Stove Kraft Ltd

To the members,

Your Directors have pleasure in presenting the 25th Annual Report of the Company and the Audited Financial Statements for the financial year ended 31 March 2024.

CIRCULATION OF ANNUAL REPORTS IN ELECTRONIC FORM

Pursuant to general circulars dated December 08, 2021, May 05, 2022, December 28, 2022, September 25, 2023 issued by Ministry of Corporate Affairs' ('MCA') read with SEBI Circular dated October 7, 2023 relaxation has been granted to the companies in respect of sending physical copies of annual report to shareholders, for general meetings held through electronic mode till 30 September 2024.

Accordingly, the financial statements (including Boards' Report, Corporate Governance Report, Management Discussion and Analysis, Business Responsibility and Sustainability Report, Auditors' Report and other documents) are being sent only through electronic mode to those shareholders whose email addresses are registered with the Depository Participants / Company's Registrar and Share Transfer Agent viz., KFin Technologies Limited ('KFin'), and whose names appear in the register of members as on 23 August 2024.The Annual Report for FY2024 is also available on the website of the Company at https:// www.stovekraft.com/investors/

Compliance with SEBI LODR Regulations

The Company has complied with all the applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

FINANCIAL HIGHLIGHTS

(Rs. in Million)

FINANCIAL AND BUSINESS PERFORMANCE

A detailed analysis of the financials and business performance of the Company during the year under review is detailed in Management Discussion and Analysis which is provided separately in the Annual Report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

The Company does not have any Subsidiaries, Associates or Joint Ventures etc. The Company's Policy for determining Material Subsidiary, as formulated by the Board of Directors, in conformity with Regulation 16 and 24 of the SEBI Listing Regulations, is placed on website of the Company and can be accessed at the web-link https://stovekraft.com/ wp-content/uploads/2023/05/Material_Subsidiary_ Policyfinal-tol-upload.pdf

DIVIDENDS

The Board has recommended dividend of Rs. 2.50 per share (25%) for FY24, subject to the approval of the shareholders in the ensuing AGM. The proposed dividend for FY24 will absorb '82.63 million. In accordance with the provisions of the Income Tax Act, 1961 the aforesaid dividend will be taxable in the hands of shareholders but liable for Tax Deduction at Source (TDS) by the Company at the applicable rates.

Dividend Distribution Policy: The Dividend Distribution Policy formulated by the Board is posted on the Company's website. The web-link to access the said policy is as follows:

https://stovekraft.com/wp-content/uploads/2022/03/Dividend-Distribution-policy-2.pdf

ENVIRONMENTAL SUSTAINABILITY

Water is a crucial resource, and the Company operates both Sewage Treatment Plants and Effluent Treatment Plants. The treated water is utilized for gardening and plantation purposes. Additionally, rainwater harvesting recharge pits have been installed in different areas of the plants to replenish groundwater levels. Rainwater harvesting involves directing roof water to these recharge pits. More than three acres of land within the plant has been transformed into a green belt.

OCCUPATIONAL HEALTH & SAFETY

The Company prioritizes Occupational Health and Safety (OH&S) with great emphasis. Plant Heads kickstart each day with safety meetings, discussing crucial safety aspects with workers. Workers undergo safety induction training, refresher courses, and job-specific training provided by both Plant Heads and the Safety Head. Additionally, the Safety Head refreshes workers monthly on safety aspects to reinforce their significance. Fire safety lectures and drills are conducted for workers in batches. Further the Company's plants are certified for ISO 9001:2015 - Quality Management Systems.

TRANSFER TO RESERVES

For FY2023-24 no amount is proposed to be transferred to reserves.

SHARE CAPITAL

As on 31 March 2024, the Authorized Share Capital of the Company is Rs. 400,000,050/- divided into 40,000,005 Equity Shares of Rs. 10/- each and the Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 33,05,17,590/-.

Change in Authorized, Issued, Subscribed and Paid-up Share Capital of the Company during FY2023-24 were as follows:

Please note that increase in issued, subscribed and paid up Capital of the Company during FY2023-24 was due to allotment of shares pursuant to exercise of ESOPs.

EMPLOYEES' STOCK OPTION PLAN

Pursuant to the resolution passed by the Board of Directors on 10 July 2018 and resolutions passed by shareholders on 10 September 2018 and on 29 September 2018 respectively the Company has adopted Stove Kraft Employee Stock Option Plan 2018 ("ESOP Plan"). Pursuant to the ESOP Plan, options to purchase Equity Shares may be granted to eligible employees (as defined in the ESOP Plan) with a view to attracting and retaining the best talent, encouraging employees to align individual performances with Company's objectives, and for promoting increased participation in the growth of the Company. Pursuant to the said resolutions, ESOP pool of 813,000 options was approved and created under the ESOP Plan.

As on 31 March 2024, 5,85,843 options were exercised at '150 per share under the ESOP Plan. The disclosure as stipulated under the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations 2021 as on 31 March 2024 is attached as Annexure - 1 to the Board's Report. The details of the Plan form part of the notes to accounts of the Financial Statements in this Annual Report. BMP & Co. LLP, Secretarial Auditors have issued a certificate certifying that the scheme has been implemented in accordance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations,2021 and the Resolutions passed by the Shareholders. The said certificate will be available for inspection during AGM.

AUDIT COMMITTEE

The details pertaining to Composition of the Audit Committee and terms of reference are included in the Corporate Governance Report, which forms part of this annual report. The Board has accepted all the recommendations of the Audit Committee made during the year.

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered during FY2023-24 were on an arm's length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Act and the Listing Regulations. There were no materially significant Related Party Transactions during the year that required shareholders' approval.

None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2023-24.

DEPOSITS

Your Company has not accepted any deposit and as such no amount of principal and interest was outstanding as at the Balance Sheet date.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

DIRECTORS Retirement by rotation

Pursuant to the provisions of section 152 of the Companies Act, 2013, Mrs. Neha Gandhi retires by rotation at the ensuing AGM and being eligible, offers herself for re-appointment. The Board recommends her reappointment.

Reappointment of Managing Director

At the Annual General Meeting held on 24 September 2020, Mr. Rajendra Gandhi, (holding DIN 01646143) was reappointed as the Managing Director of the Company for a period of five years from 17 March 2020 till 16 March 2025.

Proviso to Section 196(2) of the Companies Act, 2013 provides that the reappointment of Managing Director may be done one year before the expiry of his term. In view of the above provisions the Board, on recommendation of Nomination and Remuneration Committee, at its meeting held on 10 August 2024 has approved the reappointment and remuneration of Mr. Rajendra Gandhi, as Managing Director for a period of five years from 17 March 2025 to 16 March 2030, subject to the approval of shareholders at the ensuing Annual General Meeting. The Board recommends the reappointment of Mr. Rajendra Gandhi as Managing Director.

Independent Directors

Mrs. Shuba Rao Mayya, Mr. Natrajan Ramkrishna, Mr. Anup S Shah and Mr. Avinash Gupta continues to be Independent Directors of the Company. Pursuant to the provisions of Section 149 of the Act, the aforesaid Independent Directors have submitted declarations that they continue to meet 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 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). During the year, there has been no change in the circumstances affecting the status of Independent Directors of the Company.

The Board of Directors, based on the declarations received from the Independent Directors after duly verifying the veracity of such declarations, hereby confirms that the Independent Directors fulfil the conditions of independence specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management of the Company.

Please also note that as per Schedule IV of the Companies Act, 2013 the Independent Directors had a separate meeting on 18 March 2024.

KEY MANAGERIAL PERSONNEL (KMP)

As on 31 March 2024, Mr. Rajendra Gandhi, Managing Director; Mrs. Neha Gandhi, Executive Director; Mr. Ramakrishna Pendyala, Chief Financial Officer and Mr. Shrinivas P Harapanahalli, Company Secretary & Compliance Officer were the Key Managerial Personnel of the Company.

Changes in KMPs: Mr. Balaji A S, resigned and relieved on 13 July 2023 from the position of Chief Financial Officer. The Board has appointed Mr. Ramakrishna Pendyala as Chief Financial officer of the Company with effect from 29 July 2023.

BOARD EVALUATION

The Board carried out annual evaluation of its own performance, performance of its committees, the Chairperson and the Directors individually. A detailed note on the manner of evaluation forms a part of the Corporate Governance Report.

POLICY FOR APPOINTMENT AND REMUNERATION OF DIRECTORS

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Rules made thereunder and Regulation 19 of SEBI (LODR) Regulations, the Board on recommendation of Nomination and Remuneration Committee has formulated Nomination and Remuneration Policy. The Policy inter alia lays down the criteria for determining qualifications, attributes and independence of potential candidates for appointment as directors and determining their remuneration. The brief details of the Policy has been provided in Corporate Governance Report. The said Policy has been posted on website of the Company and the web link to access the said policy is as follows https:// stovekraft.com/wp-content/uploads/2024/07/ NRC-Policy-amended-29072023.pdf

The Company also has in place Board Diversity Policy. The Policy enables the Board to ensure appropriate balance of skills, experience and diversity in its composition.

REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND PARTICULARS OF EMPLOYEES

The information required to be disclosed in the Board's Report pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached to this report as Annexure - 2. In accordance with the provisions of Section 136 of the Act, the Board's Report and the financial statements for the financial year ended 31 March 2024 are being sent to the members and others entitled thereto, excluding the details to be furnished under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 which are available for inspection by the members at the Registered Office of the Company during business hours on all working days up to the date of the ensuing Annual General Meeting. If any member desires to have a copy of the same, he may write to the Company Secretary in this regard.

BOARD AND COMMITTEES OF THE BOARD

The number of meetings of the Board and various Committees of the Board including composition are set out in the Corporate Governance Report which forms part of this annual report.

STATUTORY AUDITORS

Members of the Company at the 22nd AGM held on 31 August 2021, appointed Price Waterhouse Chartered Accountants LLP (Firm Registration Number 012754N/ N500016) as Statutory Auditors of the Company to hold office for a term of 5 consecutive years from the conclusion of 22nd Annual General Meeting until the conclusion of 27th Annual General Meeting.

The Statutory Auditors' Report for the Financial Year 2023-24 does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDIT

The Board of Directors had appointed BMP & Co LLP, Bengaluru, Practicing Company Secretaries, to conduct Secretarial Audit of your Company for financial year ended 31 March 2024. The Secretarial Audit Report for financial year ended 31 March 2024 is attached to this report as Annexure - 3. The said report does not contain any qualification, reservation or adverse remark.

SECRETARIAL COMPLIANCE REPORT

Pursuant to Regulation 24A of the Listing Regulations, BMP & Co. LLP, Practicing Company Secretaries, have issued Annual Secretarial Compliance Report for FY2023-24. The said Report has been placed on website of the Company and the web link to access the same is https://stovekraft.com/wp-content/ uploads/2024/06/24AASCR31032024.pdf

REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditors have reported to the audit committee, any instances of fraud committed against the Company by its officers or employees.

COST AUDIT

Your Company is maintaining Cost Records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 and the Rules framed thereunder. The Cost Audit for FY2022-23 was conducted by M/s. GS & Associates, Cost Accountants and the Cost Audit Report for FY2022-23 was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the cost accounts of the Company for FY2023-24 is also being conducted by the said firm and the Report will be filed within the stipulated time.

Further the Board of Directors on the recommendation of the Audit Committee, has reappointed M/s. GS & Associates, Cost Accountants to audit the cost records of the Company for FY 2024-25 at a remuneration of Rs. 1,25,000/- plus applicable taxes and out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for ratification. Accordingly, a Resolution seeking Member's approval for the remuneration payable to M/s. GS & Associates, Cost Auditors is included in the Notice of the Annual General Meeting. The Board recommends the aforesaid resolution for approval of the members.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company continues to be compliant with the provisions relating to the constitution of Internal Committee and other provisions under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, no complaint was received under the said Act and no complaint was pending at the beginning and end of FY2023-24.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has in place a Vigil Mechanism / Whistle Blower Policy to provide a platform to the Directors and Employees of the Company to raise genuine concerns regarding any irregularity, misconduct or unethical matters / dealings within the Company. It also provides protection to employees or Directors against victimization who report genuine concerns. The Policy is placed on website of the Company and can be accessed at the link https://stovekraft. com/wp-content/uploads/2023/08/Whistle-Blower- Policy-2023.pdf.

RISK MANAGEMENT

Risk Management is an integral part of the Company's strategy and planning process. Like any other industry, the Company faces several business risks. The Company's business is exposed to internal and external risks which are identified and revisited every year. For proper risk management, the Company has the Risk Management Policy and a well-defined Risk framework. The Company has in place a Risk Management Committee to look into risk assessment and minimization. More details on risk management is furnished in Management Discussion & Analysis which forms part of the Annual report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In terms of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Corporate Social Responsibility Policy has been hosted on the Website of Company. The Annual Report on CSR activities together with brief outline of CSR Policy of the Company is annexed herewith as Annexure - 4'.

INTERNAL FINANCIAL CONTROLS

The Company has in place relevant internal controls, policies, and procedures to ensure orderly and efficient conduct of its business. Standard Operating Procedures (SOPs) and Risk Control Matrix (RCM) have been designed for critical processes across all operations. The internal financial controls are tested for operating effectiveness through management's ongoing monitoring and review processes. In our view the internal financial controls are adequate and are operating effectively.

DIRECTORS' RESPONSIBILITY STATEMENT

The Financial Statements are prepared in accordance with the Indian Accounting Standard (Ind AS) notified under the Companies (Indian Accounting Standard) Rules, 2015 as amended from time to time, the provisions of the Companies Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI).

Pursuant to Section 134 of the Companies Act 2013, the Directors state that:

a) in the preparation of the annual accounts for the financial year ended 31 March 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31 March 2024 and of the profits of the Company for the period ended on that date;

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

OTHER INFORMATION Management Discussion & Analysis

Management Discussion & Analysis for the year under review, as stipulated under Regulation 34(2)(e) of SEBI (LODR) Regulations, forms part of the Annual Report.

Business Responsibility and Sustainability Report (BRSR)

Business Responsibility and Sustainability Report for FY2023-24 is attached and forms part of the Annual Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) read with Rule 8 of the Companies (Accounts) Rules, 2014 is attached to this report as Annexure - 5.

Corporate Governance Report

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by Securities and Exchange Board of India. The report on Corporate Governance as stipulated under the SEBI (LODR) Regulations forms part of this Annual Report. The certificate from BMP & Co LLP Practicing Company Secretaries confirming compliance with the conditions of corporate governance is attached to the Corporate Governance Report.

A certificate furnished by Mr. Rajendra Gandhi, Managing Director and Mr. Ramakrishna Pendyala, Chief Financial Officer in respect of the financial statements and the cash flow statement for the financial year ended 31 March 2024 is annexed as Annexure-6' to this Report.

Disclosure under Schedule V(F) of the SEBI(LODR) Regulations,2015

Your Company does not have shares in the demat suspense account or unclaimed suspense account.

Listing

The Equity Shares of the Company are listed on the National Stock Exchange of India Limited and BSE Limited. Annual listing fee for the Financial Year 2024-25 has been paid to the National Stock Exchange of India Limited and BSE Limited.

Annual Return

Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, draft of the Annual Return of the Company for financial year 2023-24 prepared in accordance with Section 92(1) of the Act has been placed on the website and is available at https://stovekraft.com/investors/.

Material changes and commitments affecting financial position from the end of financial year till the date of this report

There have been no material changes and commitments which affect the financial position of the Company that have occurred from the end of the financial year to which the financial statements relate till the date of this report.

Cautionary Statement

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

The Company has not made any application nor any proceedings is pending under the Insolvency and Bankruptcy Code, 2016 during the year.

Others

1. The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India;

2. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefits of employees;

General

Your Directors confirm that no disclosure or reporting is required in respect of the following items as there was no transaction on these items during the year under review:

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

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

Acknowledgement

Your Directors express gratitude to all stakeholders, including customers, bankers, suppliers, distributors, dealers, and contractors, for their ongoing assistance, cooperation, and support. They also extend sincere appreciation to all employees for their dedication and ongoing contributions to the Company. The Directors are thankful for the confidence, faith, and trust shown by shareholders in the Company. Additionally, appreciation is extended to the Central Government and the Government of Karnataka for their continual support and cooperation.