Shanthi Gears Ltd. — Annual Report 2021

May 24, 2021

|(§@=7S SHANTHIGEARS LIMITED 23

Regd. Office : Phone: +91-422-4545745 304-A, Trichy Road, Fax + +91-422-4545700 murugappa Singanallur E-mail : info@shanthigears.murugappa.com Coimbatore - 641 005 Website : www.shanthigears.com CIN : L29130TZ1972PLC000649 GST : 33AADCS0692L1Z7

May 24, 2021

National Stock Exchange of India Ltd, BSE Ltd, Exchange Plaza, Sth Floor, lst Floor, Plot No. C/1, G Block, New Trading Ring, Rotunda Building, Bandra-Kurla Complex, P J Towers, Dalal Street, Bandra (E) Fort, Mumbai-400 051. Mumbai- 400 001.

Stock Code: SHANTIGEAR Stock Code: 522034 Through NEAPS Through BSEListing Centre

Total 9 pages (including covering letter)

DearSir,

Sub: Outcome of Board Meeting

Further to our letter dated 8", May 2021, we write to inform that at the meeting held today (24th May, 2021), the Board of Directors of the Company have approvedthe following:

1) Audited Financial Results for the financial year ended 31st March, 2021

The Board of Directors. of the Company, at their meeting held today (24t" May, 2021), approved the audited financial results for the financial year ended 31st March, 2021.

Accordingly, pursuant to Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") we enclose the following:

• i) Statement showing the Audited Financial Results for the quarter and year ended 31st March, 2021;
• ii) Auditor's Report from the Statutory Auditors, M/s. Deloitte Haskins & Sells on the above financial results;

Further, as required under Clause 4.1 of SEBI's circular dated 27 May,2016, we confirm that the Statutory Auditors of the Company have issued the Report on the audited financial results of the Company for the year ended 31st March,2021, with unmodified opinion.

This is for your records and for uploading in your website. A copy of the same will be uploaded in the Company's website www.shanthigears.com. An extract of the aforesaid financial results in the manner prescribed under the SEBI Listing Regulations will be published in English and Tamil newspaperswithin timestipulated.

A copy of the press release made with regard to the audited financial results for the quarter and year ended 31st March, 2021 is enclosed.

2) Closure of Register of Members

Please note that the share transfer books of the Company will remain closed from Saturday, 10' July, 2021 to Wednesday, 21st July,2021 (both daysinclusive) for the ,.purpose of ensuing 48» Annual General Meeting. 5

Cee py IRIS Works : "C" Unit, Avinashi Road, Muthugounden Pudur Post, Coimbatore - 641 402, India. Siler al Tel : +91 422 4545745 / Fax : +91 422 4545700 / Mobile : +91 96262 60500(8 Lines)

Regd. Office : Phone: +91-422-4545745 304-A, Trichy Road, Fax : +91-422-4545700 murugappa Singanallur E-mail : info@shanthigears.murugappa.com Coimbatore - 641 005 Website : www.shanthigears.com CIN : L29130TZ1972PLC000649 GST : 33AADCS0692L1Z7

3) 48th Annual General Meeting

The 48th Annual General Meeting of Members of the Company will be held on Wednesday, 21st July,2021 at 4.00 PM (IST) through Video Conferencing/Other Audio Visual Means.

For your information, the Board Meeting commenced at 11.00 A.M. and concluded at 15.05 P.M.

Please take the above on yourrecord.

Thanking you,

Yoursfaithfully, For SHANTHI GEARS LIMITED

C. Subramaniam

Company Secretary

Encl: As above

Petar we IRISS Works: "C" Unit, Avinashi Road, Muthugounden Pudur Post, Coimbatore - 641 402, India. Tel : +91 422 4545745 / Fax : +91 422 4545700 / Mobile : +91 96262 60500 (8 Lines)

Shanthi Gears Limited CIN: L29130TZ1972PLC000649 Regd. Office: 304-A, Trichy Road, Singanallur, Coimbatore-641005. Tel: +91-422-4545745 Fax: +91-422-4545700 Email: cs@shanthigears.murugappa.com, Website:www.shanthigears.com Statement of Financial Results for the Quarter and Year Ended 31 March 2021

		Shanthi Gears Limited
	Regd. Office: 304-A, Trichy Road, Singanallur, Coimbatore-641005. Tel: +91-422-4545745 Fax: +91-422-4545700	CIN: L29130TZ1972PLC000649
	Email: cs@shanthigears.murugappa.com, Website:www.shanthigears.comStatement of Financial Results for the Quarter and Year Ended 31 March 2021
	Financial Information	31.03.2021	Quarter ended31.12.2020	31.03.2020	Year ended31.03.2021	₹ Crores31.03.2020
Sl No1	ParticularsRevenue from Operations	(Refer Note 5)	Unaudited	(Refer Note 5)	Audited	Audited
	Other IncomeTotal Income	71.872.8774.74	64.831.8966.72	41.611.8043.41	215.538.28223.81	242.296.53248.82
2	Expenses(a) Cost of materials consumed(b) Changes in Inventories of finished goods and work	41.85	31.02	24.51	107.65	111.98
	in-progress(c) Employee benefits expense	(8.16)12.30	0.4612.63	(4.96)11.60	(4.12)46.92	3.8148.23
	(d) Depreciation and amortisation expense(e) Other expensesTotal Expenses	2.4214.0862.49	2.2410.1956.54	2.089.6942.92	8.8638.43197.74	8.3943.72216.13
34	Profit before tax (1-2)Tax Expense	12.25	10.18	0.49	26.07	32.69
	Current taxDeferred taxTotal tax expense	1.671.16	1.920.56	(0.10)(0.70)	4.171.73	6.211.29
56	Profit for the periods / year after tax (3-4)Other Comprehensive Income (net of tax)	2.839.42	2.487.70	(0.80)1.29	5.9020.17	7.5025.19
	Items not to be reclassified to profit or loss insubsequent periodsRe-measurement gains and (losses) on defined benefit
	obligation (net)Income tax relating to Item that will not be	(0.23)0.07		(1.35)0.46	(0.23)0.07	(1.35)
7	reclassified into profit or loss
	Other Comprehensive Income for the period / yearTotal Comprehensive Income (5+6)	(0.16)9.26	-7.70	(0.89)0.40	(0.16)20.01	0.46(0.89)24.30
8	Paid-up Equity Share Capital (Face Value of ₹1 each)	7.67	7.67	7.67	7.67	7.67
910	Reserves and Surplus (i.e Other Equity)Earnings Per Share (EPS) of Face value of ₹1 each(Not annualised for the quarters)				229.46	220.95

Notes

1. The above Financial Results were reviewed by the Audit Committee and approved by the Board of Directors of the Company at the meeting held on 24 May 2021. The results for the year ended March 31, 2021 has been audited and for the quarter ended March 31, 2021 has been reviewed by the statutory auditors. The statutory auditors of the Company have issued an unmodified report thereon.

2. The Company's main business is manufacture of Gears and Gear Products.There are no separate reportable segments as per Ind AS 108 - Operating Segments

3. The outbreak of COVID-19 pandemic has affected the Company's regular operations. Accordingly, the Company has considered the possible effects that may result from the pandemic on the carrying amounts of property, plant and equipment, investments, inventories, receivables and other current assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company, as at the date of approval of these financial results has used internal and external information which are relevant in determining the expected future performance of the Company. The Company has evaluated its liquidity position, recoverability of such assets and based on current estimates expects the carrying amount of these assets will be recovered. The impact of COVID-19 on the Company's financial results may differ from that estimated as at the date of approval of these financial results.

4. The above financial results are also available on our website www.shanthigears.com

5. The figures of the last quarter are balancing figures between the audited figures in respect of the full financial years and the published year-to-date figures upto the third quarter of the respective financial years.

6. Previous period figures have been regrouped wherever necessary.

For Shanthi Gears Limited

Place : Chennai L Ramkumar Date : 24 May 2021 Chairman

Shanthi Gears Limited Statement of Assets and Liabilities

₹ CroresAs atAs atParticulars31.03.202131.03.2020(Audited)(Audited)Non-current Assets52.18(a) Property, plant and equipment66.406.37(b) Capital work-in-progress0.037.26(c) Investment Property7.510.33(d) Intangible assets0.11(e) Financial Assets27.67(i) Investments27.674.132.47(f) Deferred Tax Assets (net)9.807.67(g) Other non-current assets107.74111.86Total non-current assetsCurrent Assets60.84(a) Inventories78.14(b) Financial Assets51.65(i) Investments19.1838.19(ii) Trade Receivables47.321.06(iii) Cash and Cash Equivalents1.970.93(iv) Other balances with banks0.7813.86(v) Other financial assets57.151.53(c) Current Tax Assets (Net)0.097.23(d) Other current assets8.93175.29Total current assets213.56283.03TOTAL ASSETS325.42Equity7.67(a) Equity Share capital7.67220.95(b) Other Equity229.46228.62237.13LiabilitiesNon-current Liabilities(a) Financial Liabilities1.382.32(i) Other Long-Term Liabilities0.16(b) Provisions0.161.54Total non current liabilities2.48Current Liabilities(a) Financial Liabilities(i) Trade Payables- total outstanding dues of micro enterprises and1.463.21small enterprises- total outstanding dues of creditors other than53.2526.91micro enterprises and small enterprises0.93(ii) Other financial liabilities0.780.44(b) Provisions0.3821.38(c) Other current liabilities29.9452.87Total current liabilities85.8154.41Total liabilities88.29283.03TOTAL EQUITY AND LIABILITIES325.42
	Shanthi Gears LimitedStatement of Assets and LiabilitiesAssets
	II. EQUITY AND LIABILITIES

For Shanthi Gears Limited

Place : Chennai L Ramkumar Date : 24 May 2021 Chairman

Shanthi Gears Limited Statement of Cash Flows for the year ended 31 March 2021

Shanthi Gears Limited
Statement of Cash Flows for the year ended 31 March 2021	Year ended	₹ CroresYear ended
ParticularsA. Cash Flow from Operating Activities	31.03.2021	31.03.2020
Profit for the yearAdjustments for:Depreciation of property, plant and equipment	20.178.74	25.198.32
Depreciation of investment properties(Profit)/Loss on Property plant & equipment Sold / Discarded (Net)	0.12(0.20)	0.07(0.32)
Income tax expenseInterest incomeDividend income	5.90(2.14)(0.98)	7.50(0.56)(2.79)
Net gain arising of financial assets measured at fair value through profit orloss	(0.40)	(0.39)
Provision for doubtful trade receivablesBad debts written offOperating Profit before Working Capital / Other Changes	(0.82)-30.39	(0.02)0.0637.06
Changes in working capital:Adjustments for (increase) / decrease in operating assets:Inventories	(17.30)	9.29
Trade receivablesOther financial assets	(9.13)(1.18)	18.320.71
Other current assetsOther non-current assetsAdjustments for increase / (decrease) in operating liabilities:	(0.26)0.72	(1.39)(4.06)
Trade payablesOther current liabilities	24.598.56	(0.81)3.04
Other long-term liabilitiesShort-term provisionsCash generated from operations	0.94(0.06)37.27	1.38(0.22)63.32
Net income tax paidNet cash generated by operating activitiesB. Cash flow from investing activities	(4.50)32.77	(7.74)55.58
Capital expenditure on fixed assets, including capital advancesProceeds from sale of property plant and equipments	(15.40)0.24	(17.51)0.33
Investment in long term investments (Net)Purchase of current investments and depositsProceeds from current investments and deposits	-(103.57)94.17	(13.51)(69.20)120.60
Interest received- OthersDividend received	3.23	0.67
- Others	0.98	2.79
Net cash flow used in investing activities (B)C. Cash flow from financing activitiesBuy-back of equity shares	(20.35)	24.17(70.00)
Dividends paid on equity sharesTax on dividend	(11.51)-	(23.01)(4.73)
Net cash flow used in financing activities (C)Net increase/(decrease) in Cash and cash equivalents (A+B+C)Cash and cash equivalents at the beginning of the year	(11.51)0.911.06	(97.74)(17.99)19.05
Cash and cash equivalents at the end of the yearCash and Cash Equivalents as at End of the Year comprises of	1.97	1.06
(a) Cash on hand(b) Balances with banksi) In Current Accounts	-1.97	0.011.05

For Shanthi Gears Limited

Place : Chennai L.Ramkumar Date : 24 May 2021 Chairman

Deloitte Haskins & Sells

Chartered Accountants Times square, 7th Floor Door No.62, A.T.T Colony Road Coimbatore – 641 018 Tamil Nadu, India

Tel: +91 422 664 6500

INDEPENDENT AUDITOR'S REPORT ON AUDIT OF ANNUAL FINANCIAL RESULTS AND REVIEW OF QUARTERLY FINANCIAL RESULTS

TO THE BOARD OF DIRECTORS OF

SHANTHI GEARS LIMITED

Opinion and Conclusion

We have (a) audited the Financial Results for the year ended March 31, 2021 and (b) reviewed the Financial Results for the quarter ended March 31, 2021 (refer 'Other Matters' section below), which were subject to limited review by us, both included in the accompanying "Statement of Financial Results for the Quarter and Year Ended March 31, 2021" ("the Statement") of SHANTHI GEARS LIMITED ("the Company"), being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("the Listing Regulations").

(a) Opinion on Annual Financial Results

In our opinion and to the best of our information and according to the explanations given to us, the Financial Results for the year ended March 31, 2021:

• i. is presented in accordance with the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended; and
• ii. gives a true and fair view in conformity with the recognition and measurement principles laid down in the Indian Accounting Standards and other accounting principles generally accepted in India of the net profit and total comprehensive income and other financial information of the Company for the year then ended.

(b) Conclusion on Unaudited Financial Results for the quarter ended March 31, 2021

With respect to the Financial Results for the quarter ended March 31, 2021, based on our review conducted as stated in paragraph (b) of Auditor's Responsibilities section below nothing has come to our attention that causes us to believe that the Financial Results for the quarter ended March 31, 2021, prepared in accordance with the recognition and measurement principles laid down in the Indian Accounting Standards and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, including the manner in which it is to be disclosed, or that it contains any material misstatement.

Basis for Opinion on the Audited Financial Results for the year ended March 31, 2021

We conducted our audit in accordance with the Standards on Auditing ("SAs") specified under Section 143(10) of the Companies Act, 2013 ("the Act"). Our responsibilities under those Standards are further described in paragraph (a) of Auditor's Responsibilities section below. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("the ICAI") together with the ethical requirements that are relevant to our audit of the Financial Results for the year ended March 31, 2021 under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion.

Deloitte Haskins & Sells

Management's Responsibilities for the Statement

This Statement which includes the Financial Results is the responsibility of the Company's Board of Directors and has been approved by them for the issuance. The Financial Results for the year ended March 31, 2021 has been compiled from the related audited financial statements. This responsibility includes the preparation and presentation of the Financial Results for the quarter and year ended March 31, 2021 that give a true and fair view of the net profit and other comprehensive income and other financial information in accordance with the recognition and measurement principles laid down in the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Financial Results that give a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the Financial Results, the Board of Directors are responsible for assessing the Company's ability, to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the financial reporting process of the Company.

Auditor's Responsibilities

(a) Audit of the Financial Results for the year ended March 31, 2021

Our objectives are to obtain reasonable assurance about whether the Financial Results for the year ended March 31, 2021 as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this Financial Results.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Annual Financial Results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors.
• Evaluate the appropriateness and reasonableness of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing Regulations.

Deloitte Haskins & Sells

• Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Annual Financial Results, including the disclosures, and whether the Annual Financial Results represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the Annual Financial Results of the Company to express an opinion on the Annual Financial Results.

Materiality is the magnitude of misstatements in the Annual Financial Results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Annual Financial Results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Annual Financial Results.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

(b) Review of the Financial Results for the quarter ended March 31, 2021

We conducted our review of the Financial Results for the quarter ended March 31, 2021 in accordance with the Standard on Review Engagements ("SRE") 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity', issued by the ICAI. A review of interim financial information consists of making inquiries, primarily of the Company's personnel responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with SAs specified under section 143(10) of the Act and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Other Matters

• The Statement includes the results for the Quarter ended March 31, 2021 being the balancing figure between audited figures in respect of the full financial year and the published year to date figures up to the third quarter of the current financial year which were subject to limited review by us. Our report on the Statement is not modified in respect of this matter.

For DELOITTE HASKINS & SELLS

Chartered Accountants (Firm's Registration No. 008072S)

Wena

Balaji M.N. Partner Membership No.202094 Bengaluru, May 24, 2021 UDIN:21202094AAAADG3892

Financial Results of Shanthi Gears Limited

Shanthi Gears Q4 net profit up by 20% over Q3

The Board of Directors of Shanthi Gears Limited (SGL), a subsidiary of Tube Investments of India Limited (TII), met today and approved the financial results for the quarter and year ended 31st March 2021.

Highlights

The Company continues to focus on 4 key priorities of Revenue growth, Profitability, ROCE and Free Cash Flow (FCF). SGL delivered strong performance on all these 4 priorities in Q4:

• Revenue of ₹ 71.9 Crores in Q4 with a 73% growth over Q4 of previous year. Revenue of ₹ 215.5 Crores in the financial year with a 11% de-growth over previous year.
• The Profit Before Tax (PBT) of ₹ 12.3 Crores in Q4 as against ₹ 0.5 Crores in Q4 of previous year. PBT of ₹ 26.1 Crores in the financial year with a 20% de-growth over previous year.
• Consequent to lower PBT, the Return on average Capital Employed (ROCE) declined to 15% in this financial year from 19% in previous year.
• The Company generated cumulative operating Free Cash Flow of ₹ 21 Crores during the year. Cumulative Free Cash Flow to PAT is 105%.

During the year the Company had booked orders for ₹ 305 Crores and registered 20% growth over previous year.

Pending orderbook as on 31st March 2021 was ₹ 225 Crores against ₹ 155 Crores in the previous year.