DIRECTORS' REPORT

The Board is pleased to present the 53^rd Annual Report together with the audited financial statements for the year ended 31^st March 2026.

1. Business Environment

Global Economic Scenario

The global economic outlook for 2026-2027 reflects a decelerating but resilient global economy heavily impacted by geopolitical instability, structural shifts, and sticky inflation. Major global institutions project that global real GDP growth will hover between 2.6% and 3.2% over the 2026-2027 period.

Economic performance is diverging across advanced and emerging markets due to a massive Energy supply shock triggered by the conflict in the Middle East.

International Monetary Fund (IMF) adjusted its baseline global growth downward to 3.1% for 2026 and 3.2% for 2027. World Bank projects a slightly more conservative path, stabilizing global expansion at 2.6% in 2026 and 2.7% in 2027. OECD forecasts world output expanding by 2.9% in 2026 before recovering to 3.0% in 2027.

The global environment in 2026 will be shaped by a complex interplay of accelerating ecological crises, structural technological shifts, and geopolitical fragmentation. While short-term political and economic pressures have temporarily deprioritised the environment behind geo-economic conflicts, long-term indicators show

planetary boundaries are under critical strain. The primary factors influencing the global environment are structured across five critical domains:

1. Technological & Infrastructure Pressures

2. Geopolitical & Policy Headwinds

3. Climate Dynamics & Planetary Boundaries

4. Natural Resource & Ecosystem Stress

5. Socio-Economic Impacts

Resilience, flexibility, and technological integration are the ultimate success factors for navigating the highly volatile 2026-2027 macroeconomic landscape. Organizations and governments must pivot from defensive cost-cutting to active structural transformation to overcome the dual pressures of sticky inflation and geopolitical friction.

On the Economy

Indian Economy

India’s GDP is projected to grow between 6.6% and 7.0% in the 2026-27 financial year. The International Monetary Fund (IMF) projects India's economy to remain the fastest-growing major economy, with real GDP growth forecasted at 6.5% for the 2026-27 fiscal year. This robust outlook is supported by strong domestic demand, easing inflation, and beneficial global trade adjustments.

Key Economic Indicators (FY27)

The fiscal deficit is targeted at 4.3% of GDP, down from 4.4% in FY26, as the government continues its calibrated fiscal consolidation. Nominal GDP is estimated to grow at roughly 10%.

Volatile crude oil prices and regional conflicts pose continued upside risks to inflation. However, overall inflation is stabilizing, which—alongside anticipated RBI rate cuts—is expected to support consumer purchasing power. Real GDP Growth of 6.5% expected with Inflation in Consumer Price Index (CPI), hovering around 4.7%. The Current Account Deficit is expected to be kept at 2.0% of GDP.

Growth Drivers

Direct tax exemptions, rationalized GST slabs, and a robust agricultural performance (boosted by favorable Rabi crops) are sustaining household and festive consumption. Services remain the primary anchor, helping to offset pressure on merchandise exports amid lingering global tariff uncertainties.

Public investment remains strong, with a continued emphasis on infrastructure development to stimulate private sector participation.

Risks & Challenges

According to reports from IMF, potential escalations in West Asian conflicts and volatile crude prices remain primary risk factors that could marginally temper longterm growth trajectories. The IMF advises careful calibration of policy responses, emphasizing targeted fiscal measures since there is limited room for extensive government manoeuvring.

Indian Gear Industry

Industrial gearbox demand in India for 2026-27 is surging, driven by the expanding manufacturing sector, "Make in India" initiatives, and heavy investments in renewable energy and automation. Valued at over USD 1.4 Billion, this sector is growing at a notable CAGR of over 7%, bolstered by robust localized manufacturing The market favors high-efficiency, compact, and IoT-enabled gearboxes, with planetary and helical types seeing the highest adoption rates across heavy industries. Key demand drivers and industry trends for 2026-27 include:

Wind Power, Mining, Cement & Automotive sectors

will be the sectors which will witness a surge in demand. Increased government infrastructure spending continues to boost demand for heavy-duty torque transmission equipment especially in the defence sector.

Helical Gearboxes dominate the standard manufacturing and material handling segments due to their high load capacity and smooth, efficient operation. Planetary Gearboxes are growing rapidly due to their high torque density, making them the preferred choice for wind turbines and precision robotics.

Technological shifts in the industry has sparked a shift toward "smart" gearboxes. Indian operators are increasingly demanding gearboxes integrated with condition-monitoring sensors for predictive maintenance, minimizing downtime in critical processes.

With stricter environmental regulations and rising power costs, there is a strong push toward energy-efficient designs that minimize power loss and weight.

Challenges of the Market

Indian industrial gear manufacturers face a confluence of margin pressures, technological disruption, and supply chain constraints. Key hurdles include raw material price volatility, a skill gap in precision engineering, and the heavy investment required to meet global quality and automation standards amid stiff international competition.

The primary operational and market challenges are in the areas of Raw Material Volatility with price fluctuations leading to Profit Squeeze, Technological Advancements & Automation.The next challenge is the The Skills Gap, Lack of Specialized Talent where there is a notable shortage of skilled technicians and engineers who are experts in gear design, metallurgy, and advanced heat treatment processes. On Talent Retention also the manufacturing sector often struggles to attract young talent, who frequently prefer opportunities in the IT and services sectors over traditional engineering roles.

Domestic players face intense competition from established global giants and cheaper imports from countries like China creating a Global Market Pressure. Limitation in R&D investment restricts the Indian manufacturer’s for robust Research and Development. This hinders the ability to innovate and build proprietary technologies that have global demand.

Although the government is pushing for an "Atmanirbhar Bharat" (Self-Reliant India) to boost localized production, challenges with domestic infrastructure, power supply, and logistics remain.

Sector-wise prospects

Railway

Railways are driving a massive, tech-led impetus on safety to eliminate human error, modernize infrastructure, and safeguard millions of passengers. Core safety technologies like Kavach Automatic Train Protection (ATP) to prevent collision. Electronic Interlocking replacing the mechanical signaling and Predictive Maintenance measures are in place. Fatigue Management: Locomotives are fitted with vigilance control devices (VCD) and fatigue-monitoring cameras to ensure loco pilots remain alert. Elimination of Level Crossings: 100% of unmanned level crossings on broad-gauge routes have been eliminated to prevent vehicle-train collisions.

On infrastructure and Rolling Stock, front upgraded LHB coaches, which feature superior anti-climbing technology and built-in fire safety and suppression systems. On Emergency Response & Passenger Security 24x7 help lines and focused safety drives, such as the Meri Saheli initiative, guarantee focused security for women passengers.

India’s bullet train network is advancing with the flagship 508 km Mumbai-Ahmedabad High-Speed Rail (MAHSR) project, which features 320 kmph trains. Additionally, seven new corridors, including Bengaluru-Hyderabad and Delhi-Varanasi, were announced in the 2026-27 Budget to boost regional connectivity. Indian Railways is executing a massive expansion of the Vande Bharat fleet, aiming for 800 trainsets by 2030 and 4,500 by 2047.

The year 2026 will be year of Major Reforms for Indian Railways. Budget 2026-27: ^2.93 lakh crore capex — highest ever — funding this expansion. In this transformation phase 7500 numbers of Electric Locomotives are planned in major production units of CLW, Dhankuni, BLW and PLW in the next five years. There will be continuous thrust on building Electric Locomotives with priority accorded to 9000 HP Freight locomotives and high speed passenger locos.

Capacity addition for track machines—or mechanized track maintenance—focuses on increasing overall track availability, expanding maintenance fleets, and optimizing operational productivity. This is vital for modern railway networks like Indian Railways to manage heavier axle loads, higher train volumes, and faster speeds without compromising infrastructure safety.

Steel

India's steel sector is experiencing unprecedented growth, with domestic demand projected to surge by 7.4% and consumption reaching around 164 million tonnes. The outlook for the Indian steel sector in FY 2026-27 is highly positive, with India expected to remain the world's fastest-growing major steel market. While global steel demand growth remains sluggish at a projected 0.3%, India’s domestic steel consumption is expected to outpace global peers significantly, forecasted to grow by 7.4% in 2026 and 9.2% in 2027.This momentum is fueled by aggressive government capital expenditure, expanding infrastructure, and a strong domestic push for manufacturing and green energy.

India's steel industry is targeting $2.5 billion in CapEx for FY 2026-27, advancing toward a 300 MTPA capacity goal by 2030. Major players like SAIL, Tata Steel, JSW, and AM/NS are aggressively scaling up integrated facilities and expanding downstream capacity with investments in green steel, supported by Production Linked Incentive (PLI) initiatives of the Government.

Major expansion plans: JSW Steel aims to nearly double its annual production capacity to approximately 80 million tonnes by 2032. Tata Steel is accelerating its India footprint to reach an overall capacity of 40 MTPA by 2030. AM/NS India (Arcelor Mittal Nippon Steel) is Ramping up the Hazira plant from 9 MTPA to 15 MTPA via a ? 60,000 crore investment, including two new blast furnaces. SAIL (Steel Authority of India Limited) is modernizing facilities to push hot metal production to 23 MTPA. Jindal Steel and Power Limited (JSPL) is executing a ? 31,000-crore capital expenditure program to take its total steelmaking capacity to 15.9 MTPA. These expansion plans will drive demand.

Extrusion

The Indian plastic extruder gearbox market for the 2026-27 period is experiencing steady growth, driven by surging demand for plastic packaging, rigid pipes, and recycling machinery. These factors push manufacturers toward high-torque, energy-efficient gearboxes that can handle modern, complex polymer processing.

The push for high-torque co-rotating twin-screw setups for compounding and heavy-duty single-screw extruders for PVC pipe manufacturing dictates current purchasing trends. Cast iron housings with hard-toothed helical or planetary gearing arrangements are highly sought after to withstand the rigorous heat and pressure of plastic extrusion. End-users are heavily prioritizing gearboxes with higher load capacities (service factor of 1.5 ), >95% operational efficiency, and low-noise continuous operations.

The Indian rubber extruder gearbox market is primarily driven by expanding tire production, rising automotive component demand, and government infrastructure projects. The Key Market Drivers for 2026-2027 will be in the areas of Tire Industry Modernization & Expansion, Automotive, Lightweighting, Infrastructure & Construction Growth: ESG & Energy Efficiency Mandates Localization and "Make in India".

Surging government investments in national infrastructure projects are boosting the demand for heavy-duty rubber products (such as hoses, conveyor belts, and sealing profiles), which directly propels the need for industrial extrusion equipment. Indian manufacturers are increasingly replacing older, energy-intensive machinery. High-efficiency gearboxes that reduce friction and power loss are highly sought after to comply with corporate sustainability and emission goals.

Cranes

Major portion of demand for the crane segment arises from the EOT crane which forms a major share. The Indian Electric Overhead Traveling (EOT) crane market is valued between INR 9,000 and 12,000 crore, experiencing robust growth. Driven by "Make in India" initiatives and rapid infrastructure and logistics expansion, the sector is projected to grow at a Compound Annual Growth Rate (CAGR) of 6% to 7.5% through 2030. Unlike conventional mobile, crawler, or tower cranes that dominate outdoor construction, EOT cranes are permanently installed for indoor, precision heavy lifting. EOT cranes consists of variety of Industrial Gearboxes customized for crane application, which extends good potential to the gear industry.

Demand is driven through growth prospects in Steel plants, automotive lines, port logistics, power, and warehousing. Emerging Opportunities include upcoming Smart factories, renewable energy, and automated logistics hubs. High Lifting capacity units (20 to 100 tons) dominate the majority of the revenue share, while 5 to 10-ton single girder cranes are prevalent in medium workshops. Industry 4.0 integration—such as smart cranes, IoT capabilities, and anti-collision sensors— is seeing increased adoption for improved safety and efficiency.

High initial investments and fluctuating raw material (steel) costs remain notable market restraints to overcome market challenges. Additionally, shortage of skilled operators, intense competition from imported equipment, adapting to new energy-efficiency regulations and strict safety standards strains budgets for smaller enterprises. Despite these headwinds, the sector is expected to see steady growth, driven by rapid industrialization, the government's push for local manufacturing, and heavy investments in the renewable energy and infrastructure sectors. Major players are combating these challenges by shifting focus to IoT & Automation, Energy Efficienct crane designs to meet strict government regulations and lower operational costs.

Material Handling Conveyors

The Indian industrial conveyor systems market is projected to reach approximately USD 15.8 billion by 2032, expanding at a robust CAGR of over 7%. This rapid growth is driven by the booming e-commerce sector, warehouse automation, and the expansion of smart factories across the country.

Belt conveyors hold the dominant share (around 28% of the operational layout) due to their versatility in heavy industrial manufacturing and packaging sectors, while roller conveyors are growing rapidly to support e-commerce fulfillment and distribution centers.

Expansion in core sectors like Steel, Power, cement and Construction will enhance the demand for conveyor systems.

Key Growth Drivers in India are Logistics & E-commerce, Manufacturing & "Make in India", Technological Integration with Conveyors incorporating AI, IoT, and sensor-driven analytics for predictive maintenance.

India's bulk material handling (BMH) market is rapidly expanding, with the sector projected to reach over 4.1 billion. Driven by massive infrastructure projects, the Atmanirbhar Bharat (Self-Reliant India) campaign, and a booming manufacturing sector, demand is surging for automated conveyors, stacker-reclaimers, and smart silo systems. Key Market Drivers will be Mining & Minerals: Increased domestic coal production and mineral extraction are demanding high-capacity belt conveyors and robust crushing and screening operations. Ports & Logistics: Expanding maritime trade requires high-volume ship loaders and continuous bulk handling terminals for faster turnaround times. Cement & Steel: The push for urbanization is heavily bolstering the core sectors, which rely on pneumatic conveying and heavy-duty chain conveyors for raw material processing. Agriculture: Rising food processing needs require efficient, automated silo storage and handling to reduce post-harvest losses.

Shift in Technological Trends The future of BMH in India is heavily leaning toward smart automation like AI-driven flow optimization: Monitoring material movement and preventing blockages in real-time. Green technologies: Energy-efficient conveyor systems and advanced dust suppression systems to meet strict environmental and compliance standards. Turnkey solutions: Companies are increasingly offering end-to-end execution, from structural design to commissioning, to streamline complex projects.

Cement

The Indian cement industry is poised for strong volume growth of 7-8% in FY26-27, driven by robust government infrastructure spending and rising rural housing demand. However, operating margins are projected to decline by 150-200 basis points due to surging petcoke, coal, and diesel costs caused by West Asia geopolitical tensions.

The Indian cement industry is on a massive expansion spree, with major manufacturers projected to add 42 to 44 million tonnes per annum (MTPA) of new grinding capacity in FY27 (2026-27). This builds upon a nearly identical addition in FY26, bringing the two-year addition pipeline to roughly 85-90 MTPA.

The expansion is fueled by a projected 6% to 7% volume growth, driven heavily by government infrastructure outlays, dedicated freight corridors, and affordable housing schemes. Incremental grinding capacities are heavily concentrated in the Eastern and Central regions to match new urbanization and industrial cluster demands.

Roughly two-thirds of the total additions are split grinding units strategically placed closer to high-consumption consumption centers. The industry is experiencing intense consolidation with larger players dominating expansions.

3. Review of Operations

In FY 25-26, Revenue from Operations at ^ 518.72 crores, with a 14% de-growth over previous year. The degrowth was due to decrease in order inflows.

Despite these challenges, the Company maintained strong operational discipline, focused on cost optimization, and strengthened customer engagement.

These measures helped enhance operational resilience and position the Company for future growth opportunities. The company made its highest capital investments during this financial year.

EBITDA decreased to ^ 118.76 crore in FY 26 from ^ 143.39 crores in FY 25 - a degrowth of 17%. The Company registered a net profit of ^ 76.66 crores.

The Company generated a Free Cash Flow of ^ 29.83 crore during the financial year against ^ 75.47 in the previous year.

The Company’s Return on Capital Employed stood at 24% in FY 26 compared to 35% in FY 25.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

4. Dividend

The Board of Directors declared an Interim Dividend of ^ 3/- per share (@ 300%) on equity share of the face value of ^ 1/- each for the financial year 202526, which was paid on 20^th February 2026 to all the eligible shareholders. A final dividend of ^ 2/- per share (@ 200%) has been proposed by the Board for the said financial year and together with the Interim Dividend of ^ 3/- per equity share, already declared and paid, in respect of the financial year 2025-26, ^ 5/- per share (@ 500%) will be considered as the total Dividend for the said financial year.

The dividend pay-out this year exceeded w.r.t Company’s policy on Dividend Distribution, to commemorate the company's performance. The Dividend Policy as approved by the Board is uploaded and is available on the following link on the Company’s website, https://www.shanthigears. com/wp-content/uploads/2021/04/SGL-Dividend-Distribution-Policy.pdf.

Details thereof also form part of this Annual Report for the information of shareholders as Annexure-A.

5. Share Capital

The paid up Equity Share Capital as on 31^st March 2026 was ^ 7.67 Crores.

6. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31^st March 2026.

7. Particulars of Loans, Guarantees

During the year under review, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. As part of treasury management, the Company deploys short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8. Directors

Mr. Mukesh Ahuja, will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 and being eligible, he offers himself for re-appointment.

The Board records its appreciation for Ms. Soundara Kumar, Independent Directors for her dedication and contributions towards the growth of the organization. Ms. Soundara Kumar retired from the Board w.e.f 30^th July 2025. During the Financial Year 2025-26 Ms. Aruna Thangaraj, has been appointed as Independent Director of the Company w.e.f 30^th July 2025.

The Board of Directors confirms that the Independent Directors appointed during the year possess strong integrity and ethical conduct. After reviewing their qualifications, background, and experience, the Board believes the director brings valuable expertise in negotiating joint venture agreements and setting up greenfield projects. Their skills in strategic decision-making, governance, and risk management will enhance the Board’s

effectiveness. The Board is confident that their independent perspective and contributions will support the company’s long-term growth and strong governance.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act. In the opinion of the Board, all the Independent Directors fulfil the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the Management.

9. Key Managerial Personnel

Mr. M Karunakaran, CEO & Whole-time Director; Mr. Walter Vasanth P J, Company Secretary & Compliance Officer and Mr. Ranjan Kumar Pati, Chief Financial Officer (resigned w.e.f., 19^th March 2026) are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

10. Internal Control System and their Adequacy

The Company has an Internal Control System, commensurating with its size, scale and complexity of its operations.

It has a sound system of internal controls in place to ensure the achievement of goals, evaluation of risks, and reliable financial and operational reporting.

This efficient internal control procedure is driven by a robust system of checks and balances that ensures the safeguarding of assets, compliance with all regulatory norms, and procedural and systemic improvements periodically.

The Company uses an ERP (Enterprise Resource Planning) package supported by in-built controls. This guarantees timely financial reporting. The audit system periodically reviews the control mechanism and legal, regulatory, and environmental compliances.

The internal audit team also checks the effectiveness of internal controls and initiates necessary changes arising out of inadequacies, if any. All financial and audit controls are further reviewed by the Audit Committee of the Board of Directors.

11. Internal Financial Control Systems with reference to financial statements

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. The Company’s business processes are enabled by an Enterprise-wide Resource Platform (ERP) for monitoring and reporting processes resulting financial discipline and accountability.

12. Enterprise Risk Analysis and Management

The Company’s risk strategy is determined by its risk appetite defined by a series of risk criteria. The criteria are based on sectoral realities, customer circumstances, liquidity available and its earnings target within accepted volatility limits. These criteria provide a reference for our operating divisions.

The Company’s risk management framework comprises a combination of centrally issued policies and divisionally-evolved procedures that are regularly reviewed for their alignment with sectoral dynamics and evolving trends.

The framework encompasses strategy and operations and seeks to proactively identify, address and mitigate existing and emerging risks with the goal of making the business model emerge stronger and business growth becomes sustainable.

The Company has constituted a Risk Management Committee aligned with the requirements of the Companies Act, 2013 and Listing Regulations. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company operates across various product platforms built over the years. Relative advantages and disadvantages of such product verticals are studied and advances are tracked. The Company seeks to address technology gaps through continuous benchmarking of existing manufacturing processes with developments in the industry and in this connection has made arrangements with technology consultants.

Sub-par utilization of capacities may lead to inadequate leverage benefits. The Company is ramping up its marketing efforts towards successful product establishment and market acceptance of its products, exploring development of alternate products and establishing a range of applications.

13. Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Practicing Company Secretary on compliance with Corporate Governance norms forms part of this report as Annexure-H.

14. Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit to the promotion of worthy causes like education, healthcare, scientific research etc. As a part of the Corporate Social Responsibility program, the Company has undertaken projects in the areas of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-B.

15. Annual Return

The Annual return in Form MGT-7 is available on the Company’s website at the following link: http://www.shanthigears.com/annual-return/.

16. Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

b) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 as at 31^st March 2026 and of the profit of the Company for the year ended on that date;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31^st March 2026 and

f) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31^st March 2026.

17. Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the

Remuneration policy are available on the website of the Company at https://www.shanthigears.com/ wp-content/uploads/2025/04/Remuneration-Policy.pdf.

18. Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website https://www.shanthigears. com/wp-content/uploads/2026/01/Policy-on-Related-Party-Transactions.pdf.

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

All transactions with Related Parties under the Companies Act, 2013, entered during the financial year were in the ordinary course of business at arm’s length and hence no particulars are required

to be entered in the Form AOC-2. Further, all transactions entered into with Related Parties during the yeareven at arm’s length basis in the ordinary course did not exceedthe thresholds prescribed under the Companies (Meetings of Board and its Powers) Rules, 2014 or Listing Regulations or the Company’s Policy in this regard and hence no disclosure was required to be made in Form AOC-2. Accordingly, there are nocontracts or arrangements entered into with Related Partiesduring the year to be disclosed under Sections 188(1) and 134(3)(h) of the Companies Act, 2013 in Form AOC-2. The form is enclosed as Annexure E.

19. Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

20. Vigil Mechanism / Whistle Blower Policy

The details of Vigil Mechanism / Whistle Blower policy are given in the Corporate Governance Report.

21. Business Responsibility & Sustainability Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility& Sustainability Report as part of the Annual Report for the top 1000 listed entities based on market capitalisation, the Business Responsibility Report forms part of the Annual Report as Annexure G. The Business Responsibility Policy of the Company is displayed in the Company’s website at the following link: https://www.shanthigears.com/wp-content/ uploads/2020/06/SGL-BRR-Policv-Mav-2020. pdf.

22. Declarations/Affirmations

During the year under review:

• There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the

financial year of the Company to which the financial statements relate viz., 31^st March 2026 and the date of this Report; &

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

23. Human Resources

Intellectual capital has been the cornerstone of Shanthi Gear’s sustenance over the years. The Company has a large pool of engineers. This critical competitive edge has enabled the Company to stand out from the clutter and develop niche solutions that address the ever-evolving requirements of the sectors it caters to.

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF, MM and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs) for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-Job projects, job enlargement /job rotation, mentoring support to the Talents are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have been given opportunities to take up higher roles and grow in the system under Grow from within Scheme.

The Company had 479 permanent employees on its rolls, as on 31^st March 2026.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-C.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

24. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place a Prevention of Sexual Harassment policy (POSH) in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual,

temporary and trainees) are covered under this policy. During the Financial Year 2025-26, no complaints relating to sexual harassment were received. Consequently, no complaints were disposed of during the year, and no complaints were pending as at the close of the financial year. Further, there were no cases pending for more than ninety (90) days as on 31^st March 2026.

26. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Sridharan & Sridharan Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure F. Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

27. Auditors

The Members have appointed M/s MSKA & Associates LLP, Chartered Accountants (Formerly known as M/s MSKA & Associates), (LLPIN. ACT - 3789) the Statutory Auditors of the Company for a period of 5 years from the conclusion of 50^th AGM (2023) till the conclusion of 55^th AGM (2028). The Statutory auditor’s report forms part of the Annual report and no qualifications or observations or other remarks have been made by Statutory auditor in his report.

In accordance with the provisions of Section 148(1) of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Company has maintained cost records in respect of Gears, Gearboxes and Accessories for the Financial Year 2025-26. Mr. B. Venkateswar was appointed as Cost Auditor for the audit of the Cost Accounting

records of the Company for the year ended 31^st March 2026. A resolution seeking Members’ ratification of the Remuneration payable to the Cost Auditor is included in the AGM notice dated 05^th May 2026. The Cost Audit report will be filed within the stipulated period.

The Members have appointed of M/s. Sridharan & Sridharan Associates, Firm of Company Secretaries in Practice, (Firm Registration: P2022TN093500) the Secretarial Auditors of the Company for a period of 5 years from the conclusion of 52^nd AGM (2025) till the conclusion of 57^th AGM (2030).

28. Subsidiaries/Associates/Joint Ventures

The Company does not have any subsidiaries/ Associates/Joint Ventures.

29. Secretarial Standards

The Company has duly complied with the applicable Secretarial Standards as required by the Companies Act, 2013.

30. General

The Company has not issued equity shares with differential voting rights or sweat equity shares, there is no reportable event with respect to one time settlement with any Bank or Financial Institution and no corporate insolvency resolution process was initiated under the Insolvency and Bankruptcy Code, 2016, eitherby or against the Company, before National Company Law Tribunal.

31. Change in Nature of Business

There has been no change in the nature of business during the financial year under review.

32. Other Confirmations

No application under the Insolvency and Bankruptcy Code, 2016 (IBC) was made on the Company during the year. Further, no proceeding under the IBC was initiated or is pending as at 31^st March 2026.

There was no instance of one time settlement with any Bank or Financial Institution.

The Company has complied with relevant provisions of the Maternity Benefit Act, 1961.

33. Acknowledgement

The Directors thank all the Customers, Vendors, Banks, State Governments and Investors for their continued support to your Company’s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering good performance during the year.