[In terms of Section 134 (3) and other applicable provisions of the Companies Act, 2013 (the "Act")) To the Members,

Directors of your Company are pleased to present herewith their 12^th Annual Report together with the Audited Financial Statements for the Financial Year 2022-23 and report of Auditors thereon.

This report is based on standalone financial statements of the Company. Since your Company does not have any subsidiary, associate or joint venture Company at the end of the year under report, your Company is not required to prepare the consolidated financial statements and accordingly disclosures based on consolidated financial statements are not required to be made in this report.

Change in status of the Company and Change of Name

In terms of Special Resolution passed by the members in last Annual General Meeting held on 12.09.2022 and as per the Fresh Certificate of Incorporation pursuant to Change of Name issued by the office of the Registrar of Companies - Gujarat, name of the Company was changed from Shantol Green (India) Private Limited to Hi-Green Carbon Private Limited.

Thereafter, as part of Company's forthcoming IPO planning (details whereof are given later in this Report) and as per the Special Resolution passed by the members in EGM held on 14.02.2023, your company is converted into a Public Company and accordingly the name of the Company is further changed to Hi-Green Carbon Limited as per Certificate of Incorporation consequent upon conversion to Public Company as issued by the Office of the Registrar of Companies, Gujarat.

Recycling of tyres - Industry outlook:

Worldwide waste Tyres is the serious issue due to its hazardous nature posing a serious environmental, health and fire risk. One person, on an average, has been generating one tyre i.e 15 Kilograms of waste tyre on yearly basis, which aggregating 120 Million MT waste tyres Worldwide. In modern era as life style and standards of living of people increased and economy is also progressing, use of two wheelers and cars and other transpiration vehicles contributing, at a faster pace than before, towards piling up of the waste tyers. Though there is huge generation of waste tyre on daily basis, only 10% of the total waste tyres are recycled in environment friendly manner. Rest of the wastes are either burnt in cement kiln or bricks making industry generating pollutants and waste tyres abandoned in landfills producing the toxic and hazardous substances affecting the environment and health of Human being as well as animals.

Pyrolysis is the only process which leads to abstract the valuable substance from the waste tyres without harming the environment and human and animal lives. Developing countries are welcoming the continuous pyrolysis for recycling of the waste tyres to control the pollution generated by the waste tyres. Now a days, in India also all major tyre manufacturing companies do focus on use of recycled materials specially the recovered carbon black, in their production process for adopting the green initiatives in the Tyre industries.

Government of India through its nodal agencies like Ministry of Environment, Forest and Climate Change, Central Pollution Control Board (CPCB) has been taking various initiatives to promote recycling of tyres in environment friendly process and recovering valuable resources. National Green Tribunal (NGT) also issued various directions to adopt the environmentally sound technology and to stop polluting technology. Recently thorough notification dated July 21, 2022 and December 31, 2021, Government implemented ERP Policy to provide intensive for recycling of Tyres and making tyre producers responsible to use recycled material and pay intensive to recyclers of waste tyres.

Financial Summary:

Dividend and Reserve:

The Board of Directors does not recommend any dividend for the year 2022-23 and no amount from current profit is proposed to be carried to general reserves.

Operational & Financial Review:

As regards financial performance, Financial Year 2022-23 proved to be most promising for the growth and development of the Company in terms of revenue and profit as evident from the summary of financials given herein above.

During last 3-4 years, directors of your Company have been very aggressive to unlock the growth potentials of the Company in terms of revenue and profitability. As a measures, the sales revenue of around Rs. 25 Crore in Pre-covid era crossed Rs. 50 Crore during last year and again to Rs. 77.89 Crore, during the reported period, thus showing three times growth in turnover when compared to the year 2019 - 20. As a result of substantial improvement in sales revenue on one hand, and keeping checks and balances on overheads and other variable expenses, your Company could significantly improve profitability over last year as the EBITA witness around 150% growth while PBT and PAT registered more than 225% growth.

Year by year, the Company registers growth in business volume. Rajasthan Plant of the Company is operating at its almost full swing and the Company faces supply shortage to cater industry demand for recovered carbon black and fuel oil. Hence, the Company is in the process of installing one more plant Maharashtra to take geographical benefits for Company's South Indian and Export customers. In recent time, the company also added the sodium silicate manufacturing plant at Rajasthan unit as part of further value addition to utilise the excess energy of main process and made our plant as zero waste discharge plant. It also contributes towards business growth of the Company.

Future Outlook:

Dynamic development of the automobile industry and growing number of various vehicles produced worldwide will resulting into generating millions tons of Waste tyres. As stated earlier in this report, waste tires when neglected or injudiciously managed can have serious social impacts to communities like causing pollution and health problems. As a result of this serious social and environment problems the recycling industry has a very active role to play by generating other products and resources without damaging the ecosystem.

Company has acquired the land for establishing a new plant at Dhule District of the Maharashtra during the year and construction and other civil work already started at that plant. By establishing this new plant at Maharashtra it shall be in far better position to bridge the demand-supply gap in South India and West India Regions. Company Management has committed its time and resources to start the commercial production at Dhule Plant in 2023-24. Apart from that the Company is also in the process of establishing its Wholly Owned Subsidiary for recycling process with its old brand name "Shantol" to take the benefits of established brand in addition to Hi-Green brand. Once all these future plans get materialized, Company expects a huge boost to the operational revenue and profitability.

Initial Public Offer (IPO) Planning:

To cater long term working capital and capital expenditure outlay of the Company, it is planned to raise further equity capital in the form of IPO. Your Company has taken various steps towards IPO process including conversion of Company into a Public Company, mandate to the Merchant Banker, appointment of Woman and Independent Directors, constituting various committees etc. in compliance of the provisions of the Act and various securities laws. Based on the progress so far made, the Company is planning to file offer documents with SEBI in the month of May 2023 and to hit the market before the end of August 2023. However, exact timings to enter the securities market depends on various factors including capital market scenario.

Change in the nature of business of the Company:

There was no change in nature of the business of the Company during the year under report.

Details as to holding, subsidiary, associate, joint venture:

RNG Finlease Private Limited (RNG for brevity) is the Holding Company of your Company at the beginning and at the end of financial year. However, at the beginning of the year, your Company was the Wholly owned Subsidiary of RNG but due to transfer of shares registered during the year, RNG is now holding 71.58% of Company's share capital. Other than this. Company does not have any subsidiary, associate or joint venture Company either at the beginning or end of the year under report and none of the Company has become or ceased to be holding, subsidiary, associate or joint venture Company of your Company.

Material changes and commitments, if any, affecting financial position:

There was no material change or commitment, in between balance sheet date and date of this Report, which may affect financial position of the Company except that as stated earlier the Company has been in the process of coming out with its maiden public offer.

Web Link of Annual Return:

Annual Return of the Company in Form MGT-7 once filed with RoC, the same shall be placed on the website of the Company at www.higreencarbon.com as required under section 92(3) of the Act.

Board Composition and changes among them:

During the year under review, there were changes in the composition of Board of Directors. Board of Directors comprised following Directors at the end of the year under report:

Audit Committee, Nomination & Remuneration Committee. Stakeholders' Relationship Committee and Vigil Mechanism

Company, on becoming public company, are now mandated to formulate Audit Committee and Nomination & Remuneration Committee of the Board.

As the Company has appointed independent directors effective from 01/04/2023 only, the Company has yet to constitute the said committees. Both the said committees shall be constituted by the Board in its next meeting and once formed shall be placed on website of the company i.e. www.higreencarbon.com.

As regards Stakeholders' Relationship Committee and Vigil Mechanism, the Board wishes to state that the same will be applicable only after the Company becomes the listed company after its IPO as referred above. However, the said committee shall be constituted and Vigil Mechanism shall be framed and approved by the Board in its next meeting. Once, the said committee is constituted and Vigil Mechanism framed, the same shall be placed on website of the company i.e. www.higreencarbon.com.

Policy for appointment and remuneration of directors:

Once, the Nomination and Remuneration Committee is formed, the Company will also prepare and approve Policy for Appointment and Remuneration of Directors providing for qualifications, positive attributes and independence of Directors along with recommendation of remuneration of Directors and Key Manorial Personnel. Detailed Nomination and Remuneration Policy once formed shall be placed on website of the company i.e. www.higreencarbon.com.

Disclosures Regarding Independent Directors:

Mr. Shaileshbhai Durlabhjibhai Sagpariya, Mr. Parashar Kishorbhai Vyas and Mr. Narendra Kantilal Patel have been appointed as Independent Directors of the company effective from April 1, 2023 by the shareholders in EGM dated March 31, 2023. The Company has received the Declaration that they meet the Criteria of independent Director as mentioned in Section 149 (6) of the act.

Annual evaluation of Board's Performance

Company does not fall under any criteria as stated in Rule 8(4) of the Companies (Accounts) Rules, 2014. Hence, the provisions relating to evaluation of Board's Performance and related disclosure are not applicable to your Company.

Board Meetings and participation of directors at Board Meetings

Details of Board Meetings held during the FY 2022 - 23 and attendance of directors thereat are as under:

All the said Board Meetings were convened and held and proceedings thereof were recorded and signed in compliance of applicable provisions of the Act and Secretarial Standards (SS -1).

Risk Management Policy:

Except the market risk involved in every business, the Board of Directors does not foresee any inherent or foreseeable external risk involved in business of the Company which may threaten the existence of the Company.

The Risk Management Policy of the Company consists of identifying those market risks which includes availability and pricing of raw materials, competitors in the markets, fluctuation in forex rates, technological changes and upgradation etc. and remedial actions to overcome those risk factors. In the opinion of the Board, the risk management policy of the Company has been working effectively.

Internal Controls including internal financial control:

The Directors wish to state that the Company is having adequate internal control and internal financial control system that commensurate with the size and nature of business. Almost all financial and other operational activities are under the direct supervision of the Directors leaving no scope for any manipulation, fraud or other irregularities. The Board reviews the internal control policy of the Company and in the opinion of the Board, the internal control and internal financial control policy of the Company have been operating effectively leaving no scope for any operational or financial irregularities including fraud.

Details in respect of fraud reported by Auditor u/s 143 (12) of the Act: Nil Directors' Responsibility Statement:

In pursuance of the provisions of Section 134 (3) (c) and 134 (5) of the Act, the directors of your Company state that:

•    in preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

•    the directors had 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 cash flow of the Company for that period;

•    the directors had taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

•    the directors had prepared the annual accounts on a going concern basis;

•    The directors have ensured compliance with provisions of all applicable laws.

Policy on Corporate Social Responsibility (CSR):

The provisions of Section 135 of the Act relating to CSR are not applicable to your Company for the FY 2022 - 23. However, the said provisions are applicable for the FY 2023 - 24. The Company has yet to formulate its CSR Policy. The Company shall formulate the required policy and will comply with the CSR related provisions in due course of time.

Cost accounting records under section 148 of the Act:

Since company has crossed the turnover of Rs. 35 Crore during previous financial year and products of the company falls under the products specified by the central government for which maintenance of cost records under section 148 of the Act read with rules framed thereunder are mandatory. Company is in the process of maintaining cost records as mandated u/s 148 of the Act.

Particulars of Loans, Guarantees or Investments under Section 186 of the Act:

The Company, during the year, has not granted any loan or provided any guarantee or security or made any investments covered u/s 186 of the Act.

Particulars of related party transaction referred to in Section 188 (1) of the Act:

The disclosures as to Related Party Transactions covered u/s 188 (1) of the Act are given in Form AOC-2 marked as 'Annexure - A'.

Particulars of employee:

As your Company is not covered u/s 197 (12) of the Act, your Company is not required to make any disclosure as to details of Company's employee as referred to in Section 197 (12) or rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Disclosure as to deposits covered under Section 73 or 76 of the Act:

Note: During the year under report Company has accepted unsecured loans only form Directors of the Company or their relatives or Inter Corporate Deposits which are disclosed in Note No. 5 and 30 to the Financial Statements as required by virtue of proviso to Rule 2 (1) (c) (viii) of the Companies (Acceptance of Deposits), Rules, 2014

Details of significant and material orders passed by the regulators or courts or tribunals:

No order was passed by any Regulator or Court or Tribunal, during the year 2022 - 23, which may impact on going concern status and Company's operations in future.

Conservation of energy, technology absorption, foreign exchange earnings and outgo:

Conservation of Energy:

Auditors:

M/s. Ranpura Desai & Co. (FRN: 117476W), Statutory Auditors of the Company had resigned on December 27, 2022, due to their preoccupation. Then, Company appointed M/s. J C Ranpura & Co., {FRN 108647W) as Statutory Auditors of the company to fill casual vacancy caused due to resignation of existing Statutory Auditors who hold the office as auditors till conclusion of ensuing AGM. The Board of Directors proposes to appoint M/s. J C Ranpura & Co., (FRN 108647W) as Statutory Auditors of the Company for a term of 5 years from conclusion of ensuing AGM.

Explanations or comments by the Board on Qualification, Reservation or Adverse Remark or Disclaimer made by the Auditors:

Qualified remarks/observations of the Auditors in their Report and Board's explanation:

Remark 1: The Auditors stated in their Report that the Company has not provided for interest due and payable to suppliers falling under the Micro, Small and Medium Enterprise Development Act, 2006, which is contrary to the provisions of the said Act. The Company has not quantified such interest payable.

Board's Explanation: In this regards, the Board likes to state that the Company informs its suppliers to confirm their status whether registered under Micro, Small and Medium Enterprise Development Act, 2006. However, the Company has received confirmation only from some of suppliers. Company usually settles the outstanding of the MSME suppliers within 4S days, except for those suppliers with whom agreed terms of payment are more than 45 days. Hence, no provision is made as to interest for delayed payments of MSME suppliers.

Remark 2: The Auditors in their Report under the head "Other Matters" have made some disclaimer notes. However, the same have no material impact on financials of the Company and the Auditors have not modified their opinion for the same. Hence, no further explanations for those disclaimers need to be made in this Report.

Remarks of Secretarial Auditor in Secretarial Audit Report: Not Applicable as the Company is not covered under the provisions of 204 of the Act and rules thereunder.

Other Statutory Disclosure:

a)    Equity Shares with Differential Rights: Since your Company has not issued Equity Shares with Differential Rights, no disclosure under Rule 4 (4) of the Companies (Share Capital and Debenture) Rules, 2014, are required to be made in this report.

b)    Sweat Equity Shares: Since your Company has not issued Sweat Equity Shares, no disclosure under Rule 8 (13) of the Companies (Share Capital and Debenture) Rules, 2014 are required to be made in this report.

c)    Employee Stock Option/Purchase Scheme: Since your Company does not have any Employee Stock Option/Purchase Scheme and has not issued any shares under any such scheme, no disclosure under Rule 12 (9) of the Companies (Share Capital and Debenture) Rules, 2014 are required to be made in this report.

d)    Disclosure under Rule 16 (4) of the Companies (Share Capital and Debenture), Rules, 2014:

Since your Company has not provided for any money or has given any financial assistance to the employees for purchase of shares of your Company, no disclosure under the said Rule is required to be made in this report.

e)    Buy back of securities: Since the Company has not bought back any shares during the year, no disclosure relating to buy back required to be made in this report.

f)    Loan for purchase of own shares: Company has not provided any loan for the purchase of its own shares in violation of section 67 of the Act.

g)    Disclosure under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013: The Company has not received any complaint nor has come across any event requiring disclosure under the said Act. Your Company is fully committed to uphold and maintain the dignity of every women working at the Company or visiting the Company.

h)    Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016: During the year under report, no application or any other proceedings under the IBC, 2016 is made by or against the Company, no such proceedings is pending at the end of the FY 2022-23.

i)    Revision in Financial Statements or Directors report: Company has not initiated any process under section 131 of the Act for revision in financial statements or Board's Report.

j) Directors' Remuneration: Remuneration paid to Directors is disclosed in Note No. 30 to Audited Financial Statements.

Appreciation:

Your Directors take this opportunity to place on record their appreciation and sincere gratitude to the Bankers to the Company for their valuable support and look forward to their continued cooperation in the years to come. Your Directors acknowledge the support and co-operation received from the employees and all those who have helped in the day to day management. The Board would be failing in its duty without acknowledging the co-operation received from various government, semi government and local authorities. The Board expects continuous patronage from all its stakeholders.