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Ucal Fuel Systems Ltd.

BSE: 500464 Sector: Auto
NSE: UCALFUEL ISIN Code: INE139B01016
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OPEN 112.00
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VOLUME 1936
52-Week high 149.40
52-Week low 102.40
P/E 16.54
Mkt Cap.(Rs cr) 245
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 112.00
CLOSE 111.55
VOLUME 1936
52-Week high 149.40
52-Week low 102.40
P/E 16.54
Mkt Cap.(Rs cr) 245
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ucal Fuel Systems Ltd. (UCALFUEL) - Director Report

Company director report

To the Members

The Directors present this 36th Annual Report along with the auditedfinancial statements of the Company for the financial year ended 31st March 2022.

1. FINANCIAL RESULTS

The Comparitive results of Audited Standalone and ConsolidatedFinancial Statements for the financial year ended 31st March 2022 and 31st March 2021 areas follows:

(Rs In Lakhs)

Standalone Consolidated
Particulars Financial Year 31.03.2022 Financial Year 31.03.2021 Financial Year 31.03.2022 Financial Year 31.03.2021
Revenue from operations 54393.51 49263.43 78229.95 68672.52
Total Expenditure 49792.86 43874.13 70953.54 62021.16
Operating Income 4600.66 5389.30 7276.41 6651.36
Other Income 384.74 466.22 3065.30 1287.57
Profit before Interest Depreciation Tax and Exceptional items 4985.40 5855.52 10341.71 7938.93
Interest 1927.90 2356.18 2310.01 2794.42
Depreciation 221237 2108.15 4128.82 4045.05
Profit before Tax & Exceptional items 845.12 1391.20 3902.88 1099.46
Exceptional items - - - -
Profit/(Loss) before Tax 845.12 1391.20 3902.88 1099.46
Tax Expense/(credit) 51.62 (2141.72) 414.26 (1786.49)
Profit/(Loss) after Tax 793.50 3532.92 3488.62 2885.95
Balance of profit brought forward from last year 13870.18 10264.97 14725.76 11764.01
Amount Available for appropriation 14663.68 13797.89 18214.38 14649.96
Appropriations
Transfer to general reserves - - - -
Dividend paid during the year 442.27 - 442.27 -
Tax on dividend - - -
Other comprehensive Income/ (loss) (34.82) 72.29 5.93 75.80
Balance Profit Carried to balance sheet 14186.59 13870.18 17778.04 14725.76

2. COMPANY?S PERFORMANCE

During the year your Company's total standalone revenue was Rs54393.51 Lakhs as against Rs 49263.43 Lakhs in FY 2020-21 representing an increase of10.41% over that of the previous year due to increase in the customer requirements. Theconsolidated revenue of the Company has also witnessed increase from Rs 68672.52 Lakhs inFY 2020-21 to Rs 78229.95 Lakhs registering a growth of 13.92%. The PBDIT has decreasedfrom Rs 5855.52 Lakhs (FY 2020-2021) to Rs 4985.40 Lakhs (FY 2021-2022) due to overallincrease in the total expenditure of the Company. The Company has netted a Profit AfterTax (PAT) of Rs 793.50 Lakhs contributing 1.46% of the turnover of FY 2021-22. TheConsolidated net profit during the year was Rs 3488.62 Lakhs in comparison with previousyear which stood at Rs 2885.95 Lakhs resulting in an increase of 21%.

Impact of Covid-19 on Business Operations

The Covid-19 pandemic which had caused severe disruptions to thevarious sectors of the economy during the financial year 2020-21 had its traces of impactin the first two quarters of the financial year 2021-22. Though the vaccination drive hasto some extent controlled the casualties the pandemic has been continuously posing myriadchallenges upon the world economies. Your Company has taken top priority to ensure thesafety and health of its employees and has relentlessly provided support and continuedfocus on running operations safely and efficiently to the best of the abilities andensured continued support and minimum impact to the customers.

The second wave of Covid-19 which led to state induced lockdowns in May2021 has brought several changes in the market conditions where the raw material pricessoared across all segments leading to increase in input costs to the Company coupled withrecord high retail fuel prices globally. Despite the decline in the automobile industrydue to Covid-19 pandemic your Company's sales have increased by 10.41% against thedeclining market in FY 2021-22.

3. DIVIDEND

The Board has out of the profits available for appropriationrecommended a dividend of Rs 2/- per equity share for the financial year 2021-22 on22113625 equity shares of face value of Rs 10 each for the approval of the shareholdersat the ensuing Annual General Meeting. The total dividend amount would be Rs 442.27 lakhs.The dividend if approved by the shareholders will be paid on or before 27th September2022 to all the eligible shareholders whose names appear in the register of members of theCompany as on 22nd August 2022 being the record date fixed for this purpose subject todeduction of tax at source where applicable.

4. TRANSFER TO GENERAL RESERVE

The Company retained the entire surplus in the Profit and Loss accountand hence there has been no transfer to the general reserve of the Company for thefinancial year 2021-2022.

5. SHARE CAPITAL

The paid-up equity share capital of the Company as on 31st March 2022stood at Rs 221136250 consisting of 22113625 equity shares having face value of Rs10/- each fully paid up. There has been no change in capital structure of the Company.

6. MANAGEMENT DISCUSSION AND ANALYSIS

The main business of the Company is manufacturing automotiveequipments/parts and pumps emission control parts and various components for both ferrousand non-ferrous material and offers comprehensive Fuel Management Systems for AutomotiveSector. A detailed analysis on the performance of the automotive industry Companies'performance internal control systems risk management are presented in the ManagementDiscussion and Analysis Report forming part of this report and provided in Annexure I.

7. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

The Company has two wholly-owned subsidiaries as on 31st March 2022.There has been no material change in the nature of the business of the Subsidiaries.Pursuant to Section 129 (3) of the Companies Act 2013 a statement containing the salientfeatures of financial statements of the Company's subsidiaries viz. Ucal PolymerIndustries Limited (UPIL) and Ucal Holdings Inc. (UHI) in Form AOC-1 is attached to thefinancial statements of the Company and is given in Annexure-II.

In terms of section 136 of the Companies Act 2013 the Company has notattached the financial statements of the subsidiary companies. However the financialinformation of the subsidiary companies is disclosed in the annual report as ConsolidatedFinancial Statements in accordance with the applicable Accounting Standards (Ind AS). Theannual accounts reports and other documents of the subsidiary companies will be availablefor inspection during business hours by any shareholder of the Company at the registeredoffice of the Company and has placed separate audited financial statements of each of itssubsidiary on its website www.ucalfuel.com. The Company shall also provide a copyof the audited financial statement in respect of each of its subsidiary companies uponrequest by any of its shareholders.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The composition of the Board of Directors and its Committees viz.Audit Committee Nomination and Remuneration Committee Stakeholders RelationshipCommittee and Corporate Social Responsibility Committee were constituted in accordancewith Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (SEBI LODR) wherever applicable. The Corporate Governance Reportannexed to this report contains an overview of the role terms of reference meetings andcomposition of the Board of Directors of the Company and its Committees.

During the year under review the following were the changes in thecomposition of Board of Directors.

• Mr.S. Natarajan (DIN: 0155988) Non-Executive IndependentDirector resigned from the Board with effect from 19th July 2021. He also ceased to beChairman of Audit Committee Nomination

and Remuneration Committee effective from the said date. The Boardplaced on record its appreciation for the valuable guidance rendered by him during histenure as Director of the Company.

• Mr. I.V. Rao (DIN: 00329370) was appointed as an AdditionalNon-Executive Independent Director by the Board of Directors in their meeting held on 13thAugust 2021. Subsequently the Shareholders at the 35th Annual General Meeting approved theappointment of Mr. I.V.Rao as an Independent Director for a period of three years witheffect 13th August 2021 to 12th August 2024. He was also appointed as Chairman/Member ofNomination and Remuneration Committee and member of the Audit Committee with effect from13th August 2021.

• Ms. Rekha Raghunathan (DIN: 00057774) resigned from the Boardwith effect from 8th February 2022. The Board placed on record its appreciation for thevaluable guidance rendered by her during her tenure as Director of the Company.

• Mr. Ram Ramamurthy (DIN: 06955444) Wholetime Director retiresby rotation and being eligible offers himself for re-appointment in this 36th AnnualGeneral Meeting of the Company.

• Mr. Ram Ramamurthy (DIN: 06955444)

completes his term as Whole-time Director by 3rd September 2022 andconsidering his experience and knowledge the Board of Directors are of opinion that there-appointment of Mr. Ram Ramamurthy as Whole-time Director will be in the best interestsof the Company and justifiable under Section 196 (3) (a) of the Companies Act 2013 andhas accordingly recommended his reappointment as Wholetime Director for a further periodof two years from 4th September 2022 to 3rd September 2024 on a remuneration as detailedin the Notice convening this 36th Annual General Meeting.

• Mr.Abhaya Shankar (DIN: 00008378) is appointed as AdditionalNon-Executive and Non-Independent Director in the Board meeting held on 25th July 2022subject to the appointment being approved by the shareholders at the ensuing 36th Annual

General Meeting. The Board recommends his appointment as Non-ExecutiveDirector for a term of three years commencing from 25th July 2022 and appropriateresolution for his appointment has been set out in detail in the Notice convening theensuing 36th Annual General Meeting.

• Ms. Lakshminarayan Priyadarshini

(DIN:06592671) completes her first term as Independent Director by 6thDecember 2022 and is eligible for re-appointment for second and final term of next fiveyears. Based on her skills experience knowledge and performance evaluation andrecommendation of the Nomination and Remuneration Committee the Board of Directors at itsmeeting held on July 25 2022 has proposed the re-appointment of Ms. LakshminarayananPriyadarshini (DIN:06592671) for the approval of the shareholders in this 36th AnnualGeneral Meeting as an Independent Director for a second and final term of five years fromthe conclusion of this 36th Annual General Meeting up to the conclusion of 41st AnnualGeneral Meeting to be held in the year 2027. The Company has received requisiteconsent/declarations for re-appointment of Ms. Lakshminarayanan Priyadarshini(DIN:06592671) as an Independent Director as required under the Companies Act2013 andrules made thereunder.

• During the year Mr.S. Narayan was appointed as Company Secretarywith effect from 16th November 2022 in the place of Ms.Rekha Raghunathan who has resignedas the Company Secretary. Mr. S. Narayan hold the office of Key Managerial Personnel (KMP)within the meaning of Section 2(51) of the Companies Act 2013.

• Mr. Jayakar Krishnamurthy Managing Director Mr. RamRamamurthy Whole-time Director Mr. Syed Abdul Hadi Chief Executive Officer Mr.Ramanathan Chief Financial Officer and Mr. S. Narayan Company Secretary hold the officeof Key Managerial Personnel of the Company as on 31st March 2022. The Information requiredpursuant to Section 197 of the Companies Act 2013 read with Rule 5 of the Companies(Appointment & Remuneration

of Managerial Personnel) Rules 2014 in respect of directors keymanagerial personnel and employees are given in Annexure-III to this report. Theinformation as per Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report.

Brief resume/details of Directors who are to be appointed/re-appointedas mentioned herein has been furnished in Annexure-A along with the explanatory statementin the Notice convening the ensuing 36th Annual General Meeting of the Company.

The Director(s) who are proposed for appointment/ re-appointment at theensuing 36th Annual General Meeting of the Company in Boards' opinion they possessintegrity necessary expertise relevant experience and proficiency. The CorporateGovernance Report annexed to this report contains necessary disclosures regarding theDirector(s) and the terms and conditions of appointment of Independent Directors have beendisclosed on the website of the Company at http://www.ucalfuel.com/UCAL-ID-appointment-letter.pdf.

All the Directors have affirmed compliance with the Code of Conduct ofthe Company. The Company has received the necessary declarations from each IndependentDirector in accordance with Section 149(7) of the Companies Act 2013 confirming thathe/she meets the criteria of independence as laid out in Section 149(6) of the CompaniesAct 2013 and in accordance with Regulations 16(1) (b) and 25(8) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and there has been no change inthe circumstances affecting their status as Independent Directors of the Company.

The Board of Directors at its first meeting of the financial year2021-22 has taken on record the declarations and confirmations submitted by theIndependent Directors and other Directors in terms of Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The Company has alsoobtained a certificate from the Practicing Company Secretary that none of the Directors onthe Board of the Company has been debarred or disqualified from being appointed orcontinuing as Directors of companies by the SEBI/ Ministry of Corporate Affairs or anysuch statutory authority. There are no Alternate Directors being appointed on the Board ofthe Company.

9. NUMBER OF BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year under review Five (5) Board Meetings were convened andheld the details of which are given in the Corporate Governance Report. The interveninggap between the meetings of the Board of Directors was within the time period prescribedunder the Companies Act 2013.

10. BOARD COMMITTEES

The primary committees of the Board are Audit Committee Nomination andRemuneration Committee Stakeholders' Relationship Committee and Corporate SocialResponsibility Committee. A detailed note on the committees along with the details oftheir meetings held during the year is provided under the Corporate Governance Reportforming part of this Board's Report.

11. DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOTACCEPTED BY THE BOARD ALONG WITH REASONS.

The Audit Committee generally makes certain recommendations to theBoard of Directors of the Company during their meetings held to consider any financialresults (Unaudited and Audited) and such other matters placed before the Audit Committeeas per the Companies Act 2013 and the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 from time to time. During theyear the Board of Directors has considered all the recommendations made by the AuditCommittee and has accepted and carried out all the recommendations suggested by theCommittee to its satisfaction. Hence there are no recommendations unaccepted by the Boardof Directors of the Company during the year under review.

12. DETAILS OF POLICIES DEVELOPED BY THE COMPANY

12.1 Nomination and Remuneration policy

The Company has formulated a Nomination and Remuneration Policy incompliance with Section 178 of the Companies Act 2013 read along with the applicableRules thereto and Part D of Schedule II of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as amended from time to time.This policy is being governed by the Nomination and Remuneration Committee and the policylays down the standards to be followed by the Nomination and Remuneration Committee forappointment remuneration and evaluation of the Directors Key Managerial Personnel andSenior Management of the Company.

The key objectives of the Policy are:

a. To formulate the criteria for determining qualificationscompetencies positive attributes and independence for appointment of a Director(Executive / NonExecutive) and recommend to the Board of Directors of the Company (the"Board") policies relating to the remuneration of the Directors Key ManagerialPersonnel and other employees.

b. To formulate criteria for evaluation of the members of the Board andprovide necessary report to the Board for further evaluation of the Board.

c. To provide to Key Managerial Personnel and Senior Management rewardlinked directly to their effort performance dedication and achievement relating to theCompany's operations.

d. To retain motivate and promote talent and to ensure long termsustainability of talented managerial persons and create competitive advantage.

The remuneration policy is designed keeping in mind various factorslike financial position of the Company trend in the industry qualification andexperience of the appointee past performance and past remuneration of the appointee. Theremuneration relating to certain senior management positions and chief executive officerhas a fixed and variable component which is based on achieving certain fixed targetsthereby aligning the vision and goals of the organisation to the compensation. Thephilosophy behind the remuneration policy is to attract and retain talented individualsand develop and motivate them to achieve the goals of the organisation. The remunerationto the Chairman and Managing Director and Whole-time Director shall be in accordance tothe limits / percentage / conditions laid down in the Companies Act 2013. The remunerationto other employees will be such that it ensures a direct relationship to theirperformance. The remuneration policy is disclosed in the website of the Company at http://www.ucalfuel.com/UCAL-Nomination-remuneration-Policy. pdf. The Salient features of theNomination and Remuneration Policy is annexed herewith marked as Annexure IV andforms part of this report

12.2 Corporate Social Responsibility (CSR) policy

Your Company recognizes that its business activities have wide impacton the societies in which it operates and therefore an effective practice is requiredgiving due consideration to the interests of its stakeholders including shareholderscustomers employees suppliers business partners local communities and otherorganizations. Your Company endeavours to make CSR an important agenda and is committed toits stakeholders to conduct its business in an accountable manner that creates a sustainedpositive impact on society.

Your Company satisfying the threshold as stipulated under Section 135of the Companies Act 2013 has established the CSR Committee comprising of members of theBoard and the Chairman of the Committee is an Independent Director. The said Committee hasformulated and approved the CSR policy as per the approach and direction given by theBoard pursuant to the recommendations made by the Committee.

The CSR Policy of the Company focuses on constitution of CSR Committeeroles and responsibilities of CSR Committee CSR activities to be undertaken andallocation of funds for carrying out such CSR activities Implementation and monitoringthe execution of CSR activities for the Company. The Policy applies to all CSRprojects/programmes undertaken by the Company in India as per Schedule VII of theCompanies Act 2013.

The Annual Report on CSR activities as required under the provisions ofthe Companies Act 2013 is annexed herewith marked as Annexure-V and forms part ofthis report.

12.3 WHISTLE BLOWER POLICY

The Company is committed to adhere to the highest standards of ethicalmoral and legal conduct of business operations. To maintain these standards the Companyencourages its employees who have concerns about suspected misconduct to come forward andexpress these concerns without fear of punishment or unfair treatment. A Vigil(Whistle-Blower) mechanism provides a channel to the Employees and Directors to report tothe Management concerns about unethical behaviour actual or suspected fraud or violationof the Code of Conduct or Policy. The mechanism provides for adequate safeguards againstvictimisation of employees and directors to avail of the mechanism and also provide fordirect access to the Chairman of the Board/Chairman of the Audit Committee in exceptionalcases.

With a view to establish a mechanism for protecting employees reportingunethical behaviour frauds or violation of the Company's Code of Conduct misuse orabuse of authority fraud or suspected fraud violation of Company rules manipulationsnegligence causing danger to public health and safety misappropriation of monies etc.the Board has adopted a Whistle Blower Policy. The Policy also provides for access to theChairman of the Audit Committee and no person has been denied access to the AuditCommittee. The details are explained in the Corporate Governance Report and are alsoposted on the Company's website at http://www.ucalfuel.com/UCAL-Whistle-Blower-Policy.pdf.

12.4 RISK MANAGEMENT POLICY:

The Company has adopted an all-pervasive Risk Management Policy toensure that effective risk management is in place to address the overall business risksand concerns. The Company has a risk management mechanism in place to manage uncertaintiesthrough risk identification assessment of risk on the scale of probability and severityrisk management framework risk matrix risk score the format of reporting of risk areasand mitigation plan to overcome the risks circulated to all the department heads.

The risk assessment report finalized with various departmentshighlighting their potential risk areas has been further reviewed by the Risk ManagementCommittee at its meeting held on 1st February 2022 wherein the said Committee perused therisk reports and held detailed discussion and suggested measures for risk mitigationincluding systems and process for internal control of identified risks. The RiskManagement Policy is disclosed in the website of the Company http://www.ucalfuel.com/UCAL-Risk-Management-Policy.pdf.

12.5 SEXUAL HARASSMENT POLICY:

The Company has in place a policy for prevention of sexual harassmentin line with the requirements of The Sexual Harassment of Women at the Workplace(Prevention Prohibition & Redressal) Act 2013. An internal committee has been set upat each plant to redress sexual harassment complaints. All employees (permanentcontractual temporary trainees) are covered under this policy. No complaint was receivedduring the financial year 2021-2022. The Sexual Harassment policy is disclosed in thewebsite of the Company at http://www.ucalfuel.com/UCAL-SEXUAL- HARASSMENT-POLICY.pdf.

12.6 PREVENTION OF INSIDER TRADING

The Company has framed a code of conduct for prevention of insidertrading based on Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015. This code is applicable to all the Board members/ employees/officers/designated persons of the Company. The code requires pre-clearance for dealing in theCompany's shares and prohibits the purchase or sale of Company shares by the Directors andthe Designated Persons while in possession of unpublished price sensitive information inrelation to the Company and during the period when the trading window is closed. The codeof conduct for prevention of insider trading is disclosed in the website of the Company http://www.ucalfuel.com/UCAL-Insider-trading-code.pdf.

13. MEETING OF INDEPENDENT DIRECTORS

In terms of Regulation 25(3) SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and as stipulated in the code for Independent Directorsunder Schedule IV of the Companies Act 2013 a separate meeting of Independent Directorswas held on 11th February 2022 to review the performance of non-independent directorsincluding Chairman and Managing Director and the Board as a whole. The IndependentDirectors also in the said meeting assessed and reviewed the quality quantity andtimeliness of the flow of information between the Management and the Board and itscommittees which is essential for effective discharge of their duties. All the IndependentDirectors attended the meeting.

14. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

Every Independent Director is briefed about the history of the Companyits policies customers technological developments Company's strategy operationsproduct offerings organisation structure human resources technologies facilities andrisk management. Factory visits are also arranged for the Directors who wish tofamiliarize themselves with the manufacturing processes and operations of the Company. TheIndependent Directors are briefed on their role responsibilities duties and are keptupdated on the various regulatory and legislative changes that may occur from time to timeaffecting the operations of the Company. The Independent Directors are also briefed on thevarious policies of the Company like the code of conduct for directors and seniormanagement personnel policy on related party transactions policy on materialsubsidiaries whistle blower policy and CSR policy. The familiarization programme for theindependent directors is disclosed in the website of the Company at http://www.ucalfuel.com/UCALFamiliarization Programme.pdf.

15. BOARD EVALUATION

An annual evaluation of the performance of the individual Executive andNon-Executive Directors Board as a whole functioning of its committees and the Chairmanof the Board was carried out based on the criteria set by the Nomination and RemunerationCommittee. A structured questionnaire was sent to all the Directors seeking qualitativeinputs and detailed comments on various parameters as recommended by the Nomination andRemuneration Committee. The methodology adopted by each Director who responded to thesurvey has graded their peers against each survey item from 1 to 3 with 1 marking theyagree to the evaluation parameters set out and 2 marking they disagree to the evaluationparameters set out and 3 marking no opinion to the evaluation parameters set out. Thegrading done on the basis of a 3-points scale revealed more realistic data on measuringthe effectiveness of the Board dynamics Director's individual performance andcontribution flow of information decision making of Directors and performance of Boardand Committee as a whole.

Board Diversity and skill set to review strategies risk managementdimensions and processes flow of information adequacy and timeliness of agendamaterials effectiveness of presentations and more importantly the processes of reviewingstrategic matters annual operating plan and strategic business plans were the key focusareas for evaluation of the Board and its Committee functioning.

I n terms of Section 134(3)(p) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board taking intoconsideration the positive feedback on the Board Evaluation Process Document from all theDirectors expressed their satisfaction on evaluation of the performance of each Directorwidely on the parameters in terms of their participation in the Board Meetings timelyguidance provided by them to the Management criteria of independence met by themeffective deployment of their Knowledge and expertise prudent business practices adoptedby them towards governance of the operations of the Company adherence to the higheststandards of integrity and business ethics exercising their responsibilities in abonafide manner in the best interest of the Company and not allowing any extraneousconsideration that shall impede their decision making authority in the best interest ofthe Company. During the evaluation process the Director who is being evaluated did notparticipate.

The Board also expressed their satisfaction on the evaluation of thefunctioning of the Board and Committee as a whole on the basis of proper combination ofDirectors having specialized knowledge expertise and high caliber in driving the growthand business of the Company high degree of professionalism maintained in conducting theBoard and Committee process presence of gender diversity and transparency while dealingwith strategic matters and openness of the Board to accept suggestions from any member ofthe Board.

16. AUDIT COMMITTEE AND AUDITORS

16.1 AUDIT COMMITTEE

The audit committee conforms to the requirements of Section 177 of theCompanies Act 2013 and Regulation 18 of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015. The members of theAudit Committee as on date of this report are Mr.S.Balasubramanian Independent DirectorMs.Lakshminarayanan Priyadarshini Independent Director Mr.IV.Rao Independent Directorand Mr. Jayakar Krishnamurthy Managing Director. Mr. S. Balasubramanian is the Chairmanof the Audit committee. The committee met five times during the year. Detailed disclosureon the terms of reference and meetings are provided under the Corporate Governance Reportforming part of this Board's Report.

16.2 STATUTORY AUDITORS

M/s R. Subramanian and Company LLP Chartered Accountants Chennai(Registration Number: 004137S/S200041) were appointed as statutory auditors of the Companyas per the members' approval accorded in their 31st Annual General Meeting (AGM) held on28th September 2017 to hold office till the conclusion of the 36th Annual General Meetingof the Company.

Based on the recommendations of the Audit Committee the Board ofDirectors now recommend their re-appointment as Statutory Auditors of the Company for asecond term of five consecutive years commencing from 36th Annual General Meeting and tohold office upto the conclusion of the 41st Annual General Meeting of the Company to beheld in the calendar year 2027. Their re-appointment is subject to approval of theshareholders of the Company at the ensuing 36th Annual General Meeting of the Company.

M/s. R.Subramanian and Company LLP Chartered Accountants haveconfirmed that they are eligible for the proposed reappointment under the Companies Act2013 the Chartered Accountants Act 1949 and the rules or regulations made thereunderthey have given their consent for their re-appointment as Statutory Auditors of theCompany and has issued certificate confirming that their reappointment if made will bewithin the limits prescribed under the provisions of Section 139 of the Companies Act2013 ('the Act') and the rules made thereunder.

The notice convening the ensuing 36th Annual General Meeting includesthe proposal for re-appointment of M/s. R.Subramanian and Company LLP CharteredAccountants as statutory auditors.

The emphasis of matter specified in the Independent auditor's report onthe Standalone Financial Statements has been explained in Note No.39 of the notes toaccounts.

The Notes on financial statement referred to in the Auditors' Reportare self-explanatory and do not call for any further comments. The Auditors' Report doesnot contain any qualification reservation adverse remark or disclaimer and no fraud havebeen reported by the auditors under Section 143 (12) of the Companies Act 2013 requiringdisclosure in the Board's report.

16.3 SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany at the Board Meeting held on 11th November 2021 had appointed M/s. P.Muthukumaran& Associates a firm of Practising Company Secretaries as secretarial auditor of theCompany to undertake secretarial audit of the Company for the financial year 2021-2022.The report of the secretarial auditor is given in Annexure-VI and forms part ofthis report.

Observation in Secretarial Audit Report

The listed entity falls under top 2000 listed entities based on marketcapitalization during the period. Hence the Board shall comprise of not less than sixdirectors as stipulated under Regulation 17 (1) (c). The Composition of the Board ofDirectors as stipulated under above said regulation is not met for the period fromFebruary 08 2022.

Management's response

On 8th February 2022 Ms. Rekha Raghunathan Director resigned from theBoard and as a consequence there arise a shortfall in the Board Composition as the Boardstrength reduced to Five Directors. The Company took immediate steps towards identifying anew Director on the Board and though it had shortlisted and conducted discussions withprospective candidates it could not onboard before the end of the financial year 31stMarch 2022. However the Board has appointed a new director Mr. Abhaya Shankar as anAdditional Non-Executive Director with effect from 25th July 2022 and with the saidappointment the shortfall in the composition of the Board have been set right. It is alsopertinent to mention that there was no shortfall in the minimum strength of theIndependent Directors and the composition of the Board Committees as of 31st March 2022did not get affected with the resignation of Ms. Rekha Raghunathan.

16.4 INTERNAL AUDITORS

M/s. P. Chandrasekar LLP Chartered Accountants continue as internalauditors of the Company. Their scope of work is periodically reviewed and updated by theaudit committee. It includes among other things a review of the operational efficiencyeffectiveness of systems and controls in existence review of the processes to safeguardthe assets of the Company and assessing the strength of the internal control in all areas.The internal auditor's report is discussed with the concerned stakeholders and correctiveremedial action is taken on a regular basis in consultation with the audit committee. Theinternal auditors were present at the audit committee meetings as and when required.

16.5 COST AUDITOR

Pursuant to the provisions of clause (g) of sub-section (3) of Section141 and sub section (3) of Section 148 of the Companies Act 2013 read with Companies(Cost Records and Audit) Rules 2014 as amended the Board of Directors in their meetingheld on 25th July 2022 have appointed Mr.LThriyambak Cost Accountant (Membership No.40720) as Cost Auditor for the financial year 20222023 at Rs 200000 per annum (RupeesTwo lakhs only) subject to the remuneration being ratified by the shareholders at theensuing Annual General Meeting to conduct the audit of the cost accounting recordsmaintained by the Company relating to those products as mandated by the Companies Act2013 and The Companies (Cost records and audit) Rules 2014 as amended. The Company hasreceived consent from Mr.L.Thriyambak for appointment as Cost Auditor for the financialyears 20222023.

The Audit Committee had recommended his appointment and remunerationsubject to the compliance of all the requirements as stipulated under the Act andcirculars issued thereunder. As specified by the Central Government under Section 148(1)of the Companies Act 2013 the cost records are required to be maintained by the Companyand accordingly such accounts and records are made and maintained.

17. DIRECTORS? RESPONSIBILITY STATEMENT

In terms of Section 134(3)(c) read with Section 134(5) of the CompaniesAct 2013 the Directors to the best of their knowledge and belief and according toinformation and explanation obtained by them confirm that

a) i n the preparation of the annual accounts the applicableaccounting standards have been followed and there are no material departures;

b) they have selected such accounting policies and applied consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year 31stMarch 2022 and of the profit and loss of the Company for the year ended 31st March 2022.

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

d) they have prepared the annual accounts on a "goingconcern" basis.

e) they have laid down proper internal financial controls to befollowed by the Company and such internal financial controls are adequate and areoperating effectively.

f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and are operatingefficiently.

18. THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THEINSOLVENCY AND BANKRUPTCY CODE 2016 DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE ENDOF THE FINANCIAL YEAR.

There are no proceedings pending under the Insolvency and BankruptcyCode 2016 during the year under review.

19. THE DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF THE VALUATION DONEAT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKSOR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.

During the year under review the Company has not carried out anyone-time settlement with the Bank or Financial Institutions in respect of any loansavailed from them.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company's CSR activities are in the field of education sportshealth sanitation and preservation of culture and heritage. As per Section 135 of theCompanies Act 2013 the CSR Policy was formulated by the CSR Committee and thereafterapproved by the Board. The CSR policy is displayed on the website of the Company http://www.ucalfuel.com/UCAL-CSR-Policy.pdf. Mr.S.Balasubramanian is the Chairman of the Committee and Mr.Ram Ramamurthy and Mr. Jayakar Krishnamurthy are the other members of the Committee. Forthe financial year 2021-22 the report on corporate social responsibility is given as Annexure-Vand forms part of the Board's Report.

21. PUBLIC DEPOSITS

During the financial year 2021-22 the Company has not accepted anydeposits from the public within the meaning of Section 73 of the Companies Act 2013 readwith Companies (Acceptance of Deposits) Rules 2014 and there is no outstanding amount onaccount of principal or interest on deposits from public as on date.

22. ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3) (a) of the Act theAnnual Return as on March 31

2022 is available on the Company's website at www.ucalfuel.com.

23. TRANSFER OF UNCLAIMED DIVIDEND AND SHARES TO THE INVESTOR EDUCATIONAND PROTECTION FUND (EPF)

The details pertaining to the transfer of unclaimed dividend and sharesto the Investor Education and Protection Fund during the reporting period are disclosed inthe Corporate Governance report annexed to this report.

24. INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has an efficient internal control system commensurate withits size and nature of business to safeguard the assets of the Company and to ensureeffective utilisation of resources. These controls ensure that transactions are completedon time and in an accurate manner and by following proper procedures and systems. TheCompany has external teams carrying out audit to strengthen the internal audit and riskmanagement functions. The internal auditors cover a wide area of operations and this isbeing continuously reviewed by the Audit Committee. Internal audit is conducted on aquarterly basis by a team of internal auditors and the reports together with the actiontaken reports are reviewed by the Audit Committee periodically. The Board and AuditCommittee ensure that the internal financial control system operates effectively and theyregularly review the effectiveness of internal control system in order to ensure due andproper implementation and due compliance with applicable laws accounting standards andregulatory norms. A system of management controls is also in place to ensure higher levelsof efficiency and to keep the organisation competitive. All the critical functions of theCompany i.e. Sourcing and Procurement Manufacturing Costing Finance Dispatch andSales are handled through Oracle fusion system which is well-integrated. Checks andcontrols have been built into the system to handle the transactions. Existing internalcontrols provide adequate assurance to the management for all the transactions coveringoperations inventory fixed assets financial records and compliance to statutoryrequirements. The systems and controls are reviewed periodically to ensure theireffectiveness. The Board has adopted various policies like Material Subsidiary PolicyWhistle Blower Policy and Related Party Transactions Policy to safeguard the assets of theCompany to

ensure timely information and to prevent and detect frauds and errors.

25. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

Information required under Section 134(3)(m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 on energy conservationtechnology absorption foreign exchange earnings and outgo is given in Annexure VII.

26. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186OF THE COMPANIES ACT 2013

Particulars of loans and advances given guarantees given securitiesprovided and investments made are provided in the Note No. 3411 and 47 of the notes toaccounts of the Standalone Financial Statements.

27. CLOSURE OF OPERATIONS OF PUDUCHERRY PLANT II OF THE COMPANY

Your Board of Directors after carefully considering various factorswith respect to continuing operations at Plant II location inter-alia the out-dation ofproducts resulting out of transition of BS IV to BS VI norms lack of business prospectsintense competition lack of orders from customers transition from BS VI to ElectricVehicle leaving no marketability of products severe impact on the production in Plant IIsubsequent to lock out and lock down situations faced earlier at Plant II felt thatcontinuing the operations of Puducherry Plant II will only lead to the burden of excessivecost of production resulting in financial loss and thus becoming a drain on the resourcesof the Company. For the reasons mentioned above continuing the manufacturing operationsat Plant II at Puducherry found to be extremely difficult the Board of Directors tookdecision to close down the Plant situated at A-98-A100-A107 PIPDIC Industrial EstateMettupalayam Puducherry - 605 009 with effect from 12th March 2022 and intimated theStock Exchanges on 10th January 2022 regarding the closure of the Puducherry Plant IIeffective from 12th March 2022.

28. MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments which affect thefinancial position of the Company which have occurred between the end of the financialyear i.e. 31.03.2022 to which the financial statements relate until the date of thisreport.

29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Company has framed a Related Party Transaction Policy in compliancewith Section 177 of the Companies Act 2013 and Regulation 23 of SEBI (Listing Obligationand Disclosure Requirements) Regulations 2015 in order to ensure proper reporting andapproval of transactions with related parties. The Policy is available on the website ofthe Company http://www.ucalfuel.com/UCAL-Related- Party-Transactions-Policy.pdf.

The material transactions entered by the Company with any related partyduring the financial year 20212022 did not have any potential conflict with the interestof Company at large as per Section 188 of Companies Act 2013. All transactions enteredinto with related parties were at an arm's length basis and in the ordinary course ofbusiness. Form AOC-2 as required under Section 134(3)(h) of the Companies Act 2013 readwith Rule 8(2) of the Companies (Accounts) Rules 2014 is given in Annexure-VIII andforms part of this report. The Company's related party transactions have been entered intofor meeting the requirements of operations and at an arm's length basis and in theordinary course of business.

30. CHANGE IN NATURE OF BUSINESS

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

31. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTSOR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY

During the year 2021-2022 no significant and material orders werepassed by the courts regulators or tribunals affecting the going concern status of theCompany and its future operations.

32. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY?SSUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

No Company has become or ceased to be the Company's subsidiary jointventure or associate Company during the financial year 2021-2022.

33. INDUSTRIAL RELATIONS / MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Company's Human Resource function is aligned with the Company's overallgrowth vision and continuously works on areas such as recruitment and selection policiesdisciplinary procedures reward/ recognition policies learning and development programmesas well as all-round employee development. The Company provides a safe and rewardingenvironment that attracts and retains a talented team and where employees are engaged indelivering exceptional results to the customers and investors. The Company acknowledgesthe indispensable role of all employees in driving continued success.

During the year cordial and healthy relations were maintained with allsections/levels of employees.

34. CORPORATE GOVERNANCE

The Company adheres to all the requirements of the code of corporategovernance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. A report on corporate governance along with certification of the ChiefExecutive Officer and Chief Financial Officer is attached in Annexure-IX. Certificatefrom M/s. P.Muthukumaran & Associates a firm of Practising Company Secretariesregarding compliance of the conditions of corporate governance as stipulated by SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is given in Annexure-X.

35. BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report as applicable to the Company interms of Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 for the financial year 2021-22 is provided in Annexure-XI to thisreport. The Company practices various business responsibility initiatives as per theframework developed under the guidance of the chairman and managing director who is alsoresponsible for the implementation of the same. The Business Responsibility Policies andthe Business Responsibility Report are displayed on the website of the Company http://www.ucalfuel.com/business-responsibility-report.asp.

As your Company does not fall under top 1000 listed entities based onmarket capitalisation calculated as of 31st March 2022 the mandatory reporting in thebusiness responsibility report on the initiatives taken by the Company from anenvironmental social and governance perspective does not become applicable to the Companyfor the financial year 2021-22.

36. STATEMENT ON COMPLIANCE TO APPLICABLE SECRETARIAL STANDARD

The Company has complied with all the applicable secretarial standardsas issued by the Institute of Company Secretaries of India during the year 20212022.

37. ANNUAL GENERAL MEETING

In view of COVID-19 pandemic and to support the health and well-beingof all stakeholders the 36th Annual General Meeting of the Company would be conductedthrough Video Conferencing (VC) or Other Audio Visual Means (OAVM) on 29th August 2022 at3.00 p.m as per the framework notified by the Ministry of Corporate Affairs andSecurities and Exchange Board of India (SEBI). The notice convening the 36th AnnualGeneral Meeting shall contain detailed instructions and notes in this regard.

In view of the exemption available vide General Circular 02/2022 datedMay 05 2022 issued by the Ministry of Corporate Affairs read with previous circulars andSEBI Circular dated May 13 2022 in this regard the Company has not printed physicalcopies of annual report for distribution. The full Annual Report shall be made availableon the website of the Company and also shall be disseminated to the stock exchanges whereshares of the Company are listed. The electronic copies of the annual report and thenotice convening the 36th Annual General Meeting would be sent to the shareholders whosee-mail addresses are registered with the Company or their respective DepositoryParticipants (DP).

38. ACKNOWLEDGEMENT

The Board thanks all its employees customers bankers vendorssuppliers and governmental agencies for their continued support even during the times ofCOVID-19 pandemic. The Board is grateful to the shareholders for their continued trust andconfidence in the Company.

For and on behalf of the Board
Place: Chennai Jayakar Krishnamurthy
Date: 25th July 2022 Chairman and Managing Director

.