DIRECTORS' REPORT

Dear Shareholders,

Your Board of Directors is pleased to present the 47^th Annual Report of Happy Forgings Limited ("the Company"), covering the
business performance and operations of the Company along with the Audited Financial Statements, prepared in accordance
with Ind AS, for the financial year ended 31^st March, 2026.

STATE OF COMPANY'S AFFAIRSFINANCIAL SUMMARY & PERFORMANCE HIGHLIGHTS

The Audited Financial Statements for the Financial Year ended 31^st March, 2026, forming part of this Annual Report, have been
prepared in accordance with the Indian Accounting Standard (hereinafter referred to as "Ind AS") prescribed under Section 133 of
the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable. Necessary disclosures
with regard to Ind-AS reporting have been made under the Notes to Financial Statements. The Company's performance during
the financial year under review as compared to the previous financial year is summarized below:

Note:

Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/
disclosure.

year ended on 31^st March, 2026 was ' 31.99 (Basic) and
' 31.92 (Diluted).

Consolidated :

During the year under review, the revenue from operations
and other income stood at ' 1,57,714.57 Lakhs as
compared to the last year's revenue and other income of
' 1,44,634.48 Lakhs. The Company has achieved Profit
Before Tax of ' 40,198.26 Lakhs and Profit After Tax of
' 30,162.85 Lakhs as on 31^st March, 2026 as against
previous year's Profit Before Tax of ' 35,955.34 Lakhs
and Profit After Tax of ' 26,743.63 Lakhs. The Company
achieved a total Comprehensive Income of ' 30,062.27

Lakhs as against previous year's Comprehensive Income of
' 26,894.03 Lakhs. The EPS on financials for the year ended on
31^st March,2026 was ' 31.99 (Basic) and ' 31.92 (Diluted).
More details on the financial statements of the Company
along with various financial ratios are available in the
Management Discussion & Analysis Report forming part of
this report.

DIVIDEND & APPROPRIATIONS

The Board of Directors of your company has decided to
recommend final Dividend of ' 4 per share of Face value of
' 2/- each fully paid for the financial year ended 31^st March,
2026 subject to the approval of shareholders in the ensuing
Annual General Meeting.

As per Regulation 43A of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 ('Listing

SHARE CAPITALa) Authorized Share Capital

During the year under review, there was no change in the Authorized Share Capital of the Company. As on 31^st March,
2026, the Authorized Share Capital of the Company stands at 15,00,00,000 equity shares of ' 2 each, aggregating to
' 30,00,00,000 (Rupees Thirty crores only).

b) Issued, Subscribed and Paid-up Share Capital

During the year under review, the paid-up capital has increased from 9,42,42,200 shares of FV ' 2/- each to 9,43,50,461
shares of FV of ' 2 each pursuant to the allotment of ESOPs during the year.

As on 31^st March, 2026, the Issued, Subscribed and Paid- up Share Capital of the Company is 9,43,50,461 Equity Shares of
FV ' 2/- each amounting to ' 18,87,00,922 (Rupees Eighteen Cr eighty-seven Lakhs nine hundred twenty two only).

c) Utilization of Proceeds of IPO

Pursuant to Regulation 32 of the Listing Regulations, the Company confirms that there were no deviations or variations in
the utilization of the IPO proceeds up to 31^st March, 2026.

The proceeds of IPO were utilized for the objects as disclosed in the Prospectus. Details as on 31^st March, 2026 are as
follows:

The Company has appointed ICRA as monitoring
agency to monitor the utilisation of the funds. The
report issued by ICRA states that there is no deviation
in the utilisation of the funds.

There was no deviation / variation in the utilisation
of the funds as certified by Mr. Pankaj Kumar Goyal,
Chief Financial Officer of the Company. Necessary
disclosures have been made to the Stock Exchanges
in the Statement of Deviation/Variation Report issued
quarterly along with the Financial Statements.

DETAILS OF SUBSIDIARY, JOINT VENTURES
AND ASSOCIATES/CONSOLIDATED FINANCIAL
STATEMENTS

The Company has one wholly owned subsidiary, M/s HFL
Technologies Private Limited.

The consolidated financial statements of the Company and
its subsidiary have been prepared in the form and manner
prescribed under the Companies Act, 2013 and will be
presented at the forthcoming Annual General Meeting. A
statement containing the salient features of the financial
statements of the subsidiary, associate(s), and joint
venture(s), in Form AOC-1, is attached as Annexure 1.
Further, no company ceased to be a Subsidiary, Joint
Venture, or Associate of the Company during the year under
review.

DIRECTORS & KEY MANAGERIAL PERSONNEL
DIRECTORS

The Board of Directors of the Company is duly constituted
in accordance with the requirements of the Companies Act,
2013 and Regulation 17 of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 ("SEBI
LODR"). The Board continues to maintain an optimum
combination of Executive, Non-Executive and Independent
Directors, ensuring appropriate balance in governance,
strategic guidance and independent judgment. The Board
also benefits from gender diversity through the inclusion of
two Women Directors.

As on 31^st March 2026, the Board comprises of 6 (Six)
Directors, which includes three Non-Executive Independent
Directors and three Executive Directors including two
women directors, Ms. Rajeswari Karthigeyan and
Ms. Megha Garg. The Chairman of the Company is an
Executive Director. Detailed profiles of all Directors,
highlighting their qualifications, competencies and
professional experience, forms part of the Annual Report.
The Company has received declarations from all Directors
confirming that they are not disqualified under Section
164(1) and 164(2) of the Companies Act, 2013. Further, none

of the Directors have been debarred or disqualified from
holding the office of Director by the Securities and Exchange
Board of India ("SEBI"), Ministry of Corporate Affairs ("MCA")
or any other statutory authority. A certificate to this effect
from a Practising Company Secretary is annexed to the
Corporate Governance Report.

In the opinion of the Board, the Directors collectively possess
the appropriate balance of skills, integrity, professional
competencies, industry knowledge and strategic insight
required for the effective functioning of the Board. A detailed
matrix outlining the core skills, expertise and attributes
required and available with the Board has been provided in
the Corporate Governance Report.

The composition and functioning of the Board reinforce
the Company's deep commitment to transparency,
accountability and strong corporate governance. The Board
continues to guide the Company's long-term vision, oversee
management performance, and ensure adherence to the
highest standards of ethical and regulatory compliance.
Re-appointment of Ms. Megha Garg, DIN 07352042, Whole
Time Director for another term of five years
Based on the recommendation of the Nomination and
Remuneration Committee, the Board of Directors approved
the re-appointment of Ms. Megha Garg (DIN: 07352042) as
a Whole-time Director of the Company for another period of
five (5) consecutive years with effect from 29^th September
2026 to 28^th September 2031, subject to the approval of the
shareholders at the 47^th ensuing Annual General Meeting.
Re-appointment of Mr. Ravindra Pisharody, DIN 01875848,
Independent Director for second term

Based on the recommendation of the Nomination and
Remuneration Committee, the Board approved the re¬
appointment of Mr. Ravindra Pisharody (DIN: 01875848)
as an Independent Director of the Company for a second
consecutive term of three years and five months from
16^th June 2027 to 15^th November, 2030, subject to the
approval of the shareholders at the 47^th ensuing Annual
General Meeting by way of special resolution.

Directors retiring by rotation

In accordance with the provisions of Section 152 of the
Companies Act, 2013, Mr. Ashish Garg (DIN: 01829082),
Managing Director (Whole-time Director) of the Company,
is liable to retire by rotation at the ensuing 47^th Annual
General Meeting ("AGM"). He has offered himself for re¬
appointment and, being eligible, the Board recommends
his reappointment for the consideration and approval of the
shareholders at the 47^th AGM.

The resolution seeking his reappointment forms part
of the Notice convening the 47^th AGM. A brief profile of
Mr. Ashish Garg, as required under the applicable provisions

of the Companies Act, 2013 and SEBI LODR Regulations, is
provided in the Annexure 1 to the Notice.

Change in Board of Directors

During the financial year under review, the following change
occurred in the composition of the Board of Directors:

Mr. Satish Sekhri (DIN:00211478), ceased to be an
Independent Director of the Company upon completion of
his first term of 5 (five) consecutive years, with effect from
close of business hours on 3^rd May, 2025.

KEY MANAGERIAL PERSONNEL

As on 31^st March, 2026, the following persons are Key
Managerial Personnel ("KMP") of the Company pursuant
to the provisions of Sections 2(51) and 203 of the Act read
with the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 . Further , there was no
change in Key Managerial Personnel during the year .

DECLARATION BY INDEPENDENT DIRECTORS

As on 31^st March, 2026, the Board comprises of three
Independent Directors. The Company has received
declarations from all Independent Directors confirming that
they meet the criteria of independence as laid down under
Section 149(6) of the Companies Act, 2013 and Regulation
16(1)(b) and Regulation 25 of the SEBI LODR Regulations.
All Independent Directors have further confirmed that they
have registered their names in the databank of Independent
Directors maintained by the Indian Institute of Corporate
Affairs (IICA), in compliance with Rule 6 of the Companies
(Appointment and Qualification of Directors) Rules, 2014.
The Independent Directors have affirmed compliance with
the Code for Independent Directors as specified under
Schedule IV of the Act and the Company's Code of Conduct
for Directors and Senior Management Personnel, formulated
in accordance with the Listing Regulations. They have also
confirmed compliance with the Code of Conduct prescribed
under the SEBI (Prohibition of Insider Trading) Regulations.
Additionally, the Company has obtained declarations from
all Independent Directors confirming that they do not
have any pecuniary relationships or transactions with the
Company, apart from receiving sitting fees, commission,
and reimbursement of expenses incurred for attending

meetings of the Board and its Committees, thereby ensuring
strict adherence to independence standards.

COMPANY'S POLICY ON APPOINTMENT AND
REMUNERATION OF DIRECTORS, KEY MANAGERIAL
PERSONNEL, SENIOR MANAGEMENT PERSONNEL
AND OTHER EMPLOYEES

The Company has in place a 'Policy on Nomination &
Remuneration for Directors, Key Managerial Personnel
(KMP) and Senior Management', which, inter-alia, lays down
the criteria for identifying the persons who are qualified
to be appointed as Directors and/or Senior Management
Personnel of the Company, along with the criteria for
determination of remuneration of Directors, KMPs, Senior
Management and their evaluation and includes other
matters, as prescribed under the provisions of Section 178
of the Companies Act, 2013 and Regulation 19 of SEBI LODR
Regulations. The Remuneration paid to the Directors is in
line with the Remuneration Policy of the Company.

The Nomination and Remuneration policy is available on the
website of the Company at

https://happyforgingsltd.com/wp-content/

uploads/2023/09/Nomination-and-Remuneration-Policy.

pdf

NUMBER OF MEETINGS OF THE BOARD

Your Board meets at regular intervals to deliberate on
key strategic matters, review business performance,
assess financial results, and provide overall direction to
the management. During the financial year 2025-26, the
Board convened four meetings, all of which were held in
compliance with the applicable provisions of the Companies
Act, 2013 and the SEBI LODR Regulations.

The particulars of the Board Meetings, including the dates
on which the meetings were held and the attendance of each
Director, are provided in detail in the Corporate Governance
Report forming part of this Annual Report. The gap between
any two consecutive Board Meetings was well within the
statutory limit of 120 days prescribed under the Act.

In addition to the meetings held physically or through
permissible electronic mode, certain urgent business
matters were also considered and approved by the Board
through resolutions passed by circulation, in accordance
with the provisions of the Act and the relevant Secretarial
Standards.

COMMITTEES OF THE BOARD

The composition of the Board Committees is fully aligned
with the requirements of the Companies Act, 2013, the rules
framed thereunder, and the SEBI Listing Regulations. The
Board has constituted the following Committees to ensure

focused oversight and effective governance in specific
functional areas:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

Each Committee has been entrusted with clearly defined
roles and responsibilities, enabling more detailed review of
matters requiring specialised attention and supporting the
Board in the efficient discharge of its duties.

The composition, terms of reference, and attendance details
of the members of each Committee during 2025-26 are
provided in the Corporate Governance Report, which forms
an integral part of this Annual Report.

The Board also confirms that there were no instances during
the year under review in which the recommendations of the
Audit Committee were not accepted by the Board.

BOARD EVALUATION

The Nomination and Remuneration Committee of the
Company has approved a comprehensive Nomination
and Remuneration Policy, which includes the criteria for
performance evaluation of the Board, its Committees, and
individual Directors. The Policy has been duly approved and
adopted by the Board of Directors.

In accordance with the provisions of the Companies Act,
2013 and Regulation 17(10) of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the
Board carried out an annual performance evaluation of its
own performance, the performance of its Committees, and
that of individual Directors. The evaluation process was
structured through a detailed questionnaire addressing
various parameters, including:

• Composition and structure of the Board and its
Committees

• Effectiveness of Board processes and information flow

• Quality of decision-making and Board discussions

• Performance of individual Directors, including
Independent Directors and the Chairperson

The performance evaluation of Independent Directors
was conducted by the entire Board, excluding the Director
being evaluated. The Nomination and Remuneration
Committee also reviewed the performance of the Board,
its Committees, and individual Directors. Feedback from
the evaluation process was deliberated in Board meetings
and noted for implementation and further improvement
wherever necessary.

The Board's assessment encompassed, among other
aspects, the clarity of roles and responsibilities of Directors,
contribution to strategic planning, effectiveness of risk
management, understanding of operational programs,
timely receipt of financial and operational reports,
monitoring progress against strategic goals, frequency and
effectiveness of Board and Committee meetings, and overall
governance practices.

The outcomes of the evaluations conducted by the
Nomination and Remuneration Committee and the
Independent Directors were presented to the Board. Based
on these outcomes, the Board discussed and formulated
actionable plans or suggestive measures to address any
identified areas for improvement. The Directors expressed
satisfaction with the evaluation process, its implementation,
and the results, affirming that the exercise has contributed
to enhanced governance and overall Board effectiveness.

MEETING OF INDEPENDENT DIRECTORS

During the financial year under review, two separate meetings
of the Independent Directors were held on Saturday,
7^th February, 2026 and Tuesday, 31^st March, 2026 without the
presence of Non-Independent Directors or the Company's
management. The Independent Directors reviewed and
evaluated the performance of the Non-Independent
Directors and the Board as a whole in their meeting held on
31 ^st March, 2026. They also assessed the quality, adequacy,
and timeliness of the information between the Management
and the Board, which is essential for the Board to discharge
its duties effectively and make informed decisions.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Act, the Directors of the
Company, based on representation from the management
and after due enquiry , confirm that:

(i) i n the preparation of the Annual Accounts for the year
ended 31 ^st March, 2026, the applicable accounting
standards have been followed and there are no material
departures from the same.

(ii) they have selected such accounting policies and
applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give
a true and fair view of state of affairs of the Company
as of 31^st March, 2026 and of the profit of the Company
for the year ended on that day.

(iii) they 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 frauds and other irregularities.

(iv) the Annual Accounts for the year ended
31^st March, 2026 have been prepared on a "going
concern" basis.

(v) they have laid down internal financial controls to

be followed by the Company and that such internal
financial controls are adequate and were operating
effectively throughout the financial year ended

31^st March, 2026.

(vi) they have devised proper systems to ensure
compliance with the provisions of all applicable laws
and that such systems are adequate and operating
effectively throughout the financial year ended

31^st March, 2026.

RISK MANAGEMENT

The Company has established a robust Risk Management
Framework to systematically identify, assess, and manage
the various risks associated with its business operations.
This framework is designed to embed effective risk
management practices at all levels of the organisation,
thereby safeguarding the Company's assets, reputation, and
the interests of its stakeholders.

In compliance with Section 134(3)(n) of the Companies Act,
2013 and Regulation 21 of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, the
Company has constituted a Risk Management Committee,
comprising members of the Board and senior executives.
The Committee periodically reviews the Company's risk
exposure and evaluates the effectiveness of measures
implemented to mitigate key risks.

The key risks identified include operational risks,
governance and regulatory risks, financial risks, cyber risks,
environmental risks, sector/industry-specific risks, and
social risks. The Company continuously monitors these risks
through structured processes and mitigation measures. To
formalise this approach, the Company has adopted a Risk
Management Policy, approved by the Board of Directors,
which provides a framework to identify, monitor, and control
business risks. The Policy is reviewed periodically and
updated as necessary to align with the evolving business
environment and regulatory requirements.

The Risk Management Policy is available on the Company's
website at:

https://happyforgingsltd.com/wp-content/
uploads/2025/02/Risk-Management-policy.pdf
Further details regarding the Company's risk management
framework and the functioning of the Risk Management
Committee are provided in the Corporate Governance
Report, which forms part of this Annual Report.

INTERNAL FINANCIAL CONTROLS

The Company has established a comprehensive system of
Internal Financial Controls designed to ensure the accuracy
and reliability of its financial reporting. These controls
include well-documented policies and procedures, clearly
defined roles and responsibilities, standard operating
procedures, risk control matrices, and robust IT systems.
Their design and operating effectiveness are periodically
tested through internal audits conducted by a reputed firm
of internal auditors.

The internal financial controls are commensurate with the
size, scale, and complexity of the Company's operations
and are intended to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements in accordance with applicable laws and
accounting standards.

The Audit Committee actively oversees and evaluates
the adequacy and effectiveness of these internal control
systems, recommending improvements wherever
necessary. The Company's internal controls are routinely
tested and certified by both the Statutory and Internal
Auditors. During the financial year under review, no instances
of significant internal control weaknesses were reported by
either the Internal or Statutory Auditors.

The Company is committed to continuously strengthening
its internal control framework to keep pace with evolving
business requirements and regulatory expectations. The
statutory certification regarding Internal Financial Controls
under Section 143(3)(i) of the Companies Act, 2013 forms
part of the Statutory Audit Report.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the
Companies Act, 2013 read with the Companies (Corporate
Social Responsibility Policy) Rules, 2014, the Company has
constituted a Corporate Social Responsibility Committee.
The composition, role, and responsibilities of the Committee
are in line with the statutory requirements.

The Company has adopted a CSR Policy, which outlines
the guiding principles and activities to be undertaken in line
with Schedule VII of the Act. The policy is available on the
Company's website at

https://happyforgingsltd.com/wp-content/

uploads/7073/09/CSR-Policy-revised-Happy-Forgings-

Limited.pdf.

During the financial year under review, the Company has
spent ' 655.28 Lakhs towards CSR initiatives in the local
communities where it operates through projects focused

on education, healthcare, environment sustainability,
skill development etc. Apart from that, the Company has
utilized ' 13.55 Lakhs from unspent CSR account for
2024-25 on the long-term project of construction of
Vocational college under Bal Vikas Trust, Ludhiana and
' 46.45 lakhs for construction of Government School,
Umaidpur respectively.

The CSR activities were implemented either directly or
through approved implementing agencies.

A detailed report on CSR activities in the prescribed format,
as required under Rule 8 of the Companies (CSR Policy)
Rules, 2014, is annexed to this Report as Annexure 2.

The Company remains committed to contributing positively
to society and creating long-term social value through its
CSR initiatives.

The Company firmly believes that businesses are
responsible not only for generating financial returns but also
for contributing to the betterment of society. It is committed
to making a meaningful impact in the areas of education,
healthcare, environment & community development and
remains committed to fulfilling its social obligations with
integrity and purpose.

The brief outline of the CSR Policy of the Company and the
initiatives undertaken by the Company during the financial
year ended 31^st March, 2026, in accordance with Section 135
of the Act and Companies (Corporate Social Responsibility
Policy) Rules, 2014 is set out in "Annexure- 2 " to this report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS
WITH RELATED PARTIES

During the year under review, all the transactions entered by
the Company with related parties were in compliance with the
applicable provisions of the Act and the Listing Regulations,
details of which are annexed to this report as "Annexure-3".
All related party transactions are entered into only after
receiving prior approval of the Audit Committee. Further, in
terms of the provisions of Section 188(1) of the Act read with
the Companies (Meetings of Board and its Powers) Rules,
2014, all contracts'/arrangements/ transactions entered by
the Company with its related parties, during the financial
year under review, were in ordinary course of business and
on arm's length and not material as per the Related Party
Transaction policy.

In line with the requirements of the Act and the Listing
Regulations, the Company has also formulated a Policy on
dealing with Related Party Transactions ('RPTs') and the
same is available on the website of the Company athttps://
happyforgingsltd.com/wp-content/uploads/2026/02/
Related-Party-Policy.pdf

Further, the Company has not entered any contracts/
arrangements/transactions with related parties which are
material in nature in accordance with the Related Party
Transactions Policy of the Company nor any transaction
has any potential conflict with the interest of the Company
at large.

PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS

The details of loans, guarantees and investments covered
under the provisions of Section 186 of the Act and Regulation
34 read with Schedule V of the SEBI Listing Regulations
form part of the Notes to the financial statements of the
Company provided in this Annual report.

PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the
Act read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014
as amended from time to time in respect of Directors/
employees of the Company and a statement showing the
names and other particulars of the employees drawing
remuneration in excess of the limits set out in Rule 5(2) and
5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 as amended from time
to- time forms part of this Board Report as "Annexure- 4"
to this report.

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

Information on conservation of energy, technology
absorption and foreign exchange earnings and outgo as
stipulated in Section 134(3)(m) of the Act read with Rule 8
of the Companies (Accounts) Rules, 2014 for year ended
31^st March, 2026 is attached as "Annexure -5"

AUDITORS & AUDIT REPORTS
Statutory Auditors and Auditor's Report

As per Section 139 of the Companies Act, 2013, read with the
Companies (Audit and Auditors) Rules, 2014, the Members of
the Company approved the appointment of M/s S R Batliboi
& Co LLP, Chartered Accountants (Firm's Registration
No. 301003E/E300005) as the Statutory Auditors of the
Company for a period of 5 (five) consecutive years to hold
office with effect from 2025-26 until the conclusion of the
51^st AGM of the Company to be held in the year 2030. The
Company has received certificate from the said auditors that
they are not disqualified and are eligible to hold the office
as Auditors of the Company. The Audit Committee and the
Board of Directors in their respective meetings held on May
17, 2025 recommended and shareholders in their meeting
held on 29^th July 2025 approved the re-appointment of

M/s. S R Batliboi & Co., LLP, Chartered Accountants, as
Statutory Auditors of the Company to hold office for a period
of 5 (Five) consecutive financial years, from the conclusion
of the 46^th Annual General Meeting held in the year 2025
until the conclusion of the 51^st Annual General Meeting to be
held in the year 2030.

The Statutory Auditors have not made any adverse
comments or given any qualification, reservation or
adverse remarks or disclaimer in their Audit Reports on the
Financial Statements both standalone and consolidated
for the Financial Year 2025-26 and the Reports are self¬
explanatory. The said Auditors' Reports for the Financial
Year ended March 31,2026, on the Financial Statements of
the Company forms part of this Annual Report.

Internal Auditors

The Company has in place an adequate internal audit
framework to monitor the efficacy of the internal controls
with the objective of providing to the Audit Committee
and the Board of Directors, an independent, objective and
reasonable assurance on the adequacy and effectiveness
of the Company's processes. The Internal Auditor reports
directly to the Chairman of the Audit Committee.

The Audit Committee and the Board of Directors, in their
respective meetings held on 9^th August 2025, appointed SCV
& Co. LLP and KPMG Assurance and Consulting Services
LLP as Internal Auditors of the Company in accordance
with the provisions of Section 138 of the Act read with the
Companies (Accounts) Rules, 2014 for the financial year
2025-26.

The Company has received consent from M/s. KPMG
Assurance and Consulting Services LLP, for appointment as
Internal Auditors of the Company for 2026-27 which was
approved by the Board of Directors in their meeting held on
21^st May, 2026.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act read
with the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, the Board at its
meeting held on 17^th May, 2025 which was duly approved
by shareholders in their meeting held on 29^th July,
2025, had appointed M/s Chandrasekaran Associates,
Practicing Company Secretaries, Peer Reviewed Firm of
Company Secretaries in Practice (Firm Registration No.
P1988DE002500) as Secretarial Auditor of the Company for
five years starting from financial year 2025-26 to financial
year 2029-30. The Secretarial Audit Report for 2025-26 in
form MR 3 is annexed to this report as "Annexure- 6".
Pursuant to provisions of Regulation 24A of Listing
Regulations, the Company has undertaken an audit for the
financial year 2025-26 for all applicable compliances as per

SEBI Rules, Regulations, Circulars, Notifications, guidelines
etc. issued thereunder.

The observation(s) / qualification(s) / remarks of the
Secretarial Auditor in their report for Financial Year 2025-26
are self-explanatory and therefore, the Directors do not have
any further comments to offer on the same.

During the financial year under review, Bombay Stock
Exchange Limited and National Stock Exchange of India
Limited had levied a fine of ' 14,160/- (including GST)
each on the Company pursuant to SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 under
Regulation 19(1) and Regulation 19(2) pertaining to
the constitution of the Nomination and Remuneration
Committee for the quarter ended June 30, 2025.

The matter was placed before the Board of Directors in its
meeting held on November 06, 2025. The Board noted that
the said non-compliance was inadvertent and not willful in
nature. The Company has paid the aforesaid fine and has
taken necessary steps to strengthen its internal compliance
monitoring mechanisms to avoid recurrence of such
instances in future.

Cost Auditors and Cost Audit Report

Pursuant to Section 148(1) of the Companies Act, 2013 the
Company is required to maintain cost records as specified
by the Central Government and accordingly such accounts
and records are made and maintained. Pursuant to Section
148(2) of the Companies Act, 2013 read with the Companies
(Cost Records and Audit) Amendment Rules, 2014, the
Company is also required to get its cost accounting records
audited by a Cost Auditor. Accordingly, the Board, at its
meeting held on 17^th May 2025 has on the recommendation
of the Audit Committee re-appointed M/s. Rajan Sabharwal
& Associates, Cost Accountants to conduct the audit of the
cost accounting records of the Company for 2025-26 on
remuneration of ' 1,50,000 plus applicable taxes and out of
pocket expenses. The cost audit report for 2024-25 placed
before the Board in the meeting held on 9^th August 2025
does not contain any observation or qualification requiring
explanation or comments from the Board under Section
134(3) of the Companies Act, 2013

The Company has received consent from M/s. Rajan
Sabharwal & Associates, cost auditors for appointment
as Cost Auditors of the Company for 2026-27 which was
approved by the Board of Directors in their meeting held on
21^st May, 2026.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, none of the auditors have
reported any instances of fraud committed against the
Company by its officers or employees to the Audit Committee
as required to be reported under Section 143 (12) of the Act.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company is committed to fostering a culture grounded
in integrity, transparency, and accountability. Its Vigil
Mechanism is designed to provide adequate safeguards
against victimization of whistleblowers, enabling them to
report concerns through designated channels, including
on an anonymous basis. All concerns raised under this
mechanism are addressed in a timely and comprehensive
manner, with appropriate actions taken based on the
findings of the investigation.

Pursuant to the provisions of Section 177(9) and (10) of the
Companies Act, 2013 and Regulation 22 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations,
2015, the Company has implemented a Vigil Mechanism
and adopted a Whistle Blower Policy. This framework allows
directors and employees to report genuine concerns relating
to unethical conduct, actual or suspected fraud, or any
breach of the Company's Code of Conduct.

The functioning of the Vigil Mechanism is overseen by
the Audit Committee of the Board, which reviews reported
matters and their outcomes, where applicable. The Policy
also provides for direct access to the Chairperson of the
Audit Committee in exceptional circumstances.

The details of this Policy are explained in the Corporate
Governance Report which forms a part of this Annual Report
and also hosted on the website of the Company athttps://
happyforgingsltd.com/wp-content/uploads/2025/02/
Whistle-Blower-Policy.pdf

There were no instances of reporting under vigil mechanism
during the financial year ended 31^st March, 2026.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section
92(3) of the Act, read with Rule 12 of the Companies
(Management and Administration) Rules, 2014, the Annual
Return of the Company in Form MGT-7 for financial year
2025-26 is available on the website of the Company at
https://happyforgingsltd.com/investors/regulation-46-
disclosures/

DEPOSITS

During the year under review, the Company has not accepted
any deposits from the public within the meaning of Section
73 of the Act read with the Companies (Acceptance of
Deposits) Rules, 2014. As the Company has not accepted
any deposit during the financial year under review there is
no noncompliance with the requirements of Chapter V of the
Act.

CREDIT RATING

The credit rating of the Company is as below:

ICRA has re-affirmed its long-term rating of [ICRA] AA
(Stable) and short-term rating [ICRA] A1 . While the overall
rated amount remains unchanged at ' 485 Cr., there has
been a reallocation in the amounts across the various bank
facilities.

CRISIL has reaffirmed its rating of CRISIL AA / stable for
various bank facilities amounting to ' 485 Cr. While the
overall rated amount remains unchanged at ' 485 Cr., there
has been a reallocation in the amounts across the various
bank facilities.

CORPORATE GOVERNANCE

Pursuant to Regulation 34(3) read with Schedule V of
the Listing Regulations, a separate section detailing the
corporate governance practices followed by the Company,
along with a certificate from M/s Chandrasekaran
Associates, Practicing Company Secretaries confirming
compliance, forms part of the Corporate Governance Report
included in this Annual Report.

Further, a certificate from the Managing Director and Chief
Financial Officer, in accordance with the Listing Regulations,
inter alia confirming the accuracy of the financial statements
and cash flow statements, the adequacy of internal control
systems, and the reporting of relevant matters to the
Audit Committee, is annexed to this Report. Additionally,
a declaration signed by the Managing Director affirming
that the members of the Board and senior management
personnel have complied with the Code of Conduct is also
included in the Corporate Governance Report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

The Management Discussion and Analysis Report in
compliance with Regulation 34(2)(e) of Listing Regulations
is provided in a separate section and forms an integral
part of the Annual report of the company for Financial Year
2025-26.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT

Pursuant to Regulation 34(2)(f) of SEBI LODR Regulations
and with effect from the financial year 2022-23, the top
1,000 listed companies based on market capitalization shall
submit a Business Responsibility and Sustainability Report
describing the initiatives taken by the Company from an
environmental, social and the governance perspective. The
BRSR report is annexed as "Annexure-7" to this Report.

HUMAN RESOURCES & INDUSTRIAL RELATIONS

The Company is committed to fostering a work environment
that promotes innovation, collaboration, and continuous
development. During the year, various employee
engagement initiatives, training program, and health and
wellness activities were undertaken to enhance employee
satisfaction and productivity. The management continues to
engage closely with employees and labour representatives
to maintain a positive and transparent workplace culture.
A detailed section on Human Resources and Industrial
Relations is included in the Management Discussion and
Analysis Report, forming part of this Annual Report.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK
OPTIONS

Employee Stock Options have been recognized as an
effective instrument to attract talent and align the interest
of employees with that of the Company, providing an
opportunity to the employees to share in the growth of the
Company and to create long term wealth in the hands of
employees, thereby acting as a retention tool.

The Company had formulated Happy Forgings ESOP
Scheme 2023 pursuant to the resolution passed by the
shareholders on 31^st July, 2023, which was further ratified by
the shareholders' in their meeting held on 29^th July 2024 and
approved maximum of 1,342,485 options under the ESOP
Scheme. As on the date of this report, 392,687 options was
granted by our Company under the ESOP Scheme. As on
financial year ended on 31 ^st March, 2026, the Company has
one Employee's Stock Option Plan, namely, Happy Forgings
ESOP Scheme 2023.

Further, during the financial year, ESOPs were allotted five
times . The details are given below:

The ESOP plan of the Company is in compliance with the
provisions of SEBI (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021 ("SEBI SBEB and Sweat
Equity Regulations") as amended from time to time. The
Nomination & Remuneration Committee monitors the ESOP
Scheme in compliance with the Act, SEBI SBEB and Sweat
Equity Regulations and SEBI LODR Regulations. A Certificate
from Secretarial Auditors of the Company, confirming that the
above ESOP Scheme has been implemented in accordance

with the SEBI (SBEB and Sweat Equity Regulations) as
amended from time to time and are as per the resolutions
passed by the Members of the Company will be available for
the inspection of the Members of the Company.

The Company does not have any scheme pursuant to which
voting rights are not exercised directly by the employees
in respect of shares allotted under Section 67(3) of the
Companies Act, 2013. Accordingly, the disclosure required
under Rule 16(4) of the Companies (Share Capital and
Debentures) Rules, 2014 is not applicable during the year
under review.

Disclosures on various plans, details of options granted,
shares allotted upon exercise, etc. as required under SEBI
SBEB and Sweat Equity Regulations and Companies
(Share Capital and Debentures) Rules, 2014 is enclosed as
Annexure -8

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

The Company has zero tolerance towards sexual harassment
at workplace and is committed to provide a safe and secure
working environment for all employees.

In accordance with the provisions of the Sexual Harassment
of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and the rules made thereunder,
the Company has constituted an Internal Complaints
Committee (ICC) to look into complaints, if any, relating to
sexual harassment.

The policy on prevention of sexual harassment at workplace
can be accessed through the below link:
https://happyforgingsltd.com/wp-content/
uploads/2023/09/Prevention-of-Sexual-Harassment-at-
Workplace-Policy-Happy-Forgings-Limited.pdf
Further, the Company has duly registered itself on the
SHe-Box (Sexual Harassment electronic Box) portal, an
online complaint management system initiated by the
Ministry of Women and Child Development, Government of
India, to facilitate the reporting and monitoring of complaints
related to sexual harassment at the workplace.

The Company has also designated a Nodal Officer for
the purpose of coordination with the authorities and for
ensuring timely and effective redressal of complaints
received through the SHe-Box portal.

During the year under review, no cases were filed under
the provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.

COMPLIANCE WITH THE MATERNITY BENEFIT ACT,
1961

Your Company is committed to providing a safe, supportive
and inclusive work environment for all employees. During
the year under review, all the applicable provisions of the
Maternity Benefit Act, 1961 and the rules made thereunder
were complied with, wherever applicable. Necessary
benefits and entitlements prescribed under the said Act were
duly extended, and all related compliances were carried out
within the prescribed timelines.

COMPLIANCE WITH SECRETARIAL STANDARDS ON
BOARD MEETINGS AND GENERAL MEETINGS

During the Financial Year 2025-26, the Company has
complied with all the relevant provisions of the applicable
mandatory Secretarial Standards i.e. SS-1 and SS-2,
relating to "Meetings of the Board of Directors" and "General
Meetings", respectively issued by the Institute of Company
Secretaries of India, and notified by Ministry of Corporate
Affairs.

CODE OF CONDUCT FOR PREVENTION OF INSIDER
TRADING IN COMPANY'S SECURITIES

In accordance with the Securities and Exchange Board of
India (Prohibition of Insider Trading) Regulations, 2015 as
amended from time to time, the Company has complied
and formulated a Code of Conduct for Prevention of Insider
Trading Policy, which prohibits trading in shares of the
Company by insiders while in possession of unpublished
price sensitive information in relation to the Company and
following link

https://happyforgingsltd.com/wp-content/
uploads/2026/02/Code-of-fair-disclosure-for-UPSI.pdf
The objective of this Code is to protect the interest of
Shareholders at large, to prevent misuse of any price
sensitive information and to prevent any insider trading
activity by way of dealing in securities of the Company by its

Designated Persons. Ms. Bindu Garg, Company Secretary
and Compliance Officer of the Company, is authorized
to act as Compliance Officer under the Code. The code is
applicable to all directors, designated persons and their
immediate relatives and connected persons who have
access to unpublished price sensitive information .

Further, the Company has maintained a Structural Digital
Database (SDD) pursuant to provisions of regulations
3 (5) and (6) of Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 2015.

GENERAL DISCLOSURES
Your directors state that:

1. No material changes and commitments affecting the
financial position of the Company have occurred from
the close of the financial year ended 31^st March, 2026
till the date of this report.

2. There was no change in the nature of business of the
Company during the financial year ended 31 ^st March,
2026.

3. During the Financial Year under review no significant
or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern
status and Company's operation in future.

4. During the financial year under review no disclosure
or reporting is required with respect to issue of equity
shares with differential rights as to dividend, voting or
otherwise, issue of Sweat equity shares and Buyback
of shares.

5. During the Financial Year under review, the Company
neither made any application nor any proceeding is
pending under the Insolvency and Bankruptcy Code,
2016 (31 of 2016).

6. The Company serviced all the debts & financial
commitments as and when they became due with the
bankers or Financial Statements.

7. The Company does not have any holding company.
Further, the subsidiary company has not paid any
commission/ remuneration to the Managing Directors
and Whole Time Directors of the Company.

8. 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:
Not applicable.

The Directors express their heartfelt thanks to the esteemed
shareholders for their continued trust and confidence in the
Company and its management. They further extend their
appreciation to the Company's vendors, investors, business
associates, and the Central and State Governments, along
with their respective departments and agencies, for their
ongoing support and cooperation.