Kakatiya Cement Sugar & Industries Ltd

To

The Members

Your Directors have pleasure in presenting the 46 Annual Report together with the Audited Financial statements for the year ended 31 March, 2025.

The Financial Results for the year ended 31 March, 2025 are summarized below:

Your Directors are pleased to recommend for your consideration a Dividend at 3.00 /- per equity share of 10/- each for the year ended 31.03.2025, at par with the dividend declared in the past few years, which entails an outlay of 233.22 lacs.

In view of the loss incurred by the Company during the year under review, no amounts were transferred to Reserves. The Company has not transferred any amount to reserves from out of the profits of the preceding financial years.

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013 and in terms of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all shares on which dividend has not been claimed for seven consecutive years shall be transferred to the Investor Education and Protection Fund (IEPF).

Accordingly, the Company has transferred 9,489 equity shares to the IEPF Authority during the year ended 31 March, 2025. The Members are requested to visit the website of the Company www.kakatiyacements.com and refer to the ‘Unpaid Dividends/IEPF' section under the heading ‘Corporate Info' to know the details of the investors whose shares/unpaid dividend have been transferred to IEPF. In case the shares/unpaid dividend of any shareholder have already been transferred to IEPF, then such shareholder is requested to claim the same from IEPF by ling the requisite e-form IEPF-5 along with all the attachments on www.mca.gov.in and to forward the uploaded e-form IEPF-5 along with all its duly executed attachments to the Company for further processing.

According to Section 125 of the Companies Act, 2013 read with Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, the Company has transferred unclaimed dividend amounting to 9,69,894/- to IEPF during the year under review. The said transfer was in respect of the unclaimed dividend for the financial year 2016-2017.

In terms of Section 134(3)(l) of the Companies Act, 2013, there are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the Report.

The Company has not accepted any deposits during the year under review and there were no outstanding deposits as at the end of the year falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

There are no significant and material orders passed by the Regulators or Courts or Tribunals in the year under review impacting the ‘going concern' status and Company's operations in future.

During the previous financial year, the Company had been levied a ne of 1,04,000 plus GST each by both BSE Limited and the National Stock Exchange of India Limited for the non-compliance under Regulation 17(1A) of the SEBI (LODR) Regulations, 2015. The company has paid the nes levied by both stock exchanges and has submitted an application seeking a waiver of the nes in accordance with the provisions of the Standard Operating Procedure (SOP) for waiver of fees. However, the application submitted by the Company for waiver of the penalty was not accepted by either of the stock exchanges.

In accordance with the provisions of the Companies Act, 2013, Smt. M Varalakshmi Director retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

The brief pro le of the Smt. M Varalakshmi, Director who is retiring by rotation and seeking reappointment at the ensuing Annual General Meeting is presented elsewhere in this Annual Report.

As on 31 March, 2025, 76,41,111 (98.29%) shares were dematerialised with the following depositories:

The Company, therefore once again requests such of the public Members who have not yet dematerialised their shares to initiate immediate steps to complete the process of dematerialisation.

Securities and Exchange Board of India has made it mandatory for holders of physical securities to furnish details of PAN, contact details (address with Pin Code, email address, mobile number), bank account, updated specimen signature and nomination/ opt-out of nomination.

The relevant forms prescribed by Securities and Exchange Board of India (viz. ISR-1, ISR-2, ISR-3, SH-13 and SH-14) can be downloaded from the Company's website and weblink is http://www.kakatiyacements.com/kyc-compliance-documents.html or that of RTA website https://xlsoftech.com.

The Statement of a airs of the Company is presented as part of Management Discussion and Analysis (MDA) Report forming part of this Report.

The performance of the Company was not up to the mark during the financial year 2024-2025 as the Cement industry as a whole in India su ered a lot.

Several adverse factors viz., weaker infrastructure demand, slowed Government spending, adverse weather, raising input costs, significant increase of Mergers & Acquisitions by prominent cement companies especially in south India.

Further, non-renewal of Power Purchase Agreement by TS Transco and the reduced area of sugarcane cultivation due to migration of farmers to alternate crops fetching more remunerative prices like oil palm cultivation have all played its role on the operations of the Company and the Company could not achieve the expected capacity utilization. The division-wise operational and financial details of the performance are stated herein below:-

During the year under review, the Cement Division has produced 1,29,778 MT as against 2,44,020 MT in the year ago period thereby registering a decrease of about 46.82%.

The Cement Division has clocked a turnover of 47.86 crores in 2024-25 as against the turnover of 97.84 crores recorded in the previous year and this works out to a decrease of 51.08%.

The Cement Division has incurred loss before interest and tax (PBIT) of 12.57 crores in the year under review as against Pro t of 4.05 crores earned in the previous year.

The Sugar cane crushed in the Sugar Division in the year under review is 47,887 MT as against 1,14,101 MT in the previous year thereby recording a decrease of about 58.03%. Even though the Company could procure the mandals and villages of its choice during the year under review, by the time the same were allotted to the Company, the cane growers in the said mandals have already entered into agreements with neighbouring factory and as a result, the Company could procure only negligible quantity of cane from these additional areas. The Government Regulation restricting the sale of the sugar has also impacted the quantum of sales during the year under review.

The Sugar Division has clocked a turnover of 43.88 crores in 2024-25 in comparison with 63.88 crores in the preceding year and thereby registering a decrease of about 31.31% over the year ago period. The Sugar Division has recorded profit before interest and tax (PBIT) of 5.08 crores in the year under review as against Pro t of 0.63 crores in the preceding year owing to better market pricing.

The Power Division has generated 21,66,438 kWh in 2024-25 as against 53,88,759 kWh of power in the preceding year thereby recording a decrease of about 59.80%.

The Power Division is mainly dependent on the Sugar Division. As there is non-availability of sufficient cane for crushing in the Sugar Division for the reasons explained therein, the performance of the Sugar Division is low and accordingly the Power Division performance is also low.

The Power division has clocked a turnover of 1.82 crores in the year under review as against the turnover of 1.24 crores made in the year-ago period.

The Power Division made a loss before interest and tax (PBIT) of 0.97 crores as against a loss of 1.07 crores in the previous year.

Taking into account the market conditions and other factors, the Company has set a target of its cement production at 2,75,000 MT for the current year.

The Sugar Division was impacted by various issues during the year under review. The scarcity of water sources, and loss of productive areas in the zonal allocation made by the Government in 2022 for part of the year are some of the critical factors which continue to impact the prospects of the Company.

However, migration of farmers to alternate crops fetching more remunerative prices and incentives from both Central and State Governments for promoting oil palm cultivation coupled with the non availability of water in sufficient quantities at regular intervals have forced the Company to downward revision of the target of cane crushing to 30,000 MT during the current year.

The performance of power division is directly linked to the operational level of the sugar division. A favorable government policy with regard to utilization of coal as an alternative fuel to bagasse during o -season of the sugar division is yet to crystallize since the government has not been permitting the power generating companies to utilize the coal as an alternative fuel to bagasse. In view of this, the performance of the power division will continue to be low and added to this factor, any serious impediments to the sugar division will further impact the performance of the power division. The non renewal of the Power Purchase Agreement has also adversely affected the operations of the Power Division and during the crushing season no power could be exported to DISCOMS.

All the properties of the Company including its buildings, Plant and Machinery and Stocks wherever required have been adequately insured.

The Annual Return as per provisions of Section 92 of the Companies Act, 2013 in Form MGT-7 is available on the Company's website, the web link is http://www.kakatiyacements.com/Admin/investors/AnnualReport/Annual%20Return_2025.pdf.

During the year under review, 4 (Four) Board Meetings were held. The details of the Board Meetings and its composition along with the attendance of the Directors are furnished elsewhere in the Corporate Governance Report.

There was no change in the Share Capital during the year under review.

There was no change in the nature of business of the Company during the year under review.

The Company follows a policy on remuneration of Directors and Senior Management personnel. The Policy is approved by the Nomination and Remuneration Committee and the Board.

Particulars of contracts / arrangements entered into by the Company with Related Parties referred to in Section 188

st

(1) of the Companies Act, 2013 for the year ended 31 March, 2025 have been provided in Form No.AOC-2 pursuant to clause (b) of sub Section (3) of Section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same are annexed to this Report (Annexure-1).

The Audit Committee and the Board also considered the Related Party Transactions as prescribed by the SEBI

Circular No. SEBI/Ho/CFD/CFD-PoD-2/P/CIR/2025/18 dated 14.2.2025 and in the format of Para 4 of the Standards where ever applicable.

All the Related Party Transactions have been approved by the Audit Committee and are at an "arms-length" basis.

The statement of particulars of Appointment and Remuneration of Managerial Personnel as per Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ending 31 March, 2025 is annexed to this Report (Annexure-2).

The following have been designated as the Key Managerial Personnel of the Company pursuant to Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

All the Independent Directors of the Company have been registered and are members Independent Directors Data Bank maintained by Indian Institute of Corporate A airs and the said registrations are valid. The Registration of Smt. Hima Bindu Myneni, is valid up to 27.02.2026 and of Shri V Siva Rama Krishna Murthy up to 27.02.2026. Registration of Shri Karumanchi Rama Rao is valid for Life Time.

All the Independent Directors of the Company have been granted exemption from passing the online pro ciency self-assessment test.

The Independent Directors have submitted the declaration of independence as required pursuant to Section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Section 149 (7) of the Companies Act, 2013 and Regulation 25(8) and 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Independent Directors have also con rmed that they are not aware of any circumstances or situations which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duty with an objective independent judgment and without any external in uence.

Further, the Board after taking these declarations / disclosures on record and acknowledging the veracity of the same, concluded that the Independent Directors are persons of integrity and possess the relevant experience to qualify as Independent Directors of the Company and are independent of the management.

The Board opines that the Independent Directors of the Company strictly adhere to corporate integrity, possess requisite expertise, experience, qualifications to discharge the assigned duties and responsibilities as mandated by the Companies Act, 2013 and Listing Regulations diligently.

Your Board has constituted various Committees of the Board as required under the provisions of the Companies Act, 2013 and of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of the composition, scope and its meetings etc., are furnished in the Corporate Governance Report, which forms part of this Report.

Pursuant to the requirement under Section 134 (3) and 134 (5) of the Companies Act, 2013 with respect to the Director's Responsibility Statement, the Board of Directors of the Company hereby con rm that: st

a. in the preparation of annual accounts for the year ended 31 March, 2025, the applicable accounting standards have been followed and that there were no material departures therefrom.

b. the Directors 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 a airs of the Company as

on 31 March, 2025 and of the loss of the Company for that period.

c. the Directors have taken proper and sufficient care for 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.

d. the Directors have prepared the Annual Accounts for the Financial Year ended 31 March, 2025 on a ‘going concern' basis.

e. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

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

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Independent Directors with specific focus on the performance of the Board and individual Directors. The observations of the evaluation made in the previous year, if any, will be considered. At the end of the current year, a comprehensive review will also be done.

The Board evaluation embraces several aspects such as development of suitable strategies and business plans at an appropriate time and its effectiveness, implementation of robust policies, procedures, size and structure and expertise of the Board.

As regards evaluation of Managing Director/Whole time Directors, aspects such as achievement of financial / business targets prescribed by the Board, developing and executing business plans, Operational Plans, Risk Management and financial a airs of the organization and Development of policies and strategic plans aligned with the vision and mission of the Company were considered.

With regard to evaluation of Non-Executive Directors, aspects such as participation at the Board / Committee Meetings, effective deployment of knowledge and expertise, independence of behavior and judgment were considered.

As regards evaluation of performance in respect of Committee Meetings, aspects such as discharge of functions and duties as per scope of the Committee, processes and procedures followed in discharging such functions were considered.

In respect of evaluation of the Chairperson, aspects such as managing relationship with the members of the Board and Management, providing ease of raising of issues, positive reception to the concerns by the members of the Board and promoting constructive debate and effective decision making at the Board were taken into account.

Further to comply with Regulation 25(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Independent Directors have also evaluated the performance of Non-independent Directors, Chairman and the Board as a whole at a separate meeting of Independent Directors.

A brief note on performance of evaluation of independent directors has been incorporated in the Corporate Governance Report.

M/s. M. Anandam & Co., Chartered Accountants, Secunderabad (FRN : 000125S) were appointed as the Statutory

rd th

Auditors of the Company for a period of 5 (Five) years by the Members at the 43 Annual General Meeting held on 8 September, 2022 and they hold officeup to the conclusion of the Annual General Meeting to be conducted in 2027. Accordingly, they continue to be the Statutory Auditors of the Company.

Your Board, on the recommendation of the Audit Committee, has appointed M/s. Ramanatham & Rao, Chartered Accountants, Secunderabad (FRN:002934S) as the Internal Auditors of the Company for the year 2025-26.

As per Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, cost records are required to be audited. Based on the recommendation of Audit Committee, your Board has appointed M/s. Narasimha Murthy & Co., Cost Accountants, Hyderabad as Cost Auditors for the current year 2025-26 and necessary Resolution for rati cation of their remuneration is placed before the Members at the ensuing Annual General Meeting for their approval in terms of Rule 14 (a)(ii) of the Companies (Audit and Auditors) Rules, 2014.

Pursuant to the provisions of Sections 204 and other applicable provisions, if any, of the Companies Act, 2013 read with Regulation 24A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, as amended from time to time, pursuant to recommendation of the Audit Committee, the Board of Directors, subject to the approval of the shareholders at the ensuing Annual General meeting, appointed Manjula Aleti & Associates, Practicing Company Secretaries (Firm Regn. No.: S2020TL735100) (Peer review Certificate No. 6702/2025) as the Secretarial Auditors of the Company for a period of not more than 5 (Five) consecutive years from the conclusion of this 46 Annual General Meeting till the conclusion of the 51 Annual General Meeting of the Company to be held in 2031 on such remuneration as may be mutually agreed to by the Audit Committee & by the Board and Secretarial Auditor.

The Secretarial Audit Report issued by Smt. Manjula Aleti, Practicing Company Secretary in Form-MR 3 for the nancial year ended 31 March, 2025 is annexed to this Report (Annexure -3).

The Certificate of Non-Disquali cation of Directors' issued by Smt. Manjula Aleti, Practicing Company Secretary under Schedule V(C)(10) (i) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 stating that none of the Directors of the Company have been debarred or disqualified from being appointed or continuing as Directors of the Company by the SEBI/ Ministry of Corporate A airs or such statutory authority as on 31 March, 2025 is annexed to this Report (Annexure -4).

SEBI has made it mandatory on the part of the Listed Companies to secure an Annual Secretarial Compliance Report from a Practicing Company Secretary on compliance of all applicable SEBI Regulations and Circulars / guidelines issued there under. The Company has obtained the Annual Secretarial Compliance Report from Smt. Manjula Aleti, Practicing Company Secretary for the year ended 31 March, 2025 and the same is annexed to this Report

(Annexure -5).

The Auditor's Report and the Secretarial Audit Report do not contain any quali cation, reservation or adverse remark.

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.

As required by the SEBI Listing Regulations, quarterly audit of the Company's share capital is being carried out by an independent Practicing Company Secretary with a view to reconcile the total share capital admitted with NSDL and CDSL and held in physical form, with the issued and listed capital. The Practicing Company Secretary Certificate in regard to the same is submitted to BSE the NSE and is also placed before the Board of Directors.

In compliance with the provisions of Section 134(3)(a) of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility (CSR) Policy) Rules 2014, the Company has constituted the CSR Committee comprising of Smt. Himabindu Myneni as the Chairperson and Shri P Veeraiah and Shri J S Rao as members. The Committee is responsible for formulating and monitoring the CSR policy of the Company.

As per Section 135 of the Companies Act, 2013 and other applicable provisions thereof, your company is not under obligation to spend any amount under CSR activities during the financial year 2024-2025 as the Company incurred cash losses during the previous financial year.

The annual report on CSR activities forms part of this Report (Annexure -6).

As per Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a detailed report on Corporate Governance together with the certificate from the Company's Auditors confirming compliance forms an integral part of this Report.

During the year under review, the Managing Director has not acquired any shares.

There are no loans, guarantees or investments made or given under Section 186 of the Companies Act, 2013.

The Company has put in place a Policy for Prevention of Sexual Harassment of Women at workplace. Internal Complaints Committee (ICC) has been setup to address complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy.

No complaint of sexual harassment has been received during the year under review.

The Company has neither earned nor used any Foreign Exchange during the year under review.

The whistle blower policy aims at conduct of the a airs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. The policy of vigil mechanism and whistle blower policy is available on company's website i.e., http://www.kakatiyacements.com/Admin/investors/Policies/Whistle%20Blower%20policy.pdf

The Company has been making endeavors to protect the environment from the evil effects of pollution from time to time. Planting of saplings and seedlings in and around the factories and colonies is being done on a continuous basis so as to develop green belt around the plant to improve the environment.

The Company has recorded Cement production of 1,29,778 MT as against 2,44,020 MT in the preceding year, thereby recording a decrease of about 46.82%.

It is hereby informing the members that as the serious impediments encountered by the Sugar Division, it was only 47,887 MT of Sugar Cane Crushing in the year under review as against 1,14,101 MT in the preceding year.

The Power Division has its own operational restraints due to non-renewal of Power Purchase Agreement.

During the year under review, the Company has clocked a turnover (excluding other income) of 89.22 crores compared to 155.95 crores recorded in the year-ago period. The segmental revenue has decreased in both Cement and Sugar Division during the year under review as compared to the previous year.

b) Industry Structure and Development:

The Company has a well developed network of dealers for its Cement Division, located in the states of Telangana and Andhra Pradesh and the Company therefore is in a reasonably comfortable position in securing orders from its clients. It is heartening to note that some of the dealers have been patronizing the Company since inception and the strong bondage that is developed between the Company and dealers is one of the prominent features of this mutually beneficial relationship.

While the Company has a well established structure and dealer network, the Company anticipates that it could have some impact on its performance in the current year due to the variation in the prices of Coal and other raw materials of Cement Division. The Company shall endeavour its best to mitigate the xed overheads to the possible extent, combat the critical challenges and move forward with a committed sprit.

The sugar industry is essentially seasonal in its nature. The availability of cane, good rainfall and proper irrigation facilities are primary issues that determine the fortunes of the industry. The allocation of zonal area to the sugar units by the department is also an important factor as allotment of villages having growth potential for cultivation of cane will facilitate higher cane production alongwith declaration of more remunerative price and other incentives by the Government to encourage sugarcane cultivation, leading to production of higher volumes in the sugar industry.

The Company is desirous of reaping the benefits of its well positioned dealer network across the states of Telangana and Andhra Pradesh in respect of its cement plant and will make every e ort to overcome the bottlenecks in achieving the targeted operations for the current year.

The Government of Telangana has not been permitting power generators to use coal as an alternative fuel during the o season of the sugar industry as a matter of policy which was not the situation a many years ago.

Unless the Government revisits the entire issue keeping in view the interest of entrepreneurs as well as all other stakeholders, it would be di cult for the power generators to survive in the long run as sub-optimal generation of power will seriously impact the viability of the industry.

In the sugar industry, fetching remunerative price for its product, adequate availability of sugar cane with close proximity to the sugar plant and industry-friendly governmental regulations are the key areas of concern.

The Company will make its best endeavors in resolving the complicated issues in the sugar and power divisions through negotiations with governmental authorities and will also liaison with the legal advisers in respect of pending litigations concerning the power division.

However, the Company, with an ability, determination and grit acquired over the years, is in a strong challenging

model and combat the critical situations resulting from micro and macro factors.

d) Segment or product-wise performance:

Segment-wise and product-wise performance has been furnished elsewhere in this Report.

The range of market operations in respect of cement product is restricted to the States of Telangana and Andhra Pradesh. The existing production capacity can be optimally utilized in catering to the requirements of the two Telugu states. In the circumstances no medium and long term strategy is being envisaged by the Company in the absence of any immediate plans for expansion.

Division-wise outlook has been furnished elsewhere in this Report.

g) Risks and concerns:

The Cement, Sugar and Power industries being core industries, there is no risk of product obsolescence or steep fall in demand by way of product substitution or otherwise and, therefore, your Directors do not foresee any major risks and concerns in the near future except as discussed elsewhere in this Report.

The Company endeavors its best to effect necessary changes, modi cations to the machinery and equipment and also to carry out necessary maintenance works to position the machinery in all the divisions in robust condition so as to keep the bottlenecks at bay.

As stated elsewhere in this Report, the Company has adequate internal control systems and the Chief Financial Officer will monitor the Internal Audit Reports and brief the Audit Committee in case any de ciency in the system is noticed and corrective measures are adopted to strengthen the system.

i) Financial Performance with respect to operational performance:

This has been discussed elsewhere in this Report.

j) Human Resource Development and Industrial Relations:

The Company believes that the quality of its employees is the key to success and is therefore committed to provide necessary human resource development and training opportunities to equip employees with additional skills to enable them to adapt to contemporary technological advancements.

Industrial Relations during the year continued to be cordial through effective communication, meetings and negotiations with the work force in an informal and congenial atmosphere.

The Company's strength consists of 439 permanent employees as on 31 March, 2025.

These details were mentioned elsewhere in this Annual Report.

Statements in this "Management Discussion and Analysis" may be considered to be "forward looking statements" within the meaning of applicable Securities Laws or Regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include demand-supply conditions, finished goods prices, raw material availability and prices, cyclical demand and pricing in the Company's markets, changes in Government Regulations, tax regimes besides other factors such as litigations and labour negotiations and health and safety related issues concerning all the stakeholders.

Your Directors take this opportunity to place on record their sincere thanks to the Banks and various departments of the Central and State Governments of Telangana and Andhra Pradesh for their support to the Industry.

Your Directors thank the entire network of dealers who have enabled the Company to achieve the volumes and kept up the rapport and friendly association with the Company.

Your Directors record their appreciation for committed support to the Company by all the employees at all levels throughout the year under reference.

Your Directors record their gratitude to all the Members who have been reposing con dence in the Company and its Management.