Tata Elxsi Ltd Directors Report

TO THE MEMBERS OF TATA ELXSI LIMITED

1. Your Directors are pleased to present the Thirty Fifth Integrated Annual Report on the business and operations of the Company along with the audited financial statements for the financial year ended March 31, 2024.

2. FINANCIAL SUMMARY

The highlights of financial performance of the Company, for the year ended March 31, 2024, are summarised hereunder:

( crore)

	FY2023-24	FY 2022-23
Revenue from operations	3,552.14	3,144.72
Other income (Net)	121.95	73.81
Total Income	3,674.09	3,218.53
Profit before financial expenses, depreciation and tax	1,168.37	1,035.09
Less: Financial expenses	20.26	16.20
Depreciation/ Amortisation	99.44	81.39
Profit before tax	1,048.67	937.50
Tax expenses	256.44	182.31
Profit after tax for the year	792.23	755.19
Other Comprehensive income	(9.97)	(5.65)
Net Profit for the year	782.26	749.54
Add: Profit brought forward	1,907.53	1,432.67
Less: Dividend	377.40	264.68
Transfer to General Reserve	10.00	10.00
Balance Profit carried to Balance Sheet	2,277.06	1,907.53

3. REVIEW OF OPERATIONS AND PERFORMANCE

The total income during the year under review increased by 14.20% from 3,218.53 crores in the previous year to 3,674.09 crores. The Profit Before Tax (PBT) was 1,048.67 crores as against 937.50 crores in the previous year. The Profit After Tax (PAT) was 792.23 crores against 755.19 crores in the previous year.

4. DIVIDEND

The Board of Directors are pleased to recommend a final dividend of 700% (70 per share), subject to tax, for the financial year ended March 31, 2024, on 6,22,76,440 equity shares of

10/- each fully paid-up, in comparison to 606%

(60.60 per share) on 6,22,76,440 equity shares of 10/- each fully paid-up in the previous year. The said dividend on equity shares is subject to the approval of the Members at the ensuing Annual General Meeting ("AGM") scheduled to be held on July 10, 2024. If approved, this will involve an outflow of 435.94 crores, compared to 377.40 crores, in the previous year.

According to the Finance Act, 2020, dividend income will be taxable in the hands of the Members w.e.f. April 01, 2020, and the Company is required to deduct tax at source from the dividend paid to the Members at prescribed rates as per the Income Tax Act, 1961.

The Companys Dividend Distribution Policy, as adopted in line with Regulation 43A of the Listing Regulations is available on the website of the Company at the link: www.tataelxsi.com/ investors/policies-and-disclosures.

5. TRANSFER TO RESERVES

Your Directors have approved a transfer of 10 crores to the General Reserves for the year ended March 31, 2024, as against an amount of 10 crores transferred in the previous year.

6. SHARE CAPITAL

As on March 31, 2024, the authorised share capital of the Company consisted of 7,00,00,000 equity shares of 10 each, and the paid-up equity share capital as on March 31, 2024, consisted of 6,22,76,440 equity shares of 10 each. During FY 2023-24, the Company has not issued any shares, securities / instruments convertible into equity shares, sweat equity shares and shares with differential voting rights.

7. TATA ELXSI LIMITED PERFORMANCE STOCK OPTION PLAN 2023

Pursuant to the approval of the Members vide special resolution passed through Postal Ballot on March 04, 2023, the Company had adopted and implemented the "Tata Elxsi Limited Performance Stock Option Plan 2023" (hereinafter referred to as "PSOP 2023" or "the Plan"), for grant of 3,11,000 fully paid-equity shares of 10/- (Rupee Ten Only), representing 0.50% of the issued share capital of the Company to the eligible employees of the Company. The Plan is intended to reward, motivate and retain the Eligible Employees of the Company as defined in the PSOP 2023, (hereinafter collectively referred to as ‘Eligible Employees) for their performance and participation in the growth and profitability of the Company. The said initiative to link the employees performance in the Company along with other initiatives would contribute to improve the performance of the Company. The Plan has been formulated in accordance with the provisions of the Companies Act, 2013 (‘the Act) and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (‘SBEB&SE Regulations) and during the year under review, there was no change in PSOP 2023.

The eligible employees shall be granted Performance Stock Options (PSOP), as determinedbytheNominationandRemuneration Committee of the Board, which will vest as per the approved vesting schedule and are be exercisable into fully paid-up equity shares of 10/- (Rupee Ten Only) each of the Company, on the terms and conditions as provided under the Plan, in accordance with the provisions of the applicable laws and regulations for the time being in force.

During the year under review, the Nomination and Remuneration Committee approved a grant of 49,343 stock options to eligible employees of the Company as per the terms and conditions of the Plan. No employee was granted stock options equal to or exceeding 1% of the issued share capital of the Company. The Vesting period for the stock options granted under the PSOP 2023 shall not be less than one year and all the stock options would vest, based on the and conditions as detailed out in the Plan. The statutory disclosures as mandated under the Act and SBEB&SE Regulations and a certificate from the Secretarial Auditors, confirming implementation of the Plan in accordance with SBEB&SE Regulations and shareholders resolution have been hosted on the website of the Company at https://www.tataelxsi.com/ investors/policies-and-disclosures and will be available for electronic inspection by the Members during the AGM of the Company. Members desirous of inspecting the certificate, may follow the procedure listed down in the Notes to the Notice of the Annual General Meeting.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

As on March 31, 2024, the Board of the Company comprised of six Directors, with three Non-Executive Independent Directors, two Non-Executive Non-Independent Directors and one Executive Director. The details of the Board composition including the profile of the Directors are available in the Corporate Governance Report section of the Annual Report.

The Board of the Company at its meeting held on April 03, 2024, based on the recommendation of Nomination and Remuneration committee, subject to the approval of the Members of the Company, considered and approved the appointment of Ms. Ashu Suyash (DIN: 00494515) and Mr. Soumitra Bhattacharya (DIN: 02783243) as Additional Directors (Non-Executive Independent Directors) for a period of 5 (five) years respectively, with effect from April 04, 2024 until April 03, 2029.

In accordance with Regulation 17(1C) of the Listing Regulations, your Company has sought the approval of the shareholders through the Postal Ballot vide Postal Ballot Notice dated April 23, 2024.

The profiles of Ms. Suyash and Mr. Bhattacharya are available on the website of the Company at https://www.tataelxsi.com/board-of-directors. Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Ankur Verma, Director retires by rotation and being eligible, offers himself for re-appointment.

During the year under review, five (5) Board meetings were held on May 18, 2023, July 17, 2023, October 17, 2023, January 23, 2024 and March 22, 2024. Further details of the Board Meeting and Committee Meetings including the attendance of the Directors are provided in the Corporate Governance Section of the Annual Report. The calendar of meetings for FY 2023-24 had been circulated to all the Directors in advance detailing the schedule of Board and Committee meetings during FY 2023-24.

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). The Directors have further confirmed that they are not debarred from holding the office of the director under any SEBI order or any other such authority. During FY 2023-24, there here has been no change in the circumstances affecting their status as Independent Directors of the Company. Pursuant to Clause VII (1) of Schedule IV of the Companies Act, 2013, a separate meeting of the Independent Directors was held on May 09, 2023.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/ Committee of the Company.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2024 are Mr. Manoj Raghavan, Managing Director and CEO; Mr. Gaurav Bajaj, Chief Financial Officer and Ms. Cauveri Sriram, Company Secretary & Compliance Officer.

9. DIRECTORS RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2023-24.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that: a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures b. The Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of our state of affairs at the end of the financial year and of our profit for that period c. The Directors had 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 and for preventing and detecting fraud and other irregularities d. The Directors have prepared the annual accounts on a going concern basis e. 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 f. The Directors have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively

10. PARTICULARS ON REMUNERATION

The statement containing particulars of the top 10 employees and the employees drawing remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of this Report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid

Annexure. The said Statement is also open for inspection through electronic mode up to the date of the ensuing Annual General Meeting. Any Member interested in obtaining a copy of the same may write to the Company Secretary.

The particulars pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is attached with this report as Annexure A.

11. PERFORMANCE EVALUATION

The Company has laid down a process for performance evaluation of the Board and its Committees as well as a framework for evaluation of the performance of each of the Directors. The evaluation criteria include inter alia, structure of the Board, qualifications, experience and competency of Directors, diversity in Board, effectiveness of the Board process, information and functioning, Board culture and dynamics, quality of relationship between the Board and management, meetings of the Board, including regularity and frequency, discussion and dissent, corporate culture and values, governance and compliance, evaluation of risk amongst others. The criteria is based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 05, 2017. The evaluation process is conducted and monitored by the Chairperson, Nomination & Remuneration Committee (‘NRC) in consultation with the members of the Committee. Upon the receipt of feedback from Directors, the Chairperson, NRC conducts a one to one meeting with the Members. Thereafter, the Chairperson, NRC briefs the Chairman of the Board on the outcome, which in subsequently discussed at the Board meeting.

For the financial year 2023-24, the performance evaluation has been conducted as per the process adopted by the Company, which is detailed out above.

12. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34 of the Listing Regulations, a separate section on Management Discussion and Analysis Report is annexed to this Directors Report.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars pursuant to Section 134(m) of the Companies Act, 2013 and read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is attached with this report as Annexure B.

14. INTEGRATED REPORT

The Integrated Report of the Company is prepared in accordance with the International Integrated Reporting (IR) framework published by the Value Reporting Foundation (VRF) which reflects the integrated thinking of the Company and its approach to its value creation. This report aims to provide a holistic view of the Companys strategy, governance and performance, and how they work together to create value over the short, medium and long term for our stakeholders. The narrative section of the Integrated Report is guided by the Integrated Reporting (IR) framework outlined by the International Integrated Reporting Council (IIRC).

15. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

In terms of Regulation 34(2) (f) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 (‘Listing Regulations) the Business Responsibility and Sustainability Report, in the prescribed format, forms an Integral Part of the Annual Report. An assurance report on the sustainability disclosures in the Business Responsibility and Sustainability Reporting for the financial year 2023-24 is a part of BRSR. This assurance report has been issue vide SEBI circular number SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated 12 July 2023.

16. CORPORATE GOVERNANCE

In terms of Regulation 34(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Corporate Governance Report, Management Discussion & Analysis Report, and the Auditors Certificate regarding Compliance to Corporate Governance requirements forms part of this Annual Report.

17. CORPORATE SOCIAL RESPONSIBILITY

In line with Section 135 of the Companies Act, 2013 read with applicable rules made thereunder, Corporate Social Responsibility (CSR) Committee has been constituted for the purposes of recommending and monitoring the CSR initiatives of the Company.

The Board, based on the recommendation of the CSR Committee, has formulated and adopted a CSR Policy, in line with Section 135 of the Companies Act, 2013 read with the applicable rules made thereunder, which is available on the website of the Company at www.tataelxsi.com/ investors/policies-and-disclosures.

The CSR objectives are designed to serve societal, local and national goals in the locations we operate, create a significant and sustained impact on local communities and provide opportunities for our employees to contribute to these efforts through volunteering.

The Annual Report on the CSR initiatives undertaken by the Company as per the Companies (Corporate Social Responsibilities Policy) Rules, 2014 (as amended) including the reasons for not utilising the complete amount for CSR as approved by the CSR Committee, is annexed as Annexure C. The details relating to the composition of the CSR Committee is provided in the Corporate Governance Report, forming part of the Annual Report.

18. RISK MANAGEMENT POLICY

The Board has adopted a Risk Management Policy to identify and categorise various risks, implement measures to minimise impact of these risks where it is deemed necessary and possible, and a process to monitor them on a regular basis including to review and monitor the cyber security measure. Further details on the Risk Management Framework is provided in the Corporate Governance Report, forming part of the Annual Report.

19. DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

20. LOANS, INVESTMENTS AND GUARANTEES

There are no loans, guarantees and investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

21. AUDIT COMMITTEE

The Company has constituted an Audit Committee in compliance with Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. The Composition of the Audit Committee in terms of Section 177(8) along with its terms of reference incorporating its functions are disclosed and is available in the Corporate Governance Report forming part of the Annual Report.

During FY 2023-24, there are no such instances where the Board has not accepted the recommendations of the Audit Committee.

22. RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered during the year under review were on an arms length basis and in the ordinary course of business and are in compliance with the applicable provisions of the Act and the Listing Regulations.

Pursuant to Section 188 of the Companies Act, 2013 read with rules made thereunder read with Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all material related party transactions require prior approval of the shareholders of the Company vide ordinary resolution.

At the 34^th Annual General Meeting of the Company held on July 04, 2023, the Members of the Company had, inter alia, approved Material RPTs of the Company with Jaguar Land Rover Limited ("JLR") for an aggregate amount not exceeding 600 crores for the financial year 2023-24. Subsequent to increased engagement with JLR and considering that value of transactions with JLR are likely to exceed the limit approved at the 34^th AGM, the Members of the Company had, vide Postal Ballot Notice dated February 13, 2024 through remote e-voting, approved the revision of the limit of the RPT with JLR to a maximum aggregated value of 675 crores for the financial year 2023-24. In compliance with Section (188) of the Companies Act, 2013 read with applicable rules made thereunder and Regulation 23(4) of the Listing Regulations, the Members of the Company had, vide Postal Ballot Notice dated February 13, 2024 through remote e-voting, accorded approval to enter into material related party transactions with JLR for an aggregate value not exceeding of 1,000 crores during financial year 2024-25.

The Company has formulated and adopted a policy on dealing with related party transactions, in line with Regulation 23 of the Listing Regulations, which is available on the website of the Company at https://www.tataelxsi.com/ investors/policies-and-disclosures.

As a part of the mandate under the Listing Regulations and the terms of reference, the Audit Committee undertakes quarterly review of related party transactions entered into by the Company with its related parties. Pursuant to Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 177 of the Companies Act, 2013, the Audit Committee has granted omnibus approval in respect of transactions which are repetitive in nature, which may or may not be foreseen, not exceeding the limits specified thereunder. The transactions under the purview of omnibus approval are reviewed on quarterly basis by the Audit Committee.

Pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, the details of contracts / arrangements entered with related parties in prescribed Form AOC-2, is enclosed with this Report as Annexure D.

23. AUDITORS

23.1. STATUTORY AUDITORS AND THEIR REPORT

The Members of the Company at the 33^rd AGM held on June 23, 2022, approved the appointment of M/s. BSR & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 101248W/W - 100022) as the statutory auditors of the Company for a period of 5 years commencing from the conclusion of the 33^rd AGM, until the conclusion of the 38^th AGM of the Company to be held in 2027.

The report issued by Statutory Auditors for financial year 2023-24 does not contain any qualifications or adverse remarks. The Statutory Auditors have not reported any no frauds under Section 143(12) of the Companies Act, 2013.

23.2. SECRETARIAL AUDIT AND REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,

Ms. Jayashree Parthasarathy of M/s. Jayashree Parthasarathy & Co., Company Secretary in practice, was appointed to undertake the Secretarial Audit for financial year 2023-24.

The Report of the Secretarial Auditor along with the certificate of non-disqualification of Directors for the year ended March 31, 2024 is annexed to the Directors Report as Annexure E. The report issued by Secretarial

Auditor for financial year 2023-24 does not contain any qualifications or adverse remarks.

24. EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2023-24 is available on Companys website at https://www.tataelxsi.com/investors/ policies- and-disclosures.

25. VIGIL MECHANISM

Your Company has established a "Vigil Mechanism" for its employees and Directors, enabling them to report any concerns of unethical behaviour, suspected fraud or violation of the Companys ‘Code of Conduct.

To this effect, the Board has adopted a ‘Whistle Blower Policy (WBP), which is overseen by the Audit Committee. The policy inter alia provides safeguards against victimisation of the Whistle Blower. Employees and other stakeholders have direct access to the Chairperson of the Audit Committee for lodging concerns if any, for review. is available on Companys website at https://www.tataelxsi.com/investors/policies- and-disclosures.

The said policy has been posted on our intranet where all the employees have access. The Company conducts ‘Policies Awareness Campaign regularly for its employees at its various centres and the WBP features in these campaigns.

26. COST RECORDS

Considering the services rendered by the Company, the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013.

27. PREVENTION OF SEXUAL HARASSMENT

We have zero tolerance for sexual harassment at workplace and have adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder for prevention and redressal of complaints under the above Act. The Company has constituted an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Four (4) complaints were received by the local Internal Complaints Committee during the year under review, and three complaints have been redressed as on March 31, 2024. The investigation pertaining to the pending complaint has been completed and grievance has been redressed as on the date of the Annual Report, in accordance with the Policy adopted by the Company and provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

28. OTHERS

There are no material changes and commitments affecting the Companys financial position between the end of the financial year to which this financial statement relates and the date of this report.

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

The details regarding remittance of Unclaimed Dividend to Investors Education & Protection Fund (IEPF) for financial year 2016-17 and thereafter in terms of Section 125 of the Companies Act, 2013 are disclosed and is available in the Corporate Governance Report forming part of the Annual Report.

29. SECRETARIAL STANDARDS

Your Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

30. ACKNOWLEDGEMENTS

Your Directors wish to thank employees, customers, partners, suppliers, and above all, our shareholders and investors for their continued support and co-operati\on.

For and on behalf of the Board

N. G. Subramaniam

Chairman

Bengaluru, April 23, 2024