Kothari Fermentation & Biochem Ltd Directors Report

TO THE MEMBERS OF

Your directors are pleased to present the 34"Annual Report together with the Audited Accounts for the year ended on 31? March 2024:

1. FINANCIAL RESULTS

(Rs. In lacs)

2. BUSINESS OPERATIONS

During the year under review, your Company achieved production of 15654 MT as compared to 16835 MT in the previous year. The turnover of the Company was Rs. 10888.09 Lakhs during the year 2023-24 and Rs.11027.46 Lakhs during previous year recorded a marginal reduction in turnover by 1.26%. However, there was net loss of Rs. 392.53 lakhs during the year 2023-24 due to market conditions and higher material cost. The operational performance during the year and the future outlook of the Company has been comprehensively covered in the Management Discussion and Analysis Report which is provided as a separate section in the Annual Report.

3. DIVIDEND

Your Directors do not recommend any dividend during the year under review.

4. DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of the Article of Association of the Company and pursuant to Section 152(6) of Companies Act, 2013 not less than two-thirds of the total number of directors (excluding Independent Director} shall be persons whose period of office is liable to determination by retirement of directors by rotation and one-third of such of the directors for the time being are liable to retire by rotation at every Annual General Meeting of the Company. Thus, Mrs. Kavita Devi Kothari (DIN: 00120415) Whole-Time Director of the Company retire by rotation on the forthcoming AGM, and being eligible, offers herself for reappointment. However, such determination of office by retirement and then re-appointment would not constitute a break in her tenure of service as the Whole-Time Director of the Company. Mr. Piyush Kumar Goel was appointed as an Independent Directors on the Board of the Company pursuant to the provisions of section 149 of the Act read with Companies (Appointment and Qualification of Directors} Rules, 2014 for a period of 5 years from 27" September, 2019 upto 26" September, 2024. The Nomination and Remuneration Committee of the Board, on the basis of the report of performance evaluation of Mr. Piyush Kumar Goel, which was satisfactory, has recommended the re-appointment of Mr. Piyush Kumar Goel as Independent Director for a second term of five (5) years on the Board of the Company with effect from 27" September, 2024 upto 26!" September, 2029. The Board is of the view that the continued association of Mr. Piyush Kumar Goel would benefit the Company, given his knowledge, experience, performance and contribution to Board processes. The resolution pertaining to re-appointment of Mr. Piyush Kumar Goel as Independent Director is set out in Item no. 03 of the Notice of the 34?" Annual General Meeting. Brief resumes of Mrs. Kavita Devi Kothari and Mr. Piyush Kumar Goel, nature of their expertise in specific functional areas, and the name of the companies in which they hold the Directorship, as stipulated under SEBI (LODR) Regulations, are given in the notice convening the Annual General Meeting. The Board recommends their appointment as such. The Independent Directors have submitted their declaration that they fulfill the requirements as stipulated in Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, as applicable.

5. INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

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 the Board and its committees, the Board is of the opinion that the companys internal financial controls were adequate and effective during the financial year 2023-24.

6. DIRECTORS RESPONSIBILITY STATEMENT

The financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention on an accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Act and guidelines issued by SEBI. The Ind AS are prescribed under Section 133 of the Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter. Pursuant to Sec. 134 (5) of the Companies Act, 2013 the directors to the best of their knowledge and ability hereby report: i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. that the directors have selected 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 2023-24, and of the profit and loss of the Company; iii. that the directors have 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 of the company and for preventing and detecting fraud and other irregularities; iv. that the directors have prepared the annual accounts on a going concern basis; v. that the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; vi. that the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CREDIT RATING

Your companys domestic credit rating by CRISIL is “CRISIL BB /Stable”(Downgraded from “CRISIL BB+/Stable”) for long- term debt facilities and ‘CRISIL A4+” (Reaffirmed) for the short-term debt facilities.

CERTIFICATIONS

Your company has been certified as ISO 22000:2018 on 12.12.2023 for its quality management systems employed at every level of the organization.

AUDITORS AND AUDITORS REPORT A) Statutory Auditors

In terms of the provisions of Section 139 of the Companies Act, 2013, the shareholders have appointed M/s Kothari Kuldeep and Co., Chartered Accountants as Statutory Auditor of the Company for a term of five years from the conclusion of the 32nd Annual General Meeting till the conclusion of 37th Annual General Meeting of the Company to be held in the year 2027. The notes on accounts are self-explanatory with regard to auditors observations. There was no qualification, reservation or adverse remark made by the Auditors for the year under review. B) Secretarial Auditors and Secretarial Standards The Board had appointed M/s Priyanka Saxena & Associates, Practicing Company Secretaries, as Secretarial Auditor to conduct the secretarial audit of the company for the financial year 2023-24, pursuant to the provisions of Section 204 of the Companies Act, 2013. The Report of the Secretarial Auditor forms part of the Boards Report as Annexure ‘A. During the Year, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India. There was no qualification, reservation or adverse remark made by the Secretarial Auditors for the year under review. 10. CORPORATE GOVERNANCE

The Company is complying with SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, as applicable with regard to Corporate Governance, and reports to that effect are being regularly filed with the Stock Exchanges. A report on Corporate Governance practices and the Certificate from the Auditors on compliance of the mandatory requirements thereof are made a part of the Annual report. 11. CSR COMMITTEE

In pursuance of Subsection (1} of Section 135 of the Companies Act, 2013, a Company is required to constitute a CSR Committee in case the net worth of the Company is Rs. 500 crore or more, or turnover of Rs. 1000 Crore or more, or a net profit of Rs. 5 Crore or more during the immediately preceding financial year. Since, our Company did not exceed the threshold in the financial year 2023-24; therefore, the CSR provisions are not applicable to the Company in the current year.

12. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

The Managements Discussion and Analysis Report for the Year under review, as stipulated under regulation 34(2}(e} of Listing Regulations is presented in a separate section forming part of the Annual Report. 13. VIGIL MECHANISM

Acomprehensive Vigil mechanism/Whistle Blower Policy has already been adopted by the Company which provides adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of employees. The policy as approved by the Board is uploaded on the Companys website at https:/Avww.kothariyeast.in/investor-files/vigil- mechanism. 14. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION

ANDREDRESSAL) ACT, 2013

The company has a policy on prohibition, prevention and redressal of sexual harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as contained under “Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013”. The Company has complied with provisions relating to the constitution of internal complaints committee under the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013. No Complaint was filed during the financial year 2023-2024. 15. RISK MANAGEMENT POLICY OF THE COMPANY

Your company has adopted a Risk management policy to identify and categorize various risks, implement measures to minimize impact of these risks where it is deemed necessary and possible, and a process to monitor them on a regular basis. 16. REMUNERATION POLICY AND BOARD EVALUATION

The Board has adopted a Remuneration Policy as recommended by the Nomination & Remuneration Committee. It provides the criteria for determining Qualifications, Positive Attributes & Independence of the Directors, defining the criteria of the remuneration of the KMPs and Senior managerial personnel along with their roles and responsibilities. The aim is to ensure that the company attracts and retains competent people. The Board has carried out an Annual Performance Evaluation of its own performance and the Directors individually. The Disclosures relating to the same are provided in the Corporate Governance Report. 17. DISCLOSURES a) Number of Board & Committee Meetings: During the year under review, Seven Board meetings, Four Audit Committee meetings, Four Stakeholders Relationship Committee meetings and Three Nomination & Remuneration Committee meetings were convened and held. Further details are mentioned in Corporate Governance Report. Pursuant to clause VII (1} of Schedule IV of the Companies Act, 2013, the Independent Directors had a separate meeting on 14.02.2024. b) Deposits - The Company has not accepted any deposit from public during the year under review. c) Share Capital - There was no change in the Companys share capital during the year under review. d) Audit Committee - The Company has duly constituted an Audit Committee, whose detailed composition and powers are provided in the Corporate Governance Report. There were no recommendations of the Audit Committee which have not been accepted by the Board during the financial year. e) Annual Return - Pursuant to Section 92(3) of the Act, as amended, draft annual return in Form MGT-7 is placed on the website of the Company at https:/Avww.kothariyeast.in/investor-files/annual-return. f) Disclosure pertaining to Managerial Remuneration - Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1} of the Companies (Appointment and Remuneration of Managerial Personnel} Rules, 2014 are provided as per Annexure ‘B. The information required pursuant to section 197 read with rule 5(2} & (3) of The Companies (Appointment and Remuneration of Managerial Personnel} Rules, 2014 in respect of employees will be provided upon request. g) Related Party Transactions There were no materially significant transactions with the related parties during the financial year that may have potential conflict with interest of the Company at large. Disclosures relating to the same are provided separately in the Corporate Governance Report. h) Particulars of Loans, Guarantees or Investments under Section 186 -There is no Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013 given by the Company. i) Cost Account and Records- Maintenance of cost records as specified by the central government under sub section (1) of section 148 of the Companies Act, 2013, is not applicable to Company and accordingly such accounts and records are not prepared. However, the cost records for internal control and Strategic Management purposes are prepared by the Company. j) Significant_and Material Orders Passed by the Regulators or Courts No significant or material orders were passed by the Regulators or Courts or Tribunals during the year which impact the going concern status and Companys operation in future. k) Internal Financial Controls - The Company has in place adequate internal financial controls with reference to financial statements. During the Year, such controls were tested and no reportable material weakness in the design or operation was observed.

18. CONSERVATION OF ENERGY, TECHNOLOGY ABSORBTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3} of the Companies (Accounts) Rules, 2014 is furnished in Annexure ‘C and is attached to this report.

ACKNOWLEDGEMENTS

Your Board of Directors is thankful to all the Shareholders for their constant faith reposed in the company. They also placed on record their sincere appreciation for the wholehearted devotion and co-operation extended by the employees at all levels, which has been a source of strength to the Company. The directors also wish to thank and deeply acknowledge the continued support, guidance and co-operation of the Customers, Auditors, Legal Advisers, consultants, Bankers, Dealers, Vendors and other stakeholders of the Company.