Your Directors have pleasure in presenting the Thirty First Annual Report together with the Audited Balance Sheet & Profit and Loss Account for the year ended 31.03.2024.

FINANCIAL RESULTS

The operating results for the year 2023-2024 are given below

Profit before Interest and Depreciation and Other adjustments

Less : Interest

Depreciation

Net Profit before Tax Provision for Tax :

Current Tax MAT Credit

Deferred Tax (income) / expenses Net Profit after Tax

Amount brought forward from previous year Amount available for appropriation

Appropriations

Dividend on Equity Shares

Other Comprehensive Income (Net of Tax)

Surplus carried over to Balance Sheet

FINANCIAL PERFORMANCE:

The Company's income for the financial year ended 31st March, 2024 was Rs. 7801.56 lacs compared to Rs. 8748.82 lacs in the previous year. The profit before tax for the Company is Rs. 802.45 lacs as against Rs. 656.67 lacs in the previous year. The depreciation for the year is Rs 345.67 lacs compared to Rs.342.85 lacs in the previous year. After providing Taxation, the Company's net profit stands at Rs 584.19 lacs as against Rs. Rs.439.03 lacs in the previous year.

An amount of Rs 3352.57 lacs is to be carried over to Balance Sheet.

The Net worth of the company is at Rs. 5,934.82 lacs as on 31.03.2024 as against Rs. 5,494.72 lacs in the previous year.

DIVIDEND

The Board of Directors has recommended a dividend of Rs 1.50 per Equity shares on 90,83,182 Equity shares of Rs 10/- each aggregating to Rs 136.25 lacs for the financial year ended 31.03.2024, (Previous year - Rs 136.25 lacs) which if approved by the shareholders in the ensuing Annual General Meeting will be paid to all the Equity shareholders, whose name appear in the Register of Members as on 30th August, 2024.

PERFORMANCE:

The company has started taking steps towards consolidation and purchasing some components.

As part of consolidation one factory unit at Thekkalur has been sold for a consideration of Rs 28 crores and our Dindigul Foundry operations are now shifted to our Vedasandur Foundry Division with effect from 16.06.2024

We expect this to have a positive impact on efficiency and increase cost savings.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Despite a decrease in the sales turnover of the company, we have focused on profitability and increased the PBT significantly to 10% vs 7.5% over the previous year.

1. Reasons for Decreased Sales: Reduction in sales is due to reduction in overall demand and not due to a reduction of market share. There was a substantial impact in sales due to the war in the Middle East region and the subsequent caution and slow down of infrastructure projects in the region. This could have a continued effect in the year to come if the situation remains unresolved or escalates. There is also a global slowdown in infrastructure spending due to elections in many major democracies.

2. Profitability Analysis: The slow markets notwithstanding, the profitability was increased. The company was able to get better margins and realization from export sales. This was assisted by the demand for large size fittings that the competition is unable to provide. The company is also continually looking at improving operational efficiency and reducing costs. Increase in Exchange rate and reduction in raw materials prices also contributed.

3. Cost Management: In order to achieve better cost management and operational efficiency we are streamlining processes, optimizing purchase and inventory management. As part of the streamlining the company is looking at consolidating operations into fewer locations thereby reducing redundant costs and increasing efficiencies. In addition to consolidating, the company is also looking at contract manufacturing or out sourcing some components to cost effective sources.

4. Investment in Growth Opportunities: The company is proposing to invest capital to the extent of 6 crores to streamline the machining and assembly operations.

5. Future Outlook: The company is taking all the necessary steps to remain confident about holding onto this level of profitability even if the world goes into chaos in the upcoming year. The new products are starting to hit the market and slowly gain acceptance which should see an increase in revenues despite poor market outlook in the near term. In the longer term, we should see significant growth in infrastructure spending once the new governments are formed globally. We are consciously developing additional supply sources to take advantage of any such spike. The company also looks forward to continuing the consolidation operations without impact to the revenue of the company that will increase profitability.

SIGNIFICANT CHANGES

Operating profit and net profit margin increased over previous year due to increase in selling prices in the export and domestic markets.

Capital expenditure to the extent of 3.35 Crores was done during the year in the infrastructure and on Valve design, machines, tooling.

Debtors, Inventories, turnover ratio, current sale ratio and debt equity ratio has not changed significantly over the previous year.

As indicated above Return on Net Worth was also affected compared to previous year. Ratios are detailed in Note 2.31 of the Notes to the Financial Statements.

RISK MANAGEMENT AND FUTURE OUTLOOK

The company has been reviewing the various risks constantly and taking steps to avoid their impact on performance. By identifying and addressing market risks proactively, the company can enhance the resilience and sustainability of its business operations in the competitive environment.

1. Commodity Price Volatility: Raw material for production is a commodity prone to price fluctuations due to changes in demand, supply, and global economic conditions. Fluctuations in these prices can directly impact our production costs and profit margins. To mitigate this risk, we are constantly working to improve yields, reduce rejections and also diversifying our supply sources.

2. Market Competition: The market for grooved fittings and valves is highly competitive, both domestically and internationally with heavy competition from Chinese manufacturers. Competitors offer similar products at substantially lower prices. To manage this risk, we are focused on items that the competition is not competitive in. Our quality and customer service differentiate us in the market. We are also slowly making in-roads into the domestic infrastructure market under the Make in India schemes.

3. Regulatory Compliance: Compliance with various regulations and standards, both in India and in export markets, is essential for our products. Changes in regulations or non-compliance can result in fines, legal issues, or loss of market access. We are investing in staying updated with regulatory changes, maintaining proper certifications, and implementing robust compliance procedures.

4. Foreign Exchange Risk: The foreign exchange rate continues to be favorable to the company and we expect this to remain through the current year. The company intends to continue to increase its domestic market share to offset any potential impact from exchange rate fluctuations. Company does not depend on any imports that will impact our costs.

5. Supply Chain Disruptions: The latest wars in the Middle East could have some impact on shipping which could potentially have impacts in managing customer commitments. To manage this risk, we are working with our distribution channels to maintain higher buffer stocks, or have contingency plans in place to quickly address any disruptions.

6. Economic Downturns: The risk of economic downturns is high given the global political situation compounded further by war risk in our primary markets. This can lead to reduced demand for our products as construction and infrastructure projects may be postponed or canceled. To manage this risk, we are focusing on diversifying our customer base across different industries and regions, maintaining strong relationships with key distributors, and implementing cost-saving measures.

7. Man power availability: Skilled man power availability is still a challenge while unskilled labor is mostly expat dependent. This could be a risk going forward depending on infrastructure investments in the Northern regions of the country. We are in the process of consolidating operations to reduce

skilled manpower requirements while also pursuing subcontract manufacturing of certain non-critical components to reduce unskilled labor requirements.

DIRECTORS

Mrs Panath Anitha, Director, who retires by rotation, and being eligible, offered himself for reappointment. The term of the Independent Director Mr R Alagar ended on 13.08.2024.

Mr Jayaram Govindarajan has been appointed as Managing Director with effect from 24.07.2024 KEY MANAGEMENT PERSONNEL

The following persons are the Key Management Personnel as per the provisions of the Companies Act, and rules made there under:-

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors further report that

(i) in the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departures;

(ii) the accounting policies selected have been applied consistently, prudent judgments and estimates have been made to give a true and fair view of the state of affairs of the company as at 31.03.2024 and of the Profit of the company and the cash flow statement for the year ended 31.03.2024.

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

(iv) the annual accounts have been prepared on a going concern basis.

(v) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. Internal financial control means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

(vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CODE OF CONDUCT

All Directors and Senior Management of the Company have affirmed Compliance with the Code of

Conduct of National Fittings Limited for the financial Year ended 31st March 2024.

DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

NUMBER OF BOARD MEETINGS

During the year, 4 (Four) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR, KEY MANAGEMENT PERSONNEL AND OTHER EMPLOYEES

The Company shall have such person on the Board who complies with the requirements of the Companies Act, 2013. Directors/KMPs shall be persons of sound integrity and honesty, apart from knowledge, experience etc in the respective fields.

Composition of the Board shall be in compliance with the requirements of the Companies Act, 2013. No person less than the age of 21 years shall be appointed as the director of the Board.

The Executive Directors are paid with remuneration as approved by the members but are not paid sitting fees. Independent directors are not entitled for ESOPs.

MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

1. Nomination and Remuneration Committee of the Board prepared and sent through its Chairman draft feedback form for evaluation of the Board and Independent Directors.

2. Independent Directors at a meeting of themselves considered and evaluated the performance of the Board, performance of the Chairman and other Non-Independent Directors.

3. The Board subsequently evaluated performance of the Board, the Committees and Independent Directors.

SHARES

There was no issue of fresh Equity Shares during the financial year. No Bonus Shares were issued. The Company has not issued any Sweat Equity Shares and not provided any Employee Stock Option Scheme. The Company has not Bought Back any of its securities during the year under review.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The company does not have any Subsidiary, Joint Venture or Associate Company.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 a statement containing salient features of the Financial Statements of your Company's Subsidiaries, Associates and Joint Ventures in Form AOC-1 is attached to the Financial Statements of your Company as Annexure - 1.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review are given in para 2.2 of Notes forming part of the financial statements.

There were no loans, guarantees made by the Company under Section 186 of the Companies Act, 2013 during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

There were no materially significant related party transactions entered by the Company with its Promoters, Directors, Key Management Personnel and other persons which may have a potential conflict with the interest of the Company.

All the related party transactions that were entered during the financial year were in the ordinary course of the business of the Company

All the related party transactions are placed before the Audit Committee for approval. Required disclosures are made to the Committee on quarterly basis in terms of the approval of the Committee.

The Policy on materiality of related party transactions and also on dealing with the related party transactions as approved by the Audit Committee and Board of Directors is uploaded on the Company's web-site and the link for the same is https://www.nationalfitting.com.

The particulars of Contracts or Arrangements with the related parties made under Section 188 of the Companies Act, 2013 are furnished in Annexure - 2 and are attached to this report.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

The Company has implemented adequate procedures and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statements.

The Company also assures that internal controls are operating effectively.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of the report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Amount prescribed for CSR Expenditure during 2023-24 is 7.24 lacs

The company spent Rs 10.79 lacs in this financial year as CSR activities. Amount unspent is Rs. Nil. Amount spent in excess: 3.54 lacs

In 2024-25 Rs 10.93 lacs has been prescribed for CSR expenditure. Details are attached separately to this report in Annexure - 3

EXTRACTS OF ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with corresponding rules, the extract of the Annual Return as at 31st March, 2024 in Form MGT 9 is hosted on the website www.nationalfitting.com

LEGAL COMPLIANCE

There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.

CORPORATE GOVERNANCE

Your Company is in compliance with the Corporate Governance guidelines, as laid out in the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations).

All the Directors and the Senior Management personnel have affirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. A certificate was received from the Managing Director in terms of SEBI Listing Regulations on the compliance declarations received from the Directors and the Senior Management personnel.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to SEBI Listing Regulations and have certified the compliance, as required under SEBI Listing Regulations. The Certificate in this regard is attached as Annexure - 4 to this Report.

The Chief Executive Officer and Chief Financial officer (CEO/CFO) certification as required under SEBI Listing Regulations is attached as Annexure - 5 to this Report.

Related Party disclosures/transactions are detailed in Note 2.32 of the Notes to the financial statement. SEXUAL HARASSMENT

Company has a policy on prohibition, prevention and redressal of sexual harassment of women at work place and matters connected therewith.

Company has constituted an Internal Control Committee for prevention of sexual harassment of women at work place.

During the year ended 31st March, 2024 no complaint was received under the policy.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has unclaimed dividend amounting to Rs. 56,84,266/-

a) Pursuant to Rule 6 (12) of IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 the dividend entitlement on the shares transferred to IEPF authority on dividend paid for the financial year 2022-23 amounting to Rs. 5,96,368/- have been transferred to the Investor Education and Protection Fund in this financial year.

b) Pursuant to the provisions of Section 124 (5) of the Companies Act, 2013, unclaimed dividend of Rs 19,57,906/- which remained unpaid or unclaimed for a period of 7 years and have been transferred to the Investor Education and Protection Fund in this financial year.

The details of the unpaid and unclaimed dividend lying with the Company have been uploaded on the website of Ministry of Company Affairs.

DEPOSITS

The Company has neither accepted nor renewed any deposits during the financial year.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) & (ii) The ratio of the remuneration of each Director to the median and mean remuneration of the employees of the Company for the financial year and the percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

iii) The percentage increase in the median remuneration of employees in the financial year: 13.25%

iv) The number of permanent employees on the rolls of the Company: 149

v) The increase in employees cost for the financial year 2023-24 was 1.06%

vi) The average increase in salaries of employees other than managerial personnel in 2023-24 was 1.60%. Percentage increase in the managerial remuneration for the year was 7.57%

vii) The Company affirms that remuneration is as per the remuneration policy of the Company.

The information required under Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2015 are given below:

During the period under review, there was no employee drawing remuneration in excess of the limits prescribed under Section 197 of the Companies Act, 2013 and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

STATUTORY AUDITORS

M/s Krishaan & Co Chartered Accountants, Chennai were appointed as Statutory Auditors of the Company from the conclusion of the 29th Annual General Meeting held on 23.09.2022 until the conclusion of 34th Annual General Meeting.

The report of the Statutory Auditors for financial year ended 31st March, 2024 is given along with the Financial Statements, which are annexed to and forms part of this report.

SECRETARIAL AUDITOR

Pursuant to the requirements of the Companies Act, 2013, the Company has appointed Mr. M R L Narasimha, B.Com, FCS, Practicing Company Secretary (Cop No: 799) as the Secretarial Auditor for the financial year 2023-24 whose report on 27th of May, 2024 is attached separately to this report. Annexure - 6.

EXPLANATION OR COMMENTS OR QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications, reservations or adverse remarks made by the Statutory Auditors in their report and there were no qualifications, reservations or adverse remarks made by the Practicing Company Secretary in the Secretarial Audit Report.

CONSERVATION OF ENERGY

Company continues to buy renewable energy.

TECHNOLOGY ABSORPTION

Company is proposing to increase cape for development of testing facilities to international standards.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange inflow (actual) : Rs. 55,44,11,607/-

Foreign exchange used (actual) : Rs. 1,12,37,292/-

INDUSTRIAL RELATIONS

Relationship with the employees/labor was cordial during the year under review.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank M/s. Bank of India for the support extended during the period. Your Directors also wish to thank all the suppliers, employees, Government Departments/Agencies and others for their valuable contribution and assistance during the year.

FOR AND ON BEHALF OF THE BOARD

Place : Coimbatore Sd/- A.V. PALANISWAMY Sd/- JAYARAM GOVINDARAJAN

Date : 27.05.2024 DIN No. 01817391 DIN No. 02178416

Managing Director Whole time Director