DIRECTORS' REPORT

Dear Members,

Your Directors are pleased to present the 47^th Annual Report and the Company's audited financial statement (Standalone and
Consolidated) for the financial year ended March 31, 2023.

Financial Results:

The Company's financial performance, for the year ended March 31, 2023 is summarized below:

Result of Operations and the state of Company's
affairs:

Your company has generated a consolidated net revenue of
H 2,894.62 Crores, EBITDA at H 254.62 Crores, PAT at H 75.43
Crores for the financial year 2022-23.

Consolidated Financial Statement:

The Consolidated Financial Statements of the Company, its
subsidiaries prepared in accordance with the Companies Act,
2013 and applicable Indian Accounting Standards along with
all relevant documents and the Auditors' Report form part of
this Annual Report. The Consolidated Financial Statements
presented by the Company include the financial results of
its subsidiary companies. The Financial Statements as stated
above are also available on the website of the Company and
can be accessed at the website viz., www.pennarindia.com.

Subsidiaries':

The following are three subsidiaries of the company as on
March 31, 2023.

a. Pennar Global INC, USA (PGI)

b. Pennar GmbH, Germany (Pennar GmbH)

c. Enertech Pennar Defense and Engineering Systems
Private Limited (Enertech)

The performance of the subsidiaries is as hereunder:

(a) Pennar Global INC, USA

Pennar Global Inc. is in the business of providing
engineering services and marketing Pennar Products
across the United States of America. The company has
recorded a consolidated net revenue of H 8744 Million
USD for the financial year 2022-23.

(b) Pennar Gmbh

Pennar Gmbh is in the business of providing engineering
services to our European clients. The company has
recorded a net revenue of H 1.91 million Euros for the
financial year 2022-23.

(c) Enertech Pennar Defense and Engineering Systems
Private Limited

Enertech Pennar Defence and Engineering Systems
Private Limited has recorded a net revenue of H 9.03
crores for the financial year 2022-23.

The financial position of each of the subsidiaries, as per the
Companies Act, 2013 is annexed. The Policy for determining
material subsidiaries may be accessed on the Company's
website at the link: http://www.pennarindia.com/policy-
determining-material.html. The information on subsidiaries
pursuant to Section 129(3) of the Act read with rule 5 of the
Companies (Accounts) Rules, 2014 is annexed herewith as
Annexure - A in Form AOC - 1.

During the year under review, the Board of Directors
approved to form a wholly owned subsidiary on February
8, 2023, in view of the same a company by name 'Pennar
Metals Private Limited' was incorporated on June 22, 2023.

Step down subsidiaries:

The following are four step-down subsidiaries of the
company as on March 31, 2023.

a. Pennar Global Metals, LLC

b. Ascent Buildings, LLC

c. Cadnum SARL

d. Pennar global Investments, LLC

Material Changes and Commitments if any affecting
the financial position of the company which have
occurred between the end of the financial year of
the company to which the financial statements
relate and the date of the report

There are no material changes and commitments affecting
the financial position of the Company.

Dividend, Fixed Deposits and General Reserves:

The company has been investing in new capital to expand
its product profile and increase the markets. This has already
shown results by achieving highest sales and EBIDTA. Most
of these activities are planned through internal sources.
Therefore, your Directors are not recommending dividend
on equity shares. Your Company has not accepted any
fixed deposits and no amount has been carried to General
Reserves during the year.

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

Particulars of loans given, investments made, guarantees
given and securities provided along with the purpose for
which the loan or guarantee or security is proposed to be
utilized by the recipient are provided in the standalone
financial statement.

Internal Financial Controls:

The details in respect of internal financial control and their
adequacy are included in the Management Discussion &
Analysis, which forms part of this report.

Contract and Arrangement with Related Parties:

All contracts / arrangements / transactions entered by the
Company during the financial year with related parties
were in the ordinary course of business and on an arm's
length basis. During the year, the Company had entered into

contract / arrangement / transaction with material related
party which could be considered material in accordance with
the policy of the Company on materiality of related party
transactions. The Policy on materiality of related party
transactions and dealing with related party transactions as
approved by the Board may be accessed on the Company's
website at the link: https://www.pennarindia.com/policy-
related-party-transactions.php

The Information on transactions with related parties
pursuant to Section 134(3)(h) of the Act read with rule 8(2) of
the Companies (Accounts) Rules, 2014 are annexed herewith
as Annexure - B in Form AOC-2.

Change in the nature of business, if any:

There is no material change in the nature of business
affecting the financial position of the Company for the year
ended March 31, 2023.

Credit Rating:

CARE has reaffirmed the 'CARE A-' Stable (Single A Minus;
Outlook: Positive) with rating assigned to long term bank
facilities. Further, CARE has reaffirmed the 'CARE A2 ' (A Two
Plus) rating to short term bank facilities of the Company.

Cash profit:

Your company has undertaken a number of steps to maintain
strong liquidity levels. The consolidated cash profit is at
H 140.4 Crores. Your company continues to focus on
generating strong cash flows to meet its future growth plans
and is comfortable with its current liquidity positions.

Board of Directors and Key Managerial Personnel:

None of the Directors of the company are disqualified under
the provisions of the Act or under the Listing Regulations.

Appointment:

The Board of Directors of the Company at its meeting held
on November 09, 2022 appointed Ms. Virginia Sharma as
Non-Executive Independent Director, the appointment was
regularized by the shareholders on December 18, 2022 by
postal ballot.

Mr. Eric James Brown and Mr. K Lavanya Kumar Rao who
retire by rotation and being eligible offer themselves for
re-appointment. Your Board recommends their appointment.

The Board of Directors of the Company at its meeting held
on August 09, 2023 designated Mr. RVS Ramakrishan, Non¬
Executive Independent Director as Chairman of the Board
of Directors. His appointment has to be ratified by the
Members at the ensuing Annual General Meeting. Your Board
recommends his appointment.

The Board of Directors of the Company at its meeting
held on August 09, 2023 appointed Mr. Nrupender Rao as
Chairman Emeritus in the Company. His appointment has to
be approved by the Members at the ensuing Annual General
Meeting. Your Board recommends his appointment.

Resignation:

Mr. Varun Chawla, Non-Executive Director of the company
resigned from the office of directorship and same was taken
note by the Board of Directors at its meeting held May 24,
2023. Your Board place on record their appreciation and
gratitude for the guidance and direction that Mr. Varun
Chawla has provided to Pennar Industries during his tenure
as non-executive non-independent director.

Mr. Nrupender Rao, Executive Chairman of the company
resigned from the office of directorship and same was
taken note by the Board of Directors at its meeting held
August 09, 2023. Your Board place on record their

appreciation and gratitude for the guidance and direction
that Mr. Nrupender Rao has provided to Pennar Industries
during his tenure as Executive Chairman.

Pursuant to the provisions of Listing Regulations, brief
particulars of the Directors who are proposed to be
appointed/re-appointed are provided as an annexure to the
notice convening the Annual General Meeting.

The Company has received declarations from all the
Independent Directors of the Company confirming that they
meet with the criteria of independence as prescribed both
under sub-section (6) of Section 149 of the Companies Act,
2013 and under SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015. The Company has devised a
Policy for performance evaluation of Independent Directors,
Board, Committees and other individual Directors which
includes criteria for performance evaluation of the Non¬
Executive Directors and Executive Directors. The details of
programmes for familiarisation of Independent Directors
with the Company, their roles, rights, responsibilities in the
Company, nature of the industry in which the Company
operates, business model of the Company and related
matters are put up on the website of the Company at the
link: https://www pennarindia com/policy-familiarization-

programme php

Mr. J S Krishna Prasad, Chief Financial Officer of the Company
resigned from the office of chief financial Officer and same
was taken note by the Board of Directors at its meeting held
on May 24, 2023.

The Board of Directors of the Company at its meeting held
on May 24, 2023 appointed Mr. Shrikant Bhakkad, Vice¬
President Finance as 'Chief Financial Officer' of the Company
with effect from May 25, 2023.

Meetings of the Board:

Four meetings of the Board of Directors were held during the
year. For further details, please refer the same in Corporate
Governance report in this Annual Report.

Buyback of Equity Shares:

The Board of Directors at its meeting held on March 9, 2022
has approved a proposal for the buy-back of equity shares
of the Company by using funds upto a limit of H 4,000 lakhs
representing 5.97% and 5.93% of the aggregate of the total
paid-up equity capital and free reserves of the Company
based on the audited standalone and consolidated financial
statements respectively of the Company for last financial
year ended on March 31, 2021. During the financial year
under review, commencing from April 01, 2022 until closure
on September 22, 2022 (i.e. prior to expiry of 6 months)
72,16,000 Equity shares of H 5 each were bought back by
the Company from the open market at an aggregate value
of H 30,02,41,149.60. These equity shares were subsequently
extinguished resulting in reduction of the paid-up share
capital of the Company to 13,49,46,231 equity shares of H 5
each.

Directors Responsibility Statement:

In terms of Section 134 (3)(c) of the Companies Act, 2013, the
Board of Directors state that:

a) in the preparation of the annual accounts for the
year ended March 31, 2023, the applicable accounting
standards have been followed and there are no material
departures from the same;

b) the Directors have selected such accounting policies
and applied them consistently and made judgements
and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the
Company as at March 31, 2023 and of the profit of the
Company for the year ended on that date;

c) the Directors have taken proper and sufficient
care for the 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;

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

e) the Directors have laid down internal financial controls
to be followed by the Company and that such internal
financial controls are adequate and are operating
effectively; and

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

Corporate Governance:

The Company is committed to maintain the highest standard
of corporate governance and adhere to the corporate
governance requirements set out by Securities Exchange
Board of India. The Report on corporate governance as
stipulated under the Listing Regulations is annexed herewith
as Annexure - C. The requisite certificate from a firm of
Chartered Accountants confirming compliance with the
conditions of corporate governance is annexed herewith as
Annexure - D.

Corporate Social Responsibility (CSR):

Pursuant to the provisions of Section 135 and Schedule VII
of the Companies Act, 2013, CSR Committee of the Board
of Directors had framed the policy on Corporate Social
Responsibility. The same is hosted on the website of the
Company viz., https://www.pennarindia.com/csr-policv.php.
The Company has a CSR Committee to monitor adherence
to Corporate Social Responsibility Policy and to track
transactions related to CSR activities etc. A detailed report
on the CSR activities inter- alia disclosing the composition of
CSR Committee and CSR activities is attached as Annexure
- E to this Report.

Nomination and Remuneration Policy:

The Nomination and Remuneration Committee of the
Company identifies the persons, who are qualified to
become Directors of the Company / who may be appointed
in Senior Management in accordance with the criteria laid
down and recommend to the Board for their appointment
and removal. The Committee also carries out evaluation of
every Director's performance. The Committee has formulated
the criteria for determining qualifications, attributes,
independence of the Directors and recommend to the Board
a Policy, relating to the remuneration for the Directors, Key
Managerial Personnel and other employees.

Risk Management:

Pursuant to section 134 (3) (n) of the Companies Act,
2013 and SEBI (LODR) Regulations, 2015, the company has
formulated a policy on risk management and constituted
a Risk Management Committee which lays down various
risk mitigating practices that your Company is required to
implement in the Company. At present, the company has
not identified any element of risk which may threaten the
existence of the company.

Statutory Auditors:

M/s. M S K A & Associates, Chartered Accountants (Firm
Registration No. 105047W) were appointed as the Statutory
Auditors of the Company to hold office for a term of five

consecutive years from the conclusion of the Annual General
meeting held in the year 2022 till the conclusion of the
Annual General Meeting to be held in the year 2027.

Pursuant to the Notification issued by the Ministry of
Corporate Affairs on May 07, 2018, amending section 139
of the Companies Act, 2013, the mandatory requirement
for ratification of appointment of Auditors by the Members
at every AGM has been omitted and hence your Company
has not proposed ratification of appointment of M S K A &
Associates, Chartered Accountants, at the forthcoming AGM.

The Auditors' Report is unmodified i.e. it does not contain any
qualification, reservation or adverse remark or disclaimer.

Cost Auditors:

The Cost Audit Report for the year ended March 31, 2022
was reviewed by the Audit Committee at its meeting held
on August 08, 2022 and has been filed with Registrar of
Companies on November 05, 2022. The Board of Directors at
its meeting held on May 25, 2022 appointed M/s. Kandikonda
& Associates., Cost Accountants, Hyderabad as Cost auditors
of the company for the year ending March 31, 2023. The
Cost Audit report for the year ended March 31, 2023 was
approved by the Board of Directors at its meeting held on
August 09, 2023 and the same will be filed with the Registrar
of Companies within the stipulated time.

Secretarial Auditor:

The Board has appointed Mr. Subhash Kishan Kandrapu,
Practicing Company Secretary, to conduct Secretarial Audit
for the financial year 2022-23. The Secretarial Audit Report
for the financial year ended March 31, 2023 is annexed
herewith as Annexure - F. The Secretarial Audit Report does
not contain any qualification, reservation or adverse remark.

Audit Committee:

The details pertaining to composition of audit committee
are included in the Corporate Governance Report, which
forms part of annual report.

Vigil Mechanism/Whistle Blower Policy:

Pursuant to Section 177 of the Companies Act, 2013 read
with Rule 7 of Companies (Meetings of Board and its Powers)
Rules, 2014, the Company has established a Whistle Blower
Policy to deal with instance of fraud and mismanagement, if
any. The details of the Whistle Blower Policy are explained
in the Corporate Governance Report. The Policy on vigil
mechanism and whistle blower policy may be accessed on
the Company's website at the link: https://www.pennarindia.
com/vigil-mechanism.php and https://www.pennarindia.
com/whistle-blower-policy.php.

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

The particulars relating to conservation of energy,
technology absorption, foreign exchange earnings and
outgo, as required to be disclosed under the Act, is annexed
herewith as Annexure - G.

Extract of Annual Return:

Extract of Annual Return of the Company is annexed
herewith as Annexure - H.

Secretarial Standards:

The Company complies with all applicable secretarial
standards issued by the Institute of Company Secretaries
of India.

Particulars of Employees and related disclosures:

The information required under section 197 of the Companies
Act, 2013 read with rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is
annexed herewith as Annexure - I.

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

The Company has zero tolerance for sexual harassment of
women at workplace and has adopted a Policy for prevention,
prohibition and redressal of sexual harassment at workplace,
in terms of provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013
and the rules framed thereunder and constituted Internal
Complaint Committee (ICC) for safe working environment
where all employees treat each other with courtesy, dignity
and respect, irrespective of their gender, race, caste, creed,
religion, place of origin, sexual orientation, disability,
economic status or position in the hierarchy.

The following is the summary of sexual harassment
complaints received and disposed off during the year:

i) No. of complaints received : nil

ii) No. of complaints disposed off: nil

Listing of Equity Shares:

The Company's equity shares are listed at the Bombay Stock
Exchange Limited, National Stock Exchange of India Limited.

Dematerialisation of Shares:

99.50% of the company's paid-up equity share capital is in
dematerialized form as on March 31, 2023 and balance 0.50%
is in physical form.

Managing Director's Declaration:

Pursuant to the provisions of Regulation 17 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015,
a declaration by the Vice-Chairman and Managing Director
of the company declaring that all the members of the board
and the senior management personnel of the company
have affirmed compliance with the Code of Conduct of the
company is annexed herewith as Annexure - J.

The CFO certification to the board pursuant to Regulation 15
of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 is annexed herewith Annexure - K.

Personnel / Industrial Relations:

The Company maintained cordial and harmonious relations
at all levels at the offices and plants of the Company and its
subsidiaries throughout the year under review.

The details of significant and material orders
passed by the Regulators or Courts or Tribunals
impacting the going concern status and company's
operations in future:

In terms of sub rule 5(vii) of Rule 8 of Companies (Accounts)
Rules, 2014, there are no significant material orders passed
by the Regulators / Courts which would impact the going
concern status of the Company and its future operations.

Reporting of frauds by auditors:

During the year under review, neither the statutory auditors
nor the secretarial auditor has reported to the audit
committee, under Section 143 (12) of the Companies Act, 2013,
any instances of fraud committed against the Company by
its officers or employees, the details of which would need to
be mentioned in the Board's report.

Management Discussion and Analysis:

The "Management Discussion and Analysis Report”
highlighting the industry structure and developments,
opportunities and threats, future outlook, risks and concerns
etc. is furnished separately and forms part of this Board's
Report.

Business Responsibility and Sustainability Report
(BRSR):

The Listing Regulations mandate the inclusion of the BRSR
as part of the Annual Report for top 1000 listed entities
based on market capitalization. In accordance with the
Listing Regulations, we have integrated BRSR disclosures
into our Annual Report.

Dividend Distribution Policy:

The web link of the Dividend Distribution Policy has been
provided below for the perusal of the shareholders. https://
www.pennarindia.com/dividend-distribution-policy.php

Appreciation:

Your directors take this opportunity to express their
appreciation for the co-operation to all the suppliers and
customers who have been associated with the Company as
partners. The Directors would also like to take this opportunity
to thank the financial institutions, banks, regulatory and
government authorities as well as the shareholders for their
continued co-operation and support. The Directors also
wish to place on record their appreciation of the devoted
and dedicated services rendered by all employees of the
Company. We look forward to further support.

By Order of the Board
for Pennar Industries Limited

Aditya Rao K Lavanya Kumar Rao

Place : Hyderabad Vice-Chairman and Managing Director Whole-time Director

Date : 09.08.2023 DIN No. 01307343 DIN No. 01710629