డైరెక్టర్ల నివేదిక HD Fire Protect Ltd.

Your Board of Directors (“Board”) are pleased to present the 29th Annual Report of HD Fire Protect Limited
("HD Fire" or "the Company"), together with the Audited Financial Statements for the financial year ended
financial year ended March 31, 2026 (“year under review” or “year” “financial year” or “FY26”).

During the year under review, the Company continued to strengthen its position as a leading manufacturer
and exporter of fire protection equipment and systems through sustained business growth, continued
investment in product development and international certifications, expansion of manufacturing capabilities,
and a strong focus on corporate governance. The year also marked an important milestone in the Company''s
journey with its conversion into a public limited company and significant progress towards the proposed
Initial Public Offering (IPO).

FINANCIAL PERFORMANCE AND SUMMARY

The summary of financial performance of the Company for the year is as under:

EXPORTS

Despite the prevailing geopolitical uncertainties and ongoing conflict in the Middle East region, the Company
demonstrated resilience and sustained business momentum, achieving an 8.47% growth in export turnover
during the financial year ended March 31,2026.

Revenue from export markets increased by ?1,314.51 lakhs, rising from ?15,526.00 lakhs in the previous
financial year to ?16,840.51 lakhs during the year under review.

This performance reflects the Company''s ability to effectively navigate external challenges while maintaining
the strength of its international operations and customer relationships.

BUSINESS OVERVIEW AND STATE OF AFFAIRS OF THE COMPANY

The Company is engaged in the business of manufacturing, supplying and exporting fire protection
equipment and systems, including water, foam and gas-based fire suppression solutions. Its product portfolio
comprises of a wide range of fire protection products and systems catering to industrial, commercial,
residential, and infrastructure sectors in domestic as well as international markets.

The Company continues to focus on delivering high-quality and innovative fire protection solutions through
its in-house manufacturing capabilities, supported by a strong presence across India and various
international markets.

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

As part of its strategic growth journey and with a view to providing public market access to its shareholders,
the Company was converted from a private limited company into a public limited company during the year
under review. The conversion was approved by the Board of Directors on May 31, 2025, and by the
shareholders on June 06, 2025, and was subsequently approved by the Registrar of Companies on June
19, 2025.

Following the conversion, the Company filed the Draft Red Herring Prospectus (“DRHP”) with SEBI, NSE
and BSE on September 24, 2025. The Company subsequently received in-principal approvals from NSE
and BSE on October 08, 2025, and November 06, 2025, respectively, and SEBI’s observation letter on
January 29, 2026. The Company is presently undertaking the necessary regulatory and procedural actions
for filing the Red Herring Prospectus and completion of the proposed Initial Public Offering (“IPO”) and listing
of its equity shares on the stock exchanges.

PRODUCT DEVELOPMENT AND APPROVALS

During the year under review, the company continued to invest in product innovation and international
certifications to strengthen its market presence and ensure compliance with global standards.

• The company completed project of FM approval of its monitor models Vajra-331-B and Vajra331 in
April 2025.

• The company initiated a new project for obtaining European CE approval for its Alarm Valves. The
approval process is underway and is expected to be completed by November 2025.

• A separate CE approval project has also been initiated for the Water Motor Gong Bell (Sprinkler
Alarm), further expanding the company’s CE-compliant product range. The approval process is
underway and is expected to be completed by August 2026.

• The company shall renew its ASME Approval for Pressure Vessels in June 2026.

• A new UL certification project has been initiated for the company’s range of foam-based fire
protection equipment, specifically designed for use with fluorine-free environmentally friendly foam,
in response to evolving global environmental standards and is expected to get completed by August
2026.

FINANCE

During the year under review, in view of optimum utilisation of resources, the Company generated cash profit
and is enjoying status of Debt Free Company.

CREDIT RATING

CRISIL, an SME Rating Agency has reaffirmed “SME 1”, the highest rating to the Company.

DIVIDEND

Interim Dividend

The Board of Directors, at its meeting held on August 18, 2025, declared an Interim Dividend of ?2/- per
equity share of face value ?5/- each (i.e., 40%) for the financial year 2025-26. The total interim dividend
payout amounted to ?3,505 lakhs. The said interim dividend was paid to those Members whose names
appeared in the Register of Members / list of Beneficial Owners maintained by the Depositories as on the
record date of August 15, 2025.

Special Dividend

The Board of Directors has recommended a Special dividend of ?3 per equity share (i.e., 60% on the face
value of ?5/- each), subject to the approval of the shareholders at the ensuing 29^th Annual General Meeting.

Upon approval, the total payout on account of the said dividend will amount to ?5256.9 lakhs.

The Dividend payout is in accordance with the Dividend Distribution Policy which is available on the website
of the Company at: https://www.hdfire.eom/wD-content/uploads/2025/10/Dividend-Distribution-Policv.pdf

TRANSFER OF EQUITY SHARES / UNCLAIMED DIVIDEND TO IEPF

Pursuant to the provisions of the Companies Act, 2013 read with the Investor Education and Protection Fund
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, dividends remaining unpaid or unclaimed
for a period of seven consecutive years are required to be transferred to the Investor Education and
Protection Fund (“IEPF”). Further, shares in respect of which dividends have remained unpaid or unclaimed
for seven consecutive years or more are also required to be transferred to the demat account of the IEPF
Authority.

During the year under review, there were no amounts lying unpaid or unclaimed for a period of seven years
requiring transfer to the IEPF. Accordingly, no amount or shares were transferred by the Company to the
IEPF Authority during the year.

TRANSFER TO RESERVES:

The Company has not transferred any amount of profit to the reserves during the financial year under review.

REPORT ON PERFORMANCE OF SUBSIDIARY. ASSOCIATE AND JOINT VENTURE COMPANIES:

During the year under review, your company did not have any Subsidiary, Associate or Joint Venture
Companies.

CAPITAL AND FINANCE

Authorized Share Capital

As on 31^st March 2026, the total authorised share capital of the Company stands at ? 90,00,00,000 consisting
of 18,00,00,000 equity shares of? 5/- each.

Paid up Share Capital

As on 31^st March 2026, the paid-up share capital of the Company stands at ? 87,61,50,000 divided into
17,52,30,000 equity shares of ?5/- each.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP1

Changes during the year under review

During the year under review, the Board, at its meeting held on May 02, 2025, appointed Mr. Hitesh Devji
Dedhia as the Chief Financial Officer and Mr. Sundaram Balasubramanian Iyer as the Company Secretary
& Compliance Officer of the Company.

The Board at its meeting held on May 31,2025, took note of the resignation of Mrs. Priyanka Dharmi Mutha
from the position of Company Secretary w.e.f. May 06, 2025.

Further, at its meeting held on June 19, 2025, the Board appointed Mr. Ramesh Chandak, Mr. Nagesh
Dinkar Pinge, Mrs. Sudha Ravi and Mr. Navin Muthu Ram as Independent Directors of the Company. The
said appointments were subsequently approved by the shareholders at the 28^th Annual General Meeting
held on August 05, 2025.

The Board also re-appointed Mr. Harish Narshi Dharamshi as Chairman and Managing Director of the
Company for a further term of five years with effect from October 01,2025. In addition, Mr. Miheer Ghotikar,
Mr. Anik Dharamshi and Mrs. Parika Ghotikar were re-appointed and designated as Whole-Time Directors
of the Company. The aforesaid re-appointments were approved by the shareholders at the 28^th Annual
General Meeting held on August 05, 2025.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Anik Narendra Dharamshi,
DIN: 02153409, shall retire by rotation at the ensuing Annual General Meeting and, being eligible, has
offered himself for re-appointment.

Declaration by Independent Directors

The Company has received necessary declarations from all Independent Directors confirming that they meet
the criteria of independence prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015.

The Independent Directors have further confirmed that there are no circumstances or situations that could
impair their ability to discharge their duties with objective and independent judgment, and that they are not
debarred from holding the office of director by any order of SEBI or any other regulatory authority.

In the opinion of the Board, all Independent Directors possess the requisite integrity, qualifications,
experience, expertise and proficiency and fulfil the conditions of independence as prescribed under the
applicable laws.

Further, all Independent Directors have registered themselves with the Independent Directors Databank and
have complied with the requirements relating to the online proficiency self-assessment test conducted by
the Indian Institute of Corporate Affairs, wherever applicable.

Independent Directors’ Review Meeting

A separate meeting of the Independent Directors was held during the year to evaluate the performance of
the Non-Independent Directors, the Chairman and the Board as a whole, and to assess the effectiveness of
the Board Committees. The evaluation was carried out through a structured assessment framework
comprising a detailed questionnaire covering various aspects of Board functioning and governance. The
performance criteria for Independent Directors included participation and contribution in meetings, quality of
deliberations, professional expertise, understanding of the Company''s business and industry, exercise of
independent judgment, strategic guidance, and adherence to the applicable governance and compliance
framework.

Familiarisation Programme for Independent Directors

The Company has in place a Familiarisation Programme for its Independent Directors to enable them to
understand the Company''s business, industry dynamics, regulatory environment, roles, rights and
responsibilities. The details of the Familiarisation Programme imparted during the financial year 2025-26 are
available on the Company''s website at: https://www.hdfire.com/wp-content/uploads/2026/04/Familiarisation-
Proaramme-FY2025-26.pdf

MEETINGS
Board of Directors

During FY26, the Board of Directors met ten (10) times. The intervening gap between any two meetings did
not exceed the period prescribed under the Companies Act, 2013. The details of attendance of the Directors
at the Board Meetings held during the year are provided below:

* Appointed as an Independent Director w.e.f. June 19, 2025.

Phys = Physical | VC = Video Conferencing ] - = Leave of Absence

Members/ Shareholders

During the year, three (3) meetings of the members were duly convened and held on June 6, 2025
(Extraordinary general Meeting), August 05, 2025 (Annual General Meeting), and September 10, 2025
(Extraordinary general Meeting).

Audit Committee

The Audit Committee is constituted in accordance with the provisions of Section 177 of the Companies Act,
2013 and the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. The Committee assists the Board in overseeing the integrity of financial reporting, internal
financial controls, risk management processes, statutory and internal audit functions, and compliance with
applicable legal and regulatory requirements. During FY26, four (4) meetings of the Audit Committee were
held. All recommendations made by the Audit Committee during the year were accepted by the Board. The
composition of the Committee and attendance of members at its meetings are provided below:

The Nomination and Remuneration Committee is constituted in accordance with the provisions of Section
178 of the Companies Act, 2013 and the applicable provisions of the SEBI Listing Regulations. The
Committee is responsible for identifying and recommending suitable candidates for appointment to the Board
and senior management, evaluating the performance of Directors, and formulating policies relating to
remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. During FY26,
one (1) meetings of the Committee were held. The composition of the Committee and attendance of
members at its meetings are provided below:

The Board has, in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act,
2013, formulated a Nomination and Remuneration Policy setting out the criteria for determining
qualifications, positive attributes and independence of a Director, and the policy relating to remuneration of
Directors, Key Managerial Personnel and other employees. The salient features of the said Policy, in brief,
are as under:

> Appointment and Selection Criteria - identification, assessment and recommendation of persons for
appointment as Directors, KMPs and Senior Management Personnel based on qualifications, expertise,
experience, integrity and leadership qualities, along with appropriate induction and training;

> Criteria for Independence - formulation of criteria for determining the independence of Independent
Directors in line with the Companies Act, 2013 and SEBI Listing Regulations, and periodic review
thereof;

> Board Diversity - promoting diversity on the Board with respect to skills, knowledge, experience,
gender, age, cultural background and other relevant attributes;

> Framework for Remuneration - ensuring that remuneration paid to Directors, KMPs and Senior
Management Personnel is reasonable, competitive and commensurate with their roles, responsibilities,
experience and performance, and aligned with industry benchmarks and the Company’s performance;
and

> Performance Evaluation - establishment of a framework for evaluation of the performance of the
Board, its committees and individual Directors.

The complete Nomination and Remuneration Policy is available on the Company’s website and stakeholders
may access the same at the following weblink:

https://www.hdfire.com/wp-content/uploads/2026/02/Nomination-and-Remuneration-Policv.pdf.

The Stakeholders'' Relationship Committee is constituted in accordance with the provisions of Section 178
of the Companies Act, 2013 and Regulation 20 of the SEBI Listing Regulations. The Committee oversees
and reviews investor grievances and ensures effective redressal of complaints relating to
transfer/transmission of securities, non-receipt of annual reports, dividends and other shareholder-related
matters. During FY26, one (1) meeting of the Committee was held. The composition of the Committee and
attendance of members at its meeting are provided below:

Risk Management Committee

The Risk Management Committee is constituted in accordance with the applicable provisions of the SEBI
Listing Regulations. The Committee assists the Board in establishing and monitoring the Company''s risk
management framework and in identifying, evaluating and mitigating key strategic, operational, financial and
compliance risks. During FY26, two (2) meetings of the Committee were held. The composition of the
Committee and attendance of members at its meetings are provided below:

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee has been constituted in accordance with the provisions of
Section 135 of the Companies Act, 2013. The Committee is responsible for formulating and monitoring the
Company''s Corporate Social Responsibility Policy, recommending CSR expenditure and overseeing the
implementation of CSR initiatives undertaken by the Company. During FY26, two (2) meetings of the
Committee were held. The composition of the Committee and attendance of members at its meetings are
provided below:

Initial Public Offer Committee

The Initial Public Offer Committee was constituted by the Board to oversee matters relating to the Company''s
initial public offering and listing process, including coordination with intermediaries, review of offer-related
documentation and implementation of decisions relating to the public issue. During FY26, six (6) meetings
of the Committee were held. The composition of the Committee and attendance of members at its meetings
are provided below:

CORPORATE GOVERNANCE:

In accordance with the disclosure requirements prescribed under Section II of Part II of Schedule V to the
Companies Act, 2013, details relating to the remuneration paid/payable to the Managing Director and Whole¬
time Directors during the financial year ended March 31,2026, including all elements of remuneration, fixed
and performance-linked components, service contracts, severance arrangements and stock options,
wherever applicable, are set out below:

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act, the Directors, to the best of their
knowledge and ability, confirm that for the FY26:

a) in the preparation of the annual financial statements for the year ended March 31,2026, the applicable
accounting standards have been followed and there are no material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of
the company at the end of the Financial Year and of the profit of the company for that period;

c) proper and sufficient care was taken for the 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 fraud and other irregularities;

d) annual accounts of the company have been prepared on a going concern basis;

e) they had laid down internal financial controls to be followed by the Company and that such internal
financial controls are adequate and were operating effectively; and

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

ANNUAL PERFORMANCE EVALUATION BY THE BOARD

The Board has carried out an annual evaluation of its own performance, that of its Committees and the
Individual Directors, including the Chairperson. The Company has established a formal and structured
evaluation framework, based on criteria prescribed by the Nomination and Remuneration Committee, and
implemented through a comprehensive and confidential questionnaire covering various performance
parameters.

As part of the evaluation process, the Independent Directors, at their separate meeting, evaluated the
performance of the Non-Independent Directors, the Chairperson and the Board as a whole. Thereafter, the
Board evaluated its own performance, that of its Committees and Individual Directors.

Based on the outcome of the evaluation, the Board noted that the performance of the Board, its Committees
and the Individual Directors was satisfactory and expressed satisfaction with the evaluation process.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the Companies Act, 2013, the Board of Directors has
constituted a Corporate Social Responsibility (CSR) Committee. The Committee is responsible for
formulating and recommending to the Board a CSR Policy outlining the activities to be undertaken by the
Company in accordance with Schedule VII of the Act, recommending the amount of expenditure to be
incurred, and monitoring the CSR initiatives from time to time.

The Company has adopted a Corporate Social Responsibility (“CSR”) Policy in accordance with the
provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social
Responsibility Policy) Rules, 2014. The Policy, inter alia, sets out the guiding principles, focus areas,
implementation framework, monitoring mechanism and annual action plan for undertaking CSR activities
and is available on the website of the Company at:

https://www.hdfire.com/wp-content/uploads/2026/04/CorDorate-Social-Responsibilitv-Policv.Ddf.

A brief outline of the CSR Policy and the details of CSR activities undertaken by the Company during FY26
are provided in Annexure 1 forming part of this Report in the format prescribed under the Companies
(Corporate Social Responsibility Policy) Rules, 2014.

RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and the SEBI Listing Regulations, the Company
has formulated a Policy on Materiality of Related Party Transaction and dealing with Related Party
Transaction which is uploaded on the Company’s website at:

https://www.hdfire.com/wp-content/uploads/2026/02/Policv-on-Dealinq-with-Related-Partv-

Transactions.pdf.

All related party transactions entered into during the financial year were in the ordinary course of business
and on arm''s length basis. Accordingly, disclosure in Form AOC-2 pursuant to Section 134(3)(h) read with
Rule 8(2) of the Companies (Accounts) Rules, 2014 is not required. Further, none of these transactions with
related parties could be considered material in nature as per the thresholds given in Rule 15(3) of Companies
(Meetings of Board and its Powers) Rules, 2014 and hence no disclosure is required to be given in this
regard.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established
a Vigil Mechanism and adopted a Whistle Blower Policy to provide a channel to Directors, employees and
other stakeholders to raise genuine concerns about unethical behaviour, actual or suspected fraud, or
violation of the Company’s Code of Conduct. The Policy ensures adequate safeguards against victimisation
and enables direct access to the Chairperson of the Audit Committee in appropriate cases. During the year
under review, no personnel was denied access to the Audit Committee. The Vigil Mechanism/Whistle Blower
Policy is available on the website of the Company at:

https://www.hdfire.com/wp-content/uDloads/2025/10A/iqil-Mechanism-Whistle-Blower-Policv.Ddf

DEPOSITS

During the year under review, your Company has neither invited nor accepted any deposits from the public
falling within the ambit of Section 73 of the Companies Act, 2013 and the rules framed thereunder. The
requisite return with respect to amount(s) not considered as deposits has been filed with Registrar of
Companies.

LOANS FROM DIRECTORS OR DIRECTOR’S RELATIVES:

During the financial year under review, the Company has not borrowed any amount(s) from any of its
directors.

PARTICULARS OF LOANS. GUARANTEES. SECURITIES OR INVESTMENTS

Particulars of loans given, investments made, guarantees or securities given during the year under review
and as covered under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in
notes to the financial statements forming part of this Annual Report.

INSURANCE

The Company takes a very pragmatic approach towards insurance. Adequate cover has been taken for all
movable and immovable assets for various types of risks.

HUMAN RESOURCE

The Company believes that its employees are its most valuable asset and remains committed to fostering a
high-performance and learning-oriented work culture. As on March 31, 2026, the Company employed
approximately 278 employees.

The Company continues to invest in the growth and development of its workforce through various training
and development initiatives. Our Continuous Learning Program focuses on enhancing technical
competencies, industry knowledge, leadership capabilities, health and wellness, self-management, and
financial awareness.

The Company remains committed to building a skilled, engaged and future-ready workforce while
maintaining harmonious employee relations.

ENVIRONMENT AND SAFETY

Your Company recognises environmental responsibility as a core priority and is committed to sustainable
practices across its operations. We have successfully implemented the ISO 14001 Environmental
Management System, reflecting our focus on environmental stewardship. Our manufacturing facilities
incorporate Sewage Treatment and Effluent Treatment Plants, enabling effective treatment and recycling of
industrial waste.

Additionally, our rainwater harvesting system promotes resource conservation by capturing and utilising
rainwater, further reducing our environmental footprint.

POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at the
Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been duly constituted to
consider and resolve complaints related to sexual harassment in a time-bound and confidential manner. The
policy lays down clear procedures for lodging complaints, conducting inquiries, and providing necessary
redressal.

In compliance with the latest amendment notified by the Ministry of Corporate Affairs, the following
disclosures are made for the financial year:

All women employees (including permanent, contractual, temporary, and trainees) are covered under this
policy. The Company remains committed to providing a safe and inclusive work environment for all
employees.

COMPLIANCE UNDER THE MATERNITY BENEFIT ACT. 1961

The Company is committed to fostering a supportive and inclusive workplace for all employees. In
accordance with the provisions of the Maternity Benefit Act, 1961, the Company has adopted appropriate
internal policies and systems to ensure full compliance with the applicable provisions relating to maternity
benefits, including paid maternity leave, nursing breaks, and protection from dismissal during maternity
leave.

During the year, the Company has complied with all applicable provisions of the said Act.

Eligible women employees have been extended the prescribed benefits, and awareness regarding maternity
rights and entitlements has been regularly communicated through HR engagement and policy dissemination.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return as on
March 31,2026, is available in prescribed format on the Company’s website at:
https://www.hdfire.com/investor-relations/.

AUDITORS

Statutory Auditors

M/s. KKC & Associates LLP (formerly known as Khimji Kunverji & Co LLP), Chartered Accountants (Firm
Registration No. 105146W/W100621), were appointed as the Statutory Auditors of the Company by the
Members at the 24^th Annual General Meeting held on September 02,2021, to hold office from the conclusion
of the said Annual General Meeting until the conclusion of the 29^th Annual General Meeting of the Company
to be held in the FY26.

Upon completion of their current term, the Board of Directors, at its meeting held on July 20, 2026, based
on the recommendation of the Audit Committee and considering their qualifications, expertise, experience
and satisfactory performance, recommended the re-appointment of M/s. KKC & Associates LLP, Chartered
Accountants, as the Statutory Auditors of the Company for a further term of five consecutive years, to hold
office from the conclusion of the 29^th Annual General Meeting until the conclusion of the 34^th Annual General
Meeting of the Company to be held in the Financial Year 2031, subject to the approval of the Members.

The Company has received a written consent and certificate from M/s. KKC & Associates LLP, confirming
that their re-appointment, if made, would be in accordance with the provisions of Sections 139, 141 and
other applicable provisions of the Companies Act, 2013 and the rules made thereunder. They have further
confirmed that they satisfy the eligibility criteria and are not disqualified from being re-appointed as the
Statutory Auditors of the Company under the applicable provisions of the Companies Act, 2013.

The Auditor’s Report on the financial statements of the Company for the FY26 forms part of the Annual
Report. The said report was issued by the Statutory Auditors with an unmodified opinion and does not contain
any qualifications, reservations, disclaimer or adverse remarks.

The observations made in the Auditor’s Report are self-explanatory and therefore, do not call for any further
comments under Section 134(3)(f) of the Act.

During the year under review, the Auditors have not reported any fraud under Section 143(12) of the
Companies Act, 2013 and therefore disclosure of details under Section 134(3)(ca) of the Companies Act,
2013 is not applicable.

Cost Auditors

In terms of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the
Company is required to maintain cost accounting records and have them audited every year. Accordingly,
the Board at its meeting held on May 11, 2026, based on the recommendation of the Audit Committee,
appointed M/s. Shekhar Joshi & Co., Cost Accountants (Firm Registration No. 100448), as the Cost Auditor
of the Company to conduct audit of the cost records for the financial year ending March 31, 2027.

A remuneration of ?60,000 (Rupees Sixty Thousand only) plus applicable taxes and reimbursement of out-
of-pocket expenses, if any, has been fixed for the Cost Auditor, subject to the ratification of such fees by the
Members at the 29^th Annual General Meeting (“AGM”). Accordingly, the matter relating to ratification of the
remuneration payable to the Cost Auditor for the financial year ending March 31, 2027 forms part of the
Notice of the 29^th AGM.

The Company has received requisite consent and certificate of eligibility from M/s. Shekhar Joshi & Co.,
Cost Accountants.

During the year under review, the Cost Auditor has not reported any fraud under Section 143(12) of the
Companies Act, 2013 and therefore disclosure of details under Section 134(3)(ca) of the Companies Act,
2013 is not applicable.

The Company has maintained cost records as specified under Section 148(1) of the Act.

Internal Auditors

Pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies
(Accounts) Rules, 2014, the Board of Directors at its meeting held on April 03, 2025, re-appointed M/s. Taral
Dedhia & Co., Chartered Accountants (Firm Registration No. 118082W), as the Internal Auditors of the
Company for the financial year 2025-26, at a remuneration to be mutually agreed between the Board and
the Internal Auditor. The Internal Audit Reports are periodically placed before the Audit Committee for its
review and consideration.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors at its meeting
held on December 11, 2025, on the recommendation of the Audit Committee, appointed M/s. Yogesh D.
Dabholkar & Co., Practicing Company Secretaries (FCS No. 6336, C.P. No. 6752, PR No. 7086/2025), as
the Secretarial Auditors of the Company for the financial year 2025-26.

The Secretarial Audit Report for the financial year 2025-26 in Form MR-3 is annexed to this Report as
Annexure 2 and forms an integral part hereof.

During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of
the Act. There is no qualification, reservation or adverse remark or disclaimer made by the Auditor in their
report.

RISK MANAGEMENT

The Company has established a robust risk management framework to identify, assess, monitor and mitigate
risks that may adversely impact the achievement of its business objectives. The Board of Directors has
approved a Risk Management Policy and related guidelines that provide a structured and systematic
approach for identifying, evaluating and managing risks across all business divisions and corporate
functions.

The risk management framework is designed to proactively address uncertainties, strengthen decision¬
making processes and enhance the Company''s ability to achieve its strategic and operational objectives.
Key business risks are periodically reviewed by the management and the Board, and appropriate mitigation
measures are implemented on a continuous basis. Risk considerations are also integrated into the
Company''s annual business plans, strategic initiatives and operational reviews.

Risk management forms an integral part of the Company''s governance and management processes. The
Company continuously monitors and reports on significant risks and uncertainties and takes necessary
actions to minimise their potential impact while leveraging opportunities that support sustainable growth and
value creation. The policy was approved on March 30, 2026, and can be accessed at:

https://www.hdfire.com/wp-content/uploads/2026/04/Risk-Manaqement-Policv.pdf

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a robust and adequate internal control system designed to safeguard and
protect its assets against unauthorised use or disposition and to ensure that transactions are properly
authorised, accurately recorded, and appropriately reported. The internal control framework is structured to
promote the effectiveness and efficiency of operations, the reliability of financial reporting, and compliance
with applicable laws and regulations.

The Internal Financial Controls with reference to financial statements as designed and implemented by the
Company are adequate. Statutory Auditors Report on Internal Financial Controls as required under Clause
(i) of sub-section 3 of Section 143 of the Companies Act, 2013 is annexed with the Independent Auditors’
Report.

During the year under review, the Company has complied with all the applicable Secretarial Standards
issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant
to Section 118 of the Companies Act, 2013.

ENERGY CONSERVATION. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO ETC ---

Your Company continues to focus on energy conservation by optimising its operations and adopting
measures to improve energy efficiency across its manufacturing facilities on an ongoing basis.

As part of its commitment to sustainable operations and environmental stewardship, the Company proposes
to undertake servicing and maintenance of its sewage and effluent treatment facilities in the coming months.
The Company also plans to review its solar power infrastructure, wherever considered appropriate, to further
enhance the use of renewable energy.

With a view to strengthening technology adoption and improving operational efficiency, the Company has
implemented SAP S/4HANA Public Cloud. The implementation is expected to enhance the efficiency and
robustness of business processes, streamline inventory management, improve production planning and
material management, and support better decision-making across the organisation.

The information required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the
Companies (Accounts) Rules, 2014, is provided in Annexure 3 to this Report.

HD FIRE PROTECT LIMITED - EMPLOYEE STOCK OPTION PLAN. 2025

In order to attract, retain, motivate and reward talented employees and directors, and to align their interests
with the long-term growth objectives of the Company and its shareholders, the Board of Directors, at their
meeting held on September 09, 2025, and the shareholders, at their Extra-Ordinary General Meeting held
on September 10, 2025, approved the introduction of “HD Fire Protect Limited - Employee Stock Option
Plan, 2025” (“ESOP 2025” or the “Scheme”).

The ESOP 2025 has been formulated in accordance with the provisions of the Companies Act, 2013 and
the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021. The Scheme aims to foster a sense of ownership among eligible employees and
directors, enhance employee engagement, and incentivise long-term value creation.

The Scheme comprises a grant of up to 13,50,000 (Thirteen Lakhs Fifty Thousand) stock options, which
shall be exercisable into an equivalent number of fully paid-up equity shares of face value of ?5/- each,
subject to applicable laws and adjustments arising out of corporate actions such as bonus issues, stock
splits, consolidations, mergers, or other reorganisation of the capital structure of the Company.

The Scheme covers eligible employees and directors of the Company and its subsidiary companies, in India
and abroad, in accordance with the eligibility criteria prescribed under the ESOP 2025 and applicable laws.
The administration and implementation of the Scheme is undertaken by the Nomination and Remuneration
Committee, which has been entrusted with the responsibility of administering the Scheme in accordance
with its terms and applicable regulatory requirements.

The Board believes that the implementation of ESOP 2025 will strengthen the Company’s ability to attract
and retain high-calibre talent, encourage employee participation in the Company''s growth and success, and
further enhance stakeholder value in the long term.

During the year under review, no options were granted under the Scheme and consequently the disclosures
to be made in terms of Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 are not
applicable.

DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

During the FY26, the Company had filed applications for compounding of offences and adjudication of
penalties under the provisions of the Companies Act, 2013. The brief details thereof are as under:

1. Compounding of Offences relating to Buy-back of Shares

The Company had filed an application under Section 441 of the Companies Act, 2013 for compounding
of offences arising from non-compliance with the signing requirements in the Letter of Offer issued in
connection with the buy-back of shares undertaken during FY 2021-22 and certain inadvertent
omissions in the explanatory statement relating to the buy-back undertaken during FY 2022-23, in
contravention of Section 68 of the Companies Act, 2013 read with Rule 17(2) of the Companies (Share
Capital and Debentures) Rules, 2014.

The Regional Director (Western Region), Mumbai, vide order dated February 12, 2026, compounded
the said offences and imposed a compounding fee aggregating to ?7,50,000, which was duly paid by
the Company and the Managing Director, being the Officer in Default.

2. Compounding of Offence relating to Appointment of Cost Auditor

The Company had filed an application under Section 441 of the Companies Act, 2013 for compounding
of offence pertaining to delay in appointment of the Cost Auditor for FY 2019-20, in contravention of
Section 148 of the Act read with Rule 6(1) and 6(2) of the Companies (Cost Records and Audit) Rules
2014.

The Regional Director (Western Region), Mumbai, vide order dated December 18, 2025, compounded
the said offence and imposed a compounding fee aggregating to ?2,50,000, which was duly paid by the
Company and the Managing Director, being the Officer in Default.

3. Adjudication of Penalties relating to Directors'' Reports and Annual Return

The Company had filed applications before the Registrar of Companies, Mumbai, for adjudication of
penalties under Section 454 of Companies Act, 2013, in respect of certain inadvertent omissions and
disclosure gaps identified in the Directors'' Reports for the financial years ended March 31, 2020 (FY
2019-20), March 31, 2021 (FY 2020-21), March 31,2022 (FY 2021-22) and March 31,2023 (FY 2022-
23), involving the provisions of Sections 92(3), 118(10), 134(3) and other applicable provisions of the
Companies Act, 2013.

Pursuant to adjudication proceedings relating to the Directors'' Report for FY 2019-20, the Adjudicating
Officer passed separate orders dated May 13, 2026 and May 15, 2026 imposing penalties aggregating
to ?4,00,000, comprising ?20,000 under Section 450, ?30,000 under Section 118(11) and ?3,50,000
under Section 134(8) of the Act. The aforesaid penalties were duly paid by the Company and the
Managing Director, being the Officer in Default.

The adjudication proceedings in respect of the Directors'' Reports for the financial years ended March
31, 2021 (FY 2020-21), March 31, 2022 (FY 2021-22) and March 31, 2023 (FY 2022-23) are currently
pending, and the orders from the Adjudicating Authority are awaited.

Further, the Company had filed a suo-moto application before the Registrar of Companies, Mumbai, for
adjudication of offence under Section 92(6) of the Companies Act, 2013, in relation to certain
inadvertent discrepancies identified in the Annual Returns filed with the Registrar of Companies for the
financial years ended March 31, 2020 (FY 2019-20), March 31, 2021 (FY 2020-21), March 31, 2022
(FY 2021-22), March 31, 2023 (FY 2022-23) and March 31, 2024 (FY 2023-24).

The Company had, prior to filing the application under Section 92(6) of the Companies Act, 2013,
pursued various statutory and procedural remedies, including seeking to revise the Annual Returns (e-
Form MGT-7), filing the requisite applications with the Registrar of Companies and exploring alternative
mechanisms for regularization of the inadvertent discrepancies.

However, the Registrar of Companies, Mumbai, vide its communication dated June 24, 2026, informed
the Company that the application could not be considered under Section 92(6) of the Companies Act,
2013, as the said provision was not applicable to the facts of the case. Consequently, no further
statutory mechanism is presently available to regularize the aforesaid filings.

STATUTORY INFORMATION AND OTHER DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following items as there were
no transactions / events on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any Scheme.

3. Voting rights which are not directly exercised by the employees in respect of shares for the subscription
/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such
persons can beneficially hold shares as envisaged under Section 67(3)(c) of the Companies Act, 2013).

4. There are no material changes and commitments affecting the financial position of the Company, which
have occurred between the end of FY26 and the date of this Report.

5. There was no application made and proceeding initiated / pending by any Financial and/or Operational
Creditors against the Company under the Insolvency and Bankruptcy Code, 2016.

6. The Company has not made any one-time settlement for loans taken from Banks or Financial
Institutions, and hence the details of difference between amount of the valuation done at the time of one¬
time settlement and the valuation done while taking loan from Banks or Financial Institutions along with
the reasons thereof is not applicable.

7. There was no revision of financial statements and Board''s Report of the Company during the year under
review.

8. None of the Directors of the Company have received any remuneration or commission from a holding
company or subsidiary company during the year. As the Company does not have any holding or
subsidiary company, this requirement is not applicable.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors would like to express their grateful appreciation for assistance and co-operation received
from Bankers, Central and State Government Departments, Customers, Vendors, shareholders and other
Business Associates for their continued and valuable co-operation and support extended to the Company.

We take this opportunity to place on record warm appreciation for the employees at all levels for their
dedicated service and valuable contributions towards the growth of the Company and look forward to their
continued commitment to achieve further growth and take up more challenges that the Company has set for
the future.