DIRECTORS' REPORT

Dear Members

The Board of Directors have pleasure in presenting their twenty sixth (26^th)Annual Report along with the audited Financial Statements (Standalone and Consolidated) ofthe Company for the Financial Year ended 31^st March 2022.

1. FINANCIAL HIGHLIGHTS & PERFORMANCE

The financial performance of the Company (Standalone and Consolidated) for theFinancial Year ended 31^st March 2022 is as under:

Standalone

The standalone revenue from operations increased by 39% to INR 19390.49 million forFiscal 2022 from INR 14000.44 million for Fiscal 2021 due to ramp-up of sales volume forsome of the new contracts especially in the EV segment and growth in sales in the Indianpassenger vehicle and commercial vehicle markets. Profit before exceptional items and taxin Fiscal 2022 was INR 4035.01 million as compared to INR 3052.49 million in Fiscal2021 reflecting an increase of 32% from the previous year. Profit after tax (PAT) in theFiscal Year 2022 was INR 3535.38 million as compared to INR 2160.39 million in Fiscal2021 reflecting an increase of 64% from the previous year due to certain one-time taximpact.

Consolidated

The consolidated revenue from operations increased by 36% to INR 21306.40 million forFiscal 2022 from INR 15663.00 million for Fiscal 2021 primarily due to the ramp up ofsales volume for some of the new contracts especially in EV segment and growth in sales inthe Indian passenger vehicle and commercial vehicle markets. Profit before exceptionalitems and tax in Fiscal 2022 was INR 4189.05 million as compared to INR 3139.02 millionin Fiscal 2021 reflecting an increase of 33% from the previous year. Profit after tax(PAT) in the Fiscal Year 2022 was INR 3615.43 million as compared to INR 2151.65 millionin Fiscal 2021 reflecting an increase of 68% from the previous year due to certainone-time tax impact.

2. PERFORMANCE OF THE COMPANY AND INDUSTRY OVERVIEW

In Fiscal 2022 Your Company continued its growth momentum as it scaled new benchmarksin Revenue and Profitability. Its Consolidated Revenue EBITDA and Profits (before tax andexceptional items) were INR 21306.40 million INR 5591.01 and INR 3615.43 millionrespectively. Growth was led by the strong traction in the EV business which witnessedrevenues more than double compared to the prior year.

Further the Motor business also contributed to the EV growth trajectory. Thisperformance was achieved in the backdrop of a challenging operating environmentcharacterised by stop start economic activity due to subsequent waves of COVID-19 highinflation and an all-round rise in operating costs. This was accentuated by the disruptionin the global supply chain which constrained availability of inputs most notably causinga shortage of semi-conductors for the auto industry worldwide.

Encouragingly it was witnessed that most countries and regions experienced more rapidrecovery in economic activity following subsequent waves. Further the scale-up andsuccess of vaccination Programmes enabled faster resumption by mitigating the severity ofsubsequent waves. The auto industry responded to the constrained availability insemi-conductors by prioritising production of higher value vehicles and those with newertechnologies. As a result global sales of automobiles have started to recover due to thepent-up demand preference for personal mobility and increasing acceptance of newertechnologies like EVs and hybrid vehicles.

While the multiple factors such as subsequent waves of the pandemic disruption insupply chain constraints to timely availability and transportation of raw materials andthe compounding effect on vendors suppliers and contractors intensified the challengesyour Company did not experience any interruption in the ability to supply systems andcomponents and ensured that customers did not experience any disruption to their productlines. Your Company was able to continue to drive business development and won 43 newprogrammes during the last three quarters for the Fiscal 2022. As of 31^stMarch 2022 we have total 30 EV Programmes out of which 9 EV programmes are under serialproduction and 21 Programmes will undergo serial production in the Fiscal 2023 or laterdepending upon customer production schedules.

Your Company undertook active measures to promote health and safety and socialdistancing efforts and enforced all guidelines and protocols stringently. Anothersignificant area of focus remains to train and create enough learning opportunities forits workforce as well as undertaking initiatives to maintain harmony in the workplace.During the Fiscal 2022 your Company has added to its workforce with focus on augmentingR&D capabilities through significant additions to the R&D team.

During the year under review your Company commenced construction of its new facilityat Chakan (Pune) which will be the tenth facility globally and the seventh in India.Further your Company has made exciting progress in new product areas including winningits maiden order for an Integrated Motor Controller Module and expanding drivelineproducts portfolio with two new products namely Spool Gear and Epicyclic Geartrain whichfind application in the EV drivetrains. The Company also launched its next generation ofmotors and controllers with high efficiency torque and power density including theintroduction of its maiden motor T-REF which is made without use of rare earth elements.Besides these the Company has also formed three technology partnerships for thedevelopment of different technology of motors. These partnerships were 1) with IRP ofIsrael to co-develop a magnet-less motor for electric two- and three-wheelers 2) withEnedym Inc. a Canadian company for development of next-generation switched reluctancemotors and 3) with C-Motive a US based company for the development of motors based onelectrostatic technology.

As per Nomura research reports' data global light vehicle sales declined by 3% to 79.5million in the Fiscal 2022 from 82.3 million in the Fiscal 2021 whereas the Company'srevenue from operations grew by 36% in the same period.

By 2025 IEA expects global electric vehicle sales to reach ~15 million accounting for~15% of global light-vehicle sales by volume. By 2030 IEA expects global electric vehiclesales to cross 27 million accounting for ~22% of light-vehicle sales.

The outlook for the Fiscal 2023 is one of continued industry recovery principally interms of underlying demand. This should be supported with build-back by OEMs gaining speedthrough the year as supply chain issues related to semiconductors are expected to ease. Asper Nomura the global light vehicle market is expected to grow to around 85.5 million inthe calendar year 2022.

3. MANAGEMENT DISCUSSION AND ANALYSIS

A detailed analysis of your Company's performance is discussed in the ManagementDiscussion and Analysis Report for the Financial Year 2021-22 pursuant to the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 which forms part ofthis Annual Report.

4. CORPORATE DEVELOPMENTS

Initial Public Offer

Your Company has successfully completed the initial public offering of its equityshares ("IPO") which comprised of fresh issue of 10309278 equity sharesaggregating to INR 3000 million by the Company ("Fresh Issue") and anoffer for sale of 180412371 equity shares aggregating to INR 52500 million through bookbuilding process.

The net proceeds from the Fresh Issue were fully utilised for the objects as disclosedin the Prospectus viz; INR 2411.17 million towards repayment and pre-payment ofidentified borrowings of the Company and INR 523.13 million towards general corporatepurpose and INR 65.70 million towards IPO expenses.

Scheme of Amalgamation of Comstar Automotive Technologies Private Limtied with theCompany

Your Company has filed a Scheme of Amalgamation (Scheme) of Comstar AutomotiveTechnologies Private Limited ("Comstar") a wholly-owned subsidiary withitself before the Hon'ble National Company Law Tribunal Chandigarh Bench (NCLT) on10^th January 2020. The Scheme was sanctioned by NCLT vide its Order dated 7^thJanuary 2022. The certified true copy of the Order was filed by the Company and Comstarwith the Registrar of Companies NCT of Delhi & Haryana on 28^th January2022. The Scheme has become effective from 28^th January 2022 with theappointed date of 5^th July 2019.

5. TRANSFER TO RESERVES

The Board of Directors of the Company do not propose to transfer any amount toreserves.

6. DIVIDEND

The Board of Directors at their meeting held on 5th May 2022 has recommended thepayment of INR 0.77 per equity share of the Company having the face value of INR 10/- eachas final dividend for the Financial Year ended 31^st March 2022. The finaldividend will be paid to the shareholders who are holding the shares of the Company as onThursday 30^th June 2022. The payment of final dividend is subject to theapproval of the shareholders in the ensuring Annual General Meeting of the Company.

During the year under review the Board of Directors of the Company at their meetingheld on 1^st February 2022 declared an interim dividend of INR 0.77 per equityshare of the Company having face value of INR 10/- each. The interim dividend was paid tothe shareholders on 25^th February 2022.

In view of the changes made under the Income-tax Act 1961 by the Finance Act 2020dividends paid or distributed by the Company shall be taxable in the hands of theShareholders.

The abovesaid dividend declared is in accordance with the Dividend Distribution Policyof the Company.

The Board has adopted the Dividend Distribution policy in its meeting held on 27^thJanuary 2021 in accordance with the provisions of regulation 43A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended from time to time.The policy can be accessed on the Company's website at https://sonacomstar.com/policies-and-codes.

7. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

During the year under review no amount was required to be transferred to the InvestorEducation and Protection Fund by the Company.

Allotment of equity shares pursuant to Initial public offer

During the year under review your Company has allotted 10309278 equity shares at anoffer price of INR 291/- each as part of IPO of the Company. With the said allotment thepaid-up equity share capital has increased to INR 5832898380 consisting of 583289838equity shares of INR 10/- each from INR 5729805600 consisting of 572980560 equityshares of INR 10/- each.

Allotment of Equity Shares under Sona BLW Precision Forgings Limited-Employee StockOption Scheme -2020

During the year under review your Company has allotted 1062872 equity shares of theCompany having face value of INR 10/- each fully paid-up to the eligible employees of theCompany upon exercise of the vested options as granted to them under the Sona BLWPrecision Forgings Limited-Employee Stock Option Scheme-2020 ("ESOPScheme-2020").

As a result the paid-up share capital of the Company increased from INR 5832898380consisting of 583289838 equity shares of INR 10/- each to INR 5843527100 consistingof 584352710 equity shares of INR 10/- each. The equity shares allotted under the ESOPScheme-2020 rank pari-passu with the existing equity shares of the Company.

The Company has not issued equity shares with differential rights as to dividendvoting or otherwise.

The Company has not issued any sweat equity shares to its directors or employees.

Consolidation of Authorised Share Capital due to Merger of Comstar with the Company

During the Financial Year under review Comstar Automotive Technologies PrivateLimited an erstwhile wholly-owned subsidiary merged with the Company and pursuant tothe Scheme of Amalgamation the authorised share capital of Company increased from INR10000000000 to INR 11500000000.

9. CHANGE IN NATURE OF BUSINESS

During Financial Year 2021-22 there was no change in the nature of Company's business.

10. SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

As at 31^st March 2022 the Company has 4 (four) directly held subsidiariesand 5 (five) step down subsidiaries the details of which is given in the Annual Return (FormMGT- 7) of the Company which is available on the website of the Company athttps://sonacomstar.com/investor/annual- reports-and-returns.

Pursuant to Section 129(3) of the Companies Act 2013 (‘Act') the Companyhas prepared the Consolidated Financial Statements which forms part of this AnnualReport. Further a statement containing salient features of Standalone FinancialStatements of subsidiaries in Form AOC-1 is attached to the Consolidated FinancialStatements of the Company and therefore not repeated in this report for the sake ofbrevity.

in accordance with Section 136 of the Act the audited Financial Statements includingthe Consolidated Financial Statements and related information of the Company and auditedFinancial Statements of each of its subsidiaries are available on the website of theCompany viz. https:// sonacomstar.com/investor /subsidiary-companies-financial-statements.

Cessation of Comstar Automotive Technologies Private Limited as subsidiary of theCompany

Consequent to the merger of Comstar Automotive Technologies Private Limited (Comstar)an erstwhile wholly-owned subsidiary with the Company during the year under reviewComstar ceases to be the wholly-owned subsidiary of the Company and the two subsidiariesof Comstar i.e Comstar Automotive USA LLC and Comstar Automotive Technology ServicesPrivate Limited became the direct subsidiary of the Company.

Save and except as provided herein above no other company has become or ceased to besubsidiary joint venture or associate of the Company during the year under review.

Material subsidiaries

As on 31^st March 2022 your Company had one material subsidiary viz.Comstar Automotive USA LLC (‘Comstar USA').

Pursuant to Regulation 24(1) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Mr. Jeffrey Mark Overly Independent director of theCompany was appointed as Director on the Board of Comstar USA with effect from 16*^hFebruary 2021.

However pursuant to the definition of material subsidiary under Regulation 24 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the income ornetworth of Comstar USA has fallen below the threshold limit of 10 % of consolidatedincome or networth of the Company of the Financial Year ending 31^st March2022. Accordingly Comstar USA ceases to be the material subsidiary of the Company witheffect from 1^st April 2022.

The policy for determining material subsidiaries as approved by the Board is uploadedon the Company's website and can be accessed at the web-link: https://sonacomstar.com/policies-and-codes

11. CORPORATE GOVERNENCE

The Company is committed to pursue and adhere to the highest standard of CorporateGovernance as set out by the Securities and Exchange Board of India (SEBI) and theCompanies Act 2013. The report on the Corporate Governance as stipulated in regulation 34read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed as Annexure-A to this Report.

Board of Directors

Your Board comprises eight Directors including four Independent Directors (includingone woman Independent Director) one Executive Director and three Non-ExecutiveDirectors.

All Directors take active part in the deliberations at the Board and Committee Meetingsby providing valuable guidance and expert advice to the Management on various aspects ofbusiness governance etc. and play a critical role on strategic issues and add value inthe decisionmaking process of the Board of Directors.

Re-appointment of Mr. Vivek Vikram Singh (DIN: 07698495) as the Managing Director &Group CEO

The tenure of Mr. Vivek Vikram Singh (DIN: 07698495) as the Managing Director &Group Chief Executive Officer shall expire on 4^th July 2022. The Board at itsmeeting held on 9^th June 2022 based on the recommendation of the Nominationand Remuneration Committee (‘NRC') has re-appointed Mr. Vivek Vikram Singh (DIN:07698495) as Managing Director & Group CEO of the Company with effect from 5^thJuly 2022 to hold office for a term of 5 consecutive years commencing from 5^thJuly 2022 to 4^th July 2027 (both days inclusive) and approved theremuneration payable to Mr. Vivek Vikram Singh subject to approval of the Shareholders ofthe Company in the ensuing Annual General Meeting.

Re-appointment of Mr. Amit Dixit as Director

i n accordance with the provisions of Section 152 and other applicable provisions ifany of the Companies Act 2013 and the Articles of Association of the Company Mr. AmitDixit (DIN: 01798942) Non-Executive Director of the Company is liable to retire byrotation at the ensuing Annual General Meeting and being eligible off'er himself forre-appointment.

In accordance with the provisions of Section 152 and other applicable provisions ifany of the Companies Act 2013 and the Articles of Association of the Company and on therecommendation of the Nomination and Remuneration Committee the Board recommendsre-appointment of Mr. Amit Dixit (DIN: 01798942) as director liable to retire by rotation.

In the opinion of the Board all the Directors as well as the Directors proposed to beappointed/re-appointed possess the requisite qualifications experience and expertise andhold high standards of integrity.

The list of key skills expertise and core competencies of all Directors and number ofBoard and its Committee meetings attending by them is provided in the Corporate GovernanceReport forming the part of this Board's Report.

None of the Directors of the Company have resigned during the year under review.

Key Managerial Personnel

As on 31^st March 2022 following are the Key Managerial Personnel (‘KMP')of the Company as per Section 2(51) and 203 of the Companies Act 2013:

During the year under review there were no changes in the KMP of the Company.

13. DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors on the Board of the Company have submitted requisitedeclarations to the Board that they fulfil all the requirements as stipulated in Section149(6) of the Act and regulation 16(1)(b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

All Independent Directors of the Company have affirmed compliance with the Schedule IVof the Act and Company's Code of Conduct for Directors and Senior Management.

All the Independent Directors of the Company have complied with the requirementpertaining to the inclusion of their names in the data bank of independent directorsmaintained by Indian Institute of Corporate Affairs and they meet the requirements ofproficiency self-assessment test.

i n the opinion of Board of Directors of the Company Independent Directors on theBoard of Company hold highest standards of integrity and are highly qualified recognisedand are doyen of the industry. There is an optimum mix of expertise (including financialexpertise) leadership and professionalism.

14. REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT

The remuneration paid to the Directors Key Managerial Personnel and Senior Managementis in accordance with the Nomination and Remuneration Policy of the Company formulated inaccordance with Section 178 of the Act and regulation 19 read with Schedule II of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. Further details onthe same are given in the Corporate Governance Report which forms part of this AnnualReport.

Further the Managing Director & Group CEO of the Company is not in receipt ofremuneration and commission from holding company or subsidiary company.

The erstwhile holding company (and now a major shareholder) of the Company namelySingapore VII Topco III Pte. Ltd. (Singapore VII) has adopted an exit returnincentive plan (ERI Plan) pursuant to which Singapore VII rewarded/will rewardcertain identified employees of the Company and/or its subsidiaries (including each of KeyManagerial Personnel and Executive Director(s) who are not promoters of the Company) withcash rewards based on certain disposition event(s) in relation to its interest in theCompany. These cash awards were paid/ will be paid to such employees entirely by SingaporeVII (without any recourse or liability to the Company). None of the promoters nomineedirector or shareholder of the Company having significant influence is beneficiary ofthe ERI Plan.

The Board of Directors and Shareholders of the Company have approved the ERI Plan inits meeting held on 6*^h August 2021 and 9^th September 2021respectively in compliance with regulation 26(6) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

Accordingly Singapore VII paid part of cash reward to the identified employees(including the Managing Director and Group CEO) of the Company.

The Remuneration Policy is available on the website of the Company athttps://sonacomstar.com/policies-and-codes.

15. DISCLOSURE UNDER RULE 5(1) AND 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATIONOF MANAGERIAL PERSONNEL) RULES 2014

The disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 (Rules) is provided in a separateAnnexure-B forming part of this Report.

As per second proviso to Section 136(1) of the Act and second proviso of Rule 5 ofRules the Report and Financial Statements are being sent to the Members of the Companyexcluding the statement of particulars of employees under Rule 5(2) and 5(3) of Rules. Anymember interested in obtaining a copy of the said statement may write to the CompanySecretary at the Registered Office of the Company or by way of e-mail atinvestor@sonacomstar. com.

16. BOARD EVALUATION

The Board of Directors of the Company in its meeting held on 1^st February2022 amended the policy for evaluation of the performance of the board of directors("Policy") in compliances with the provision of Section 178 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The criteria of evaluation arebased on "Guidance note on Performance Evaluation" issued by the Securities andExchange Board of India on 5^th January 2017.

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board has carried out an annualevaluation of its own performance and that of its Committees as well as performance of allthe Directors individually and the Chairperson.

Feedback

Feedback was sought by way of a structured questionnaire covering various aspects ofthe Board's functioning and the evaluation was carried out based on responses receivedfrom the Directors.

Evaluation of Committees

The performance evaluation of Committees was carried out by the Board after seekinginputs from the committee members on the basis of the criteria such as structure andcomposition of Committees fulfilment of the functions assigned to Committees by the Boardand applicable regulatory framework frequency of meetings adequacy of time allocated atthe Committee Meetings adequacy and timeliness of the agenda and minutes circulatedefl^ectiveness of the Committee's recommendation to the Board etc.

Evaluation of Directors and Board

A separate exercise was carried out by the Nomination and Remuneration Committee of theBoard to evaluate the performance of Individual Directors.

The performance evaluation of the Non-Independent Directors and the Board as a wholewas carried out by the Independent Directors. The performance evaluation of theChairperson of the Company was also carried out by the Independent Directors taking intoaccount the views of the Executive Directors and Non-Executive Directors.

The evaluation of directors was based on inter-alia various criteria such asqualification and experience fulfilment of functions as assigned attendance at Board andCommittee Meeting contribution to strategy and other areas impacting Company'sperformance availability and attendance etc.

The evaluation of the Board was based on the criteria such as structure and compositionof the Board frequency of meetings adequacy of time allocated at the Board Meetingsadequacy and timeliness of the agenda and minutes circulated functions of the Boardgovernance and compliance etc.

Evaluation for Independent Directors

The performance evaluation of Independent Directors was carried out by the Board ofDirectors based on various criteria inter-alia including attendance at Board andcommittee meetings qualification experience ability to function as a team commitmentroles performed and understanding of industry.

Results of Evaluation

The outcome of such performance evaluation exercise was discussed at a separate meetingof the Independent Directors held on 23^rd March 2022 and was later tabled atNomination and Remuneration Committee and the Board of Directors of the Company held onthe same day.

The Directors expressed their satisfaction with the evaluation process. During the yearunder review the Nomination and Remuneration Committee ascertained and reconfirmed thatthe deployment of "questionnaire" as a methodology is effective for evaluationof performance of Board and Committees and Individual Directors. The overall performanceof the Board as whole Independent Directors Non-Executive Directors and Chairman of theBoard was positive.

17. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

All Independent Directors are familiarised with the operations and functioning of theCompany. The details of the training and familiarization program are provided in theCorporate Governance Report.

18. DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act 2013 the Directors of the Company statethat:

1. in the preparation of the annual accounts for the Financial Year ended 31^stMarch 2022 the applicable accounting standards were followed along with properexplanation relating to material departures;

2. they have selected such accounting policies and applied consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs as at 31^st March 2022 and of the profit and lossfor that period;

3. t hat proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of your Company and for preventing and detecting fraud and other irregularities;

4. that the annual accounts for the Financial Year ended 31^st March 2022have been prepared on a going concern basis;

5. that they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating eff^ectively;and

6. that they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.

19. EMPLOYEE STOCK OPTION SCHEME-2020

i n terms of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations2021/ SEBI (Share Based Employee Benefits) Regulations 2014 (to the extent applicable)as amended from time to time the Nomination and Remuneration Committee of your Board(also designated as the Compensation Committee) inter- alia administers andmonitors the Sona BLW Precision Forgings Limited- Employee Stock Option Scheme-2020" ("ESOPScheme-2020") of your Company.

During the year under review no fresh grants were made under the ESOP Scheme-2020.

Applicable disclosures as stipulated under the SEBI (Share Based Employee Benefits)Regulations 2014 and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations2021 ("SEBI SBEB Regulations") (wherever applicable) with regard to theESOP Scheme are available on the Company's website at https://sonacomstar.com/investor/annual-reports-and-returns.

The Company has received a certificate from M/s. PI & Associates SecretarialAuditor of the Company as required under Regulation 13 of SEBI SBEB Regulations andconfirm that the ESOP Scheme-2020 has been implemented in accordance with theseRegulations. The Certificate is available for inspection during the AGM of the Company andalso placed at the website of the Company at: https://sonacomstar.com/investor/annual-reports-and-returns.

20. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013

Pursuant to Section 186 of the Companies Act 2013 disclosures on particulars relatingto loans advances guarantees and investment form part of the Standalone FinancialStatements in the Annual Report.

21. DEPOSITS

During the year under review the Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits)Rules 2014.

22. MATERIAL CHANGES

There have been no material changes and commitments which affect the financial positionof the Company that have occurred between the end of the financial year to which thefinancial statements relate and the date of this report.

23. RELATED PARTY TRANSACTIONS

All transactions with related parties were reviewed and approved by the Audit Committeeand are in accordance with the Policy on Related Party Transactions formulated andadopted by the Company. An omnibus approval from the Audit Committee is obtained for therelated party transactions.

There were no contracts arrangements or transactions entered into during the yearunder review that fall under the scope of Section 188(1) of the Companies Act 2013 excepttransfer of 15 Nos of AC induction motor to Comstar Automotive Technologies PrivateLimited (erswhile wholly-owned subsidiary of the Company) for a consideration ofapproximately INR 308557/- which was not in the ordinary course of business.

As required under the Companies Act 2013 the prescribed Form AOC-2 is appended as Annexure-Gto this Report.

The Board has amended the policy on Related Party Transactions as required under theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which isavailable on the website of the Company at https://sonacomstar.com/policies-and-codes.

The Company in terms of regulation 23 of the Listing Regulations submitted disclosuresof related party transactions on a consolidated basis in the format specified in therelevant accounting standards to the stock exchanges. The said disclosures can be accessedon the website of the Company at https://sonacomstar. com/investor/financial-information.

Related party Transactions are detailed in Note 36 to the Standalone FinancialStatements of the Company.

24. MEETINGS OF THE BOARD

During the year under review nine (9) meetings of the Board were held. The details ofthe meetings of the Board of Directors during the Financial Year 2021-22 are given in theCorporate Governance Report which forms the part of this Report.

The Board met quarterly and the gap intervening between two meetings was within thetime prescribed under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

The details and attendance of meetings of the board its committees and the annualgeneral meeting are mentioned in the Corporate Governance Report which forms part of thisReport.

25. COMMITTEES OF THE BOARD

The Board of Directors of the Company have the following committees:

• Audit Committee;

• Nomination and Remuneration Committee;

• Corporate Social Responsibility Committee;

• Stakeholders Relationship Committee;

• Risk Management Committee;

• Environment Social Governance Committee;

• Capex Committee.

During the year under review the Board of Directors constituted a committee called theEnvironment Social Governance (ESG) Committee to have an oversight over theimplementation of ESG Framework of the Company.

The details with respect to the composition powers roles terms of reference etc. ofthe aforesaid committees are given in details in the Corporate Governance Report whichforms part of this Report.

During the year under review all recommendations made by the committees were acceptedby the Board.

26. DOWNSTREAM INVESTMENT

During the Financial Year 2021-22 the Company has not made any downstream investmentwhich tantamount to indirect foreign investment. Hence the requirement of obtainingcertificate from the statuary auditors under the extant Foreign Exchange Management (Non-debt Instruments) Rules 2019 is not applicable.

27. AUDITORS AND AUDIT REPORT Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Board of Directors haveappointed M/s. PI & Associates Practicing Company Secretaries as SecretarialAuditors to undertake the audit of the secretarial records for the Financial Year 2021-22.

The Secretarial Auditors' Report for the Financial Year 2021- 22 does not contain anyqualification reservation or adverse remark and enclosed as Annexure-D to thisreport.

Further the Board of Directors in their meeting held on Thursday 5^th May2022 re-appointed M/s. PI & Associates Company Secretaries as Secretarial Auditorsto undertake the audit of the secretarial records for the Financial Year 2022- 23.

Statutory Auditors

M/s. Walker Chandiok & Co. Chartered Accountants (FRN No. 001076N) was appointedas statutory auditors for a period of 5 (Five) years in the 21^st annual generalmeeting held on 28^th September 2017 till the conclusion of ensuring 26^thAnnual General Meeting.

M/s. Walker Chandiok & Co. Chartered Accountants (FRN No. 001076N) are eligible tobe re-appointed for another term of 5 (five) years in terms of the provisions of Section139 and 141 of the Act.

Accordingly the Board of Directors of the Company at their meeting held on 9^thJune 2022 on the recommendation of the Audit Committee and subject to the approval ofthe shareholders of the Company in the ensuing AGM have approved the re-appointment ofM/s. Walker Chandiok & Co. LLP Chartered Accountants (Firm Registration No.001076N/N500013) as Statutory Auditors for a second term of 5 consecutive years i.e.from the conclusion of the 26^th AGM till the conclusion of 31^st AGMof the Company.

The Statutory Auditors' Report on standalone and consolidated financials for FinancialYear 2021-22 does not contain any qualification reservation or adverse remark ordisclaimer and the same forms part of this Annual Report.

Cost Auditors

Consequent to the merger of Comstar with the Company the Company is required tomaintain cost records for certain products of Motor business for Financial Year 2022-23as specified by the Central Government under sub- Section (1) of Section 148 of the Act.

The Board of Directors of the Company at its meeting held on Thursday 5^thMay 2022 on the recommendations made by the Audit Committee have appointed M/s. Jayaram& Associates as Cost Auditors of the Company to conduct the audit of cost records ofcertain products for the Financial Year 2022-23.

M/s. Jayaram & Associates being eligible have consented to act as the CostAuditors of the Company for the Financial Year 2022-23.

Internal Auditors

The Board of Directors have in their meeting held on 09^th June 2022appointed M/s. BDO India LLP (Firm Registration No. MCA: AAB-7880) as Internal Auditorsof the Company for the Financial Year 2022-23.

28. INTERNAL CONTROL SYSTEM

The Company has in place internal control system which is commensurate with its sizescale and complexities of its operations M/s. BDO India LLP (Firm Registration No. MCA:AAB-7880) was appointed as Internal Auditor of the Company for the Financial Year2022-23.

The main thrust of internal audit is to test and review controls appraisal of risksand business processes besides benchmarking controls with best practices in the industry.

The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame. The Audit Committee of the Board of Directors are periodically apprised of theinternal audit findings and corrective actions are taken accordingly. Significant auditobservations and corrective actions taken by the management are presented to the AuditCommittee of the Board. For more details refer to the ‘internal control systems andits adequacy' section in Management's Discussion and Analysis Report which forms part ofthis Annual Report.

29. REPORTING OF FRAUD

During the year under review none of auditors have reported any instances of fraudcommitted in the Company by its officers or employees to the Audit Committee underSection 143 (12) of the Companies Act 2013.

30. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The total CSR Obligations of the Company including the CSR obligations of theerstwhile wholly owned subsidiary of the Company; i.e. Comstar Automotive TechnologiesPrivate Limited ("Comstar") which was merged with the Company w.e.fJanuary 28 2022 for the Financial year 2022 was INR 55.10 million. Out of which theCompany had spent INR 40.11 million during the Financial Year ended 31^stMarch 2022 and the remaining unspent amount of INR 15 million for the Financial Year2021-22 which pertains to ongoing projects was transferred to the Unspent CSR Account ofthe Company on 26^th April 2022.

The CSR Committee has been entrusted with the prime responsibility of recommending tothe Board the CSR activities to be undertaken by the Company in terms of CSR Policy theamount of expenditure to be incurred and monitoring the implementation of the framework ofthe CSR Policy.

The Annual Report on CSR activities having a brief overview of the projects undertakenas required under the Companies (Corporate Social Responsibility Policy) Rules 2014 hasbeen annexed as Annexure-E of this Report.

The Board of Directors of the Company amended the CSR Policy of the Company pursuant toamendments in the Companies (Corporate Social Responsibility Policy) Rules 2014 andSection 135 of the Act. The CSR Policy of the Company is available on the website of theCompany at https://sonacomstar.com/investor/corporate-social- responsibilities.

31. AWARDS AND RECOGNITIONS

We are happy to inform that your Company has received the following recognitions/awardsduring the period under review:

32. RISK MANAGEMENT

Pursuant to Section 134(3)(n) of the Companies Act 2013 and Regulation 17(9) of SEBI(LODR) Regulations 2015 the Company has formulated and adopted a Risk Management policy.The primary objectives of the policy include identification and categorisation ofpotential risks their assessment and mitigation and to monitor these risks.

The Board has entrusted the Risk Management Committee (RMC) with overseeing theprocesses of identification evaluation and mitigation of risks. The RMC inter alia periodicallyreviews the organisational risks that are spread across operational financialtechnological and environmental spheres and shall provide guidance to the management team.Further the RMC in its meeting held on 23^rd March 2022 appointed Mr. RohitNanda Chief financial officer of the Company as the Chief Risk Officer of the Company.

Your Company is committed to protect the interests of its customers stakeholdersinvestors shareholders employees and each person or entity with whom it is associated.Towards this goal your Company will further strengthen the internal processes andevaluate even more innovative ways to blunt the risk impact. The details of the RMC alongwith its charter are set out in the Corporate Governance Report forming part of thisReport.

33. VIGIL MECHANISM

Your Company is committed to highest standards of professionalism honesty integritytransparency and ethical behaviour. Pursuant to the provisions of Section 177(9) &(10) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers)Rules 2014 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Board of Directors had approved the Policy on vigil mechanism/whistle blowerwhich provides mechanism to its directors employees and other stakeholders to raiseconcerns about any wrongdoing in the Company and provide for adequate safeguards againstvictimisation of employees and other persons who avail this mechanism.

The mechanism under the policy has been appropriately communicated within theorganisation. The Audit Committee of the Board shall review the functioning andimplementation of the Whistle-blower mechanism on quarterly basis.

During the year under review the Company has not received any complaints under thesaid mechanism. The whistle blower policy of the Company has been displayed on theCompany's website at the link: https://sonacomstar. com/policies-and-codes.

34. ANNUAL RETURN

In accordance with the provisions of Companies Act 2013 the Annual Return of theCompany in the prescribed format is available at: https://sonacomstar.com/investor/annual-reports-and-returns.

35. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company is in compliance with all applicable secretarial standards issued by theInstitute of Company Secretaries of India.

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

No significant and material order has been passed by any regulator or court ortribunal which might impact the going concern status and Company's operations in future.

37. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is provided in the Annexure-Pforming part of this Report.

38. HUMAN RESOURCES

The Company is committed to living the Sona values in the true spirit by integratingthem with the people practices delivering superior quality to our employees customer andshareholders. Our Company considers the employees as its true partner in success.

Our world is in motion fighting climate change at a pace that is gathering speed. TheCompany undertakes various employee engagement Programmes and fosters a culture oflearning and continuous improvement so that we give our customers business partnersemployees executives and shareholders an idea of the path that we want to pursue overthe next few years.

The year under review has been one of the toughest years due to COVID-19 2^ndwave that we have ever faced. Very few events in human history have had such a profoundimpact on the way we operate.

Despite the volatility through the first quarter of Financial Year 2021-22 we showedgreat resilience quickly adapted to the new ways of working and delivered the customerdemands. Our focus remained high on three important areas: Employee Safety & WellnessEffective Communication & Managing teams and staying committed to the customerdemand.

This year we strengthen our focus on Company processes and systems. We inducted brighttalent from Tier - I institutes like BITS Pilani and NIFFT at the entry level inEngineering and Manufacturing. We uplifted the infrastructure and enhanced the employeeexperience by introducing a professionally managed cafeteria service to cater healthy andhygienic food.

To achieve the Company's goals we cascaded organisation goals (Managing Points) toKPIs till the last mile. We initiated the Quality visit to strengthen our processes forcontinuous improvement and for the immediate action plan. We introduced technicalskill-based online training Programmes and Future Skill Prime by covering 36% of thestaff and man-days.

39. POLICY ON PREVENTION OF SEXUAL HARASSMENT OF WORKMEN AT WORKPLACE (PREVENTIONPROHIBITION & REDRESSAL) ACT 2013

As per the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 ("Prevention of Sexual Harassment Act")The Company has formulated a Policy on Prevention of Sexual Harassment at Workplace ("POSH")for prevention prohibition and redressal of sexual harassment at workplace and anInternal Complaints Committees has also been set up to redress any such complaintsreceived.

The Company is committed to providing a safe and conducive work environment to all ofits employees and associates.

The Company periodically conducts sessions for employees across the organisation tobuild awareness about the POSH policy and to sensitise the employees of the existing POSHframework.

During the year under review no complaints have been received by the Company under thePOSH.

40. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

In terms of the provision of regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company voluntary submit the Business Responsibility& Sustainability Report ("BRSR") for the Financial Year 2021-22 inplace of the Business Responsibility Report. The BRSR is attached to this report as Annexure-K.

41. CAUTIONARY STATEMENT

The Annual Report including those which relate to the Directors' Report ManagementDiscussion and Analysis Report may contain certain statements on the Company's intentexpectations or forecasts that appear to be forwardlooking within the meaning ofapplicable securities laws and regulations while actual outcomes may differ materiallyfrom what is expressed herein. The Company bears no obligations to update any such forwardlooking statement. Some of the factors that could affect the Company's performance couldbe the demand and supply for Company's product and services changes in Governmentregulations tax laws forex volatility etc.

42. ACKNOWLEDGEMENT

The Board of Directors acknowledges and places on record their sincere appreciation toall stakeholders customers vendors banks Central and State Governments and all otherbusiness partners for their continued co-operation and for the excellent support receivedfrom them.

The Board also wishes to place on record its appreciation to the esteemed investors forshowing their confidence and faith in the management of the Company.

Your Directors recognise and appreciate the efforts and hard work of all the employeesof the Company and their continued contribution to promote its development.