Kothari Sugars & Chemicals Ltd

To the Members

The Directors are pleased to present the 64th Annual Report of the Company together with the Audited Financial Statements for the year ended March 31,2025.

The Company's Profit before Tax for the year ended 31st March 2025 has decreased by Rs. 2,515 lakhs to Rs. 1,677 lakhs as compared to Rs. 4,191 lakhs in the previous year. The total income for the year ending 31st March 2025 was Rs. 32,642 lakhs as against Rs. 51,812 lakhs in the previous year. The decrease in revenue is mainly due to lower sales volumes of Sugar, Power and Bagasse. The reduced sales were a result of lower sugarcane crushing and sugar production, which were adversely impacted by pest infestation and scanty rainfall, leading to a decline in recovery rates.

During 2024 - 25 Sugar Season (SS) the world sugar production is expected to be around 175.54 million metric tons as against consumption of 180.42 million metric tons. In 2023 - 24 Sugar season, the sugar production was 181.8 million metric tons against consumption of 179.1 million metric tons. The forthcoming year 2025 - 26 SS, the production is expected to surpass marginally the consumption.

India's sugar production during 2023 - 24 SS was 31.8 million metric tons and during 2024 - 25 sugar season, it is expected to be around 25.8 million metric tons. The decrease in sugar production is mainly on account of yield reduction reported in Maharashtra, Uttar Pradesh & Karnataka. The sugar consumption in the year 2024 - 25 t SS is expected to be around 28.0 million metric tons.

Tamilnadu's Sugar production for the year 2024 - 25 SS is expected to be around 0.8 million metric tons against previous year's 1.05 million metric tons. States sugarcane cultivation areas got affected due to pest and disease incidence resulting in reduced crop yield and sugar recovery.

In addition, due to the higher cost of cane harvesting (manual) and the higher revenue reported from 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 30% than the previous year.

The Company's command area cane planting is expected to be same as that of previous years achievement due to pest and disease incidence and area diversion to other crops. Confidence building measures are being taken up to overcome the pest & disease incidence, involving Senior Scientists from the Sugarcane Breeding Institute, Coimbatore and Senior officials from the Department of Agriculture, Tamilnadu.

Your company has optimized its crushing operations by operating Kattur unit alone because of less cane quantum. Your Company crushed 2,61,780 tons of cane in 2024 - 25 and produced 2,39,970 quintals of sugar as against crushing of 8,35,208 tons of cane and sugar production of 7,46,880 quintals in the previous year. In the financial year 2024 - 25, the average Sugar recovery was 8.94% as against 8.88% in the previous year. The reduction in cane crushing was on account of the decrease in sugarcane planting area and yield.

Your company is taking various steps to improve Sugarcane plantation including:

• Providing incentives for cane planting

• Adoption of latest technologies on sugarcane cultivation, mechanisation, water conservation etc.

• Development of new sugarcane varieties for higher yield and sugar recovery with the help of ICAR-SBI and TNAU.

With all these measures, we could see a positive trend in fresh sugarcane planting. However, it may take couple of years to develop sufficient cane to operate both units of the company at optimum capacity.

Your Company produced 168.95 lakh litres of alcohol during the financial year 2024 - 25 as against 198.53 lakhs litres in the previous year. Your Company has supplied 10.92 lakh litres of Ethanol to Oil Marketing Companies during the ethanol marketing year 2023 - 24. For the marketing year 2024 - 25, against the Order/LOI of 8 lakhs litres, 6 lakh litres supplied till April'25, and the balance quantity will be supplied before July'25 end.

During the financial year 2024 - 25, the total power generation was 18.63 million units against 71.42 million units for the corresponding period of 2023 - 24. 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 Rs. 5.189/Kwh. The surplus power from the Kattur unit is being sold to open access consumers through bilateral agreements / IEX.

The Board of Directors met on 29th May 2025 to take account of the full year's performance, various growth opportunities and challenges. After reviewing this, the Board of Directors has decided not to recommend any dividend for the year 2024 - 2025, in order to conserve resources, considering the challenges ahead.

(i) Your company produces the following liquid biofertilisers in technical collaboration with Tamilnadu Agricultural University (TNAU) at Kattur.

(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, there by 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 25 sugarcane harvesters through entrepreneurs. We hope that in the coming years mechanized sugarcane cultivation will play a major role.

(Rs. in Lakhs)

Kattur Distilery unit has received Best Distillery-Platinum Award - (2023-24) - Tamilnadu Region from the SISSTA.

Your Company's Research and Development (R & D) unit commenced operations in April 2023. The unit primarily focuses on developing various value-added products from Sugar and other by-products. A key area of focus is on Bio-fermentation, which is an emerging field through which many such value-added products can be produced using sugar and other by-product as feedstock. The capital outlay in the R & D unit so far is around Rs. 30 Crores including ongoing projects.

Current research projects include the development of low-calorie sweeteners and a few probiotic strains. Additionally, the Company has initiated research in the area of biosimilars. The Company has collaborated with a few agencies / experts to expedite the research projects. The Company's R & D unit has been recognized by the Department of Scientific and Industrial Research (DSIR), Government of India.This recognition affirms the Company's compliance with national R & D standards and underscores its commitment to advancing research and development.

During the year 06 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.

Mrs. Nina B. Kothari, (DIN: 00020119) Director is liable to retirement by rotation at the ensuing 64th Annual General Meeting and being eligible offers herself for re-appointment. Mr. Arjun B Kothari, (DIN: 07117816) was reappointed as Managing Director with effect from 01st September 2022 for a period of three years and the Board proposes to reappoint him for another period of three years with effect from 01st

September 2025 subject to approval of shareholders in this Annual General Meeting.

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.

Mr. Abdul Kareem Sait (DIN: 03265300) has been appointed as an Additional Director in the capacity of Independent Director of the Company, with effect from 27th June 2025 for a term of five years, subject to the approval of the shareholders in this Annual General Meeting. Mr. C. V. Krishnan (DIN: 01606522), Independent Director resigned from the Board with effect from 27th June 2025. The Board places on record its appreciation for the valuable advice and contribution made by Mr. C. V. Krishnan during his tenure with the Company. (Note: The aforesaid appointment and resignation were duly approved and taken on record by the Board at its meeting held on 27th June 2025. The Board also approved the inclusion of the same in the Board's Report.)

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 18, 2025 without the presence of NonIndependent Directors and members of the Management to evaluate the performance of the Non - Independent Director & Board as a whole.

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.

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

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.

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.

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 31st March 2025 to the date of this report.

The paid-up equity share capital of the Company as on March 31, 2025 was Rs. 8,288.86 Lakhs. The Company has neither issued any shares with differential voting rights nor granted stock options or sweat equity.

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/Rs.q=node/20

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 61st AGM held on 3rd August 2022 to hold office till the conclusion of the 66th 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 2024 - 25 and no fraud was reported by auditors under Section 143(12) of the Companies Act, 2013.

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 64th Annual General Meeting

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 M/s. Alagar and Associates LLP, Chennai, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2024-25. The Secretarial Audit Report is forming part of this Annual Report. The Secretarial Report does not contain any qualifications or observations.

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2024 w.e.f December 13, 2024, the Secretarial Auditors shall now be appointed by the Members of the Company, on the recommendation of the Board of Directors, for a period of five (5) consecutive years.

M/s. Alagar & Associates LLP, a peer reviewed firm of Company Secretary in Practice (Firm Registration No. L2025TN019200) have confirmed that they fulfill the criteria and are eligible for appointment and have not incurred any of disqualifications under SEBI Listing Regulations.

In accordance with the above said Regulation, based on the recommendation of the Audit Committee, the Board of Directors at its meeting held on May 29, 2025, proposed the appointment of Secretarial Auditor to the members at the 64th Annual General Meeting.

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.

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 2024 - 2025.

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 by the Audit 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.

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.

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.

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.

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

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

The Independent Directors of the Company had met during the year on 18th Mar 2025 to review the performance of NonIndependent 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.

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

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 2025 - 2026 to NSE where the Company's Shares are listed.

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.

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.

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.

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

a) The ratio of the remuneration of each director to the median employee's remuneration for the financial year and such other details:

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) 3.89% 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 31st Mar 2025: 472

(e) Increase of remuneration for employees was in the varying range of 5% to 8%,and for KMP the increase was 5% and 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

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

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.