Dear Shareholders,

The Board of Directors is delighted to present the 36^th Annual Report on the business operations of Varroc Engineering Ltd. ("the Company") along with the summary of standalone and consolidated financial statements for the year ended March 31,2024.

In compliance with the applicable provisions of the Companies Act, 2013, ("the Act"), the Securities and Exchange Board of India ("SEBI") (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), this Board's Report is prepared based on the operational performance of the Company for the year under review.

OVERVIEW OF FINANCIAL PERFORMANCE

Key highlights of consolidated and standalone financial performance for the year ended March 31, 2024 & March 31, 2023 are summarised as under:

(Rs in Million)

FINANCIAL LIQUIDITY

Cash and cash equivalent as on March 31,2024, was Rs 597.12 million vis-a-vis Rs 1,496.36 million in the previous year. The Company's working capital management is robust and involves a well-organised process, which facilitates continuous monitoring and control over receivables, inventories and other parameters.

WRITING OFF OF INVESTMENT

During the year, the Company has derecognised (written-off) loans given to VarrocCorp Holding BV (‘VCHBV'), Netherlands including interest on such loans aggregating to Rs. 11,796.44 million after making requisite submissions to AD Bank. The Company has claimed this write-off on loans as an allowable business loss, considering that these loans extended to VCHBV were in the nature of trade investments to derive benefits for the Company's businesses rather than for earning dividend/capital appreciation. The Company has obtained legal opinions from two independent senior counsels who have supported their view on claiming this write-off of loans as an allowable business loss. Accordingly, the Company has considered this loss as tax deductible for computation of tax provision and recognised deferred tax asset of Rs. 2,448.03 million (after adjusting other taxable income pertaining to current financial year). These loans pertained to funding of Varroc Lighting Systems (‘VLS') entities (erstwhile subsidiaries of VCHBV) which were fully provided for during the period ended September 30, 2022 when the VLS business was sold to Compagnie Plastic Omnium SE, France.

ESCROW SETTLEMENT

As reported last year, in relation to sale of (WoS) Global Lighting Business [VLS], the equity value agreed under Securities Purchase Agreement [SPA] was Euro 69.50 million (subject to closing adjustments as provided under the SPA). Later, Settlement Agreement was executed on July 14, 2023 whereby the parties have agreed for a final equity value of Euro 54.50 million.

Accordingly VarrocCorp Holding B.V. received the remaining consideration amount of Euro 13 million on July 17, 2023 pursuant to the terms of the Settlement Agreement.

This Settlement Agreement marks the completion of the sale of VLS Lighting Business.

ELIGIBILITY CERTIFICATE

In the current year, the Company received eligibility certificates (ECs) in respect of three plants in Aurangabad/Pune under the Maharashtra Electronic Policy 2016 effective from April 1, 2022 and valid for 10 years. Under these ECs, the Company is eligible to claim incentive in the form of taxes payable under SGST on finished goods eligible for incentives from the respective plants. The Company has considered these as grants related to income under Ind AS 20 by recognizing the same as income in profit and loss based on SGST collected for the period/year. The amount of income recognised in the current year in respect of the aforesaid ECs is Rs. 989.71 million pertaining to the period April 1,2022 to March 31,2024.

DIVIDEND AND TRANSFER TO RESERVE

With a view to conserve resources for expansion of business, your directors have thought it prudent not to recommend any dividend for the financial year under review. Further, as permitted under the provisions of the Companies Act, 2013 (Act), the Board does not propose transferring any amount to general reserve.

Pursuant to Regulation 43A of the SEBI Listing Regulations, the Board of Directors of the Company had formulated a Dividend Distribution Policy (‘the Policy'). The Policy is available on the Company's website URL: https://varroc.com/ investors/corporate-governance

CHANGE IN THE NATURE OF BUSINESS

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

SCHEME OF AMALGAMATION

The Board of Directors has approved the draft Scheme of Amalgamation of Varroc Polymers Limited (a wholly owned subsidiary of the Company) with the Company under Sections 230 to 232 (Scheme) and other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder ('the Act'). The appointed date of the said scheme is April 01, 2024, or such other date as may be approved by National Company Law Tribunal [NCLT] or any other competent authority.

The Scheme is subject to inter-alia receipt of the approval of the Regional Director, MCA and the Registrar of Companies, NCLT Mumbai Bench and other regulatory authorities, as may be applicable.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

There have been no material changes or commitments that have affected the financial position of the Company between the close of FY 2023-24 and the date of this report including proposed amalgamation of Varroc Polymers Limited (a wholly owned subsidiary of the Company) with the Company.

CAPITAL & DEBT STRUCTURE

There has been no change in the authorised and paid-up share capital of the Company during the financial year ended 31^st March, 2024. The paid-up equity share capital of the Company as on 31^st March 2024 is Rs 15,27,86,400/- comprising of 15,27,86,400 equity shares of Re. 1/- each.

The Company has not issued any other shares or instruments convertible into equity shares of the Company or with differential voting rights nor has granted any Sweat equity.

Further, the Company does not have any scheme to fund its employees to purchase the shares of the Company.

Non-Convertible Debentures: During the year under review, the Company had raised Rs 2500 Million through issuance of privately placed rated, listed, senior, secured, redeemable, taxable, transferable Non-Convertible Debentures. The proceeds from the issue have been utilised for repayment of existing listed NCDs, other outstanding debt and for general corporate purposes.

The previous NCDs issued as treated in the Issue Memorandum by the Company in September, 2021 have been fully redeemed in June 2023 [Rs 1250 Million] and September, 2023 [Rs 2500 Million] with coupon payments on annualised basis.

The Company is compliant with the minimum public shareholding requirements. The breakup of Promoter and Public Shareholding of the Company post aforesaid sale of shares is provided below:

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (SEBI Listing Obligations and Disclosure Requirements), Regulations, 2015, (‘SEBI Listing Regulations') is presented in a separate section, forming part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Report, describing the initiatives taken by your Company from environment, social and governance perspective, for the FY 2023-24, Business Responsibility and Sustainability forms part of this Annual Report as required under Regulation 34(2) (f) of the Listing Regulations.

CORPORATE GOVERNANCE

Your Company believes in attainment of highest levels of transparency in all facets of its operations and maintains an unwavering focus on imbibing good Corporate Governance practices. Your Company continues to strengthen its governance principles to generate long term value for its various stakeholders on a sustainable basis thus ensuring ethical and responsible leadership both at the Board and at the Management levels.

A separate section on Corporate Governance is included in this Annual Report along with requisite certificate from Uma Lodha & Co., practicing Company Secretaries, confirming the compliance, with conditions on Corporate Governance as stipulated in the SEBI Listing Regulations as on 31^st March 2024.

BOARD POLICIES - The details of the policies approved and adopted by the Board, as required under the Act and SEBI Listing Regulations, are available on the Company's website on the link https://varroc.com/investors/corporate-governance/.

CREDIT RATING

The Credit rating of the Company is managed by India Rating and Research Limited. the Financial Year under review, your Company's long rating, including NCD was at ‘IND A+/Stable'. The rating on the Company's short-term bank facilities and commercial paper programme has been reaffirmed at ‘IND A1'.

INVESTOR RELATIONS (IR)

The Company strives for excellence in its investor relations ("IR") engagement with international and domestic investors. There is a structured conference call every quarter to discuss published results. The management has periodic interactions with the financial Community, including investors and analysts, through individual meetings and investor conferences.

The Company participated in investor meetings and conferences organized by reputed broking houses during the year. It is ensured that critical information related to the company is uploaded on the company's website and made available to the stock exchanges so that it can be accessed easily and equally by all.

DEPOSITS FROM PUBLIC

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of the FY 2023-24 or the previous financial years. Your Company did not accept any deposit during the period under review.

NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEES

Regular meetings of the Board and its Committees are held to discuss and decide on various business policies, strategies, financial matters and other businesses. Due to business exigencies, the Board has also been approving proposals by circulation from time to time.

During FY 2023-24, Five (5) Board Meetings were convened, the details of which are given in the Report on Corporate Governance, which forms part of this Annual Report. The intervening gap between consecutive meetings was not more than one hundred and twenty (120) days as prescribed by the Act and the Listing Regulations.

The Company has the following seven (7) Board-level Committees, which have been established in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

1. Audit Committee

2. Risk Management Committee

3. Nomination and Remuneration Committee

4. Stakeholders' Relationship Committee

5. Corporate Social Responsibility Committee

6. Finance Committee

7. ESG Steering Committee

The details with respect to the composition, terms of reference, number of meetings held, etc. of these Committees are included in the Report on Corporate Governance, which forms part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee consists of Mr. Gautam Khandelwal as the Chairman, Mrs. Vijaya Sampath, Mr. Vinish Kathuria and Mr. Tarang Jain, Members. During the year, there were no instances where the recommendations of the Audit Committee were not accepted by the Board.

Cessation of Director

Mr. Rohit Prakash (DIN 02425849), Wholetime Director and Occupier of the plants of the Company resigned from directorship of the Company with effect from August 09, 2023. The Board had expressed its sincere gratitude and placed on record its appreciation of their significant contribution during his tenure as Director of the Company.

Appointment of Director

• The shareholders at their 35^th Annual General Meeting held on September 13, 2023 re-appointed Mr. Tarang Jain (DIN: 00027505), who was retiring by rotation.

• The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on August 09, 2023 appointed Mr. Tarun Tyagi (DIN 10204986) as an Additional Director of the Company, in the category of Executive/Non-Independent Director. Further, the shareholders at their 35^th Annual General meeting held on September 13, 2023, appointed him as wholetime Director, liable to retire by rotation, for a period of (3) three years commencing from August 09, 2023 to August 08, 2026.

Retirement of director by rotation

Mr. Arjun Jain (DIN 07228175), Executive, non- independent director and Mr. Dhruv Jain (DIN 09710448), Non-executive, non- independent director of the Company will retire by rotation at the ensuing 36^th AGM and being eligible, offers themselves for re-appointment.

The Nomination and Remuneration Committee and the Board of Directors recommends to the Members passing of the ordinary resolution for re-appointment of Mr. Arjun Jain and Mr. Dhruv Jain as Director retiring by rotation.

Declaration from Independent Directors

The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:

• they meet the criteria of independence as prescribed under the provisions of the Act, read with the Rules made thereunder and Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;

• they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and

• they have registered themselves with the Independent Director's Database maintained by the Indian Institute of Corporate Affairs.

In the opinion of the Board, all Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity required to discharge their duties with an objective independent judgment and without any external influence. List of key skills, expertise and core competencies of the Board, including the Independent Directors, forms a part of the Corporate Governance Report of this Annual Report.

KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 203 of the Act, as on March 31, 2024, the Company has the following Key Managerial Personnel:

(a) Mr. Tarang Jain, Chairman & Managing Director

(b) Mr. Arjun Jain, Whole-time Director

(c) Mr. Tarun Tyagi, Whole-time Director

(d) Mr. K. Mahendra Kumar, Group Chief Financial Officer

(e) Mr. Ajay Sharma, Group General Counsel and Company Secretary

ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

According to the provisions of the Act, the corporate governance requirements as prescribed by the SEBI Listing Regulations, the Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors.

The Nomination & Remuneration Committee (NRC) has defined the evaluation criteria for the performance evaluation of individual Directors, the Board and its Committees. The performance of the Board was evaluated by the Board of Directors after seeking input from all the Directors on the basis of criteria such as structure of the board, meetings and functions of the board, degree of fulfilment of key responsibilities, establishment and delineation of responsibilities to committees, effectiveness of board processes, information and functioning and quality of the relationship between the Board and the Management, etc. The performance of the Committees was evaluated by the Board after seeking input from the Committee Members on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the board, contribution to decisions of the board, effectiveness of the meetings and quality of the relationship of the committee with the Board and the Management, etc.

The Board and the NRC reviewed the performance of the individual Directors on the basis of criteria such as knowledge and competency, fulfilment of functions, ability to function as a team, initiatives taken, availability and attendance at meetings, integrity, independence, contribution at board/committee meetings and guidance/support to the management outside board/committee meetings, etc. In addition, the Chairman was also evaluated on key aspects of his role, including effectiveness of leadership and ability to steer the meetings, impartiality, ability to keep shareholders' interests in mind and motivating and providing guidance to the executive directors, etc.

Performance of Non-Independent Directors, performance of the Board as a whole, and performance of the Chairman of the Company were evaluated in a separate meeting of Independent Directors, taking into account the views of Executive Director and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its Committees and individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

POLICY ON APPOINTMENT OF DIRECTORS AND REMUNERATION

The management of the Company is immensely benefitted from the guidance, support and mature advice from members of the Board of Directors who are also members of various committees. The Board consists of directors possessing diverse skill, rich experience to enhance quality of its performance. The Company has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee.

The Company's Remuneration Policy is framed for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel in line with the requirement of the Section 178 of the Act, Regulation 19 read with Part D of Schedule II of the Listing Regulations. The said Policy is available on the Company's website at the weblink: https://varroc.com/investors/corporate-governance/.

The main objective of the said Policy is to ensure that the level and composition of remuneration are reasonable and sufficient to attract, retain, and motivate the Directors, Key Managerial Personnel (KMP) and senior management employees. The remuneration involves a balance between fixed and incentive pay, reflecting short- and long-term performance objectives appropriate to the workings of the Company and its goals. The extract of the said Policy is also covered in the Corporate Governance Report which forms part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

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 including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year ended 31^st March 2024.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of their information and knowledge, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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 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 by the Company and that such internal financial controls are adequate and were operating effectively;

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

a. STATUTORY AUDITOR

The shareholders of the Company at the 35^th AGM held on September 13, 2023, approved the re-appointment of SRBC & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 301003E/IE300005), as the Statutory Auditors of the Company for a second term of five consecutive years to hold the office till the conclusion of 40^th AGM to be held in the year 2028.

The Auditor's report for FY 2023-24 on the consolidated financial statements of the Company contains the following qualification:

• As disclosed in note 50 to the consolidated financial statements, the financial results and other financial information for the year ended March 31, 2024 in respect of Varroc TYC Corporation BVI ("China JV"), a joint venture accounted for under the equity method, considered for the purpose of preparation of the consolidated financial statements, is unaudited. Hence, we are unable to determine the impact of Group's share of profit/ loss from China JV on the consolidated profit/loss before tax, profit/loss after tax, total comprehensive income and earnings per share for the year ended March 31,2024 and Group's share of net assets of China JV on the investment in China JV as at March 31, 2024, had the financial results/ other financial information of China JV been audited.

Management Response:

• The Group's investment in Varroc TYC Corporation BVI (‘VTYC' or ‘China JV'), a joint venture accounted for under the equity method, which is carried at Rs 4,044.50 million as at March 31, 2024, and the Group's share of VTYC's net profit of Rs 428.79 million which is included in the Group's income for the period then ended are based on management certified accounts and were not subjected to audit. The Group is currently undertaking negotiations with the JV partner for resolution of certain matters regarding operation of the JV, pending which the Group is unable to get the financial and other information of VTYC.

Apart from the above, there are no further qualifications, reservations, or adverse remarks on the financial statements for the year ended March 31,2024. The notes on the financial statement referred to in the Auditors' Report are self- explanatory and do not call for any further comments. The Auditor's Report is enclosed with the financial statements.

The total fees for all the services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditor, and all entities in the network firm/network entity of which the statutory auditor is a part, is given below:

(Rs in million)

b. COST AUDITOR

The Board had appointed M/s S. R. Bhargave & Co., Cost Accountants, Pune (Firm Registration No. M - 000218), as Cost Auditor for conducting the audit of Cost Records of the Company for Financial year ended 31^st March, 2024.

In accordance with Section 148 of the Companies Act, 2013, based on the recommendation of the Audit Committee, the Board of Directors of the Company, at their meeting held on May 17, 2024, re-appointed M/s S. R. Bhargave & Co., Cost Accountants, Pune (Firm Registration No. M - 000218), as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year ending 31^st March,2025. M/s S. R. Bhargave & Co., have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) read with Section 148(5) of the Companies Act, 2013.

As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members' ratification for the remuneration payable to M/s S. R. Bhargave & Co., Cost Auditors is included in the Notice convening the 36^th Annual General Meeting.

The Cost Audit Report for the Financial Year 2023-24 will be filed within the stipulated period.

C. SECRETARIAL AUDITOR

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Uma Lodha & Co. (C.P.No.2593), Company Secretaries in Practice, Mumbai, as the Secretarial Auditor to undertake the Secretarial Audit of the Company for the financial year ended March 31,2024.

The Secretarial Audit Report for the Financial Year ended 31^st March, 2024 is annexed herewith and forms an integral part of this report. The report does not contain any qualification, reservation, or adverse remark or disclaimer. Further, the Company is in compliance with the Secretarial Standards, specified by the Institute of Company Secretaries of India (‘ICSI').

Secretarial Audit of Material Unlisted Indian Subsidiary

Varroc Polymers Ltd. (VPL), is a material subsidiary of the Company. The Secretarial Audit of VPL for the financial year ended 31^st March, 2024 was carried out pursuant to Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 by M/s Uma Lodha & Co. (C.P. No.2593), Company Secretaries in Practice, Mumbai. The Secretarial Auditor's Report of VPL, is annexed herewith and forms an integral part of this report.

ANNUAL SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the Financial Year ended 31^st March, 2024 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by M/s Uma Lodha & Co. (C.P. No.2593), Company Secretaries in Practice, Mumbai has been submitted to the Stock Exchanges within the prescribed timelines. The said report does not contain qualification, reservation or adverse remark.

INTERNAL AUDITOR

The Internal Auditor of the Company is a permanent invitee to the Audit Committee Meeting and regularly attends the Meetings for reporting their findings of the internal audit to the Audit Committee Members.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The disclosures required to be made under Section 134(3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are provided in Annexure - I.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENT

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes to the standalone Financial Statements.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors, KMPs and employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure II to this Report.

Further, as required under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than Rs 10,200,000/- per annum during the year ended 31^st March, 2024 or employees who were employed for a part of the Financial Year and were in receipt of remuneration of not less than Rs 8,50,000/- per month during any part of the said year is included as an annexure to this report. In terms of the 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 kept open for inspection during working hours at the registered office of the Company. Any member who is interested in obtaining these, may write to Group General Counsel & Company Secretary at the registered office of the Company.

The said statement is also available on your Company's website, the weblink to which is https://varroc.com/investors/ corporate-governance/.

The Company had no employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration, which in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or wholetime director or manager and holds by himself or alongwith his spouse and dependent children, not less than 2% of the equity shares of the Company.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Our Policy on Related Party Transactions is intended to ensure that proper reporting, approval, and disclosure processes are in place for all transactions between the Company and its Related Parties. It ensures that all related-party transactions are carried out as per arm's length parameters and adequate information is provided to shareholders bringing transparency.

All Related Party Transactions are placed before the Audit Committee for its review and approval. Only independent directors who are members of the Audit Committee approve the same. Prior omnibus approval is obtained for RPTs on a quarterly basis for transactions which are of repetitive nature and/or entered in the ordinary course of business and are at arm's length. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or others, that may have a potential conflict with the interests of the Company at large or that warrant the approval of the shareholders. No material contracts or arrangements with related parties were entered into during the year. The Company has nothing to report in Form AOC-2, hence, the same is not annexed.

In line with the requirements of the Companies Act, 2013 and Listing Regulations, the Company has formulated a Policy on Related Party Transactions (RPTs), including any amendments thereto for identifying, reviewing approving and monitoring of RPTs. The said policy is available on the Company's https://varroc.com/investors/corporate-governance/.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy, as part of Vigil Mechanism to provide appropriate avenues to all individuals associated with the Company to bring to the attention of the Management any issue which is perceived to be in violation of or in conflict with the Code of the Company. The Policy provides for adequate safeguards against victimisation of employees who avail themselves of the mechanism. No person has been denied access to the Chairman of the Audit Committee. All cases, registered under the Code and the Whistle Blower Policy of the Company, are reported to the Management Committee and are subject to the review of the Audit Committee. The Whistle Blower policy is uploaded on the website of the Company at https://varroc.com/investors/corporate-governance/.

RISK MANAGEMENT

The Company has constituted a Risk Management Committee (RMC) consisting of Board Members and Senior Management Personnel and has delegated the function of formulating, implementing, monitoring, and reviewing the risk management policy to the Committee. It has a defined risk control and management policy in place that is consistent with the provisions of the Act and the SEBI Listing Regulations. The RMC Committee plays a pivotal role in supervising the way in which management oversees adequacy, adherence & effectiveness to the Company's risk management framework, considering the risks the business challenges and opportunities. A business-centric approach to risk management is used to identify potential risks. Based on materiality of the risk, response strategies are developed and assigned to concerned risk owner. The process of risk management helps to identify, prioritise, mitigate, monitor, and appropriately report any significant threat to the organisation's strategic objectives, its reputation, operational continuity, environment, compliance, and the health & safety of its employees. The Company has established procedures to periodically place before the Board/Audit Committee, the risk assessment and minimisation procedures being followed by the Company and the steps taken by it to mitigate the Risks.

INTERNAL CONTROL SYSTEM AND THEIR ITS ADEQUEACY

The Company has a defined organisational structure, documented policy guidelines, and a defined authority matrix that ensures efficiency of operations, compliance with internal policies and applicable laws and regulations, as well as protection of resources. The Company advocates that a strong internal control system complements strong Governance processes and plays a critical role efficient conduct of in the day-to-day operations of the Company.

To this end, the Company has put in place an effective internal control system to synchronise its business processes, operations, financial reporting, fraud control, and compliance with extant regulatory guidelines and compliance parameters. The Company ensures that a standard and effective internal control framework operates throughout the organisation, providing assurance about the safekeeping of the assets and the execution of transactions as per the authorisation in compliance with the internal control policies of the Company.

The internal control system is supplemented by extensive internal audits, regular reviews by the management, and guidelines that ensure the reliability of financial and all other records. The management periodically reviews the framework, efficacy, and operating effectiveness of the Internal Financial Controls of the Company.

A comprehensive Internal Audit Programme has been instituted by internal audit function of the Company, which presents the paramount observations on a quarterly basis before the Audit Committee and the Board for review. The Internal Audit function helps anchor, supervise, and monitor the effectiveness and adequacy of control systems. Internal Audits are carried out to review the adequacy of the internal control systems and compliance with policies and procedures.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES

As defined under the Act, the Company has 16 subsidiaries, including step-down subsidiaries, and 3 joint venture Companies as on March 31,2024.

• Companies which have become subsidiaries - Varroc Czech Republic s.r.o.

• Companies which have ceased to be a Joint Venture of the Company: Nil

• Companies which have become a Joint Venture of the Company: Nil

• Companies which have become an associate of the Company: Nil

Material Subsidiaries

The Company has 1 unlisted material subsidiary incorporated in India i.e. Varroc Polymers Ltd. The Policy for determining Material Subsidiaries as formulated in line with the requirements of the Act and the Listing Regulations, and the same can be accessed on the Company's website at https://varroc.com/investors/corporate-governance/.

Consolidated Financial Statements

According to Section 129(3) of the Act, the consolidated financial statements of the Company and its subsidiaries, joint ventures, and associates are prepared in accordance with the relevant Indian Accounting Standard specified under the Act, and the rules thereunder and form part of this Annual Report. A statement containing the salient features of the financial statements of the Company's subsidiaries, joint ventures, and associates in Form No. AOC-1 is given in this Annual Report.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate audited financial statements in respect of subsidiaries are available on the website of the Company https://varroc.com/investors/financial-results/.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The Company is a strong believer in the Varroc Group philosophy of giving back to the community and acknowledging the role played by communities in the growth of our business. Our various CSR initiatives ensure a better environment for everyone. The Company assists in promoting rural and nationally recognized sports and environmental sustainability.

CSR activities, projects, and programs undertaken by the Company are in accordance with Section 135 of the Act and the rules made thereunder. Such CSR activities exclude activities undertaken in pursuance of its normal course of business.

Under Section 135 of the Act, the Company was required to spend Rs 7.38 million (2% of the average qualifying net profits of the last three financial years) on CSR activities on projects in FY 2023-24. During the year under review, the Company has spent Rs 15.22 million on CSR activities. The Company has fulfilled its obligation of spending CSR amount as per Section 135 of the Act for FY 2023-24. The Board of Directors has approved the same.

The Annual Report on CSR containing particulars as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are provided in Annexure - III annexed to this Report. The CSR Policy may be accessed on the Company's website at the link: https://varroc.com/investors/corporate-governance/.

CERTIFICATES/CONFIRMATIONS/DECLARATIONS/AFFIRMATIONS DURING THE YEAR UNDER REVIEW

• In the preparation of the financial statements, the Company has followed the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with relevant rules thereunder. The Significant Accounting Policies which are consistently applied have been set out in the notes to the financial statements.

• Code on Social Security, 2020 - The Code on Social Security, 2020 (‘Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

• The Company uses SAP ECC R6 as the accounting software. SAP ensures an audit trail, providing standard functionality and logging in all changed data in the system. This functionality and audit trail feature in SAP has been operational throughout the year for all relevant transactions recorded through the application in the Company.

• There were no significant material orders passed by the regulators or courts or tribunals impacting the Company's going concern status and its operations in the future.

• The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

• There was no fraud reported by the Statutory Auditors and the Secretarial Auditors of the Company under Section 143(12) of the Act to the Audit Committee.

• The Certificate duly signed by the Chairman & Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31,2024, as submitted to the Board of Directors at its meeting held on May 17, 2024, is annexed to this report.

• The declaration by the Chairman & Managing Director regarding compliance by the Board members and senior management personnel with the Company's Code of Conduct is annexed to this report.

• The details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year - Nil.

• The details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof: Nil

• During FY 2023-24, Mr. Tarang Jain, Chairman & Managing Director, and Mr. Arjun Jain, Whole-Time Director, received remuneration of Rs 39.58 million and Rs 3.66 million, respectively, from material subsidiary Varroc Polymers Ltd.

a) TRANSFER OF UNCLAIMED DIVIDEND / DEBENTURE REDEMPTION / DEBENTURE INTEREST TO IEPF:

As required under Section 124 of the Act, no Unclaimed Dividend/ Debenture redemption/ Debenture Interest has been lying with the Company for a period of seven years. Accordingly, no amounts have been transferred to the Investor Education and Protection Fund established by the Central Government.

b) TRANSFER OF SHARES TO IEPF

As required under Section 124 of the Act, no equity shares, in respect of which dividends have not been claimed by the members for seven consecutive years or more, have been transferred by the Company to the Investor Education and Protection Fund Authority (IEPF) during the Financial Year 2022-23.

ANNUAL RETURN

As required under Sections 92(3) and 134(3) (a) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), Annual Return in Form MGT - 7 is available on Company's website at the link https://varroc.com/investors/corporate-governance/.

DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has a policy for prevention of Sexual Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH'). During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. At multiple times, the Company had arranged an online orientation programme and workshops, for its Internal Committee Members under POSH Act, at PAN India Level, in order to make them proficient to discharge their duties. The training was attended by all the Internal Committee Members at PAN India. The Company has in place a Module on "PREVENTION OF SEXUAL HARASSMENT IN WORKPLACE (POSH) in - MyCoach E-Learning Platform, for sensitising the employees with the provisions under the POSH.

GREEN INITIATIVES

As a responsible corporate entity, the Company wholeheartedly endorses and supports the ‘Green Initiative' launched by the Ministry of Corporate Affairs, Government of India. This initiative facilitates electronic delivery of documents, including the Annual Report, quarterly and half-yearly results, and other such documents, to shareholders' registered e-mail addresses with their DPs or with the Company or its RTA. An electronic copy of the Notice of the 36^th Annual General Meeting of the Company shall be sent to all Members whose email addresses are registered with the Company/ Depository Participant(s).

ACKNOWLEDGEMENTS

Your Directors place on record their acknowledgement for the co-operation received from the Customers, Vendors, Bankers, Associates, Collaborators and the Employees of the Company, without which it would not have been possible for the Company to achieve its performance and growth.

The Directors also thank the Government of India, the Government of various states in India, the Government of various countries, and the concerned government departments and agencies for their co-operation.