Hatsun Agro Product Ltd

To the Members,

Your Directors are pleased to present their 40th Report along with the audited financial statements for the financial year ended March 31, 2025.

The financial results of the Company for the year ended 31st March, 2025 are summarised below:

( in Crores)

During the year under review, your Company clocked a total income of 8,686.71 Crores as against 8,012.98 Crores representing an increase of 8.41% over that of the previous year. The PBDIT has increased from 921.54 Crores (FY 2023-2024) to 1,033.13 Crores (FY 2024-2025) representing an increase of 12.11%. The Net Profit during the year was 285.44 Crores in comparison with previous year which stood at 267.27 Crores resulting in an increase of 6.80%.

During the year under review, there was no change in the nature of business.

For the Financial Year 2024-2025, your Company declared an Interim dividend of 6/- (600%) per fully paid up equity share of the face value of 1 per share (ISIN: INE473B01035) on 15th July, 2024 for the Financial Year 2024-25.

The cash outflow on account of Interim dividend absorbing a sum of 133,64,89,608/- (Rupees One Hundred Thirty Three Crores Sixty Four Lakhs Eighty Nine Thousands Six Hundreds Eight only) including a tax deducted at source calculated at different rates as per the Certificates/Submissions made by the Shareholders as per the Income Tax Act was paid as Interim Dividend for the financial year 2024-25 out of the accumulated profits of the Company.

During the year 2024-25, a Dividend amount of 33,87,751/- ( 26,26,734 - declared on 27.04.2017 and 7,61,017 declared on 13.07.2017) which remained unclaimed for a period of 7 consecutive years) being unclaimed dividend pertaining to the financial years 2016-17 and 2017-18 (Interim dividends) was transferred to Investor Education & Protection Fund (IE&PF).

During the Financial Year 2024-25, your Company did not effect any change in the Share Capital and hence, the paid up

Equity Share Capital of the Company stood at 22,27,48,268 Equity Shares of 1 per Equity Share amounting to 22.28 Crores.

Pursuant to the Share Purchase Agreements dated 20th January, 2025 entered in to with the erstwhile shareholders of Milk

Mantra Dairy Private Limited ("Milk Mantra"), the Company acquired the entire Share Capital (31,69,056 equity shares of 10/- each and 16,06,372 compulsorily convertible preference shares of 10/- each) of Milk Mantra by discharging the Purchase Consideration of 233 Crores between 27th January, 2025 to 25th March, 2025 and upon acquisition of the said Shares, Milk

Mantra has become the Wholly Owned Subsidiary of our Company.

Milk Mantra empowers the Farmers by sourcing the Milk from them with its better sourcing model, and ensures superior quality dairy products for its consumers. It owns a strong brand milk product viz., Milky Moo. Your Company considers the acquisition of Milk Mantra, a strategic decision, which will yield immense benefits to the Company in the years to come. Milk

Mantra recorded a turnover of 290.94 Crores in 2024-25 against 276.42 Crores during the previous year 2023-24.

In accordance with Section 129(3) of the Act, the Company has prepared the Consolidated financial statements of the Company. Further, a statement containing the salient features of financial statements of the Wholly Owned Subsidiary Company in Form No. AOC-1 is attached herewith as Annexure G. The annual accounts of the Wholly Owned Subsidiary is hosted on the website of the Company viz. www.hap.in and will also be kept open for inspection by the shareholders at the registered office of the Company till the date of AGM. The Company will also provide a copy of the annual accounts of Wholly Owned Subsidiary company to the shareholders upon their request.

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

The total borrowings reduced from 2,271.55 Crores to 2,096.51 Crores mainly on account of reduction in inventory levels and also due to internal accruals from operations/improvement in the business of the Company. Your Company follows judicious management of its Short Term and Long Term Borrowings with strong relationship with various reputed Banks from whom your Company has availed Credit facilities at very competitive rates.

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public, outstanding and unclaimed as at 31st March, 2025, was NIL.

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IE&PF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IE&PF Rules"), all the Unpaid or Unclaimed dividends are required to be transferred by the Company to the IE&PF Authority after the completion of seven years. Further, according to the Rules, the Shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IE&PF Authority. During the year 2024-25, a Dividend amount of

33,87,751/- ( 26,26,734 - declared on 27.04.2017 and 7,61,017 declared on 13.07.2017) which remained unclaimed for a period of 7 consecutive years) being unclaimed dividend pertaining to the financial years 2016-17 and 2017-18 (Interim dividends) was transferred to Investor Education & Protection Fund (IE&PF).

The details in respect of transfer of unclaimed dividends are provided in the Shareholder information section of this Annual Report and are also available on our website, at https://www.hap.in/unclaimed-dividened.php

During the financial year 2024-25, the Company has provided security to the extent of 20 Crores for the financial facility availed by Milk Mantra Dairy Private Limited, a wholly owned subsidiary of the Company. The same was satisfied by Milk Mantra Dairy Private Limited on 31st March, 2025. Except the above, there were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Investments under the provisions of Section 186 of the Companies Act, 2013 have been made. Particulars of investments covered under Section 186 forms part of the notes on financial statements provided in this Annual Report.

Dr. Archana Narayanaswamy (DIN: 03560101) who was appointed as an Additional Director under the category of Non-Executive Independent Woman Director with effect from 29th March, 2024 was appointed as Non-Executive Independent Woman Director with the approval of Members through Postal Ballot dated 21st June, 2024 to hold office as Non-Executive Independent Woman Director of the Company for a period of 5 (five) consecutive years w.e.f., 29th March, 2024.

Mrs. Bharathi Baskar (DIN: 10695960) who was appointed as an Additional Director under the category of Non-Executive Independent Woman Director with effect from 15th July, 2024 was appointed as Non-Executive Independent Woman Director with the approval of Members at the Annual General Meeting held on 28th August, 2024 to hold office as Non- Executive Independent Woman Director of the Company for a period of 5 (five) consecutive years w.e.f., 15th July, 2024. Mr. C Sathyan (DIN: 00012439), who was the Managing Director of the Company was re-designated as Executive Vice Chairman of the Company for a period commencing from 12th September, 2024 to 18th October, 2025 (both days inclusive) with the approval of Members through Postal Ballot dated 28th October, 2024.

Mr. J Shanmuga Priyan (DIN: 10773578) who was appointed as an Additional Director with effect from 12th September, 2024 was appointed as Managing Director with the approval of Members through Postal Ballot dated 28th October, 2024. Mr. Tammineedi Balaji (DIN: 00127833) Non-Executive Independent Director of the Company completed his 2 (two) terms of consecutive five years (i.e., 10 years) as an Independent Director on 22nd September, 2024 and hence ceased to be an Independent Director from the close of business hours on 22nd September, 2024. The Board placed on record its grateful appreciation for the distinguished services rendered by Mr. Tammineedi Balaji during his association with the Company as an Independent Director. Dr. Chalini Madhivanan (DIN: 02982290) Non-Executive Independent Woman Director of the Company completed her 2 (two) terms of consecutive five years (i.e., 10 years) as an Independent Woman Director on 22nd September, 2024 and hence ceased to be an Woman Independent Director from the close of business hours on 22nd September, 2024. The Board placed on record its grateful appreciation for the distinguished services rendered by Dr. Chalini Madhivanan during her association with the Company as an Independent Woman Director.

Mr. P Vaidyanathan (DIN: 00029503) Non-Executive Non- Independent Director resigned from the position as such with effect from the close of business hours on 12th September, 2024 due to his personal commitments. The Board placed on record its grateful appreciation for the distinguished services rendered by Mr. P Vaidyanathan during his association with the Company as a Non-Executive Non-Independent Director.

Mr. D Sathyanarayan (DIN: 08489439) Non-Executive Non- Independent Director resigned from his position with effect from the close of business hours on 12th September, 2024 due to his personal commitments. The Board placed on record its grateful appreciation for the distinguished services rendered by Mr. D Sathyanarayan during his association with the Company as a Non-Executive Non-Independent Director. Mr. G Somasundaram, Company Secretary and Compliance Officer of the Company resigned from the position due to superannuation with effect from the close of business hours on 31st July, 2024. The Board placed on record its appreciation for the services rendered by Mr. G Somasundaram during his tenure at the Company Secretary. Mr. C Subramaniam (Membership No: FCS6971) was appointed as the Company Secretary and Compliance Officer of the Company with effect from September 14, 2024. Mr. C Sathyan, Executive Vice-Chairman, Mr. J Shanmuga Priyan, Managing Director, Mr. H Ramachandran, Chief Financial Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMPs) of the Company as per Section 203 of the Companies Act, 2013. Brief Profile of Directors appointed during the Financial Year 2024-25:

Dr. Archana Narayanaswamy aged 62 years is a highly accomplished dental professional with a stellar academic background and extensive expertise in the field. She obtained her B.Sc in Home Science from S.I.E.T. Women's College, Chennai, in 1982, followed by a BDS from Ragas Dental College, Chennai, in 1997. Driven by a passion for innovation, she further honed her skills through specialised training, including the Progressive Orthodontic Seminars in Singapore in 2001 and a Fellowship in Laser Dentistry from The Tamil Nadu Dr. MGR Medical University, Chennai, in 2014. With a commitment to excellence and patient-centric care, she continues to lead the way in advancing dental healthcare, leveraging cutting-edge technologies and techniques to deliver superior outcomes and enhances patient satisfaction.

In the Opinion of the Board, the Independent Director Dr. Archana Narayanaswamy appointed during the financial year ended 31st March, 2024 has the requisite Independence, Integrity, Expertise and Experience.

Mrs. Bharathi Baskar was a Banker with more than three decades of experience in the areas of Operations, Regulatory Compliance and Customer Service. She is a famous television personality and an ace debator. Besides this she is also a motivational speaker and a writer who has authored five books on various women empowerment topics. She is also the recipient of the Tamil Nadu Government's Literary Award "Kambar Vizidhu 2022." In the Opinion of the Board, the Independent Woman Director Mrs. Bharathi Baskar appointed with effect from 15th July, 2024 has the requisite Independence, Integrity, Expertise and Experience.

Mr. J Shanmuga Priyan, aged 47 years, is a Post Graduate in Commerce and possesses a rich experience in the Dairy Industry served in various positions in Hatsun Agro Product Limited up to the level of Chief Operating Officer handling Commercials, Procurement, Logistics, Operations, Finance

& Accounts, Auditing etc., in the Company and his Service/Experience in Hatsun Agro Product Limited is spanning over a period of more than two decades. He joined Hatsun Agro Product Limited on 7th March, 2001 and has acquired the in depth knowledge of the business, products, operations etc., in the Dairy Industry. He is in-charge of the day to day operations of our Company. He is holding a Directorship in Milk Mantra Dairy Private Limited which is the wholly owned subsidiary of Hatsun Agro Product Limited. In the Opinion of the Board, the Managing Director Mr. J Shanmuga Priyan appointed with effect from 12th September, 2024 has the requisite Expertise and Experience to serve as the Managing Director.

Other than the above, there were no Resignations or Changes in the Directors and Key Managerial Personnel that happened during the financial year 2024 – 25 which is under review.

As per provisions of the Companies Act, 2013, Mr. C Sathyan, Executive Vice Chairman and Mr. K S Thanarajan, Non-Executive Director are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board of Directors recommends their re-appointment.

Mr. C. Sathyan, aged 46 years is the Executive Vice Chairman of our Company. He has held various executive positions during his career, spanning over 20 years. He is vested with the responsibility of supporting the Chairman, setting up of the goals, formulating the Strategies, Business plans and monitoring their Implementation besides acting as a bridge between the Board and Management. He is the son of Mr. R. G. Chandramogan, the Chairman of the Company. Except the Directorship held in this Company, Mr. C. Sathyan does not hold any Directorship in any other Company.

Mr. K.S. Thanarajan, aged 76 years is a Master in Economics from the University of Madras. He has been in the dairy business for more than 20 years and brings with him a deep functional experience of the dairy industry.

Your Board recommends the reappointment of Mr. C. Sathyan and Mr. K.S. Thanarajan who are retiring by rotation in the ensuing Annual General Meeting.

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the financial year ended March 31, 2025.

Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

As per the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, your Company presents the Business Responsibility and Sustainability Report (BRSR) in the format as specified by SEBI which is forming part of this report.

During the year under review, Seven (7) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the time period prescribed under the Companies Act, 2013.

The primary five committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. Other than the above said primary committees, the Board has the following additional committees also viz., Borrowing & Investment Committee and Core Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of this Board's Report. The composition of the Primary Committees as of 31st March 2025 (including the changes effected up to the date of this report) and their meeting dates are given below:

Pursuant to the Appointment, Resignation and Cessation of Directors, i) the Audit Committee was re-constituted w.e.f., 13th September, 2024. The Audit Committee at present (w.e.f., 13th September, 2024) comprises of Mr. S.Subramanian (Chairman), Mr. K.S. Thanarajan, Mr. V R Muthu, Dr. Archana Narayanaswamy and Mrs. Bharathi Baskar, as its Members. ii) the Nomination and Remuneration Committee was re-constituted w.e.f., 13th September, 2024. The Nomination and Remuneration Committee at present (w.e.f., 13th September, 2024) comprises of Mr. S.Subramanian (Chairman), Mr. V R Muthu and Mrs. Bharathi Baskar, as its Members. iii) the Stakeholders' Relationship Committee was re-constituted w.e.f., 13th September, 2024. The Stakeholders' Relationship Committee at present (w.e.f., 13th September, 2024) comprises of Mr. S.Subramanian (Chairman), Mr. K.S. Thanarajan, Mr. V R Muthu and Dr. Archana Narayanaswamy, as its Members.

There is no change in the constitution of Corporate Social Responsibility Committee, Risk Management Committee, Borrowing & Investment Committee and Core Committee.

The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during its meetings held to consider financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year, the Board of Directors considered all the recommendations made by the Audit Committee, accepted and carried out the same to its satisfaction. Hence there are no recommendations of Audit Committee unaccepted by the Board of Directors of the Company during the year under review.

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable Rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The objective of this policy is to ensure

• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

• Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

• Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance with short and long-term performance objectives appropriate to the working of the company and its goals; This policy is being governed by the Nomination and Remuneration Committee comprising of members of the Board, as stated above, comprising of three Independent Directors. The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors and Key Management Personnel. Salient features of the Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report. The detailed policy is hosted on the website of the Company and the web link for same is https://www.hap.in/policies.php.

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange

Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. This policy governs the criteria for deciding the remuneration for Directors, Key Managerial Personnel and Senior Management Personnel. It is affirmed that the remuneration to Directors, Key Managerial Personnel and Senior Management Personnel is being fixed based on the criteria and parameters mentioned in the above mentioned policy of the Company.

The Company recognises and values the importance of a diverse board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

Your Company recognises that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organisations. Your Company endeavours to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Your Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of members of the Board, as stated above, and the Chairman of the Committee is Non-Executive and Independent Director. The said Committee has formulated and approved the CSR policy as per the approach and direction given by the Board pursuant to the recommendations made by the Committee including guiding principles for selection, implementation and monitoring of activities as well as formulation of Annual Action Plan for the Company with its major focus on:-

• Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring.

• Make sustainable contributions to communities.

• Identify socio-economic opportunities to perform CSR activities.

• Focus on social welfare activities and programmes as envisaged in Schedule VII of The Companies Act, 2013.

• Modalities of utilising the funds and implementation of schedules for the Projects or Programmes.

• Monitoring and Reporting mechanism for the Projects or Programmes; and

• Details of need and impact assessment study, if any, for the Projects undertaken by the Company

The CSR Committee recommends to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of the Companies Act, 2013 as per CSR Policy of the Company. Annual Report on CSR activities as required under the provisions of the Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management. The Company has formed a Risk Management Committee comprising of four members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimising the risk and monitor the risk management for the Company.

The policy broadly defines the scope of the Risk Management Committee which comprises of:-

Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company.

Ensuring that the Company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

Evaluating significant risk exposures of the Company and assess management's actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as business continuity planning and disaster recovery planning & testing).

Co-ordinating its activities with the Audit Committee in instances where there is any overlap with audit activities (e.g. internal or external audit issue relating to risk management policy or practice).

Reporting and making regular recommendations to the Board.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle-Blower) mechanism provides a channel to the Employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or Policy. The mechanism provides for adequate safeguards against victimisation of employees and directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle-Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place/suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy. The Managing Director is also empowered to bring about necessary changes to this Policy, if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances.

According to the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended, your company falling under top 1000 listed entities based on the market capitalisation (calculated as on March 31 of every financial year) has framed the Dividend Distribution Policy which is attached in this Annual Report marked as Annexure E.

Weblink:https://www.hap.in/policies.php.

The Company has formulated a Policy for Determining Material Subsidiaries and the same is available on the Company's website: https://www.hap.in/policies.php Though, Milk Mantra Dairy Private Limited is a Wholly Owned Subsidiary of the Company, it is not a Material Subsidiary of the Company. The Company does not have any other material subsidiary.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non-Executive and Independent Directors is being conducted through a survey which contains a questionnaire capturing each Board and Committee Member's response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. The methodology adopted by each Director who responded to the survey has graded their peers against each survey item from 1 to 5 with 1 marking the lower efficiency and 5 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and Committee as a whole.

The Independent Directors evaluation is being done by the entire Board with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., their performance by way of active participation, in Board and Committee meetings, discussing and contributing to strategic planning, fulfillment of Independence criteria as specified under SEBI (LODR) Regulations, 2015 as amended and their independence from the Management etc., ensuring non participation of Independent Director being evaluated.

Apart from the above, the performance of Non-Independent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in a bona fide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company was also carried out to evaluate their performance.

The performance evaluation of the Non-Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of the Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in an unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any business of the Board during their Meetings and addressed them in the best interest of the Company.

As per the SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2018/79 dated 10th May 2018, the followings details are being provided on Board evaluation.

Every Independent Director on being inducted into the Board attends an orientation program. To familiarise the new Directors with the strategy, operations and functions of our Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Company's strategy, operations, product offerings, Organisation structure, human resources, technologies, facilities and risk management.

Further, at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation program for Independent Directors is hosted on the website of the Company and the weblink for same is https://www.hap.in/policies.php.

The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to ‘Meetings of the Board of Directors' and ‘General Meetings', respectively, have been duly followed/complied with by the Company.

Milk Mantra Dairy Private Limited become a Wholly Owned Subsidiary of your Company by way of acquisition of the entire Shareholding in that Company during the Financial Year 2024-25. Apart from the above, your Company does not have any other subsidiary or joint venture or associate companies.

At the Annual General Meeting held on 20th September, 2022, M/s. Deloitte Haskin & Sells, Chartered Accountants, (Firm Registration number 117366W/W100018) were re-appointed as Statutory Auditors of the Company to hold office for a Second and Final Term of 5 consecutive years from the conclusion of Thirty Seventh (37th) Annual General Meeting of the Company until the conclusion of Forty Second (42nd) Annual General Meeting of the Company to be held in the calendar year 2027. The Company has received a Certificate from the Statutory Auditors to the effect that they are not disqualified to continue as Auditors of the Company.

The Notes on 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, reservation, adverse remark or disclaimer.

Total Fees for all the Services paid the Company, on Consolidated basis to Statutory Auditors for the Financial Year 2024-25 was 0.98 Crores (excluding tax) for your Company ie., Hatsun Agro Product Limited and 0.35 Crores (excluding tax) for your Wholly Owned Subsidiary Company ie., Milk Mantra Dairy Private Limited in 2024-25 totaling 1.33 Crores (excluding tax) for the Group.

The Board, in consultation with the Statutory Auditors and as per the recommendation of Audit Committee, will decide the payment of Audit Fee payable to the Statutory Auditors for all their services including audit of accounts, tax audit etc., for the financial year 2025-26 excluding out of pocket expenses.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S. Dhanapal, Senior Partner, M/s. S. Dhanapal & Associates LLP, a firm of Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2024-2025 is annexed herewith marked as Annexure C and forms part of this report. As required by the Listing Regulations, the Auditors' Certificate on Corporate Governance is enclosed as Annexure D to the Board's report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer. Pursuant to Regulation 24A(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, M/s. S. Dhanapal & Associates LLP, a firm of Practising Company Secretaries is proposed to be appointed as Secretarial Auditors for first term of Five consecutive years from FY 2025-26 to FY 2029-30 subject to the approval of Shareholders in the ensuing Annual General Meeting.

Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read with sub section (3) of Section 148 of the Companies Act, 2013, the Company has appointed M/s. Ramachandran & Associates, Cost Auditors (Firm Registration No.000799) as Cost Auditor of the Company to conduct the audit of the Cost Accounting records maintained by the Company relating to those products as mandated by the Companies Act, 2013 and the Companies (Cost records and audit) Rules, 2014, as amended. In this regard, the units manufacturing Milk Powder at Palacode, Salem and Kanchipuram have been covered under Cost Audit for the financial year 2024-25.

The Company maintains the Cost Records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 as applicable to the Company.

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instance of fraud committed in the Company by its Officers or Employees to the Audit Committee under Section 143(12) of the Companies Act, 2013 details of which needs to be mentioned in this report.

Details as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

* Resigned and relieved from the employment on 15th March, 2025

(i) Details of the employees employed throughout the year and drawing remuneration which in the aggregate is not less than Rupees One Crore and Two Lakhs per annum, during the financial year. - NIL.

(ii) Employees employed for a part of the financial year, was in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Eight Lakhs and Fifty Thousand per month, during the financial year.- NIL.

(iii) None of the employees except the Executive Vice Chairman employed throughout the financial year or part thereof, hold by himself or along with his spouse and dependent children, more than two per cent of the equity shares of the Company.

1 Appointed as Managing Director with effect from 12th September, 2024. He was a Chief Executive Officer up to 11th September, 2024 2 Resigned with effect from 31st July, 2024 due to superannuation 3 Appointed with effect from 14th September, 2024

The median remuneration of Employees for the Financial

Year 31st March, 2025 was arrived at 27,754/- per month and the median remuneration of Employees for the previous financial year 31st March, 2024 was arrived at 22,196/- per month and accordingly, there was an increase of 25.04% in the median remuneration of employees in the financial year.

The Number of permanent employees on the rolls of the Company as of 31st March, 2025 stood at 5,313.

The average percentile increase was about 8.76% for all the employees who went through the compensation review cycle in the year. For the managerial personnel, the compensation has increased for Executive Vice Chairman, Managing Director, CFO and the Company Secretary, due to annual increment based on their performance. The remuneration for the Executive Vice Chairman and Managing Director is determined by the Shareholders for a defined term as stipulated under the Companies Act, 2013.

The compensation decisions are taken after considering at various levels of the benchmark data and the compensation budget approved for the financial year. The Nomination and Remuneration Committee recommends to the Board of Directors any compensation revision of the managerial personnel. In respect of Whole-time Directors the remuneration fixed for them is finally approved by the Shareholders.

All the Non-Executive Directors except the Chairman were entitled to only the Sitting fees of 75,000 for every Board Meeting they attend and a Sitting fee of 15,000 for every

Committee Meeting they attend as Members of respective committees pursuant to the revision in the sitting fees approved by the Board at its meeting held on 19th January, 2024.

Mr. K.S. Thanarajan, Non-Executive Non-Independent Director held 6,68,179 Equity shares as of 31st March 2025. Dr. Archana Narayanaswamy, Non-Executive Non-Independent Woman Director held 60,000 Equity Shares as of 31st March 2025.

Mr. V.R. Muthu, Non-Executive Independent Director held 59,773 Equity Shares as of 31st March, 2025.

Other than the Sitting fees, Mr. D Sathyanarayan, Non- Executive Non-Independent Director of the Company was paid a Remuneration for the services rendered by him after obtaining the approval of the Members by passing a Special Resolution through Postal Ballot dated 13th December, 2023.

The term Internal Financial Control has been defined as the policies and procedures adopted by the company to ensure orderly and efficient conduct of its business, including adherence to company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Your Company has adequate and robust Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit reports are submitted to the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. The Audit Committee also conducts discussions about Internal Control System with the Internal and Statutory Auditors and the Management of the Company and satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of

Women at the Workplace (Prevention, Prohibition & Redressal)

Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has not received any complaint on sexual harassment during the financial year ended 31.03.2025.

During the year, there are no significant and/or material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company's operations in future.

There have been no material changes and commitments which affect the financial position of the company which have occurred between the end of the financial year i.e., from 31.03.2025 to which the financial statements relate until the date of this report.

As per the MCA Notification dated 28th August, 2020 making an amendment to Rule 12(1) of The Companies (Management and Administration) Rules, 2014, a weblink of the Annual Return is furnished in accordance with sub section (3) of Section 92 of the Companies Act, 2013 and as prescribed in Form MGT 7 of the Companies (Management and Administration) Rules, 2015 You may please refer to our Company's weblink https://www.hap.in/annual-return.php.

As required under Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, the Company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the Company's website. The weblink for the same is https://www.hap.in/policies.php There were no related party transactions entered into during the financial year by the company with the Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the Company at large other than the remuneration paid to the Executive Director/s and Non-Executive Director/s and Dividend received by them from the Company in proportion to the shares held by them, the transactions with HAP Sports Trust by way of contribution towards CSR activities, the payment made to the Registrar and Share Transfer Agents and the payments made to the wholly owned Subsidiary Company Milk Mantra Dairy Private Limited.

The details of Related Party Transactions are provided in the Notes to the Accounts and AOC-2 forming part of the Director's Report - Marked as Annexure H.

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended. A report on Corporate Governance including Management Discussion and Analysis under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a certificate from M/s. S Dhanapal & Associates, LLP, a firm of Practising Company Secretaries, confirming to the compliance is annexed herewith marked as Annexure D and forms part of this report.

The details on Conservation of energy, technology absorption, foreign exchange earnings and outgo are annexed herewith as marked as Annexure F and forms part of this report.

In terms of Section 134 (5) of the Companies Act, 2013, the Directors would like to state that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review.

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

6. The Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

As the members are aware, your Company's shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company's shares.

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

AND THEIR STATUS AS AT THE END OF FINANCIAL YEAR 2024-2025: NIL.

DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF: NA.

DETAILS OF ONE TIME SETTLEMENT, IF ANY; NIL

The Directors wish to thank the business associates, customers, vendors, bankers, farmers, channel partners and investors for their continued support given by them to the Company. The Directors would also like to thank the employees for the contributions made by them at all levels.