Kothari Sugars & Chemicals Ltd

To the Members

Your Directors present the 63^rd Annual Report of the Company together with the Audited Financial Statements for the year ended March 31, 2024.

Financial Summary & Highlights of the Company (' in Lakhs)

Financial Highlights

The Company's Profit before Tax for the year ended 31^st March 2024 has decreased by '1,293 lakhs to '4,192 lakhs as compared to '5,485 lakhs in the previous year. The total income from operations for the year ended 31^st March 2024 is '51,812 lakhs as against '61,850 lakhs in the previous year. The decrease in revenue is mainly due to lower sales volumes of Sugar, Power and Bagasse.

Sugar Industry Overview World Sugar:

During 2023 - 24 Sugar Season (SS) the world sugar production is expected to be around 181.8 million metric tons as against consumption of 179.1 million metric tons. In 2022 - 23 Sugar season, the sugar production was 180.4 million metric tons against consumption of 176.2 million metric tons. The forthcoming year 2024 - 25 SS is expected to be a balanced year in terms of production and consumption of sugar.

India's sugar production during 2022 - 23 SS was 32.8 million metric tons and during 2023 - 24 sugar season, it is expected to be around 32.0 million metric tons. The marginal decrease in sugar production is mainly on account of the deficit of monsoon rain in Karnataka, Andhra Pradesh and Tamilnadu. The sugar consumption in the year 2023 - 24 SS is expected to be around 29.0 million metric tons.

Tamilnadu 's Sugar production for the year 2023 - 24 SS is expected to be around 1.2 million metric tons against

previous year's 1.5 million metric tons. The Northeast Monsoon failure in most of the States sugarcane cultivation areas affected the standing crops yield and sugar recovery and led to lesser sugar production than the initial estimate. In addition, due to the higher cost of cane harvesting (manual) and the higher revenue reported for other competitive crops like Paddy, Banana, Tapioca, Gingelly etc., sugarcane planting got affected in most of the factories command area. It is expected that there will be a reduction in fresh sugarcane planting area by around 40% than the previous year.

The Company's command area received about 35% lesser rainfall than the long period average rainfall. Fresh cane planting is expected to be around 50% of previous years achievement due to the water scarcity reported in the garden land areas and also due to crop failure because of pest and disease incidence. Confidence building measures are being taken up, involving Senior Scientists from the Sugarcane Breeding Institute, Coimbatore and Senior officials from the Department of Agriculture, Tamilnadu.

Performance of Business Segment Sugar

Your Company has crushed 8,35,208 tons of cane in 2023 - 24 and produced 7,46,880 quintals of sugar as against crushing of 10,87,693 tons of cane and sugar production of 10,38,540 quintals in the previous year. In financial year 2023 - 24, the average Sugar recovery was 8.88% as against 9.57% in the previous year. The

reduction in cane crushing was on account of the decrease in sugarcane planting area and yield.

Alcohol

Your Company has produced 198.53 lakh litres of alcohol during the financial year 2023 - 24 as against 178.22 lakhs litres in the previous year. This is the highest production ever achieved by your company. Your Company has supplied 9.07 lakh litres of Ethanol to Oil Marketing Companies during the ethanol marketing year 2022 - 23. For the marketing year 2023 - 24, against the Order/LOI of 6.30 lakhs litres, 3.25 lakh litres supplied till March'24, and the balance quantity will be supplied before July' 2024 end.

Co-generation of Power

During financial year 2023 - 24, the total power generation was 71.42 million units against 88.25 million units for the

corresponding period of 2022 - 23. The decrease in power production was due to the decrease in cane crushing volume. The long term PPA with TANGEDCO continues for Sathamangalam unit with a tariff of '4.837/Kw-hr. The surplus power from the Kattur unit is being sold to open access consumers through bilateral agreements / IEX. Dividend

The Board of Directors met on 17^th May 2024 to take account of the full year's performance, various growth opportunities and challenges, and also took note of the interim dividend of '0.50 paise per equity share of '10/- each declared during the year and the same was paid to the shareholders within the stipulated time. After reviewing this, the Board of Directors has decided not to recommend a final dividend for the year 2023 - 2024, in order to conserve resources, considering the challenges ahead.

(a) Conservation of Energy : Sathamangalam unit

(b) Technology absorption

(i) Your company has entered into a technology transfer agreement and a MOU with Tamil Nadu Agricultural University (TNAU) for establishing a Bio-fertiliser unit at Kattur.

The Bio-fertiliser unit commenced trial production in May 2024. The estimated project cost is '1.09 Cr. and will be producing the following biofertilisers:

(a) Glucono Acetobacter Diazotrophicus - Nitrogen Fixer

(b) Phospho Bacteria - Bacillus magaterium (PSB) - Phosphorus Solubilzer

(c) Phospho Bacteria - Arbuscular mycorrhizae (AM fungi) - Phosphorus Mobilizer

(d) Frareuria Aurantia- Paenibacillus Mucilaginosus - Potash Release Bacteria

(e) Zinc Solubilizer- Pseudomonas Chloroaphis (ZSB)

(f) Vasicular Arbuscular Mycorrhize (VAM)

(ii) To reduce the dependency on labour and to reduce the cost of cultivation of sugar cane, your company has facilitated development of mechanical cane planters to suit the soil and other field conditions prevailing in the command area. These planter machines can do six operations simultaneously, thereby reducing the time consumed for planting besides reducing the cost by over 60%. As of now there are 5 planters in both the unit's area.

(iii) Harvesting of sugar cane is the major labour intensive and expensive activity of sugarcane cultivation. To reduce the cost and dependency of labour, your Company has deployed about 30 sugarcane harvesters through entrepreneurs. We hope that in the coming years mechanized sugarcane cultivation will play a major role.

(c) Foreign exchange earnings and Outgo

(' in Lakhs)

Awards and Recognition

"Best overall performance sugar mill award" was received from Bharatiya Sugar.

Sathamangalam

Best Technical Efficiency (2022-23) - Gold award in Tamil Nadu Region was received from the SISSTA.

Kattur Distilery unit has received Best Distillery-Platinum Award - (2022-23) - Tamilnadu Region from the SISSTA. Research & Development:

Your Company's Research and Development (R&D) unit started functioning from April'23.This unit is mainly focusing on developing various value-added products from Sugar and other bi-products.

Board Meetings

During the year 05 Board Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between any two meetings was within the period as prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and MCA circulars thereon.

Directors and Key Managerial Personnel Pursuant to Section 149(11) of the Companies Act, 2013, Mr. P. S. Gopalakrishnan, Mr. P. S. Balasubramaniam and Mr. V. R. Deenadayalu, Independent Directors of the Company ceased to hold their office due to retirement on completion of their second term with effect from 01^st April 2024 and Board places on record its appreciation and gratitude for their years of service, valuable contributions, guidance and support provided by the retiring directors during their tenure as Independent Directors of the Company.

Mr. M. Silvester Goldwin, (DIN: 08145634) Director is liable to retirement by rotation at the ensuing 63^rd Annual General Meeting and being eligible offers himself for re-appointment. Mr. M. Silvester Goldwin, (DIN: 08145634) was re-appointed as Whole Time Director with effect from 01^st August 2021 for a period of three years and the Board proposes to reappoint him for a further period of three years with effect from 01^st August 2024 subject to approval of shareholders in this Annual General Meeting of the Company.

Mr. M. R. Mohan, (DIN: 10289673) and Mr. S. Sundarraman, (DIN: 01032768) were appointed as the Independent Directors of the Company with effect from 08^th November 2023 as approved by the shareholders through postal ballot.

Mr. Arjun B Kothari, Managing Director, Mr. M. Silvester Goldwin, Whole Time Director, Mr. R. Krishnan, Chief Financial Officer and Mr. R. Prakash, Company Secretary are the Key Managerial Personnel of the Company as per section 203 of the Companies Act, 2013.

Declaration from Independent Directors The Company has received necessary declaration from each Independent Director of the Company under Section149(7) of the Companies Act, 2013 and Regulation 16 of the SEBI (LODR) Regulations, 2015 that the Independent Directors of the Company continues to meet the criteria of their Independence laid down in Section 149(6) and continue to be included in the Data Bank maintained by the Indian Institute of Corporate Affairs and the online proficiency self-assessment test requirement pursuant to Rule 6(4) of Companies (Appointment and Qualification of Directors) Rules, 2014.

During the year under review, the Independent Directors met on March 07, 2024 without the presence of Non -Independent Directors and members of the Management to evaluate the performance of the Non - Independent Director & Board as a whole.

Composition of Audit Committee During the year 04 Audit Committee meetings were held, the details of the composition of Audit Committee are provided in the Corporate Governance Report of this Annual Report. The Board has not rejected any proposal/ recommendations of Audit Committee during the year. The intervening gap between any two meetings was within the period as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The salient features of the Remuneration Policy are stated in the Corporate Governance Report. The Remuneration Policy approved by the Board of Directors is posted on the website of the Company www.hckotharigroup.com/kscl Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named "Whistle Blower Policy" to deal with genuine concerns, if any, raised by the Directors / Employees. The details of Vigil Mechanism / the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the Company's website www.hckotharigroup.com/kscl. There were no incidents / concerns reported during the year under review. Prevention of Insider Trading

The Company has adopted a Code of Prevention of Insider Trading with a view to regulating trading in securities by the Promoters, Directors and Designated Persons of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company's shares by the Promoters, Directors and the Designated Persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed.

Directors' Responsibility Statement

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

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

(b) the directors had 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 the company at the end of the financial year and of the profit and loss of the company for that period;

(c) 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.

(d) the directors had prepared the annual accounts on a going concern basis;

(e) 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; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Material changes and commitments

There is no change in the nature of business of the company during the year. There is no material change or commitment affecting the financial position of the company that has occurred since 31^st March 2024 to the date of this report.

Share Capital

The paid-up equity share capital of the Company as on March 31, 2024 was '8,288.86 lakhs. The Company has neither issued any shares with differential voting rights nor granted stock options or sweat equity.

Annual Return

As required under Section 92(3), copy of Annual Return is placed on the Company's website.The web link to access the annual return is http://hckotharigroup.com/ kscl/?q=node/20

a) Statutory Auditors

The Statutory Auditors of the Company M/s. P. Chandrasekar LLP, Chartered Accountants (Registration No.: 000580S/S200066) has been reappointed for the second term by the Shareholders at the 61^st AGM held on 3^rd August 2022 to hold office

till the conclusion of the 66^th Annual General Meeting of the Company.

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. There are no qualifications or observations, or any adverse remarks made by the Auditors in their Report on the Financial Statements for the year 2023 - 24 and no fraud was reported by auditors under Section 143(12) of the Companies Act, 2013.

b) Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Audit Records maintained by the Company in respect of its Sugar, Co-gen and Distillery Unit are required to be audited. Your Directors, on the recommendation of the Audit Committee, appointed Mr. K. Suryanarayanan, Cost Accountant in Practice for conducting the audit of cost records of the Company and the remuneration payable to the Cost Auditor is required to be ratified by the Members in a general meeting. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to Mr. K. Suryanarayanan, Cost Accountant, is included at Item No. 3 of the Notice convening this 63^rd Annual General Meeting.

c) Secretarial Auditor

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. M. Alagar, of M/s. M. Alagar and Associates, Chennai, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is forming part of this Annual Report. The Secretarial Report does not contain any qualifications or observations.

d) Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act, 2013 and the Companies (Accounts) Rules, 2014, the Company has appointed M/s. R. Subramanian & Co. LLP, Chartered Accountants, Chennai as Internal Auditor for Kattur unit & Head office and M/s. V. P. Mukundan & Associates, Chartered Accountants, Chennai as Internal Auditor for Sathamangalam unit of the Company.

Deposits

The Company has not accepted deposits either from the members or public falling within the ambit of Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year, hence, there were no outstanding deposits during and at the end of the financial year 2023 - 2024.

Significant and Material Orders Passed by the Regulators

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Internal Financial Control Systems and their Adequacy The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit function is carried out by an independent firm of Chartered Accountants. The scope and authority of the Internal Audit function is defined bytheAudit Committee. The Internal Audit Reports are placed before the Audit Committee on a quarterly basis for its scrutiny and suggestions, if any. The Internal Auditor attends the Audit Committee meetings.

The Internal Auditors monitor and evaluate the efficacy and adequacy of the 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 the Internal Auditors, the Company undertakes corrective action in the respective areas and strengthens controls.

Particulars of Loans, Guarantees or Investments

The Company has not given any Loans or Guarantees covered under the provisions of section 186 of the Companies Act, 2013. The details of the general investments made by the company are given in the notes to the financial statements.

Risk Management

Pursuant to the requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has laid down the procedures to inform Board Members about the risk assessment and minimization procedures. Accordingly, the Company periodically submits the Risk Management Review Report to the Board for its review and suggestions.

Corporate Social Responsibility Policy

Pursuant to the provisions of section 135 and schedule VII of the Companies Act, 2013, Corporate Social Responsibility (CSR) Committee was formed to recommend (a) the policy on CSR and (b) implementation of the CSR Projects or Programs to be undertaken by the Company as per CSR Policy for consideration and approval by the Board of Directors. The policy on CSR as approved by the Board

is posted on the Company's website www.hckotharigroup. com/kscl. A detailed Report on CSR activities in the prescribed format is forming part of this Annual Report. Related Party Transactions

All related party transactions entered during the financial year were on an arm's length basis and in the ordinary course of business. There were no ‘material' contracts or arrangements or transactions, and therefore disclosure in form AOC-2 is not required. All related party transactions are placed before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are foreseen and repetitive in nature. For all the transactions entered pursuant to the omnibus approval so granted, a statement giving details of all such transactions is placed before the Audit Committee for their review on a quarterly basis.

The policy on Related Party Transactions as approved

by the Board is posted on the Company's website

www.hckotharigroup.com/kscl

Annual Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the Annual Performance Evaluation of the Board, its committees and of individual directors in the format (questionnaire) prescribed by the Nomination and Remuneration Committee of the Company.

The structured questionnaire covers various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance etc. The performance evaluation of the Directors (without participation of the relevant Director) was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process.

Separate Meeting of Independent Directors

The Independent Directors of the Company had met during the year on 07^th Mar 2024 to review the performance of Non-Independent Directors and the Board as a whole, reviewed the performance of the Chairperson of the Company and also assessed the quality, quantity and timeliness of flow of information between the company management and the Board without the presence of the Non-Independent Directors and members of the Management.

Disclosure about Cost Audit

Disclosure under the Insolvency and Bankruptcy Code, 2016

There was no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the financial year.

Listing with Stock Exchanges

The Company is listed in The National Stock Exchange of India Limited (NSE) and the Stock Code is KOTARISUG & ISIN INE419A01022. The Company confirms that it has paid the Annual Listing Fees for the year 2024 - 2025 to NSE where the Company's Shares are listed.

Corporate Governance and Shareholders Information Your Company has taken adequate steps to adhere to all the stipulations laid down in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance is included as a part of this Annual Report.

Certificate from the Practising Company Secretary confirming the compliance with the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this Report.

Management Discussion and Analysis Report

A detailed discussion on the industry structure (dealing with world sugar and Indian sugar) as well as on the financial and operational performance is contained in the ‘Management Discussion and Analysis Report' that forms an integral part of this Report.

Disclosure under the Sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013

The Human Resources Department created an "Internal Complaints Committee" for the prevention and redressal of sexual harassment of women at workplace as per the requirement of Sexual harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013. There were no incidents of sexual harassment reported during the year under review, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report.

Particulars pursuant to Section 197(12) and the relevant Rules:

a) The ratio of the remuneration of each director to the median employee's remuneration forthe financial year and such other details: Except Mr. Arjun B. Kothari, Managing Director and Mr. M. Silvester Goldwin, Whole Time Director of the Company, no other director was in receipt of remuneration except sitting fees.

b) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

c) 11.70% increase has been reported in the median remuneration of employees in the financial year.

d) The number of permanent employees on the rolls of the company as on 31^st Mar 2024 : 512.

e) Increase of remuneration for employees was in the varying range of 5% to 20% and for KMP the increase was in the varying range of 10% to 12% for the year.

f) We affirm that the remuneration paid during the period under review is as per the Remuneration Policy of the Company.

Compliance with Secretarial Standards

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India.

Cautionary Statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may constitute ‘forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ from those either expressed or implied in the statement depending on the circumstances. Acknowledgement

Your Directors thank the Banks, Customers, Farmers, Financial Institutions, Government Authorities, Suppliers and Shareholders for their continued support. Your Directors also place on record their appreciation for the services rendered by the employees of the Company.

Acknowledgement

Your Directors thank the Banks, Customers, Farmers, Financial Institutions, Government Authorities, Suppliers and Shareholders for their continued support. Your Directors also place on record their appreciation for the services rendered by the employees of the Company.