.61
Profit before tax (PBT) 4,381.84 1,950.63
Less: Tax expenses 1110.79 518.84
Net Profit after tax (PAT) 3,271.05 1,431.79
Add: Other Comprehensive Income (23.92) (3.11)
Total Comprehensive Income 3,247.13 1,428.68

During FY 2021-22, the Companys revenue was up by 56% Y-o-Y, as operations of the Company were back to normal as compared to the previous year, which were impacted by COVID-19 pandemic driven lockdown and the Company also shown strong growth in the business throughout the year. Total expenses increased by 44% during the same period. The PBT is Rs 4,381.84 million for FY 2021-22 as against Rs 1,950.63 million in FY 2020-21. Increase in PBT can be attributed to increase in sales due to increased business volume.

The Financial Statements for FY 2021 -22 have been prepared in accordance with Indian Accounting Standards ("Ind-AS").

Financial Position

The Company continues to remain debt free and generated adequate cash flow to meet its working capital needs. Trade receivables increased by Rs 1,674.27 million in line with the increased revenue during the FY 2021-22 compared to FY 2020-21. Cash and cash equivalents and investments in mutual funds as at March 31,2022 were Rs 1137.46 million as compared to Rs 1,704.04 million as at March 31,2021. For more details on financial position and business review, please refer Management Discussion and Analysis.

The business of the Company has not undergone any change in the financial year under review.

Post Balance sheet event

There is no reportable event comprising material changes and commitments between the date of financial year end and the date of this report affecting the financial position of the Company.

Reserves

The Board of Directors of the Company did not propose to transfer any amount to reserves during the financial year under review.

Dividend

The Board of Directors, subject to approval of Members at ensuing Annual General Meeting (AGM), has recommended dividend of Rs. 1.5/- per equity share of Rs. 10/- each fully paid up (1 5%) for the year ended 31 March, 2022. Dividend Distribution Policy is available on the website of the Company and can be accessed at https://www.timken.com/en-in/investors/policies/.

Corporate Governance

Companys mission, vision and core values guide the Company and this direction keeps the Company successfully working together, so as to enable us to make the world a more productive place and deliver value to our stakeholders. The Vision Statement of the Company expresses its aspiration to be the global leader in bearings and mechanical power transmission, continually improving performance, reliability and efficiency. The Company strongly believes that it can become a strong leader only by way of maintaining good and sound Corporate Governance structures. Good Corporate Governance practices followed by the Company inter-alia include strong and independent Board, transparency and accountability, robust policies and regulatory compliance framework, strong internal controls and monitoring of such controls, empowerment of employees/various stakeholders and timely disclosures. The Company continuously monitors market trends and reviews changing legal requirements and wherever required fine-tunes its procedures, structures, systems so as to comply with applicable legal and regulatory requirements. Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), Corporate Governance Report along with Compliance Certificate from Practicing Company Secretary is attached as Annexure-1.

Directors and Key Managerial Personnel

During the FY 2021-22, the Board comprised 6 Directors out of which 3 were Independent, 2 were Executive and one was Non -Executive Director. During the year under review, re-appointment of Mrs. N S Rama (DIN:06720033) as an Independent Director was approved by the members at 34th AGM of the Company.

Based on recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company has approved:

• Appointment of Mr. George J Ollapally (DIN: 09607523) as an Additional & Independent Director of the Company w.e.f. 1 June, 2022 fora period of 2 years subject to approval of the members of the Company.

• Appointment of Mr. Veerappan V (DIN: 01593254) as an Additional & Independent Director of the Company w.e.f. 1 June, 2022 for a period of 2 years subject to approval of the members of the Company.

• Re-appointment of Mr. Sanjay Koul (DIN:05159352) as a Managing Director of the Company for a further period of 5 years w.e.f. 26 October, 2022 subject to approval of the members of the Company.

• Appointment of Mr. Hansal Patel (DIN: 09607506) as an Additional Director of the Company w.e.f. 1 June, 2022.

In the opinion of the Board, aforesaid persons possess requisite expertise, skills, integrity and experience and their association and leadership will be beneficial to the Company. Hence, the Board recommended their appointment/re-appointment at 35th AGM.

The Company is in receipt of Notices under Section 160 of the Companies Act, 2013 (the Act) in respect of proposed appointment/re- appointment of Mr. Ollapally, Mr. Veerappan, Mr. Koul & Mr. Patel as mentioned above at ensuing AGM.

Mr. Avishrant Keshava (DIN: 07292484), Director will retire by rotation at 35th AGM and being eligible, offers himself for re-appointment.

Pursuant to Section 203 of the Act, Mr. Sanjay Koul as Managing Director, Mr. Avishrant Keshava as Chief Financial Officer and Mr. Mandar Vasmatkar as Company Secretary serve as whole-time Key Managerial Personnel (KMP). During the year under review, there has been no change in KMP.

Directors Responsibility Statement

In pursuance of Section 134(5) of the Act, the Directors hereby confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made;

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

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and were operating effectively; and

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

Annual Declarations from Independent Directors

The Company has received necessary declarations from all Independent Directors of the Company confirming that each of them has met with criteria of independence laid down in Section 149 of the Act and Regulation 16 of Listing Regulations. Independent Directors details have been included in the databankof Independent Directors maintained by Indian Institute of Corporate Affairs (IICA).

Meetings of the Board and its Committees

The Board has met six times and Audit Committee has met five times in FY 2021-22. The gap between two consecutive Board Meetings and two consecutive Audit Committee Meetings was within prescribed timelines under the Act and Listing Regulations. The Board of Directors of the Company has accepted all recommendations put forward to it by the Audit Committee. The Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee met once while the Risk Management Committee met three times during FY 2021-22. Details relating to composition of the Board and its Committees along with its meetings held during FY 2021-22 are given in Corporate Governance Report which is attached as Annexure -1.

Independent Directors Meeting

One meeting of the Independent Directors was held on 21 February, 2022 which was attended by all the Independent Directors without participation of Non-Independent Directors and members of management.

Nomination and Remuneration Policy

Based on recommendation of the Nomination and Remuneration Committee, the Board has laid down a Policy for remuneration of Directors, KMPs and other employees. During the year under review, changes were made in the Nomination and Remuneration Policy mainly to comply with amendments in Listing Regulations. Changes mainly cover amendment in definition of material related party transactions and concept of material modification in related party transactions. Updated Policy is disclosed on the Companys website at https://www.timken.com/en-in/investors/policies/.

The salient features of the Policy are as follows:

• It covers role of the Nomination and Remuneration Committee in line with Section 178 of the Act and Listing Regulations.

• It lays down factors and personal specifications that need to be considered for appointment of a Director.

• It specifies terms and conditions that need to be considered for appointment of Directors, KMPs and Senior Management Personnel including tenure of appointment, removal and retirement.

• It also lays down parameters for payment of remuneration to Executive Directors, Non- Executive/ Independent Directors, KMPs and Senior Management Personnel.

Ratio of Remuneration

Pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, applicable details are given in specified format which is attached as Annexure - II.

Information required under Section 197(12) of the Act read with Rules 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, is annexed to this report. However, this Report and the Financial Statements are being sent to the shareholders of the Company excluding aforesaid information. Any shareholder interested in obtaining such information may write to the Company Secretary at the Registered Office of the Company. The said information is also available for inspection at the Registered Office during working hours up to the date of AGM.

Formal Annual Evaluation of the Board of Directors, its Committees and individual Directors

The Board has carried out performance evaluation of the Board of Directors as a whole, various Committees of the Board and individual Directors based on performance evaluation criteria. Each Director has provided feedback in writing to Chairman about the Board as a whole, various Committees and individual Directors. Further, Independent Directors in their separate meeting held on 21 February, 2022 have evaluated performance of Non- Independent Directors, Chairman and the Board as a whole.

Risk Management

The Board of Directors of the Company has constituted Risk Management Committee which inter-alia is responsible for assessment of risks, establishment of framework for monitoring risks and developing strategy for mitigation of various risks. During FY 2021-22, the Company was certified for ISO 31000:2018 Standards.

Enterprise Risk Management (ERM) is the process of identifying and addressing methodically the potential events that represent risks to achievement of strategic objectives, or to opportunities to gain competitive advantage. Risk management is an essential element of the strategic management of the Company and the same is embedded in the ongoing activities of the business. The Company has adopted

ISO 31000:2018 as a reference and developed its enterprise risk management policy & system around framework and principles of ISO 31000:2018. The fundamental elements of ERM as developed at the Company includes assessment of significant risks and implementation of suitable risk responses. Risk responses include acceptance or tolerance of a risk; avoidance or termination of a risk and reduction or mitigation of risk via internal control procedures or other risk prevention activities. Other important elements of aforesaid ERM are risk philosophy or risk strategy, risk culture and risk appetite. These are expressions of attitude to risk in the Company, and the amount of risk that the Company is willing to take. In March 2022 , the Company completed its process of risk management certification through third party Auditing agency thereby demonstrating its capability to adapt framework and structure of ISO 31000:2018 and to continually improve risk and opportunity management at enterprise level.

Vigil Mechanism

The Whistle Blower Policy of the Company is disclosed on the Companys website at https://www.timken.com/en-in/investors/policies/ . The Company feels that turning ethics into action is everyones responsibility. To help protect Companys values and reputation, associates and business partners are encouraged to speak up if something just doesnt seem right or when they have a question. It enables the Company to better uphold its values and fulfill commitments towards shareholders, customers, suppliers and the community. The Company has adopted a Whistle Blower Policy in terms of which associates, business partners of the Company are provided with mechanism to raise and resolve their concern or question. Open door policy of the Company supports an environment that encourages associates to ask questions and report concerns. When associates have a question or concern, they can speak with a supervisor or manager with whom they feel comfortable. If associates are not comfortable disclosing their identity, they may choose to submit concern or question to "Timken Helpline", a toll free phone number and choose not to disclose their identity. The Company investigates all reports promptly, thoroughly and fairly, and takes actions when appropriate. The Company expects to participate in investigations if required but safeguards confidentiality both during and after the investigation. The Company does not tolerate acts of retaliation against anyone who makes report in good faith.

Corporate Social Responsibility

The Corporate Social Responsibility (CSR) Committee of the Board is responsible for evaluation and implementation of CSR Projects. Based on recommendation of the CSR Committee, the Board has spent Rs. 5,20,53,075/-on CSR activities during FY2021-22 in line with CSR Policy of the Company. During the year under review, changes were made in CSR policy to comply with changes in the Act and Rules made thereunder and updated CSR Policy is available on the Companys website at https://www.timken.com/en-in/investors/policies/. Details about CSR Projects carried out in FY 2021-22 are also available on Companys website at https://www.timken.com/en- in/investors/statutorv-compliances/#other

Salient features of the CSR Policy are as follows:

• It lays down CSR Philosophy, Vision and Commitment of the Company.

• It specifies guidelines for implementation of CSR Projects through CSR Partners including eligibility criteria for CSR Partners.

• It also lays down roles and responsibilities of the CSR Committee.

Annual Report on CSR Activities is attached to this Report as Annexure- III.

Statutory Audit

Current term of Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) as Statutory Auditors will come to an end at 35th AGM of the Company. Pursuant to Section 139 of the Act, it is proposed to re-appoint Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) as the Statutory Auditors of the Company for a further period of 5 years from conclusion of 35th AGM till 40th AGM. The Statutory Auditors have confirmed that they are eligible for re-appointment and are notdisqualified.

The Independent Auditors Report for FY 2021-22 do not contain any qualification or adverse remark. During the year under review, there were no frauds reported by the Statutory Auditors to the Audit Committee/ Board under Section 143(12) of the Act.

Secretarial Audit

Pursuant to Section 204 of the Act, Mr. Nagarjun Y G, (ACS: 52406 & CP No: 19301), Company Secretary in Practice, has submitted the Secretarial Audit Report which is attached as Annexure - IV. There are no qualifications or adverse remark made by the Secretarial Auditor. The Company has complied with norms of applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

Cost Audit

In terms of Section 148 of the Act, the Company is required to maintain cost records and have its records audited by Cost Accountant. The Company has maintained the cost records for FY2021 -22 as required under Section 148 of the Act.

The Board of Directors, on recommendation of the Audit Committee, has re-appointed M/s Shome and Banerjee (Firm Registration No. 000001) as Cost Auditors for FY 2022-23. In terms of Section 148 of the Act read with Rules made thereunder, remuneration payable to Cost Auditors is required to be ratified by Members of the Company. Accordingly, appropriate resolution for ratification of remuneration payable to Cost Auditors for FY 2022-23 has been inserted in the Notice convening 35th AGM. The Board requests members to approve/ratify remuneration of Rs. 6,00,000/-(Rupees six lakhs only) plus applicable taxes and out of pocket expenses payable to Cost Auditors for FY 2022-23.

The Cost Audit Report of the Company for FY 2020-21 was filed on 5 October, 2021 (within the stipulated due date).

Internal Audit

KPMG Assurance and Consulting Services LLP acted as Internal Auditors for FY 2021-22. They conducted periodical audits and submitted their reports to the Audit Committee. Their reports have been reviewed by the Audit Committee.

Internal Financial Controls

The Company has a system of internal controls commensurate with the nature of its business and the size and complexity of its operations. The Company has adequately documented policies, procedures and authorization matrix aligned with the level of responsibility which is designed to provide reasonable assurance on recording of transactions, effectiveness, and efficiency of operations, providing reliable financial information and safeguarding of assets. The Company has developed and implemented a framework for ensuring internal controls over financial reporting. The Company has carried out evaluation of design and effectiveness of these controls and noted no significant material weaknesses or deficiencies which can impact financial reporting.

Related Party Transactions

In terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, a summary of material related party transactions in the ordinary course of business and on arms length basis is given in Form AOC-2, attached to this Report marked as Annexure- V.

The Company has adopted Related Party Transactions Policy and all its transactions in ordinary course of business are entered in accordance with the said Policy. Related Party Transactions Policy is available on the website of the Company at https://www.timken.com/en-in/investors/policies/. All related party transactions entered into by the Company during FY 2021-22 are disclosed in the Financial Statements for the year ended 31 March, 2022.

Listing with Stock Exchanges

The Company confirms that it has paid Annual Listing Fees for FY 2022-23 to National Stock Exchange of India Limited and BSE Limited, where the Companys shares are listed.

Annual Return

A copy of Annual Return as on 31 March, 2021 is placed on the Companys website atwww.timken.com/en-in. Draft Annual Return as on 31 March, 2022 is available on the website of the Companvatwww.timken.com/en-in.

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

Details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are attached to this Report marked as Annexure-VI.

Investor Education and Protection Fund

Pursuant to Section 124 of the Act and Rules made thereunder:

(i) the Company has transferred following unclaimed dividend amounts to Investor Education and Protection Fund (IEPF) during FY2021-22:

 

Particulars Amount (in Rs)
Dividend paid by erstwhile ABC Bearings Limited (amalgamated with the Company) for FY 2013-14 3,12,788/-
Interim dividend paid by the Company for FY 2014-15 36,12,621/-
Dividend paid by the Company for FY 2020-21 against shares already transferred to IEPF 13,09,696/-

(ii) During FY 2021-22, the Company also transferred 60,742 equity shares to IEPF.

(iii) Unpaid dividend for FY 2014-15 relating to ABC Bearings Limited (amalgamated) is due for transfer to IEPF in the month of September, 2022.

Financial Performance of any Subsidiary/Associate/Joint Venture Company

The Company does not have any Subsidiary, Associate or Joint Venture Company.

Deposits

The Company has not accepted Deposits as defined in the Act and Rules framed thereunder.

Particulars of Loans, Guarantees or Investments

Particulars about investments made by the Company during the year are disclosed in the Financial Statements. During the year under review, the Company did not give any loans except to its employees as part of the conditions of service. Also, the Company did not give any guarantee or extended any securities in connection with any loan.

Significant and/or material orders passed by the Regulators

No significant and/or material order was passed by any Regulator, any Court in India or any Tribunal, impacting going concern status and the Companys operations in future.

Other Reports/Annexures

Pursuant to the Act and Listing Regulations, following reports form part of this report:

1. Management Discussion and Analysis -Annexure -VII

2. Declaration regarding compliance with Codeof Conduct-Annexure-VIII

3. Business Responsibility and Sustainability Report-Annexure- IX

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

The Company does not tolerate discrimination, sexual harassment or any other harassment whether engaged in by management or associates or other individual with whom associates come into contact during work. The Company has adopted Anti-Sexual Harassment Policy in line with Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has constituted Internal Complaints Committee to redress complaints received regarding sexual harassment as required by aforesaid Act. During the year under review, the Company has not received any sexual harassment complaint.

Other Disclosures

Sweat Equity Share The Company has not issued any Sweat Equity Share and therefore, disclosure norms are not applicable to the Company.
Shares with differential Rights The Company has not issued any Share with differential rights and therefore, disclosure norms are not applicable to the Company.
Shares under Employees StockOption Scheme The Company does not have any stock option scheme and therefore, disclosure norms are not applicable to the Company.
Purchase by Company or giving of loans by it for purchase of its shares The Company has not purchased or given any loan to purchase its Equity Share and therefore, disclosure norms are not applicable to the Company.
Buy Back of Shares The Company has not bought back any Equity Share and therefore, disclosure norms are not applicable to the Company.
Demat Suspense/Unclaimed Suspense Account Notapplicable.
Settlement with Banks/Financial Institutions Notapplicable.
Proceedings pending under Insolvency and Bankruptcy Code, 2016 Notapplicable.

Acknowledgment

We wish to place on record sincere thanks to employees, customers, shareholders and suppliers. Each one of you are vital to the Companys continuous success. The Company is in a great position to deliver new level of performance in FY 2022-23 while remaining committed to long term strategy and growing as global leader.

For and on behalf of the Board of Directors
Sdl-
Date : 1 July, 2022 Sanjay Koul Chairman & Managing Director
Place : Bengaluru DIN: 05159352