DIRECTORS' REPORT

INDUSTRY OVERVIEW AND COMPANY'S PERFORMANCE:
Industry Overview

2025-26 unfolded against a complex and volatile global
backdrop. The year began with persistent Russia-Ukraine
conflict and renewed Middle East tensions, including the
Israel-Gaza war drawing in regional powers, alongside Red
Sea shipping disruptions that raised freight costs. Early in the
fiscal year, the re-emergence of US-led trade protectionism
with significant tariff announcements added uncertainty to
global supply chains and markets. The situation escalated
sharply in the final quarter, as US-Israeli strikes on Iran in
late February, 2026 triggered the Strait of Hormuz crisis,
disrupting a major oil chokepoint and causing sharp fuel
price volatility through March.

Against this backdrop, global economic growth moderated.
The International Monetary Fund (IMF) projected 2025
global growth at 3.2%, a downward revision from the 3.3%
estimated at the start of the fiscal year, with risks tilted to
the downside owing to trade policy uncertainty, elevated
public debt levels, and geopolitical fragmentation. Inflation
continued its gradual decline globally, though divergence
persisted easing more rapidly in emerging markets while
remaining above target in some advanced economies. Global
financial markets navigated elevated volatility through the
year, sensitive to evolving tariff developments and central
bank policy signals.

India's economy demonstrated resilience through this
period of global uncertainty. The Second Advance Estimates
released by the National Statistics Office (NSO) under MoSPI
projected real GDP growth at 7.6% in 2025-26, up from 7.1%
in 2024-25, underpinned by strong performance in the
manufacturing and services sectors. The services sector,
particularly financial and professional services as well as
trade, hotels, transport, and communication, remained the
primary growth engine. Manufacturing activity recorded
double-digit growth during the year, supported by the
government's continued emphasis on domestic production
and infrastructure investment.

Headline inflation in India reached its lowest level since the
inception of the CPI series. The average CPI inflation for
April-December 2025 stood at 1.7%, a sharp decline driven
by a broad-based moderation in food and fuel prices. This
enabled the Reserve Bank of India to initiate monetary easing,
with cumulative repo rate cuts of 100 basis points since
February 2025, creating a more supportive environment
for consumption and investment. Rural demand remained
strong, supported by healthy agricultural output and
improving farm incomes.

India's diverse industry landscape continued to benefit from
robust domestic fundamentals. Key sectors driving economic
activity included automotive and driveline components,
agriculture, construction, infrastructure, manufacturing,

and services. The Central Government's sustained focus
on infrastructure spending through programmes such as
the National Infrastructure Pipeline and the PM GatiShakti
initiative supported underlying demand for construction and
agricultural equipment.

Agriculture retained its structural importance, contributing
approximately 17% of GDP and supporting a large portion
of India's rural workforce. The sector benefited from
above-normal monsoon conditions in 2025-26, with strong
Kharif and Rabi output supporting rural incomes and farm
mechanisation demand. The domestic tractor industry
recorded its best-ever annual volumes during 2025-26,
with wholesale sales crossing the 10 Lakh (1 Million) unit
milestone, a first for the Indian tractor industry. The shift
from 2-wheel drive (2WD) to 4-wheel drive (4WD) tractors
accelerated meaningfully during the year, supported by
a GST rationalisation that narrowed the price differential
between the two configurations, significantly increasing the
addressable market for 4WD axle manufacturers.

India's manufacturing sector continued its growth trajectory,
with double-digit growth recorded in 2025-26 under the
revised GDP series. The sector is on course to increase
its contribution to GDP, supported by the government's
long-term ambition of raising manufacturing's share
toward 25% in the medium term (by around 2030-2035).
Government-led initiatives such as Atmanirbhar Bharat,
Make in India, enhanced localisation efforts, and the
Production-Linked Incentive (PLI) schemes have continued
to drive investment in domestic component manufacturing.

These measures are benefiting suppliers across the
automotive and off-highway driveline space through deeper
localisation and supply chain development.

The domestic construction equipment market experienced
a contraction in 2025-26. According to the Indian
Construction Equipment Manufacturers' Association
(ICEMA), domestic construction equipment sales declined
approximately 7% to 1,13,229 units. This was attributed to
slower infrastructure project execution, delays in project
awards and slower adoption of BS-V compliant machines.
However, construction equipment exports grew strongly
up ~32% providing a remarkable offset and demonstrating
healthy global demand, particularly from African, Middle
Eastern, and Latin American markets.

The Indian off-highway vehicles market comprising
agricultural equipment (tractors and harvesting equipment)
and construction vehicles, showed a mixed picture in
2025-26. While the agricultural segment, driven by the
structural 2WD to 4WD transition and record tractor volumes,
outperformed expectations, the domestic construction
equipment segment was weak. The off-highway industry
continues to navigate structural shifts driven by tightening
emission norms, evolving customer preferences around fuel
efficiency and technology, and the early-stage emergence of
electrification in the agricultural tractor segment. OEMs are
increasingly required to look beyond traditional purchasing
factors such as price, design, and brand, and invest in new
product differentiation strategies including engineering and
electrification roadmaps.

The Consolidated EBITDA of the Company grew by 33%
and stood at ' 2,475 Million as compared to ' 1,864 Million
in the previous fiscal. Profit After Tax increased by 48% to
' 1,306 Million as compared to ' 881 Million in the previous
fiscal. EBITDA margin improved to 10.8% from 10.2% in
2024-25, and PAT margin expanded to 5.7% from 4.8% in

2024- 25. This performance underscored the continued
strength of the Company's business model and its capacity
to convert volume growth into superior profitability.

Margin expansion during the year was driven by operating
leverage on higher volumes, disciplined cost management,
continued localisation gains, and a richer product mix with
greater contribution from high-value 4WD axles and TBH
programs. The engineering services business generated
approximately ' 100 Million in revenue in 2024-25, with the
Company signing an engineering services agreement with
Montra Electric (TICMPL) for e-transmission development
for electric agricultural tractors, marking early entry into the
EV driveline space.

The Standalone basic and diluted EPS of the Company
stood at ' 22.51 for the Financial Year ended 31^st March,
2026, as against ' 15.16 for the Financial Year ended
31^st March, 2025.

DIVIDEND:

The Board of Directors, at its meeting held on
26^th May, 2026, had recommended a final dividend of ' 6.75
per equity share of ' 10 each (@ 67.50%), for the financial year

2025- 26, which is subject to approval of members at the
ensuing Twenty Ninth Annual General Meeting ("AGM").

Dividend Distribution Policy

This policy has been framed and adopted in terms of
Regulation 43A ofthe SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 ("Listing Regulations"),
which, inter alia, lays down various parameters relating to
declaration / recommendation of dividend. The policy is
placed on the Company's website at

https://www.carraroindia.com/storage/app/uploads/
public/676/08b/cb8/cil dividend distribution
policy 67608bcb870c0008893296.pdf

Transfer to reserves

The Company has not transferred any amount of profits to
reserves.

BUSINESS OF THE COMPANY AND ITS SUBSIDIARY
INCLUDING COMMENCEMENT OF ANY NEW BUSINESS
LINES:

The Company continues to operate as a leading provider
of integrated driveline solutions for off-highway vehicles,
serving prominent OEMs in the agricultural tractor and
construction equipment sectors. Through its manufacturing,
engineering and product development capabilities, the
Company designs and produces axles, transmissions,
gears and related components that address the evolving
requirements of customers in India and international
markets. Its long-standing expertise, customer-centric
approach and commitment to quality have enabled the
Company to establish itself as a trusted technology partner
within the off-highway industry.

Over the years, the Company has evolved from a
manufacturing-focused organisation into an integrated
engineering and technology-driven enterprise. This
transformation was further strengthened through the
integration of Carraro Technologies India Private Limited and
its engineering centre in Pune, enhancing synergies between
design, product development, validation and manufacturing

activities. The strengthened engineering platform enables
the Company to deliver customised solutions, accelerate
product development cycles and support customers
throughout the entire product lifecycle.

During Fiscal Year 2025-26, the Company continued
to consolidate its position in its core agricultural
and construction equipment markets while
pursuing opportunities in higher value-added and
technology-intensive applications. Particular emphasis was
placed on advanced driveline solutions, next-generation
transmission systems and products designed to improve
performance, efficiency and sustainability. The Company
further strengthened collaboration with customers through
co-development initiatives, application engineering support
and tailored product solutions that meet specific market
requirements.

Operational excellence and responsible business practices
remain central to the Company's strategy. Continuous
efforts were undertaken to enhance manufacturing
efficiency, strengthen quality standards, develop employee
capabilities and promote workplace safety. The Company
also continued to focus on resource optimisation,
environmental responsibility and sustainable value creation
across its operations, reinforcing its commitment to
long-term stakeholder value.

Innovation and technology development continue to be
key drivers of the Company's future growth. Leveraging
its engineering expertise and advanced manufacturing
capabilities, the Company is actively engaged in the
development of future-ready driveline technologies, including
advanced transmission systems, electrification-ready
architectures and specialised solutions for agricultural and
construction equipment applications. Access to the broader
technological know-how and international experience of
the Carraro Group further enriches these initiatives, while
allowing the Company to maintain a strong and distinctive
identity within its markets.

Looking ahead, the Company remains focused on
strengthening its competitive position, expanding customer
relationships, enhancing technological capabilities and
pursuing sustainable growth opportunities in both domestic
and international markets. Through its integrated approach
to engineering, manufacturing and innovation, the Company
is well positioned to support the evolving needs of OEM
customers and create long-term value for all its stakeholders.

CHANGE IN NATURE OF BUSINESS:

There was no change in the nature of business during the
period under review.

CONSOLIDATED FINANCIAL STATEMENTS:

As per Regulation 33 of the Listing Regulations and Section
129 of the Companies Act, 2013 ("Act") read with the rules

made thereunder, consolidated financial statements of the
Company for the financial year 2025-26 have been prepared
in compliance with applicable accounting standards.
The audited financial statements of the Company and its
subsidiary have been approved by the board of directors of
respective entities.

During the year under review, the Board of Directors reviewed
the affairs of the subsidiary company in accordance with
Section 129(3) of the Act. Consolidated financial statements
together with the statutory auditor's report thereon form part
of this Annual Report.

SUBSIDIARY:

The Company has one subsidiary i.e. Carraro Technologies
India Private Limited ("CTIPL") as on 31^st March, 2026 and as
on the date of this report.

In terms of Section 129(3) of the Act, a statement in
Form AOC-1, containing salient features of the financial
statements of the Company's subsidiary, forms part of the
Annual Report. A copy of the audited financial statements
of CTIPL will be available for inspection by any shareholder
of the Company at its registered office during business
hours. These financial statements are also placed on the
Company's website at www.carraroindia.com/investors/
investor-information/subsidiary-financial-statements

SHARE CAPITAL:

The paid-up equity share capital of the Company as on
31^st March, 2026, was ' 568,515,380. During the year
under review, there has been no change in authorised,
issued, subscribed and paid up share capital, including any
reclassification or sub-division thereto. The Company has
not issued shares with differential voting rights, sweat equity
shares, neither has it granted any employee stock options
nor has issued any convertible securities.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Changes in Board of Directors and Key Managerial
Personnel

> Dr. Balaji Gopalan, Managing Director, basis the
recommendation of the Nomination and Remuneration
Committee and Board of Directors, was re-appointed
in the 28^th Annual General Meeting held during the
year, commencing from 4^th February, 2026 up to and
including 8^th August, 2029.

> Mr. Sudhendra Mannikar, Whole-Time Director and
Chief Operating Officer, basis the recommendation
of the Nomination and Remuneration Committee
and Board of Directors, was re-appointed in the
28^th Annual General Meeting held during the year,
commencing from 15^th March, 2026 up to and including
8^th August, 2029.

> Mr. Nakul Shivaji Patil, a qualified Company Secretary
and an Associate Member of the Institute of Company
Secretaries of India (Membership No. A39990), had
resigned from the position of Company Secretary and
Compliance Officer of the Company effective from
the closing business hours of 20^th November, 2025.
The Board placed on record its appreciation for the
contributions made by Mr. Nakul S Patil during his
tenure.

> Mr. Mohith Kumar Khandelwal, a qualified Company
Secretary and a Fellow Member of the Institute of
Company Secretaries of India (Membership No.
F11243) on the recommendation of the Nomination
and Remuneration Committee, was appointed as the
Company Secretary and Compliance Officer of the
Company by the Board of Directors at its meeting held
on 11^th February, 2026.

Brief profile of the directors and key managerial personnel
of the Company, is given below:

Mr. Ettore Francesco Sequi, (DIN: 10734894), is the Chairman
and Independent Director of the Company. He holds a
pre-reform degree in political science from the University
of Cagliari. He also serves as the national representative
of Italy within the Board of Government Representatives
of the Einstein Telescope Infrastructure. He has over 38
years of experience in the field of foreign affairs. He was
previously associated with the Ministry of Foreign Affairs
and International Cooperation, Italy in various capacities
from year 1985 to 2023.

Mr. Tomaso Carraro, (DIN: 00592312), is the Vice-Chairman
and Non-Executive Director of the Company. He is also one
of the Promoters of the Company. He has been associated
with the Company since 21^st April, 2015. He holds a master's
degree in business administration from the Graduate School
of Business, University of Chicago. He has over 27 years of
experience in the manufacturing sector.

Dr. Balaji Gopalan, (DIN: 07108093), is the Managing
Director of the Company. His association with the Company
dates back to 1^st September, 1998 when he joined the
Company as an employee and over the years of his
employment was successfully elevated to the leadership
role. In the AGM held on 11^th September, 2025, he was re¬
appointed as the Managing Director of the Company for a
term of approximately 3 Years and 6 Months and 5 days
commencing from 4^th February, 2026 up to and including
8^th August, 2029. He holds a degree of doctor of philosophy in
human resource management from the University of Pune.
He has over 26 years of experience in the manufacturing
sector.

Mr. Sudhendra Mannikar, (DIN: 07483321), is the

Whole-time Director and Chief Operating Officer of the
Company. His association with the Company dates back to

2^nd August, 1999 as an employee and over the years of his
employment was successfully elevated to the leadership
role. In the AGM held on 11^th September, 2025, he was re¬
appointed as the Whole-time Director & Chief Operating
Officer of the Company for a term of approximately 3 Years
and 4 Months and 25 days commencing from 15^th March,
2026 up to and including 8^th August, 2029. He holds a
bachelor's degree in engineering (production) from University
of Pune and a masters' degree in business administration
from Savitribai Phule Pune University. He has over 26 years
of experience in the field of supply chain, purchase and
operations.

Mr. Davide Grossi (DIN: 10252992), is the Whole-time
Director and Chief Financial Officer of the Company. He
holds an undergraduate degree in business administration
from Bocconi University, Italy and a masters' degree of
science in accounting, corporate finance, and control from
Bocconi University. He has 14 years of experience in the field
of finance.

Mr. Enrico Gomiero, (DIN: 00588074), is a Non-Executive
Director of the Company. He holds a diploma of accountant
and commercial expert from the Technical Institute for
Commercials and Surveyors of Padua, Italy. He has over 30
years of experience in the manufacturing sector. He was also
previously associated with Carraro S.p.A. (ultimate holding
company) in his capacity as a manager.

Mr. Andrea Conchetto, (DIN:10669692), is a

Non-Executive Director of the Company. He holds a diploma
in electrotechnical engineering from the University of Padua,
Italy. He is currently associated with the Carraro Group,
including Carraro S.p.A., Carraro Drive Tech Italia S.p.A.,
Carraro China Drive Systems Co. Ltd, and Siap S.p.A. He has
over 24 years of experience in the manufacturing sector.
He was previously associated with AEG Electric Motors as
a commercial-technical engineer and with Carraro S.p.A.
(ultimate holding company) as a manager.

Mrs. Uma Manoj Mandavgane (DIN: 03156224), is an

Independent Director of the Company. She holds a bachelor's
degree in commerce from the University of Mumbai. She is
a member of the Institute of Chartered Accountants of India
and a certified information systems auditor. She has over 15
years of experience in the field of advisory and consulting.
She was previously associated with Deloitte Touche
Tohmatsu India Private Limited in the capacity of a manager
in the enterprise risk services department.

Mr. Kishore Mukund Saletore, (DIN: 01705850), is an

Independent Director of the Company. He is an associate at
the Institute of Chartered Accountants of India and is also a
Post Graduate in Management from the Indian Institute of
Management, Bangalore. He was previously associated with
Bharat Forge as the Whole time Director and Group Chief
Financial Officer.

Mr. Mohith Kumar Khandelwal is the Company Secretary,
Compliance Officer and Senior Manager - CS, Legal &
Compliance of the Company. He is a Fellow Member of the
Institute of Company Secretaries of India, having membership
no. F-11243. He has over 11 years of experience in the
legal and secretarial domain. He has handled several key
assignments, including preferential issues, QIPs, corporate
restructuring, and amalgamations. Prior to this, he was
associated with Balaxi Pharmaceuticals Limited and Power
Mech Projects Limited, Hyderabad.

Retirement of directors by rotation

In terms of Section 152(6) of the Act, Mr. Davide Grossi
(DIN: 10252992), Whole-Time Director & Chief Financial
Officer and Mr. Andrea Conchetto (DIN: 10669692),
Non-executive Director, who retires by rotation at the
ensuing Annual General Meeting ("AGM") and being eligible,
has offered themselves for re-appointment. Information as
required under Regulation 36(3) of the Listing Regulations is
provided in the Notice convening the AGM.

Key Managerial Personnel:

The following officials were the 'Key Managerial Personnel'
of the Company in terms of the provisions of Sections 2(51)

and 203 of the Act during the 2025-26 and as on the date of
this Report:

i. Dr. Balaji Gopalan, Managing Director;

ii. Mr. Sudhendra Mannikar, Whole-time Director and
Chief Operating Officer;

iii. Mr. Davide Grossi, Whole-time Director and Chief
Financial Officer;

iv. Mr. Nakul Patil, Company Secretary & Compliance
Officer and Assistant General Manager - CS, Legal
and Compliance. (Ceased w.e.f. 20^th November, 2025);

v. Mr. Mohith Kumar Khandelwal, Company Secretary &
Compliance Officer and Senior Manager- CS, Legal and
Compliance. (Appointed w.e.f. 11^1h February, 2026).

Committees of Board of Directors:

We have in place all the Committees of the Board which are
required to be constituted under the Companies Act, 2013
and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. A detailed note on the Board and its
Committees is provided under the Corporate Governance
Report which forms part of this Annual Report.

The Company Secretary & Compliance Officer of the
Company acted as the Secretary to the above-mentioned
committees.

During the year under review, all recommendations made
by the various committees including audit committee were
considered and accepted by the Board.

Board of Directors and its Committee meetings

Board and Committee meetings of the Company are
conducted as per the provisions of the Act, the Listing
Regulations and Secretarial Standard-1.

Based on the dates of meetings decided by the Board,
adequate notice is given to all directors and Committee
members; an agenda with detailed notes thereon and
reference annexures are sent at least seven days before
the respective meeting. If any board meeting is to be held
at a shorter notice, permission of at least one independent
director is ensured. The notes to agenda contain relevant
information and supporting documents along with
recommendation from the management, for meaningful
deliberation and / or decision on the agenda items.

During the financial year under review, the Board met five
(5) times. A detailed update on the Board, its composition
and attendance of the Directors at each meeting is provided
in the Corporate Governance report, forming part of this
Annual Report.

The Board has constituted five Committees, namely, Audit
Committee, Nomination and Remuneration Committee,
Corporate Social Responsibility Committee, Stakeholders'
Relationship Committee and Risk Management Committee.
A detailed charter including terms of reference of various
Board constituted committees, number of committee
meetings held during the financial year under review and
attendance of members at each meeting, also forms part of
the Corporate Governance report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(3)(c) of the Act, the Directors,
based on the representation received from the management,
confirm that:

i. in the preparation of the annual accounts for the
year ended 31^st March, 2026, the applicable Indian

Accounting Standards ("Ind AS") have been followed
along with proper explanation relating to material
departures;

ii. the directors 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;

iii. the directors 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;

iv. the directors have prepared the annual accounts on a
going concern basis;

v. the directors have laid down internal financial controls
to be followed by the Company and such internal
financial controls are adequate and are operating
effectively; and

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

DECLARATION BY INDEPENDENT DIRECTORS:

In terms of Section 149(7) of the Act & Rules made
thereunder and Regulation 16(1)(b) and Regulation 25 of
the Listing Regulations, the Independent Directors of the
Company have submitted their declarations confirming
compliance with the criteria of independence as stipulated
thereunder. The Directors have further confirmed that they
are not debarred from holding the office of the director under
any SEBI Order or any other such authority.

Opinion of the Board with regard to integrity, expertise
and experience (including proficiency) of the Independent
Directors:

The Board is of the opinion that the Independent Directors
of the Company are professionally qualified and well
experienced in their respective domains and meet the criteria
regarding integrity, expertise, experience and proficiency.

Their qualifications and experience in varied fields help in
strengthening the Company's systems and processes to
align the same with good industry practices and beliefs of
corporate governance.

DIRECTORS' REMUNERATION POLICY AND CRITERIA
FOR MATTERS UNDER SECTION 178 OF THE ACT:

In terms of Section 178 of the Act, the Nomination and
Remuneration Policy covers Directors, Key Managerial
Personnel and Senior Management Personnel of the
Company. The policy, inter alia, lays down the principles
relating to appointment, cessation, remuneration and
evaluation of Directors, Key Managerial Personnel and
Senior Management Personnel of the Company.

Details of the Company's policy on directors' appointment
and remuneration, including criteria for determining
qualifications, positive attributes, independence of a director
and other matters as stipulated under Section 178(3) of the
Act, forms part of the Corporate Governance report.

The policy is placed on the Company's website at

https://www.carraroindia.com/storage/app/uploads/
public/66b/213/d32/nomination and renumeration
policy 66b213d32e3ad427839307.pdf

PERFORMANCE EVALUATION:

An annual performance evaluation was conducted for
the Board as a whole, its individual members, and its
Committees. The evaluation framework was developed after
considering the requirements of the Companies Act, 2013,
the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the guidance notes issued by SEBI,
and the Company's Nomination and Remuneration Policy.
The assessment was carried out through a structured
questionnaire covering various parameters, including the
composition and structure of the Board, the effectiveness of
Board processes, the quality and adequacy of information
flow, the functioning of the Board and its Committees,

commitment to corporate governance principles, and the
Board's contribution to the effective management and
strategic direction of the Company etc.

In a separate meeting of the Independent Directors held on
10^th February, 2026, the performance of the Non-Independent
Directors and the Board as a whole was evaluated. The
Independent Directors also assessed the performance of the
Chairman, taking into account the views of the Executive and
Non-Executive Directors. Further, they reviewed the quality,
adequacy, and timeliness of information flow from the
Management to the Board to enable the effective discharge
of its responsibilities. The outcome of these evaluations
was discussed at the Board meeting held subsequently on
11^th February, 2026, and the performance of the Independent
Directors was evaluated by the entire Board, excluding the
Director being evaluated at that meeting.

As an outcome of the above exercise, the Board expressed
its satisfaction with the evaluation process.

RISK MANAGEMENT

The Company has constituted a Risk Management
Committee and formulated a Risk Management Policy in
accordance with the Companies Act, 2013 and Regulation 21
of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. The details of Committee and its terms
of reference are set out in the Corporate Governance Report
forming part of the Board's report. The risk Management
Policy of the Company is hosted on the website of the
Company at

https://www.carraroindia.com/storage/app/
uploads/public/66b/213/8c7/risk management
policy 66b2138c7e1c6942389796.pdf

SECRETARIAL STANDARDS:

The Company is compliant with the Secretarial Standards on
Meetings of Board of Directors (SS-1) and General Meetings
(SS-2).

INTERNAL FINANCIAL CONTROLS:

The Board of your Company has laid down internal financial
controls to be followed by the Company and that such
internal financial controls are adequate and operating
effectively. Your Company has adopted policies and
procedures for ensuring the orderly and efficient conduct of
its business, including adherence to the Company's policies,
the safeguarding of its assets, the prevention and detection
of frauds and errors, the accuracy and completeness of the
accounting records, and the timely preparation of reliable
financial disclosures.

CORPORATE GOVERNANCE:

In compliance with Regulation 34 of the Listing Regulations,
a separate report on Corporate Governance along with a
certificate from the statutory auditors towards compliance
with the provisions of Corporate Governance, forms an
integral part of this Annual Report.

The Managing Director and the Whole-time Director & Chief
Financial Officer have certified to the Board with regard
to financial statements and other matters as required
under Regulation 17(8) read with Schedule II to the Listing
Regulations forms part of this Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to the provisions of Regulation 34(2)(e) of the SEBI
Listing Regulations, a Report on Management Discussion
and Analysis forms an integral part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT:

Pursuant to Regulation 34(2)(f) of the SEBI Listing
Regulations, the Business Responsibility and Sustainability
Report ('BRSR') is shown in separate section forming part of
this Annual Report and is also available on the Company's
website at https://www.carraroindia.com/investors/
financial-information/annual-reports

CODE OF CONDUCT FOR PREVENTION OF INSIDER
TRADING AND FAIR DISCLOSURE OF UNPUBLISHED
PRICE SENSITIVE INFORMATION:

The Company in terms of the SEBI (Prohibition of Insider
Trading) Regulations, 2015 ("PIT Regulations"), has adopted
a "Code of Conduct to Regulate, Monitor and Report trading
by Designated Persons and their Immediate Relatives"
("PIT Code") and 'Code or Practices and Procedures for
Fair Disclosure of Unpublished Price Sensitive Information'
("UPSI Code"). These Codes provide a framework for the
protection and fair disclosure of UPSI and regulate trading
in the Company's securities to prevent insider trading and
ensure compliance with applicable regulations.

The PIT Code and the UPSI Code are drawn up on the
principle that the Company's directors and employees owe a
fiduciary duty, inter alia, to the shareholders of the Company
to place the interest of shareholders above their own and
conduct their personal securities transactions in a manner
that does not give rise to any conflict of interest.

The PIT Code and UPSI Code are placed on the Company's
website at: https://www.carraroindia.com/investors/corporate-
oovernance/oolicies

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

The information on conservation of energy, technology
absorption and foreign exchange earnings and outgo as
stipulated under Section 134(3)(m) of the Act read with Rule
8 of the Companies (Accounts) Rules, 2014, is attached as
Annexure I.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

In terms of Section 135 of the Act read with Schedule VII
to the Act and Company's Corporate Social Responsibility
("CSR") Policy, the CSR projects and programmes
undertaken are recommended by the CSR Committee and
approved by the Board. These are primarily aimed towards
enhancing employability by imparting skill-building training
to unemployed youth, providing community facilities, etc.

Salient features of the CSR Policy are available on the
Company's website at www.carraroindia.com. The Annual
Report on CSR activities is attached as Annexure II to this
Report.

I n terms of Section 135 of the Act read with Rule 4(5) of the
Companies (Corporate Social Responsibility Policy) Rules,
2015, the Whole-time Director & Chief Financial Officer
of the Company has provided requisite certificate that the
funds disbursed by the Company during the financial year
2025-26 have been utilised for the respective purposes and
in the manner as approved by the Board.

Expenditure towards CSR activities

As per the requirements under the Act, the Company
earmarked an amount of ' 17.26 Million towards CSR
activities for the financial year 2025-26, based on the average
net profit, calculated in terms of Section 198 of the Act of
the immediately preceding three financial years. The Board
of Directors approved the following projects / programmes
to be undertaken as CSR activities during the financial year
2025-26, and all of these activities were as per Schedule VII
to the Act and the CSR Policy of the Company:

i. Tech Skill Development Programme;

ii. Development of Children's playpark; and

iii. Project Kanyadaan.

During the financial year 2025-26, the Company spent
a total of ' 17.34 Million on approved CSR projects and
programmes, in compliance with Section 135 of the Act.

DETAILS IN RESPECT OF FRAUDS REPORTED BY
AUDITORS:

During the financial year under review, no instances of fraud
have been reported under Section 143(12) of the Act.

AUDITORS:

Statutory Auditors

M/s. Deloitte Haskins & Sells LLP (FRN: 117366W/
W-100018) ("Deloitte"), were appointed as the Statutory
Auditors of the Company for a second term of five
consecutive years commencing from the conclusion of the
Twenty Fourth AGM till the conclusion of the Twenty Ninth
AGM of the Company to be held in the year 2025-26.

The Statutory Auditors of the Company have issued an
unmodified opinion on the financial statements, both
standalone and consolidated, for the financial year ended
31 ^st March, 2026. The Auditor's Report for the financial year
ended 31 ^st March, 2026 on the financial statements of the
Company forms part of this Annual Report.

As the second term of the existing statutory auditors
concludes at the ensuing AGM, the Board of Directors
at their meeting held on 11^th February, 2026, based on
the recommendation of the Audit Committee, approved
the appointment of M/s. M S K C & Associates LLP
(FRN: 001595S/S000168) as the Statutory Auditors of the
Company for a term of five consecutive years, subject to
the approval of the shareholders at the ensuing AGM. The
resolution proposing the appointment of M/s. M S K C &
Associates LLP as the statutory auditors of the Company
forms part of the notice of the Twenty Ninth AGM of the
Company.

Cost Auditors

As per the provisions of Section 148 of the Act and Rule 3
of the Companies (Cost Records and Audit) Rules, 2014, the
Company is required to have the audit of its cost records
conducted by a Cost Accountant.

The Board had appointed M/s Adawadkar Deshmukh
& Associates, Cost Accountant (FRN: 000421) as Cost
Auditor of the Company for the financial year 2025-26.
The remuneration proposed was ' 3,40,000 and which was
ratified by the shareholders of the Company at their Twenty
Eighth AGM held on 11^th September, 2025.

Based on the recommendation of the Audit Committee,
the Board at their meeting held on 26^th May, 2026, has
re-appointed M/s Adawadkar Deshmukh & Associates, Cost

Accountant (FRN: 000421) as Cost Auditor of the Company
for the financial year 2026-27 as well. It is proposed to retain
the same remuneration as of previous year i.e. ' 3,40,000
which is subject to ratification by the shareholders at the
ensuing AGM. The said remuneration is excluding applicable
taxes and out-of-pocket expenses, if any, payable at actuals.
The resolution seeking ratification of remuneration from the
shareholders forms part of the notice of the Twenty Ninth
AGM of the Company.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the
Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 and Regulation 24A of the SEBI LODR
Regulations, M/s. Mehta & Mehta, Practicing Company
Secretaries, a firm registered under the Indian Partnership
Act, 1932 having Firm Registration Number MU000019250,
ICSI Firm Registration Number P1996MH007500
holding peer review certificate, were appointed as the
Secretarial auditors of the Company for a period of five
consecutive years commencing from 1 ^st April, 2025 up to
31^st March, 2030.

The Report of the Secretarial Auditor is annexed herewith as
Annexure III.

Directors Response on the observations made by the
Secretarial Auditors in the report:

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies
Act, 2013 and the Rules made thereunder, M/s A S Havaldar
& Associates, a Firm of Chartered Accounts (FRN:140036W),
held the office of Internal Auditors of the Company for the year
under review. The internal audit reports and the suggestions
made on a quarterly basis by the internal auditors, were duly
noted by the Board and acted upon.

DISCLOSURES:

The Act and the Listing Regulations mandate formulation
of certain policies for listed companies. During the year,
the Board has framed and approved policies as required
under the Listing Regulations as well as under the Act.
The Company during year had further adopted few policies
to align with the principles and disclosures of Business
Responsibility and Sustainability Report.

The above-mentioned policies are available on the
Company's website at the link www.carraroindia.com/
i n vestors /co rpo rate - g ove rn a n ce/ po l i c i es

PARTICULARS OF EMPLOYEES AND RELATED
DISCLOSURES:

Disclosure of remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1)
of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are annexed herewith as

Annexure IV.

A statement containing particulars of employees as required
under Section 197(12) of the Act read with Rules 5(2) and
5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 forms part of this Report.
In terms of Section 136 of the Act, the Annual Report and
financial statements are being sent to the shareholders
excluding the aforesaid annexure. The said annexure
is available for inspection at the registered office of the
Company during business hours and will be made available
to any shareholder on request through email Company_
Secretary@carraroindia.com.

PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS:

The Company has not given any guarantees covered under
the provisions of Section 186 of the Act. Particulars of
loans, advanced and investments form part of the notes
to standalone financial statements. Kindly refer note nos.
16, and 7.1 of the standalone financial statements for
the details of investments made by the Company as on
31^st March, 2026.

DEPOSITS:

During the year under review, the Company has neither
accepted any deposits from the public nor any amount from
its directors.

VIGIL MECHANISM-CUM-WHISTLE BLOWER POLICY:

In terms of the provisions of Section 177(9) of the Act, read
with Rule 7 of the Companies (Meetings of Board and its
Powers) Rules, 2014, the Company has established a vigil

mechanism, which forms part of the Vigil Mechanism-Cum-
Whistle Blower Policy in terms of Regulation 22 of the Listing
Regulations for directors and employees. The objective of
this policy is to provide a reporting mechanism for any person
who observes any unethical behaviour, actual or suspected
fraud, or violation of the Company's Code of Conduct for all
members of the Board and Senior Management ("Codes of
Conduct"). Such person can report the same to the Whistle
Blower Officer ("WB Officer") appointed under the policy. The
said policy also encompasses reporting of instances of leak
of Unpublished Price Sensitive Information ("UPSI").

Protected disclosures can be made by a whistle blower
to a dedicated e-mail ID and / or postal address of WB
Officer, appointed under the policy. The policy has been
hosted on the Company's website at https://www.
carraroindia.com/storage/app/uploads/public/66b/213/
b07/whistleblowing vigil mechanism policy carraro
india 66b213b07c99e706098897.pdf

A WB Officer has been appointed in terms of the provisions
of the Act to independently investigate protected disclosures
communicated under the policy and matters of violation to
the Codes of Conduct.

MATERIAL CHANGES AND COMMITMENTS AFFECTING
FINANCIAL POSITION OF THE COMPANY BETWEEN
31^st MARCH, 2026 AND DATE OF BOARD'S REPORT:

There have been no material changes and commitments
affecting the financial position of the Company, which have
occurred between the end of the financial year and the date
of this Report.

RELATED PARTY TRANSACTIONS:

In line with the requirements of the Companies Act, 2013 and
the SEBI Listing Regulations, the Company has formulated a
Policy on Related Party Transactions.

The policy can be accessed on the Company's website
at https://www.carraroindia.com/storage/app/uploads/
public/66c/44c/946/related party transactions
policy 66c44c946d248444192428.pdf

As per the Listing Regulations, all Related Party Transactions
("RPT") and any modifications thereto are placed before the
Audit Committee for approval. Further, the Audit Committee
accords specific / omnibus approval for RPTs, which are

in ordinary course of business and satisfy the principles /
conditions of being at arm's length basis. Details of the
RPTs entered pursuant to the specific and omnibus approval
granted are placed on quarterly basis before the Audit
Committee for review and update.

The Company did not have any contracts or arrangements
with related parties in terms of Section 188(1) of the
Companies Act, 2013. Accordingly, the disclosure of related
party transactions as required under Section 134(3)(h) of the
Companies Act, 2013 in Form AOC-2 is not applicable to the
Company for 2025-26 and hence does not form part of this
report.

However, the Company has obtained shareholder's approval
for material related party transaction in accordance with
Regulation 23 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 at their 28^th Annual General
Meeting held on 11^th September, 2025.

Details of related party transactions entered into by the
Company, in terms of Indian Accounting Standard 24 (Ind
AS-24) have been disclosed in the notes to the standalone/
consolidated financial statements forming part of this report.

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

The Company has adopted a "Policy for Prevention of Sexual
Harassment" ("POSH Policy") in line with the requirements of
the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. The POSH Policy
aims to provide a safe, friendly, positive and productive
working environment and promote an atmosphere in which
employees can realise their maximum potential. This Policy
applies to all the employees, workers, visitors and other
persons (whether in the office premises or outside while on
assignment) of the Company.

The Company observes zero tolerance towards any kind
of violation of the POSH Policy. As per the POSH Policy, the
Company has constituted Internal Committees ("IC"). The
committee is chaired by a female employee and other senior
management officials of the Company are its members along
with an external member who has experience in dealing with
cases relating to sexual harassment. The IC is responsible
for redressal of complaints related to sexual harassment
and follows the guidelines provided in the POSH Policy.

Pursuant to Rule 8 (5)(x) of the Companies (Accounts) Rules, 2014, the disclosure of the complaints received during financial
year under review is given below:

DISCLOSURE UNDER THE MATERNITY BENEFIT ACT,
1961:

During the year under review, the maternity benefit leave of
26 weeks with remuneration was granted to a total 4 women
employees of the Company including one (1) woman
employee of Company' subsidiary, CTIPL. The Company has
observed compliance with the applicable requirements laid
under the Maternity Benefit Act, 1961.

INDUSTRIAL RELATIONS:

During the year under review, the industrial relations
remained cordial.

As on the date of this Report, the Company had entered
into two agreements with labour unions for the Company's
plants located at Ranjangaon (Dist. Pune, Maharashtra).
There were no changes made into the agreements during
the financial year under review.

INVESTOR EDUCATION AND PROTECTION FUND:

In accordance with the provisions of Sections 124 and
125 of the Act and the Investor Education and Protection
Fund (Accounting, Audit, Transfer and Refund) Rules, 2016
("IEPF Rules"), dividends of a company that remain unpaid
or unclaimed for a period of seven years from the date of
transfer to the Unpaid Dividend Account shall be transferred
by such company to the Investor Education and Protection
Fund ("IEPF").

In terms of the foregoing provisions of the Act, no dividend
amount or shares were required to be transferred to the IEPF
by the Company during the year ended 31^st March, 2026.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS
PASSED BY REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND
COMPANY'S OPERATIONS:

During the financial year under review, there were no
significant material orders passed by Regulators / Courts /
Tribunals which would impact the going concern status of
the Company and its future operations.

DETAILS OF APPLICATION MADE OR ANY PROCEEDING
PENDING UNDER THE INSOLVENCY AND BANKRUPTCY
CODE, 2016 ("IBC"):

During the financial year under review, neither the Company
made any application nor any proceedings were pending
against the Company, under the IBC.

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF
THE VALUATION DONE AT THE TIME OF ONE-TIME
SETTLEMENT AND THE VALUATION DONE WHILE
TAKING LOAN FROM THE BANKS OR FINANCIAL
INSTITUTIONS:

The Company has not made any one-time settlement for
loans taken from the Banks or Financial Institutions, and
hence the details of difference between amount of the
valuation done at the time of one-time settlement and the
valuation done while taking loan from the Banks or Financial
Institutions along with the reasons thereof is not applicable.

ANNUAL RETURN:

In terms of Section 92(3) read with Section 134(3)(a) of the
Act, the annual return of the Company for the financial year
ended 31 ^st March, 2026 shall be available on the Company's
website at https://www.carraroindia.com/investors/
financial-information/annual-returns

ACKNOWLEDGMENTS:

Your Directors take this opportunity to express their sincere
appreciation for the commitment, hard work and support of
all its employees and workmen during the year.

The Directors also express their gratitude to the shareholders,
workmen unions, customers, vendors, dealers, bankers,
government authorities of India and other countries where
the Company operates and all other business associates
for their continued support extended to the Company
and for placing their confidence in the management. The
management looks forward to their continued support in
future.

For and on behalf of the Board

Balaji Gopalan Sudhendra Mannikar

Managing Director Whole-time Director & COO

DIN:07108093 DIN:07483321