Krebs Biochemicals & Industries Ltd

To,

The Members,

The directors submit the 32nd Annual Report of Krebs Biochemicals & Industries Limited (the 'Company') along with the audited financial statements for the financial year ended 31st March 2024.

1. Financial Summary

(Rs. in Lakhs)

2. Financial Performance and Operations

During the financial year under review, the Company has reported total income of Rs. 5087.28 lakhs as against total income of Rs. 5275.46 lakhs in the previous financial year. During the year under report, operations of the Company have resulted in a loss of Rs. 1972.84 Lakhs as against loss of Rs. 2469.19 Lakhs of the previous financial year. Detailed Performance of the Company is given in the Management Discussion and Analysis Report forming part of this Annual Report.

3. Change in nature of business

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

4. Dividend

In view of losses incurred during the year, no dividend is proposed to be declared for the financial year 2023-24.

5. Material changes and commitments affecting the financial position of the Company

No material changes or commitments affecting the financial position of the Company have occurred between the end of the financial year to which financial statement in this report relate and date of this report.

6. Share Capital

There is no change in the share capital of the Company during the financial year under report.

7. Investor Education and Protection Fund

No amounts and/or shares were transferred or transferable to the Investor Education and Protection Fund during the year under review.

8. Statutory Auditors, Audit Report and Aud ited Accounts

At the 27th Annual General Meeting held on September 25, 2019, the Members approved appointment of M/s. Bhavani & Co, Chartered Accountants (Firm Registration No. 012139S) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of the 27th AGM till the conclusion of the ensuing 32nd Annual General Meeting.

The term of appointment of M/s. Bhavani & Co, Chartered Accountants (Firm Registration No. 012139S) as Statutory Auditors is coming to end at the conclusion of the forthcoming Annual General Meeting. It is now proposed to re-appoint M/s. Bhavani & Co, Chartered Accountants, as the statutory auditors of the Company to carry out the statutory audit activities for a further period of 3 (three) years from the conclusion of 32nd AGM and till the conclusion of 35th AGM of the Company.

The Auditors report read with notes to the accounts refereed to therein are self explanatory.

Explanation or Comments on Qualification, Reservation or Adverse Remark or Disclaimer made by the Auditors:

9. Internal Auditors

The Board of Directors based on the recommendation of Audit Committee have re-appointed M/s. Suryanarayana & Suresh, Chartered Accountants, Hyderabad, as Internal Auditors of the Company for the Financial Year 2024-25 at their meeting held on 21st May, 2024.

The internal auditors have submitted their reports at quarterly intervals to the Audit Committee and the Board during the financial year ended 31st March, 2024.

10. Directors and Key Managerial Personnel

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board and Committees.

The Board of Directors at their Meeting held on 9th August, 2023, appointed Mr. Jitendra Shah (DIN-09377846) as Managing Director/CEO of the Company effective from 10th August, 2023 for term of 3 years and shareholders approved the appointment at Annual General Meeting held on 27th September, 2023.

Mr. P. K. Bhattacharya (DIN- 07131152) resigned from the post of Managing Director of the Company, w.e.f 9th August, 2023 after the closure of business hours. However, he shall continue as Non-Executive Director on the Board of the Company w.e.f 10th August, 2023, liable to retire by rotation.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company as on the date of this report are:

Mr. Jitendra Shah - Managing Director& CEO Mr. Ritesh Jain - Chief Financial Officer

Mr. Rakesh R. Kalbate - Company Secretary & Compliance Officer

Appointment/ Resignation of KMPs

a) Mr. Rohit Taparia, resigned from the post of Company Secretary with effect from 20th October 2023.

b) The Board of Directors appointed Mr. Keyur Doshi as Company Secretary & Compliance Officer of the Company, w.e.f 17th January 2024.

c) Mr. Keyur Doshi resigned from the post of Company Secretary & Compliance Office of the Company w.e.f. 15th April, 2024.

d) The Board of Directors at its meeting held on 21st May, 2024 appointed Mr. Rakesh R. Kalbate as a Company Secretary & Compliance Officer of the Company.

Retirement by Rotation

Dr. R. T. Ravi (DIN: 00272977) and Mr. P K. Bhattacharya (DIN: 07131152) retires by rotation as Directors at the ensuing Annual General Meeting and they have offered themselves for re-appointment.

11. Declaration of Independence

The Company has received the declarations under section 149(6) of the Companies Act, 2013, from the Independent Directors that each of them meets the criteria of independence and there has been no change in the circumstances which may affect their status as Independent Directors during the year.

All the Independent Directors have registered themselves under Independent Directors data bank maintained by the Indian Institute of Corporate Affairs (IICA).

12. Board Meetings

During the financial year 2023-24, Five (5) meetings of the Board were held. Details of the meetings of the Board and attendance of the Directors have been provided in the corporate governance report which forms part of this report.

13. Corporate Social Responsibility

The provisions of Section 135 of the Companies Act, 2013 pertaining to Corporate Social Responsibility (CSR) is not applicable to the Company.

14. Quality Initiatives

The Company is committed to meet the customers Quality requirements and satisfaction by maintaining high degree of assurance in Quality, Safety, efficacy of the products manufactured. The Company maintains mutual and beneficial relationship with the Suppliers, Vendors and Customers.

The Company provide continual training to all the employees working in the plants for upgrading their knowledge of CGMP practices. Your Company continuously focus on developing new products with innovative knowledge and robust practices meeting the Regulatory requirements.

The Company is committed to meet the regulatory standards set by global regulators and our Unit-II Vizag site has been accredited and certified by EDQM, Europe. Many customers have audited Unit-I Nellore plant and have approved the plant as qualified Vendor. Company is totally focusing to be as an integrated Company emerging in the Pharma market by improving and implementing best-in class methodologies to meet the customer requirements with zero complaints and by implementing the ALCOA Practices in both the plants.

15. Policy on directors' appointment and remuneration and other details

The Nomination and Remuneration Committee has laid down the criteria for Directors' appointment and remuneration including criteria for determining qualifications, positive attributes and independence of a Director. The following attributes/criteria for selection have been laid by the Board on the recommendation of the Committee:

• The candidate should posses the positive attributes such as leadership, entrepreneurship, industrialist, business advisor or such other attributes which in the opinion of the Committee the candidate possess and are in the interest of the Company;

• The candidate should be free from any disqualifications as provided under sections 164 and 167 of the Companies Act, 2013;

• The candidate should meet the conditions of being independent as stipulated under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 in case of appointment as an independent director; and

• The candidate should posses appropriate educational qualification, skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, infrastructure, medical, social service, professional teaching or such other areas or disciplines which are relevant for the Company's business.

16. Board Evaluation

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of Independent Directors, Board of Directors and Committees of the Board. The criteria for performance evaluation is based on the parameters like attendance and participation at the meetings of the Board and Committees thereof, contribution to strategic decision making, review of financial statements, business performance.

The Board has carried out evaluation of its own performance as well as that of the Committees of the Board and all the Directors.

17. Remuneration Policy

The objective and broad framework of the Company's Remuneration Policy is to consider and determine the remuneration, based on the fundamental principles of payment for performance, potential and growth. The Remuneration Policy reflects on certain guiding principles of the Company such as aligning remuneration with the longer term interests of the Company and its shareholders, promoting a culture of meritocracy and creating a linkage to corporate and individual performance and emphasising on line expertise and market competitiveness so as to attract the talent. The Nomination and Remuneration Committee recommends the remuneration of Directors and Key and Senior Managerial Personnel, which is approved by the Board of Directors, subject to the approval of shareholders, where necessary. The level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate the directors, key managerial personnel and other employees of the quality required to run the Company successfully. The relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. The remuneration to directors, key managerial personnel and senior management personnel should also involve a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. The Remuneration Policy is placed on the Company's website at http://www.krebsbiochem.com/documents/54405 dae0fa8dbfdd493d897deab01b3.pdf.

Information about elements of remuneration package of individual directors is provided in the Annual Return as provided under Section 92(3) of the Companies Act, 2013 which is placed on the website of the Company.

18. Familiarisation program for Independent Directors

The Company has conducted familiarisation programs for the Independent Directors as required under the provisions of Companies Act, 2013, the same is uploaded on the Company's website at www.krebsbiochem.com.

19. Internal Financial Control Systems and their adequacy

The details in respect of internal financial controls and their adequacy are included in the Management Discussion and Analysis Report which forms part of this report.

20. Audit Committee

Your Company has a duly constituted Audit Committee and the Board has accepted all the recommendations of Audit Committee during the year under review. The members of the Audit Committee are:

The details pertaining to meeting, role and responsibilities of Audit Committee are provided in the Corporate Governance Report, which forms part of this report.

21. Nomination and Remuneration Committee

Your Company has in place a duly constituted Nomination and Remuneration Committee which has following members:

Details pertaining to meetings, role and responsibilities of Nomination and Remuneration Committee are provided in the Corporate Governance Report which forms part of this report.

22. Stakeholders Relationship Committee

Your Company has constituted a Stakeholders Relationship Committee as required under the provisions of SEBI Listing Regulations and the Companies Act, 2013. Members of the committee are:

Details pertaining to meetings, role and responsibilities of Stakeholders Relationship Committee are provided in the Corporate Governance Report which forms part of this report.

23. Corporate Governance

As per the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has complied with the requirements of Corporate Governance in all material aspects.

A report on Corporate Governance together with a certificate of its compliance from the Statutory Auditors, forms part of this report.

24. Loans and Investments

During the year under review, the Company has not given any loans and not made any investments under the provisions of Section 186 of the Companies Act, 2013.

25. Particulars of Employees

Pursuant to the provisions of Section 197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employee of the Company is drawing salary of more than Rs. 1.02 Crores (Rupees One Crore Two Lakhs) per annum or Rs. 8.5 lakhs (Rupees Eight Lakhs Fifty Thousand) per month, as the case may be, for the financial year ended 31st March 2024.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration

of Managerial Personnel) Rules, 2014, is provided in a separate Annexure-I forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

26. Cost Audit

Pursuant to the provisions of section 148 of the Companies Act, 2013, the cost audit of cost records became applicable to the Company for financial year 2023-24. M/s. Bojanapalli & Associates, Cost Accountant (Firm Registration No. 100849) were appointed as Cost Auditors to conduct audit of cost records of the Company for the financial year 2023-24.

The Cost Audit Report for financial year 2023-24 shall be filed on or before due date after approval by the Board of Directors in the Board Meeting.

27. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, the Company has appointed M/s DSMR and Associates, Practicing Company Secretaries, as Secretarial Auditors to undertake the secretarial audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure- II to the Board's Report.

Qualifications in Secretarial Audit Report:

28. Annual Secretarial Compliance Report

The Company has undertaken an audit for the financial year 2023-24 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by M/s. DSMR & Associates, Practicing Company Secretaries, Hyderabad has been submitted to the Stock Exchanges within the specified time.

29. Transactions with related parties

Information on transactions with related parties are given in Annexure-III in Form AOC-2 and the same forms the part of this report.

30. Fixed Deposits

Your Company has not accepted any fixed deposits and as such no principal or interest was outstanding as on the date of the Balance Sheet.

31. Annual Return

In accordance with the requirements of Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, a copy of Annual Return in Form MGT-7 is placed on the website of the Company at www.krebsbiochem.com.

32. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

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 fair and true view of the state of affairs of the Company at the end of the financial year;

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 fraud and other irregularities.

iv) They have prepared the annual accounts on a going concern basis.

v) They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.

vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

33. Disclosures relating to Subsidiaries, Associates and Joint Ventures

The Company does not have any Subsidiary Company, Associate Company or Joint Ventures Company.

34. Disclosure Requirements

As per SEBI Listing Regulations, Corporate Governance Report with Auditors' Certificate thereon and Management Discussion and Analysis are attached, which form part of this report.

35. Code of Conduct

The Board has laid down a code of conduct for Board members and senior management personnel of the Company. The Company has also adopted code of conduct for independent directors incorporating the role and functions, duties as laid down in the Companies Act, 2013. The said code of conduct is available on the website of the Company www.krebsbiochem.com. The Board members and senior management personnel have affirmed compliance with the said code of conduct. A declaration signed by the Managing Director in this regard is given at the end of this report.

36. Prevention of Insider Trading

The Company has adopted a code of conduct for prevention of insider trading. All directors, senior management employees and other employees who have access to the unpublished price sensitive information of the Company are governed by the Code. During the year under report, there has been due compliance with the code of conduct for prevention of insider trading.

The said code is available in the Company's website www.krebsbiochem.com.

37. Vigil Mechanism/Whistle Blower Policy

The Company has in place a whistle blower policy and no personnel have been denied access to the Chairman of the Audit Committee. The policy also provides for the safeguarding of whistle blowers. The whistle blower policy is available on website of the Company www.krebsbiochem.com.

38. Energy conservation, technology absorption and foreign exchange earnings outgo

The information on 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-IV" to this report.

39. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. The employees are provided training programs at regular intervals on manufacturing facilities on safety and environment.

40. Significant or material orders passed against the Company

During the year under review, there were no significant or material orders passed against the Company by regulators/ Courts/Tribunals impacting the going concern status and operations of the Company in future.

41. Disclosure on Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code (IBC)

During the year under review, there were no IBC proceedings initiated/ pending against the Company.

42. Disclosures pertaining to the Sexual Harassment of Women at the workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has complied with the provision relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

There are no complaints registered in this matter during the year under review.

43. Secretarial Standards

The Company is in due compliance with the applicable secretarial standards issued by the Institute of the Company Secretaries of India (ICSI).

44. Acknowledgments

Your Directors take this opportunity to express their sincere appreciation to the shareholders, customers, bankers, employees, suppliers and other business associates for the excellent support and co-operation extended by them.