Dear Members,

Your Board of Directors ("the Board") is pleased to present the 5^th Annual Report of HP Adhesives Limited ("the Company") for the financial year ended 31^st March, 2024.

In compliance with the applicable provisions of the Companies Act, 2013 ("the Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), this report covers the financial results and other developments during the FY 2023-24.

FINANCIAL HIGHLIGHTS / RESULTS

(' in Lakhs)

OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE

In FY 2023-24, your Company reported Revenue from operations of ' 23,601.78 Lakhs compared to ' 23,299.60 Lakhs in the previous financial year resulting in a growth of 1.30% year-on-year. Profit before tax (after exceptional items) increased to ' 2,811.66 Lakhs in financial year ended March 2024 compared to Profit before tax (after exceptional items) of ' 1,503.36 Lakhs in the previous year, registering a growth of 87.02%. Profitability has significantly improved in FY 2023-24 due to key factors like volume-led growth in several product categories, stable raw material pricing environment and dedicated focus of the management on profitability by ensuring continuous improvement in manufacturing processes and raw material sourcing. The financial results have been discussed in detail in the Management Discussion and Analysis Report which forms part of this Annual report.

DIVIDEND

The Board of Directors at their meeting held on 14^th May, 2024, has recommended payment of ' 0.30 (15%) per equity share of ' 2/- each fully paid-up as final dividend for the financial year 2023-24. The final dividend, subject to the approval of the shareholders at the ensuing Annual General Meeting ("AGM") of the Company.

In terms of Ind AS 10, events after the reporting period as notified by the Ministry of Corporate Affairs, the proposed dividend of ' 275.62 Lakhs is not recognised as a liability as of 31^st March, 2024.

The dividend, if approved at the ensuing AGM, would be paid to those Members whose names appear in the Register of Members/Beneficial Owners maintained by the depositories as stated in notice of the ensuing AGM.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

The provision of Section 125 of the Act is not applicable as the Company did not declare any dividend before final dividend of financial year 2023-24.

RESERVES

There is no amount proposed to be transferred to the Reserves.

DEPOSITS

During the year under review, the Company has not accepted any fixed deposits within the meaning of Section 73 of the Act and the rules made there under.

a) AUTHORIZED, ISSUED, SUBSCRIBED AND PAID-UP EQUITY SHARE CAPITAL

During the year under review, pursuant to Shareholders' approval dated 29^th September, 2023 the Company sub-divided 1 (One) Equity Share of the Company of the face value of ' 10/- (Rupees Ten Only) each into 5 (Five) Equity Shares of ' 2/- (Rupees Two Only) each. Details of the same are as follows:

As of 31^st March, 2024 the Authorised Share Capital of the Company is 10,00,00,000 Equity Shares of ' 2 each amounting to ' 20,00,00,000/- (Rupees Twenty Crores) and Issued, Subscribed and Paid-up Share Capital of the Company is 9,18,74,735 Equity Shares of ' 2/- each amounting to ' 18,37,49,470/- (Rupees Eighteen Crores Thirty-seven Lakh Forty- nine Thousand Four Hundred and Seventy).

b) UTILISATION OF IPO PROCEEDS

Pursuant to Regulation 32 of the Listing Regulations, a statement/explanation for the deviation(s) or variation(s) in the use of proceeds of IPO is herein given below:

*Necessary disclosures have been made to the Stock Exchanges in the Statement of Deviation/Variation Report issued quarterly along with the Financial Statements.

The proceeds of IPO were utilised for the objects as disclosed in the Prospectus. Details as on 31^st March, 2024 are as follows:

(' in Lakhs)

#The amount has been utilised for the Capex Object as defined in the Prospectus. However, there has been a delay in utilisation of the Capex amount as compared to revised timeline.

Details of delay in implementation of the object(s) are mentioned hereunder:

There has been no deviation in the utilisation of the IPO proceeds of the Company. The Monitoring Agency Reports are available on the Company website www.hpadhesives.com as well as submitted to stock exchanges.

MATERIAL CHANGES AFFECTING THE COMPANY (AFTER CLOSURE OF FINANCIAL YEAR)

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the close of the Financial Year as on 31^st March, 2024, to which the Financial Statement relate and the date of this Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The constitution of the Board of the Company is in accordance with Section 149(6) of the Act and Regulation 17 of the SEBI Listing Regulations. The detailed composition of the Board as of 31^st March, 2024 is as follows:

RETIREMENT BY ROTATION

Ms. Nidhi Haresh Motwani, Executive Director, is liable to retire by rotation and being eligible for re-appointment at the ensuing Annual General Meeting ("AGM") of your Company, has offered herself for re-appointment. Her details as required under the SEBI Listing Regulations are contained in the accompanying Notice convening the ensuing AGM of your Company.

An appropriate resolution seeking your approval for her reappointment as Director is included in the Notice.

INDEPENDENT DIRECTORS' DECLARATION

The Company has received the necessary declaration from each independent director under Section 149(7) of the Act, that he meets the criteria of independence laid down in Section 149(6) of the Act and Regulation 25 of SEBI Listing Regulations.

KEY MANAGERIAL PERSONNEL

Mr. Karan Haresh Motwani, Managing Director, Mr. Mihir Suresh Shah, Chief Financial Officer and Ms. Jyoti Nikunj Chawda, Company Secretary and Compliance Officer are Key Managerial Personnel of the Company in accordance with the provisions of Section(s) 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managing Personnel) Rules, 2014.

BOARD AND COMMITTEE MEETINGS

Your Board of Directors met 6 (Six) times during the FY 2023-24. The details of the meetings and the attendance of the Directors are mentioned in the Corporate Governance Report.

The Board of Directors of your Company have formed various committees, as per the provisions of the Act and SEBI Listing Regulations and as a part of the best corporate governance practices, the terms of reference and the constitution of these Committees are in compliance with the applicable laws and to ensure focused attention on business and for better governance and accountability. The constituted committees are as below:

a) Audit Committee;

b) Nomination and Remuneration Committee;

c) Stakeholders Relationship Committee; and

d) Corporate Social Responsibility Committee.

The details with respect to the composition, terms of reference, number of meetings held and business transacted by the aforesaid committees are given in the Corporate

Governance Report of the Company which is presented in a separate section and forms a part of the Annual Report of the Company.

POLICY ON DIRECTORS' APPOINTMENT, REMUNERATION AND OTHER DETAILS

Based on the recommendation of the Nomination and Remuneration Committee (NRC), the Board has adopted the Remuneration Policy for Directors, KMPs and Senior Management Personnel. NRC has formulated the criteria for determining the qualifications, positive attributes and independence of an Independent Director. The Company's Policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Act is disclosed in the Corporate Governance Report, which is a part of the Annual Report and is also available on https:// www.hpadhesives.com/wp-content/uploads/2014/08/ Nomination-and-Remuneration-Policy.pdf.

BOARD EVALUATION AND ASSESSMENT

Pursuant to the provision of the Act read with Regulation 17 of the SEBI Listing Regulations, the Board carried out a performance evaluation of the Board of Directors as a whole, Committees of the Board and Individual Directors. The performance of the Board as a whole, Committees and Individual Directors was evaluated by seeking inputs from all Directors based on certain parameters as per the Guidance Note on Board Evaluation issued by SEBI. The feedback received from the Directors was discussed and reviewed by the Independent Directors at their separate annual meeting held on 7^th February, 2024, and also shared with the Board. The Independent Directors in the said meeting also evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, that is necessary for the Board to effectively and reasonably perform their duties. They expressed their satisfaction in respect thereof.

FAMILIARISATION PROGRAMME

Towards familiarisation of the Independent Directors with the Company, the independent directors of the Company were enlightened about the business affairs of the Company, product portfolio, business strategies, financial performance and industry scenario including those pertaining to Legislations & Economic environment and on matters affecting the Company. Periodic presentations are also made at the Board and Committee meetings on business and performance updates of the Company including Finance, Sales, Marketing, Business strategy and risks involved.

The details of Familiarisation Program imparted to the Independent Directors for the FY 2023-24 are available on the website of the Company at www.hpadhesives.com.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

i. in preparation of the annual accounts for the year ended 31^st March, 2024, the applicable accounting standards have been followed and there are no material departures from the same;

ii. 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 state of affairs of the Company as at 31^st March, 2024 and of the profit of the Company for the year ended on that day;

iii. they have taken proper and sufficient care 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 frauds and other irregularities;

iv. the Annual Accounts for the year ended 31^st March, 2024 have been prepared on a "going concern" basis;

v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively throughout the financial year ended 31^st March, 2024; and

vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively throughout the financial year ended 31^st March, 2024.

Further, there are no qualifications, reservations or adverse remarks made by the statutory auditor/secretarial auditor in their respective reports.

BUSINESS RESPONSIBILITY REPORT

The provision of Regulation 34(2)(f) of the SEBI Listing Regulations, regarding the Business Responsibility Report is not applicable to the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under the review as stipulated under Regulation 34 of the SEBI Listing Regulations is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

Report on Corporate Governance and Certificate by the Practicing Company Secretary regarding compliance with the conditions of Corporate Governance as stipulated in Part C of Schedule V of the SEBI Listing Regulations, are provided in a separate section and forms a part of the Annual Report.

AUDITORSStatutory Auditors: 5

Pursuant to the provisions of Section 139 of the Act, M/s.

Priya Choudhary & Associates LLP Chartered Accountant (Firm Registration No. 011506C/C400307) are appointed as the Statutory Auditor's of the Company from the conclusion of 1^st Annual General Meeting up to the conclusion of 6^th Annual General Meeting of the Company.

Secretarial Auditor:

Further, the Board of Directors at their meeting held on 10^th May, 2024 has appointed M/s. Shivam Sharma & Associates, Practicing Company Secretaries (Certificate of Practice No. 16558) as the Secretarial Auditor for FY2024-25.

Pursuant to Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel)

Rules, 2014, the Company had appointed M/s. Shivam Sharma & Associates, Practicing Company Secretaries (Certificate of Practice No. 16558) as the Secretarial Auditor of the Company for the FY 2023-24. The Company has received consent from M/s. Shivam Sharma & Associates to act as such.

AUDITOR'S REPORT Statutory Audit Report:

The Auditor's Report on the financial statements of the Company for the financial year ended 31^st March, 2024 forms part of the Annual Report. The said report was issued by the Statutory Auditor with an unmodified opinion and does not contain any qualifications, reservations or adverse remarks.

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

Secretarial Audit Report:

The Secretarial Audit Report in form MR-3 for FY 2023-24 is enclosed as "Annexure I" to this report. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks. During the year under review, the Secretarial Auditor has not reported any fraud under Section 143(12) of the Act and therefore disclosure of details under Section 134(3)(ca) of the Act is not applicable.

Pursuant to Regulation 24A of Listing Regulations read with SEBI Master Circular No. SEBI/HO/ CFD/PoD2/ CIR/P/2023/120 dated 11^th July, 2023, the Annual Secretarial Compliance Report of the Company is uploaded on the website of the Company i.e. https://www.hpadhesives.com/ investor-relations/.

ACCOUNTING TREATMENT

The accounting treatment is in line with the applicable Indian Accounting Standards (IND-AS) as recommended by the Institute of Chartered Accountants of India (ICAI) and prescribed by the Central Government.

HOLDING, SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES

During the period under review, Company has no subsidiaries or Associate Companies or Joint ventures. However post end of FY2024, on 11^th April, 2024, the Company formed Unitybond Solutions Private Limited, a wholly owned subsidiary involved in manufacturing, distribution and trading of adhesives and sealants.

SECRETARIAL STANDARDS

During the year under review, the Company has complied with all the applicable provisions of Secretarial Standard - 1 and Secretarial Standard - 2 issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

Policy on Related Party Transactions and the same is available on its website at https://www.hpadhesives.com/ wp-content/uploads/2022/07/Pol icy-on-Dealing-with- Related-Party-Transactions_amended.pdf. The Policy captures framework for Related Party Transactions and intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions with related parties.

All transactions with related parties are placed before the Audit Committee for its review and approval. An omnibus approval from the Audit Committee is obtained for the related party transactions which are repetitive in nature, based on the criteria approved by the Audit Committee. The Audit Committee reviews all transactions entered into pursuant to the omnibus approvals on a quarterly basis.

All transactions with related parties entered into during FY 2023-24 were at arm's length basis and in the ordinary course of business and in accordance with the provisions of the Act and rules made thereunder, the SEBI Listing Regulations and the Company's Policy on Related Party Transactions.

During the year under review, there were no transactions for which consent of the Board was required to be taken in terms of Section 188(1) of the Act and accordingly, no disclosure is required in respect of the related party transactions in Form AOC-2 under Section 134(3)(h) of the Act and rules

framed thereunder. Further, there were no material related party transactions in terms of the SEBI Listing Regulations requiring approval of the Members during the year under review. The attention of the Members is drawn to note no. 43 of the financial statements setting out the disclosures on related party transactions for FY 2023-24.

Pursuant to Regulation 23(9) of the SEBI Listing Regulations, your Company has filed the reports on related party transactions with the Stock Exchanges within statutory timelines.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is enclosed as "Annexure II" to this report.

RISK MANAGEMENT

The provision of Regulation 21 (4) of SEBI Listing Regulations is not applicable to the Company.

ANNUAL RETURN

Pursuant to Sections 92(3) and 134(3)(a) of the Act, the Annual Return (Form MGT-7) is available on the Company's website at https://www.hpadhesives.com/investor- relations/.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a Corporate Social Responsibility (CSR) Committee. It is committed to ensure the social well-being of the communities through its CSR initiatives, in alignment with the Company's key priorities. The details of the Committee along with its terms of reference have been provided in the Corporate Governance Report.

The Company has adopted a Corporate Social Responsibility Policy in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 which can be accessed at https://www.hpadhesives.com/wp-content/ uploads/2014/08/Corporate-Social-Responsibility-Policy. pdf.

The brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company during the financial year ended 31^st March, 2024, in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out in "Annexure III" to this report.

INTERNAL FINANCIAL CONTROL

The Company has laid down internal financial control through entity level control inter-alia to ensure orderly and efficient conduct of business, including adherence to the Company's policies and procedures, accuracy and completeness of accounting records and timely preparation and reporting of reliable financial statements/information, safeguarding of assets, prevention and detection of frauds and errors.

The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Whistle Blower Policy, Code of Conduct for regulating, monitoring and reporting Insider Trading and such other procedures for ensuring the orderly and efficient conduct of its business, prevention and detection of frauds and errors, accuracy and completeness of the accounting and timely preparation of financial information.

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 2015, the Board has approved the Code of Conduct for Prohibition of Insider Trading and the same is being implemented by the Company.

VIGIL MECHANISM

In pursuance of the provisions of Section 177(9) & (10) of the Act and Regulation 22 of SEBI Listing Regulations, a vigil mechanism named "HP Adhesives Limited Whistle Blower Policy" for Directors and employees to report genuine concerns has been established. The policy on whistle mechanism can be accessed at https://www.hpadhesives. com/wp-content/uploads/2014/08/Vigil-Mechanism- Whistle-Blower-Policy.pdf.

The policy lays down a framework and process, which provides a platform to disclose information, confidentially and without fear of reprisal or victimisation, where there is reason to believe that there has been serious malpractice, fraud, impropriety, abuse or wrongdoing, grievances about leakage of unpublished price sensitive information, illegal and unethical behaviour within the Company to the Vigilance Officer.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

During the period under review, the Company has not provided any loans/ investments which come under the provisions of Section 186 of the Companies Act, 2013.

SHARE REGISTRAR & TRANSFER AGENT (R&T)

Bigshare Services Private Limited is the Registrar and Transfer Agent of the Company. They were appointed as the Registrar and Share Transfer Agent of the Company with effect from 7^th July, 2021.

WORKPLACE POLICY S'

The Company has zero tolerance for sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013 and the rules framed thereunder. The Company has duly constituted an Internal Complaints Committee (ICC) as required under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company did not receive any complaints during FY 2023-24.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including amendments thereto), is attached as "Annexure IV" to this Report.

HUMAN RESOURCES

The Company considers its Human Resource (HR) as the key to achieve its objectives. HR and Functional Department creates all strategies along with Senior Management and Board of Directors to attract talent and build capabilities.

The employees are sufficiently empowered and enabled to work in an environment that inspires them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind fulfilling the Company's vision. Your Company appreciates the contribution of its dedicated employees.

GENERAL

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

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

b. Issue of shares (including sweat equity shares) to employees of the Company under any scheme;

c. No significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future;

d. No frauds were reported by the Auditors during the year under review; and

e. Maintenance of Cost Records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 is not required by the Company.

CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis Report describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed in the statements.

ACKNOWLEDGEMENTS

Your Directors express their gratitude to the members, bankers, customers, regulatory and statutory authorities, and other business stakeholders for their valuable support and co-operation.

Your directors also thank the employees of the Company for their continued contribution, commitment and dedication.