Laxmi Organic Industries Ltd

The Members,

Your Directors are pleased to present their report on the business and operations of your Company along with the audited accounts of your Company for the year ended March 31, 2023.

* The figures of FY 2021-22 are restated numbers to give effect of the merger of Acetyls Holdings Private Limited (AHPL) and Yellowstone Chemicals Private Limited (YCPL) w.e.f. October 02, 2021 in accordance with Appendix C of Ind AS 103- Business Combinations.

The Directors are pleased to recommend a Dividend of 25% (Rs 0.50 per equity share) on the face value of Rs 2/- per share of the Company for the financial year ended March 31, 2023. The Dividend, if approved by the Members at the ensuing Annual General Meeting, will result into an outflow of approximately Rs 133.27 million.

The dividend pay-out for the year under review is in accordance with the Dividend Policy approved and adopted by the Board of Directors of the Company.

Key financial highlights during the year were as under:

> Total Revenue from operations reduced by 6.5% to Rs 26,934.11 million against Rs 28,817.16 million of the previous year.

> Earnings before interest tax depreciation and amortization (EBITDA) reduced by 23.2% to Rs 2,723.47 million against Rs 3,546.50 million of the previous year.

> Profit Before Tax (PBT) reduced by 37.5% to Rs 1,834.15 million against Rs 2,935.96 million of the previous year.

> Net Profit reduced by 43.8% to Rs 1,347.39 million from Rs 2,396.14 million of the previous year.

Management's Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange

Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), is presented in a separate section, forming part of the Annual Report.

The Board of Directors of your Company has decided not to transfer any amount to the General Reserve for the year under review.

The authorized share capital of the Company as on March 31, 2023 increased to Rs 76,00,00,000/- (Rupees Seventy Six Crore) divided into 38,00,00,000 (Thirty Eight - Crore) equity shares of Rs 2/- (Two) each after the absorption of Acetyl Holdings Private Limited and Yellowstone Chemicals Private Limited ("Wholly Owned Subsidiaries) during the financial year under review.

During the year under review, the Company has issued 15,13,435 Equity Shares pursuant to the exercise of Options by the employees under Employee Stock Option Scheme - 2020 ("ESOP-2020") and has granted 2,76,855 stock options as approved by Nomination and Remuneration Committee on May 04, 2022.

The Company has one Employees' Stock Option Schemes as under:

Laxmi - Employee Stock Option Plan -2020 (Active employee stock option scheme):

Pursuant to the resolutions passed by the Shareholders on November 24, 2020, the Company has approved the Laxmi - Employee Stock Option Plan 2020 ("ESOP-2020") for issue of employee stock options ("ESOPs") or thank you grants or restricted stock units ("RSUs") to eligible employees up to 6,750,000 options, which may result in issue of not more than 6,750,000 Equity Shares. The primary objective of ESOP-2020 is to reward and motivate the employees and to retain the employees of the Company and its Subsidiaries, as the case may be, by way of rewarding their high performance. ESOP-2020 is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014.

Pursuant to the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 as amended from time to time, the details of stock options as on March 31, 2023 are specified in Annexure "A" to this Report.

During the year under review the Company availed various credit facilities from the existing Bankers as per the business requirements. Your Company has been regular in paying interest and repayment of principal amount to all lenders.

Your Company runs a large foreign currency portfolio under the guidance and supervision of its Finance Committee of the Board. It has a foreign currency management policy approved and reviewed by the Board from time to time.

Versus the USD, during the fiscal under review, Indian Rupee depreciated by 8.46% from Rs 75.77 on April 04, 2022, to Rs 82.18 on March 31, 2023. The USD INR pair moved in the range of 83.29 - 75.31 with an annual realized volatility of 4.37% which is in line with the volatility of 4.35% of the previous financial year.

The Company‘s financial prudence, discipline and performance is also acknowledged by credit rating agencies. Rated since 2018, by India Ratings & Research Private Limited, your Company's debt facilities are rated as under:

The Company has well-established, comprehensive and adequate internal controls commensurate with the size of the operations. These controls are designed to assist in identification and management of business risks and ensuring high standards of corporate governance. The internal financial controls have been documented and embedded in the business processes. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

Assurance on the effectiveness of internal financial controls is obtained through monthly management reviews, control self-assessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by direct reporting of Internal Auditors to the Audit Committee of the Board.

To further strengthen the compliance processes the Company has an internal compliance tool for assisting statutory compliances. This process is automated and generates alerts for proper and timely compliance. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.

As per the requirements of SEBI Listing Regulations, 2015, a Risk Management & ESG Governance Committee has been constituted with responsibility of preparation of Risk Management Plan. The details of the constitution, authority and terms of reference of the Risk Management & ESG Governance Committee is captured in the Corporate Governance Report

The Company's Policy on Prevention of Sexual Harassment at Workplace is in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (Prevention of Sexual Harassment of Women at Workplace Act) and rules framed thereunder. Internal Complaints Committee have also been set up to redress complaints received regarding sexual harassment.

During the year under review, no complaints of sexual harassment were received by the Company. The Company is committed to providing a safe and conducive work environment to all of its employees and associates.

The employees are the most valuable asset for the Company and the Company's focus remains to attract, develop and retain talent. The Company continues to provide an environment of open culture and congenial work atmosphere and healthy industrial relations and is committed to providing the employee with a pragmatic workplace. During the year under review, the Company has undertaken new initiatives on Human Resource front. For more details on HR initiatives please refer page no 28.

The details of the subsidiaries and the joint ventures as on March 31, 2023 is given as under:

The financial information of the Subsidiary Companies as required pursuant to Section 129(3) of the Companies Act, 2013 read with applicable provision of the Companies (Accounts) Rules, 2014 is set out in Form No. AOC-1 is annexed as an Annexure "B" to this report.

During the year under review, the scheme of merger of wholly owned subsidiary namely, Acetyls Holding Private Limited (‘AHPL') and its step-down subsidiary namely, Yellowstone Chemicals Private Limited (‘YCPL'), with the Company with the appointed date as of October 02, 2021 was approved by NCLT by passing a Final Order dated August 28, 2022 (‘Final Order'). As specified in the Final Order the Company has filed Form INC-28 on September 30, 2022 and made the Final Order effective. Consequently, the Company has merged the financials of AHPL and YCPL in these Unaudited Standalone Financial Result.

During the year under review, Laxmi Petrochem Middle East FZE, a Wholly Owned Overseas Subsidiary of the Company, incorporated in Dubai, has been dissolved with effect from December 08, 2022 vide termination certificate issued by Hamriyah Free Zone Authority, Government of Sharjah. The Company is also in the process of striking-off of the name of the two other wholly owned subsidiaries namely, Laxmi Lifesicences Private Limited and Yellowstone Specialty Chemicals Private Limited.

During the year under review, your Company has infused 26% equity capital stake in Radiance MH Sunrise Seven Private Limited in order to avail benefits under solar power energy schemes.

The annual accounts of Subsidiary Companies are available for inspection by any Shareholder at the registered office of the Company and interested Shareholder may obtain it by writing to the Company Secretary of the Company. The same are also placed on the website at https://www.laxmi.com/investors/financials.

The Policy for determining material subsidiaries can be downloaded from the website of the Company using following link: https://www.laxmi.com/investors/policies. As per the materiality Policy, LOBV is a material subsidiary of the Company.

Mr. Harshvardhan Goenka (DIN: 08239696) retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for reappointment. Based on the performance evaluation and recommendation of the Nomination and Remuneration Committee, the Board recommends his reappointment.

Further, during the year Mr. Satej Nabar (DIN: 06931190), the Executive Director & Chief Executive Officer (ED & CEO) of the Company, resigned and decided to move on from the Company to pursue his personal interests outside the organization. His resignation has been effective from the closing business hours of April 02, 2023, and consequently, Mr. Satej shall also cease to be the Key Managerial Personnel of the Company effective closing business hours of April 02, 2023. The Board noted and accepted his resignation at its meeting held on February 27, 2023 and places on record its immense appreciation for his contribution during his tenure as an ED & CEO of the Company.

At the Board Meeting held on February 27, 2023, based on the recommendation of the Nomination & Remuneration Committee, Dr. Rajan Venkatesh (DIN: 10057058), has been appointed by the Board as the Managing Director & Chief Executive Officer (MD & CEO) of the Company for a period of five years with effect from April 03, 2023, till March 31, 2028. Dr. Rajan is also appointed as Key Managerial Personnel of the Company with effect from April 03, 2023. Consequently, Mr. Ravi Goenka (DIN: 00059267), the current Chairman and Managing Director of the Company has stepped down from the role of the Managing Director with effect from April 03, 2023, and he was appointed by the Board as Whole-Time Director designated as Executive Chairman of the Company w.e.f. April 03, 2023, for the remaining tenure of this appointment. The Company is in the process of seeking Member's approval for the aforesaid appointments/ change in designation through postal ballot.

During the year under review, the non-executive directors of the Company had no material pecuniary relationship or transactions with the Company, other than sitting fees, commission, if any and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/ Committee of the Company.

Details of the Directors seeking appointment/reappointment including profile of these Directors, are given in the Notice convening the 34th Annual General Meeting of the Company.

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 164(2) of Companies Act, 2013.

In accordance with the provisions of Section 2 03 of th e Companies Act, 2013, and rules made thereunder, following are the Key Managerial Personnel of the Company for the year ended March 31, 2023:

a. Mr. Ravi Goenka - Executive Chairman

b. Mr. Satej Nabar - Executive Director & CEO

c. Ms. Tanushree Bagrodia - CFO

d. Mr. Aniket Hirpara - Company Secretary &

Vice President - Legal and Secretarial

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations, 2015. There has been no change in the circumstances affecting their status of Independent Directors of the Company.

The Board is of the opinion that all the Independent Directors appointed are of integrity and possess the requisite expertise and experience (including the proficiency). In terms of Regulation 25(8) of the Listing Regulations, they have confirmed that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Based on the declarations received from the Independent Directors, the Board has confirmed that they meet the criteria of independence as mentioned under Regulation 16(1)(b) of the Listing Regulations and that they are independent of the management.

The details relating to the Board's Performance evaluation are in the Corporate Governance Report.

During the year under review, the Company has not accepted any fixed deposits from public pursuant to Section 73 and Section 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, as amended from time to time.

All the assets of the Company, including the building, plant & machinery and stocks at all locations, have been adequately insured.

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval and also before the Board for its noting and approval, if required as per the policy on Materiality of Related Party Transaction of the Company. Prior omnibus approval of the Audit Committee and Board is being obtained on a yearly basis for the transactions which are foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed periodically and a statement giving details of all related party transactions along with the Arm's Length Certificate obtained by Independent Chartered Accountant, is placed before the Audit Committee and the Board of Directors for their noting on a quarterly basis. The particulars of contracts entered during the year as per Form AOC-2 are enclosed as Annexure "C". Members may also refer to Annexure 1 to the standalone financial statement which sets out related party disclosures pursuant to Ind AS.

Except Mr. Ravi Goenka, Mr. Harshvardhan Goenka and Mr. Rajeev Goenka, none of the other Directors have any pecuniary relationships or transactions vis-a-vis the Company.

Pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014, as amended from time to time, Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018), be and is hereby appointed as Auditors of the Company in place of the retiring auditors, M/s. Natvarlal Vepari & Co., Chartered

Accountants (Firm Registration No: 106971W) to hold office from the conclusion of this 34th Annual General Meeting till the conclusion of the 39th Annual General Meeting to be held in financial year 2027-28, at such remuneration, as may be mutually agreed between the Board of Directors of the Company and the Auditors.

The notes on the financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification(s), reservation(s), adverse remark(s) or disclaimer(s).

During the year under review, the Statutory Auditors have not reported to the Audit Committee under Section 143(12) of the Companies Act, 2013, any instance of fraud committee against the Company by its officers or employees, the details of which would need to be mentioned in the Board Report.

The Board of Directors has on the recommendation of the Audit Committee, appointed M/s GMJ & Associates, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2023-24.

The Secretarial Audit Report for the financial year ended March 31, 2023 is annexed herewith marked as Annexure "D" to this Report. The Secretarial Audit Report does not contain any qualification(s), reservation(s), adverse remark(s) or disclaimer(s).

Additionally, in line with SEBI Circular dated February 08, 2019, an Annual Secretarial Compliance Report confirming compliance of all applicable SEBI Regulations, Circulars and Guidelines by the Company was issued by the Secretarial Auditors and filed with the Stock Exchanges, is annexed to this report as Annexure "E" The remarks provided in the report are self-explanatory.

The Directors state that applicable Secretarial Standards relating to ‘Meetings of the Board of Directors' and ‘General Meetings', have been duly complied with by the Company.

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended, the cost audit record maintained by the Company is required to be audited. The Board of Directors has on the recommendation of the Audit Committee, appointed M/s. B.J.D. Nanabhoy & Company, a firm of Cost Auditors for conducting the audit of such records and for preparing Compliance Report for the Financial Year 2023-24.

M/s. B.J.D. Nanabhoy & Company have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013, and Rules made thereunder, and have also certified that they are free from any disqualifications specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act.

As required under the Companies Act, 2013, the remuneration payable to the Cost Auditors is required to

be ratified by the members of the Company. Accordingly, resolution seeking members' ratification for remuneration to be paid to Cost Auditors is included in the Notice convening Annual General Meeting.

Further, the Board hereby confirms that the maintenance of cost records specified by the Central Government as per Section 148(1) of the Companies Act, 2013, and rules made thereunder, is required and accordingly, such accounts/ records have been made and maintained.

The Company is committed to contribute towards the local communities through CSR initiatives under defined thematic areas like Health, Education, Water, and Waste Management. During the year, various CSR initiatives have been undertaken. For more details on CSR please refer page no 36. The Annual Report on CSR Activities as on March 31, 2023, is annexed herewith as Annexure "F".

The details of various meetings of the Board and its committees are given in the Corporate Governance Report.

The details of the various Committees constituted by the Board are given in the Corporate Governance Report.

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this report.

Your Company's Board of Directors is responsible for the preparation of the Consolidated Financial Statements of your Company & its Subsidiaries (‘the Group'), in terms of the requirements of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act. The respective Board of Directors of the Companies included in the Group are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets and for preventing and detecting frauds and other irregularities, the selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent, and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the Consolidated Financial Statements by the Directors of your Company, as aforestated. The Consolidated Financial Statements of the Company and its subsidiaries is provided separately and forms part of the Annual Report.

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as Annexure "G" and forms part of this Report.

The copy of the annual return for financial year under review will be uploaded on the website of the Company.

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

The information required pursuant to Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, has been provided as Annexure "H"

The requisite details relating to the remuneration of the specified employees under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report. Further, this report and accounts are being sent to Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure will be open for inspection by any Member. Interested Members may write to the Company Secretary.

The Managing Director and Whole Time Director of the Company are not in receipt of any remuneration and/or commission from any Holding/Subsidiary Company, as the case may be.

There are no significant material orders passed by regulators or courts which would impact the going concern status of the Company and its future operations.

During the year under review, there was no instance to report containing Statement of Deviation(s) or Variation(s) as per Regulation 32 of SEBI Listing Regulations, 2015.

Securities Exchange Board of India (SEBI) through a notification dated May 05, 2021 has made amendments to certain provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR). As per the amendment, the listed entities are required to submit a new report on ESG parameters, namely Business Responsibility and Sustainability Report (BRSR) in the prescribed format. Since your Company is one of the top 1000 listed entities as on March 31, 2023, we have prepared BRSR for the Financial Year 2022-23, which is presented in a separate section, forming part of the Annual Report.

The Corporate Governance Report relating to the year under review is presented in a separate section, forming part of the Annual Report.

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

1. that in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for the year ended on that date;

3. that proper and sufficient care has been taken 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;

4. that the annual financial statements have been prepared on a going concern basis;

5. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

6. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Your Directors wish to place on record their sincere appreciation for the continued cooperation and support of the customers, suppliers, bankers and Government authorities. Your Directors also wish to place on record their deep appreciation for the dedicated services rendered by the Company's executives, staff and workers.