Shanthi Gears Ltd

Transaction details

• Target Company: Shanthi Gears Limited.
• Disclosing Party: Tube Investments of India Limited (Promoter group).
• Transaction Type: Acquisition of voting-rights shares.
• Pre-Transaction Holding: 5,40,57,475 shares (70.46%).
• Transaction Details: Acquired 20,64,713 shares (2.69%) via market block deal.
• Post-Transaction Holding: 5,61,22,188 shares (73.16%).
• Date of Transaction: 21 August 2026.
• Share Capital Context: Before: 7,67,15,853; After: 7,67,15,853; Diluted: 7,67,15,853.

Financial results and governance

• Unaudited standalone Q1 FY27 results approved for quarter ended 30 June 2026.
• Limited Review Report by MSKA & Associates attached.
• Statutory Labour Code impact recognized as an exceptional item in prior period.
• Resignation of Mr. Malliraj S, Head - Strategic Sourcing, effective 15 September 2026.
• No consolidated results due to absence of subsidiary/affiliate.
• Unexecuted order book stood at ₹378 crore as of 30 June 2026.

Meeting Details

• Date of meeting: 29 July 2026.

Key Agenda Items

• Approve unaudited standalone financial results for quarter ended 30 June 2026.

Other Notes

• Trading window remains closed until 48 hours after unaudited results release.

Interim CFO appointment

• Mr. Sukanta Kumar Panigrahi appointed Interim Chief Financial Officer with immediate effect; term not applicable.
• Sudhir R unable to join the company due to personal reasons.
• Authorised KMPs for materiality disclosures: CEO M Karunakaran and Company Secretary Walter Vasanth P J.
• Brief profile: Sukanta Kumar Panigrahi, CA and Company Secretary with 18 years' experience.
• Past roles include Tube Investments of India Limited, River Mobility, Ford Motors, and BNY Mellon.
• No relationships with other directors disclosed.

Financials

• Revenue from operations ₹518.72 cr, down 14% YoY due to weaker orders.
• EBITDA ₹123.54 cr; EBITDA margin 23.82%.
• PAT ₹76.66 cr; EPS ₹9.99.
• ROCE 24% in FY26, down from 34.77% in FY25.
• Free cash flow ₹29.83 cr, vs ₹75.47 cr prior year.
• Interim dividend ₹3 per share; final ₹2 per share; total ₹5.
• Paid-up capital ₹7.67 cr; net worth ₹440.06 cr.
• Debt-free; cash + investments around ₹66.64 cr.

Capex & assets

• Highest-ever capex on plant and machinery; additions ₹63.29 cr.
• CWIP ₹25.79 cr; transfers to PPE ₹42.40 cr.
• Net fixed assets ₹105.83 cr as at 31 Mar 2026.
• Investment property ₹9.37 cr; fair value ₹43.13 cr; rent ₹1.32 cr.
• R&D expenditure ₹6.44 cr; turnover 1.25%.
• Projects in progress CWIP ₹24.49 cr; remaining in CWIP.

Governance & capital structure

• Board eight directors; Aruna Thangaraj appointed Independent Director on 31 Jul 2025.
• CFO Ranjan Kumar Pati resigned w.e.f 19 Mar 2026.
• Statutory auditors: MSKA & Associates LLP; Secretarial: Sridharan & Sridharan.
• Promoter TI holds 70.47% stake.
• Promoter reclassification to public category approved by stock exchanges (Dec 2025, Mar 2026).

BRR & ESG performance

• 61% of energy from renewables; wind 6.7 MW and solar 190 kW.
• Total energy 73,101 GJ; renewables 38,486 GJ; non-renewables 34,615 GJ.
• Waste generated 5,701 MT; 5,387 MT recycled; 315 MT disposed.
• CO2: Scope 1 391 tCO2e; Scope 2 5,536 tCO2e; total 5,927 tCO2e.
• LTIFR: employees 0; workers 0.35.
• CSR spend ₹2.19 cr; saplings, X-ray machine, classrooms; aspirational district Coimbatore.

Markets & risk

• India revenue ₹449.11 cr; Rest of World ₹69.61 cr; total ₹518.72 cr.
• Export turnover accounts for 13% of total turnover.
• No single external customer >10% of revenue.
• Statutory impact of new Labour Code recognized as exceptional ₹4.78 cr.

Notes on governance & risk

• Auditors' report: unqualified; no material qualifications.
• Internal controls certified; ISO 45001/14001 compliant.
• Secretarial audit: no qualifications; no IBC concerns.

Overview

• Standalone reporting for Shanthi Gears' Indian manufacturing units.
• Three plants and one office constitute the reporting boundary.
• Exports contribute 13% of turnover.
• Markets span 28 Indian states/8 UTs and 27 international markets.
• Core activities: design/manufacture of gears, gearboxes, geared motors; refurbishing gearboxes.
• Turnover mix: GGM 48%, GDS 52%.

Key ESG Risks & Opportunities

• Regulatory compliance risk; target zero non‑compliance via robust digital monitoring.
• Occupational health and safety risk; ISO 45001 supports zero-incident culture.
• Climate change opportunity through renewable energy adoption and cleaner production.
• Waste and water management opportunities; ongoing improvements planned.
• Sustainable supply chain program with ESG supplier assessments and training.
• Cybersecurity risk; comprehensive information security protocols and testing.
• Product stewardship risk; lifecycle considerations with supplier collaboration.

Governance & Policy Highlights

• Board oversight with a dedicated sustainability committee; quarterly reviews.
• Anti-corruption policy and Code of Conduct in place.
• Whistle Blower Policy and POSH policy in place.
• Certifications: ISO 9001, ISO 14001, ISO 45001, IRIS, AS9100D, NADCAP.
• Assurance: no external assurance reported for the BRSR.
• Policies cover entity operations; value chain partners not formally extended.

Social Responsibility & Workforce

• Total workforce: 396 employees and 1,039 workers.
• Female representation: employees 9%, workers 6%.
• LTIFR: employees 0; workers 0.35; total injuries 1 worker.
• Well-being spend: 15% of revenue on wellbeing measures.
• Retirement benefits: PF, gratuity, ESI, and bonuses for staff.
• Grievance mechanisms: Whistleblower policy, POSH ICC, multiple channels.
• CSR focus: 8 projects in aspirational districts; ₹2.19 crore spent.
• Human rights training: 87% of employees and 85% of workers covered.

Environmental Performance

• Total energy 73,101 GJ; 61% from renewable sources (53% captive, 8% third-party).
• Scope 1: 391 tCO2e; Scope 2: 5,536 tCO2e; total 5,927 tCO2e.
• Water withdrawals: groundwater 25,281 kl; third-party 14,216 kl; total 39,497 kl.
• Waste: total 5,701.47 t; recycled 5,386.9 t; hazardous 349.8 t; MS scrap 5,343.21 t.
• Waste disposal: incineration 0.03 t; other disposal 314.58 t.
• Environmental certifications: ISO 14001; EMS in place; EPR SOPs in progress.

Stakeholder Engagement & Complaints

• Key stakeholder groups: employees, shareholders/investors, customers, communities, vendors.
• Engagement channels: digital platforms, emails, retail outlets, surveys; frequency: regular.
• Customer response: initial reply within 7 days; average resolution ~29 days.
• Consumer complaints: 112 received; 0 unresolved at year-end.
• Inclusive engagement: CSR initiatives with communities and NGOs; aspirational district projects.
• Value chain engagement: 103 partners invited; 77 attended ESG awareness sessions.

Other Notable Metrics

• Product mix: GGM 48%, GDS 52% of turnover.
• R&D and capex: R&D 1% of total; capex ₹3.71 Cr (6% of capex).
• CSR turnover ₹518.72 Cr; net worth ₹440.06 Cr.
• LCA not conducted; external assurance not disclosed.
• Policy disclosures available on company website; includes CSR and materiality policies.

Financial performance

• Revenue from operations ₹518.72 cr; down 14% YoY.
• EBITDA ₹118.76 cr; down 17% from ₹143.39 cr.
• PAT ₹76.66 cr; PAT margin 14.8%.
• EPS ₹9.99 (basic and diluted).

Operations & geography

• Q4-2025-26 order bookings reached record levels.
• Highest-ever plant and machinery investments, signaling growth confidence.
• Geographic revenue: India ₹449.11 cr; Rest of World ₹69.61 cr.
• AS-9100D and IRIS certifications obtained for aerospace and rail components.

Dividends & capital allocation

• Dividend policy targets payout of about 25% of standalone profits.
• FY25-26 dividends: interim ₹3; final ₹2; total ₹5 per share.
• Promoter holding: Tube Investments of India Limited at 70.47%.

Liquidity & capital structure

• The company is debt-free with no long-term borrowings.
• Cash and cash equivalents ₹1.33 cr; bank balances ₹73.88 cr; fixed deposits ₹72.82 cr.
• Operating cash flow ₹70.10 cr; net investing ₹45.30 cr; financing outflow ₹38.47 cr.

Governance & board changes

• Board consists of eight directors; new independent Aruna Thangaraj appointed 30-Jul-2025.
• Independent directors declared independence under the Companies Act and SEBI LODR.
• Audit Committee has four independent directors; chair L Ramkumar.
• Statutory auditors: MSKA & Associates LLP through 2028 AGM.
• Secretarial auditors: Sridharan & Sridharan Associates; no observations.
• Remuneration: CEO ₹1.51 cr; Non-Executive Directors ₹1.36 cr.
• Promoter reclassification approved by stock exchanges during 2025-26.

CSR & ESG

• CSR spend ₹2.19 cr; CSR projects in education, environment, health care, rural development.
• 2030 ESG goals: energy intensity 30% reduction; renewable energy 75%; water intensity 50% reduction; waste intensity 50%.
• FY25-26 performance: energy intensity -10%; renewable energy 61%; water -13%; waste -12%.
• Women in management 6% vs 20% target.

Audits & internal controls

• Auditors: MSKA & Associates LLP; unqualified opinion.
• Internal controls: ISO 45001/14001; ERP-based; ICFR adequate.
• Secretarial audit: no observations; Annexure F.

Industry outlook & risks

• Industry growth: Indian gear market surging; Make in India; 7%+ CAGR.
• Key risks: raw material volatility, skill gap, global competition.
• Labour Code: statutory provisions increase defined benefit obligation; exceptional item recognised.

AGM Details

• 53rd AGM scheduled for 29 July 2026 at 4:30 PM IST via VC/OAVM.
• Record date for voting: 22 July 2026.
• Remote e-voting window: 26–28 July 2026.
• Deemed venue: registered office of the company.

Resolutions & Dividend

• Adopt Audited Financial Statements for FY 2025-26 and related reports.
• Final dividend of Rs 2 per share recommended; total Rs 5 per share.
• Re-appointment of Mukesh Ahuja as Director retiring by rotation.
• Special: Commission to Non-Executive Directors for FY2025-26 to FY2029-30 up to 1% of net profits.
• Appointment of K Ilango as Non-Executive Independent Director for five years.
• Payment of Rs. 1 crore commission to M A M Arunachalam for FY 2025-26.
• Ratify remuneration of Cost Auditor for FY 2026-27 at Rs 80,000 plus taxes.

Director Changes

• K Ilango appointment effective 5 May 2026 as Independent Director.
• Mukesh Ahuja re-appointed as Director retiring by rotation.

Auditors

• Remuneration for Cost Auditor ratified for 2026-27: Rs 80,000 plus taxes.

Voting Update

• Outcomes pending; results to be announced within two working days.
• Results will be posted on company site and NSDL.

Dematerialisation status and listing

• Dematerialisation requests received for quarter ended 30 June 2026 processed and confirmed to depositories (accept/reject).
• Securities dematerialised have been listed on the stock exchanges where existing securities are listed.
• Security certificates received for dematerialisation were mutilated and cancelled after verification; depository's name substituted as registered owner.