Sharat Industries Ltd

Dear Shareholders,

Your Director are pleased to present their Thirty-Fourth (34^th) Annual Report on the business and operations of your Company along with the audited financial statements, both standalone and consolidated, for the financial year ended 31^st March 2024.

1. FINANCIAL HIGHLIGHTS:

2. SUMMARY OF OPERATIONS & STATE OF COMPANY AFFAIRS:

The turnover of the company for the year ended 31^st March, 2024 was _ 30,215.92 Lakhs against

_ 33,253.83 Lakhs in the previous year. The profit for the year after tax is _ 587.30 lakhs as against a profit of _ 654.42 lakhs during the previous financial year.

Sharat Industries Limited is one of the very few companies in India which has all 4 divisions located within a 5-kilometer radius. All the divisions work together to ensure that there is continuous production throughout the year despite pre-existing seasonality in the business in general. This results in high quality produce due to quick processing and reduced logistics. The Company has invested significantly in the capex of its farm and processing divisions in recent years to further boost the production capacity.

The shortfall in market demand during the year and price fluctuations were the key factors for inappreciable profits. The company is exploring alternate market facilities to increase export volume and lower operating costs. The directors are confident that the performance of the company will improve in the years to come.

3. CHANGES IN SHARE CAPITAL:

During the year under review there were no changes to Share Capital of the Company.

Authorized Share Capital:

The authorized Share Capital of the Company as on 31^st March 2024 is _ 50,00,00,000/- (Rupees Fifty Crore) divided into 5,00,00,000 Equity shares having face value of Rs. 10/- each.

Paid-Up Equity Share Capital:

The Paid-up Capital of the Company is _ 23,91,25,000 (Rupees Twenty Three Crores Ninety One Lakhs Twenty Five Thousand) divided into 2,39,12,500 equity shares having face value of _ 10/- each.

4. DIVIDEND:

The Board of Directors at their meeting held on 14^th November 2023, declared an interim dividend of _ 0.25 (Twenty Five paise only) (2.5%) per equity shares of _ 10/- each. The interim dividend was paid to the shareholders on 08^th December 2023. The total outflow on account of said dividend was _ 59.78 lakhs. Your Board has not recommended any further dividend for the financial year 2023-2024.

5. TRANSFER TO RESERVES:

The Board of Directors of your company has decided not to transfer any amount to the reserves for the year under review.

6. CREDIT RATING:

The Credit rating of the Company remained unchanged during the Financial Year under review.

7. LISTING OF SHARES:

The Equity shares of the Company have been listed on the BSE Limited. The Company has paid applicable listing fees to the Stock Exchange and Depositories within stipulated time.

8. NATURE OF BUSINESS:

The company continues to be an integrated Aquaculture company with Hatchery, Culture, Feed and Shrimp Processing & Exports business and during the year, the company has not changed its business.

9. MATERIAL CHANGES AND COMMITMENTS:

There have been no material changes and commitments, which affect the financial position of the company that have occurred between the end of the financial year to the date of this report.

10. ALTERATION OF MEMORANDUM OF ASSOCIATION

During the year under review, your company has not altered its Memorandum of Association and Articles of Association.

11. INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY:

In accordance with Section 134(5) of the Act, the Company has Internal Financial Control Policies by means of policies & procedures commensurate with size and nature of operations. The Company's policies, procedures & standards are developed to uphold internal controls across the organisation. These controls ensure transactions are authorised, recorded and reported correctly and assets are safeguarded and protected against loss from unauthorised use or disposition. In addition, there are operational controls and fraud risk controls, covering the entire spectrum of internal financial controls. The controls were tested during the year and no material weakness exists. Audit Committee of the Board, periodically reviews the internal audit plans and observations/recommendations of Internal and Statutory Auditors. In accordance with Rule 8(5) (viii) of Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements.

12. ANNUAL RETURN:

Pursuant to the provisions of Section 92(3) and Section 134(3) of the Companies Act 2013 read with rule 12 of the Companies (Management and Administration) Rules 2014 as amended from time to time, the Annual Return of the Company as on 31^st March 2024 in e-form MGT-7 is available on Company's website and can be accessed at http://www.sharatindustries.com/uploads/3/9/8/5/39859679/sil_draft_mgt-7_fy_23-24.pdf

United Aquatech Private Limited

United Aquatech Private Limited is Company's associate in Chennai. Your company holds 49% of United Aquatech Private Limited equity share capital. United Aquatech Private Limited deals in business of Special Purpose Vehicle (SPV) for development of and operation of Shrimp farm at project locations.

During the year under review, United Aquatech Private Limited recorded revenue of _ 178.68 lakhs (previous year _ 284.79 lakhs) and registered loss before tax of _ 10.61 lakhs (previous year loss _ 20.04 lakhs)

Pursuant to section 129(3) of the Act, the statement containing the salient features of the financial statements of the Company's associate is enclosed as Annexure- III of the Board Report.

14. STATUTORY AUDITORS:

M/s A. R Krishnan & Associates, Chartered Accountants (FRN: 009805S) were re-appointed as statutory auditors of the Company for a second term of five (5) consecutive years, to hold office from the conclusion of the 32^nd Annual General Meeting held on 29^th September 2022 till the conclusion of 37^th Annual General meeting to be held in the year 2027.

15. STATUTORY AUDITORS' REPORT:

The Statutory Auditors report for the Financial Year 2023-2024 does not contain any qualification, reservation or adverse remark or disclaimer.

16. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the year under review, there were no changes on the Board of Directors of the Company.

KEY MANAGERIAL PERSONNEL:

Mr. M. Balamurugan (Membership No: A66115) was appointed as Company Secretary and Compliance officer with effect from 22^nd April 2023 and continues to hold the position.

RE-APPOINTMENT OF DIRECTOR RETIRING BY ROTATION:

In terms of Section 152 of the Companies Act, 2013, Mr. Shanmugam P (DIN: 08877587) is liable to retire by rotation at the ensuing 34^th Annual General Meeting and being eligible, offers himself for re-appointment.

The Board of Directors, based on the recommendation of the Nomination and Remuneration Committee has recommended the re-appointment of Mr. Shanmugam P (DIN: 08877587) as Director of the Company.

17. DECLARATION FROM INDEPENDENT DIRECTORS:

The Board of Directors has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of Independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(b) read with Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). The Independent Directors have also complied with the Code of Conduct prescribed in Schedule IV to the Act.

In accordance with Companies (Appointment & Qualification of Directors) Fifth Amendment Rules, 2019, Company has received declarations from Independent Directors confirming that they have registered with the Independent Directors Data Bank through Indian Institute of Corporate Affairs.

Information on familiarization program to Independent Directors is provided in the Corporate Governance Report section of this Annual Report.

18. SEPARATE MEETING OF INDEPENDENT DIRECTORS

Separate meeting of Independent Directors was held on 14^th February 2024 to review the performance of the Non-Independent Directors and the Board as a whole, to review the performance of Chairperson of the Company and assess the quality, quantity and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

19. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 & 134 (5) of the Companies Act, 2013, shall state that:

a. that the financial statements for the year ended March 31, 2024 have been prepared in conformity with Indian Accounting Standards (Ind AS) and requirements of the Act, and that of guidelines issued by SEBI, to the extent applicable to the Company along with proper explanation relating to 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 as at 31^st March 2024 and of the profit of the company for the year ended on that date;

c. The directors had 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.

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.

20. NUMBER OF MEETINGS OF THE BOARD:

During the Financial Year 2023-2024 under review, the Board of Directors of the company met 5 (Five) times i.e., on 22^nd April 2023, 30^th May 2023, 12^th August 2023, 14^th November 2023 and 14^th February 2024.

The further details relating to the Board meetings are given in Corporate Governance Section of this Annual Report. The gap between any two Meetings was within the period prescribed in the Companies Act 2013 and SEBI LODR.

21. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

As on the date of this report, the Board consists of 6 (Six) Directors, of which 2 (Two) are Executive Directors (one Managing Director and one Whole-Time Director), 4 (Four) are Non-executive Directors (Three are Independent and one is Non-Independent) Director. The policy of the Company on Director's appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under subsection (3) of Section 178 of the Companies Act, 2013 (the Act) is available on the Company's website at http://www.sharatindustries.com/uploads/3/9/8/5/39859679/ sharat_industriesfiremuneration_policy.pdf

22. AUDIT COMMITTEE:

Your Company has an Audit Committee pursuant to the requirements of the Act read with Rules framed there under and SEBI (LODR) Regulations, 2015. The details relating to the same are given in the report on Corporate Governance forming part of this Report. During FY 2023-2024 the recommendations of Audit Committee were duly accepted by the Board.

23. VIGIL MECHANISM/ WHISTLE – BLOWER POLICY:

Pursuant to Section 177(9) of the Companies Act 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has formulated a whistle blower mechanism for directors and employees to report concerns about unethical behavior, actual or suspected frauds or violation of the Company's code of conduct and ethics. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. The Whistle Blower Policy covering all the employees and directors is available in the Company's website. The Vigil Mechanism Policy has been uploaded on the website of the Company at http://www.sharatindustries.eom/uploads/3/9/8/5/39859679/sharat_ industries_vigil_mechanism_and_whistle-blower_policy.pdf

24. RISK MANAGEMENT:

The risk management is based on the clear understanding of the type and severity of risks that the organization faces and the processes to be followed for monitoring and measuring on a continuous basis to manage the same with ease and efficiency.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

The details of conservation of energy, technology absorption, foreign exchange earnings and outflow are as follows:

a. Conservation of energy

b. Technology absorption:

26. FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the year under review, the details of Foreign Exchange Earnings and outgo are as under:

27. CORPORATE SOCIAL RESPONSIBILITY(CSR):

In terms of Section 135 of the Companies Act 2013 read with CSR rules, your company during the year 2023-2024 spent _12.10 Lakhs being the two percent of the average net profit of your Company during the three preceding financial year in accordance with CSR policy of the Company.

Annual Report on CSR initiatives as required under the Companies (Corporate Social Responsibility Policy) Rules 2014, as amended (CSR Rules) is annexed as Annexure – I and forms part of this report.

28. CORPORATE GOVERNANCE:

In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a Compliance report on Corporate Governance as per Schedule V of the Listing Regulations, along with a Certificate of Compliance from the Practicing Company Secretary forms part of this report as Annexure – VI

29. DEPOSITS

During the year under review, your Company has not invited or accepted any deposits from the public under Section 76 of the Companies Act, 2013 and Rules made there under.

30. PARTICULARS OF EMPLOYEES REMUNERATION:

The information as required under the provisions of Section 197(12) of the Companies Act, 2013 and read with Rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure – V attached herewith which forms part of this report.

The statement containing such particulars of employees as required in terms of the provisions of Section 197(12) of the Act read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of the Annual Report. Pursuant to the provisions of the Section 136(1) of the Companies Act, 2013, the reports and accounts, as set out therein, are being sent to all members of the Company, excluding the aforesaid information and the same is open for inspection at the registered office of the Company during working hours up to the date of Annual General Meeting and if any member is interested in obtaining such information, may write to the Company Secretary at the registered office of the Company in this regard.

31. MANAGERIAL REMUNERATION RECEIVED FROM THE COMPANY, HOLDING OR SUBSIDIARY COMPANY:

During the year, the Company does not have holding or subsidiary Company.

32. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 DETAILS OFLOANS:

During the year under review, the Company has not given any loan, guarantee or made Investment as per the provisions of Section 186 of the Companies Act 2013.

33. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All the related party transactions entered during the year were in ordinary course of business and on arm's length basis.

There are no materially significant related party transactions that may have potential conflict with interest of the company at large.

The details of the related party transactions as per Indian Accounting Standards (Ind AS) – 24 are set out in the notes to the Financial Statements of the Company.

Form AOC-2 pursuant to Section 134 (2) (h) of the Companies Act, 2013 read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 is set out as Annexure – IV to the report.

The policy on Related Party Transaction as approved and can be accessed at the website of the Company http://www.sharatindustries.com/uploads/3/9/8/5/39859679/sharat_industries_rtp.pdf

34. COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETING:

During the Financial Year 2023-2024, your company has complied with applicable Secretarial Standards, namely SS-1, SS-2 & SS-3 issued by Company Secretaries of India.

35. ANNUAL SECRETARIAL COMPLIANCE REPORT

Annual Secretarial Compliance report for the Financial Year ended 31^st March, 2024 on the compliance of all applicable SEBI regulation and circulars/guidelines, issued by M/s. BP & Associates, Practicing Company Secretaries, Chennai was submitted to BSE Limited.

36. SECRETARIAL AUDITOR ‘S REPORT

In terms of Section 204(1) of the companies Act 2013, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Board of Directors has appointed M/s. BP & Associates, Practicing Company Secretaries, Chennai as Secretarial Auditors of the Company for conducting the Secretarial Audit for the financial year 2023-2024.The report of the Secretarial Auditor is Annexure –II to this report.

The Secretarial Audit report for the financial year ended 31^st March 2024 contains qualification and clarification by the Board is as follows:

37. INTERNAL AUDIT:

Pursuant to Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 and all other applicable provisions (including any amendment thereto) if any of the Companies Act, 2013, M/s. P S S & CO Chartered Accountants, Chennai were re-appointed as the Internal Auditors of the Company for the Financial Year 2023-2024.

38. COST AUDIT:

The provisions of the Cost Audit are not applicable to the Company.

39. MANAGEMENT DISCUSSION AND ANALYSIS REPORT.

Management Discussion and Analysis Report of the company for the year under review as required under Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in this report.

40. SIGNIFICANT OR MATERIAL ORDERS PASSED BY REGULATORS/COURTS/TRIBUNAL

There are no significant and material order passed by the regulators or court or tribunal impacting the going concern status and the Company's operations in furture.

41. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

To prevent sexual harassment of women at work place, a new act The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9^thDecember, 2013 and every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee.

Your Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment.

42. MECHANISM FOR BOARD EVALUATION:

Regulation 17(10) of SEBI (LODR) Regulations, 2015 states that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal Annual Evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors.

Schedule IV of the Companies Act,2013 states that the performance evaluation of the Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

The Directors evaluation was broadly based on the parameters such as understanding of the Company's vision and objective, skills, knowledge and experience, participation and attendance in Board/Committee meetings; governance and contribution to strategy; interpersonal skills etc.

The Board has carried out the annual performance evaluation of its own performance the Directors individually as well as evaluation of the working of its Board Committees. A structured questionnaire was prepared covering 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.

43. PREVENTION OF INSIDER TRADING:

The Company has a policy viz., Code of Conduct to regulate, monitor and report trading by designated person and same has been posted on the website of the company http://www.sharatindustries.com/ uploads/3/9/8/5/39859679/code_of_conduct_for_insiderfitrading.pdf

44. PERSONNEL:

The relations between the management and the staff were very cordial throughout the year. Your Directors take this opportunity to record their appreciation for the co-operation and loyal services rendered by the employees.

45. GENERAL

Your directors state that no disclosure or reporting is required of the following matter as there were no transaction on these matters during the year under review:

• Issue of equity shares with differential rights.

• Issue of shares to employees of the Company under any scheme.

• No instance of fraud reported by the Auditors under section 143 (12) of the Act.

• There are no proceedings pending under the Insolvency and Bankruptcy code, 2016.

• There was no instance of one-time settlement with any Banks or financial institution.

46. ACKNOWLEDGEMENTS:

Your Directors gratefully acknowledge with thanks the constructive guidance and co-operation extended by MPEDA, AXIS BANK LIMITED and Government of Andhra Pradesh, Tamil Nadu and also to employees at all levels, suppliers, dealers and customers for their strong support.

Your Directors also thank the shareholders for their continued confidence and trust placed by them with the Company.