Your directors have pleasure in presenting the 29^th Annual

Report together with audited accounts for the year ended

31^st March 2023. The summarised financial results of the

Company are presented hereunder:

OPERATING AND FINANCIAL PERFORMANCE:

(Rs. in cr.)

DIVIDEND

Your Company paid an interim special dividend of Rs.1.50/- per share (30%) in February 2023.

Your directors are pleased to recommend a final dividend of

Rs. 1.50/- per share (30% on the face value of Rs.5/-).

In addition, your directors are pleased to recommend a special dividend of Rs.1.00/- per share (20% on the face value of Rs.5/-), which, together with the interim special dividend of Rs.1.50/- per share,paid during February 2023, and the final dividend of

Rs.1.50 /- per share paid now, would aggregate to a total Dividend of Rs.4.00/- per share (80% on the face value of Rs.5/-)for the Financial Year 2022-23. Special dividends are paid out of a portion of the proceeds received by Your Company from the dis-investments made during the year.

The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is is available in the company's website https://www.sundaramholdings.in/investorinfo/default.aspx

# on the enhanced paid-up Capital of Rs.111.05 cr.

Indian Economy

The Indian economy,appears to have moved on after its encounter with the pandemic, staging a recovery in FY22 ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in FY23. Statistics place real domestic product (GDP) growth at 7% for FY 2023, which is higher than almost all major economies in the world. This growth was driven primarily by private consumption and investment.

As the Global Economy was recovering from the pandemic induced output contraction, the Russia-Ukraine conflict which broke out in February 2022, triggered a swing in commodity prices and, thus, accelerating existing inflationary pressures. This resulted in India?€™s inflation increasing to 6.7% during FY 2023 as compared to 5.5%in FY2022.

As per the annual Economic Survey, industry is estimated to have grown by4.1% in the last financial year. The services sector is estimated to have grown by 9.1% in FY23, as against 8.4% in FY22 while agriculture is estimated to have grown by 3.5% in the year under review, as against 3.0 % in the previous year,making India one of the fastest growing economies in the world.

The fiscal deficit for the year 2022-23 is likely to hover around the projected target of 6.4%, due to an appreciable increase in tax collections during the year and prudent fiscal management by the Government.

The third and fourth quarters of FY23 witnessed a gradual pickup in most macro variables, with an improvement in consumption, investment, capacity utilisation, among many others. As a result, FY23 is likely to record a growth of about 7.2%, exceeding the 7% advance estimates released in February 2023.

Automotive sector outlook

Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.

After facing the challenges like disruption caused by the pandemic, semi-conductor chip shortages, supply chain disruptions, the automotive sector witnessed growth across all segments during FY 2023 as given in the below graphs.

During FY 2023, the domestic automotive industry continued to witness multiple trends at play across segments such as increased consumer confidence and recovery in demand, electrification of power train, increasing digitalisation, supply chain recalibration and moderation in exports. Escalating geopolitical tensions and rising inflation during early FY 2023 resulted in sharp commodity price increases and cast a shadow on the pace of global recovery. Nevertheless, the domestic automotive industry witnessed a healthy revival in demand, aided by a recovery in economic activity and increased mobility.

Despite rising interest rates during the year and the increased costs of vehicles owing to stricter emission norms and safety norms, the demand recovery continued for commercial vehicles with volumes rapidly approaching pre-pandemic peak levels.

Rising truck utilization has been crucial for firm freight rates and improved demand for the truck segment. Demand grew at 27 percent growth in LCVs and 49 percent in MHCVs driven by increased activity in roads, construction, housing as well as rising e-com penetration and increased focus on last-mile connectivity. Tractor sales hit a new peak in FY2023 driven by normal monsoons, improved farm incomes and higher construction activity. Passenger vehicles posted record sales in FY2023 with a 27 percent YoY growth and surpassed pre-pandemic peak levels despite lingering effects of supply chain constraints and semiconductor shortages. This growth in passenger vehicles was primarily driven by increased customer preference for UVs and a shift from compact cars to compact UVs.

The outlook for 2023-24 is of continued recovery in vehicle sales, primarily led by gradual easing of supply-side constraints, easing inflationary pressures viz., on industrial commodities. Domestic industry growth is estimated at mid-to high single digit levels in the incoming year across various automotive segments. The moderation in growth rates stem from a high base of the previous year as well as the lagged impact of rate hikes and vehicle price increases on demand.

Expected economic growth of ~6 percent, increased budget allocation towards infrastructure spending and improving truck operator profitability should support demand growth in CVs. Passenger vehicle segment, despite challenges of long delivery times, is expected to sustain growth rates viz., in the UV segment, with a slew of launches expected from various players.

EXEMPTED CORE INVESTMENT COMPANY

As at the date of the audited balance sheet for the financial year ended 31^st March 2023, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.