Shree Ajit Pulp and Paper Ltd

DIRECTORS' REPORT

To,

The Members,

Shree Ajit Pulp and Paper Limited

Your Directors have pleasure in presenting their Twenty-Ninth Annual Report and the Audited Financial Statements for the financial year ended on 31st March, 2024, together with the Independent Auditors' Report thereon.

Financial Results:

Transfer to reserve:

The Company was not required to transfer any amount to any reserves during the year.

Dividend:

The company anticipates significant capital expenditure and investment requirements in upcoming period to support growth initiatives and operational efficiency. Retaining earnings will enable us to fund these strategic investments effectively. Hence your company does not recommend any dividend for the financial year 2023-24.

The Company has not paid any Interim Dividend during the financial year under review.

Fund Raising (Rights Issue):

The Board, at its meeting held on 14th July, 2023, approved the issuance of equity shares of the Company by way of a rights issue to the existing shareholders of the Company for an amount not exceeding 35 crores. Subsequently, the Right Issue Committee of the Board approved the allotment of 35,71,133 partly paid Equity Shares having face value of 48 per share payable as application money and 70 per equity shares (80 i.e. at a premium 28.56 crones at an issue price of 10 each for an amount aggregating to 32 per share payable on first and final call) on a rights basis. The said issue opened for subscription by shareholders on January 30, 2024 and closed on February 20, 2024. The shares were allotted to the shareholders on February 26, 2024.

The funds raised by the Company through aforesaid Rights Issue, have been utilised for the objects stated in the Letter of Offer, dated January 15, 2024 and no deviation from stated purposes has taken place.

Management Discussion and Analysis:

Management's Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 (LODR Regulation) read with Schedule V thereto, forms part of this Annual Report.

Corporate Governance:

Your Company is committed to maintain the steady standards of corporate governance and adhere to the corporate governance requirements set out under extant law. The Report on corporate governance as stipulated under Regulation 34 of the SEBI Listing Regulations read with Schedule V thereto is placed in a separate Section forming part of the Annual Report.

Compliance Certificate from practicing company secretaries regarding compliance of conditions of corporate governance is attached herewith. Finance:

The repayment of due loan installments and interest payment is being regularly done.

Subsidiary Company, Joint Venture and Consolidated Financial Statements:

The Company has One Subsidiary Company i.e. Shree Samrudhi Industrial Papers Private Limited which has not yet commenced any business as on 31st March, 2024. Further, the Company has One Joint Venture named Shree Samrat Pulp and Paper LLP (formerly known as Shree Samrat Pulp and Paper Private Limited) as on 31st March, 2024.

As required by Section 129 (3) of the Companies Act, 2013 and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Consolidated Financial Statements for the year ended on 31st March, 2024, prepared in accordance with the relevant accounting standards as prescribed under Section 133 of the Companies Act, 2013 and the Auditors report there on are attached.

As required by first proviso of Section 129 (3) of the Companies Act, 2013 and Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing the salient features of the financial statements of the Company's subsidiary (Shree Samrudhi Industrial Papers Private Limited) and joint venture (Shree Samrat Pulp and Paper Private LLP), in form AOC-1 is also attached. The statement also provides the details of performance and financial position of the said subsidiary Company and joint venture LLP.

Shareholders interested in obtaining a copy of the annual audited financial statements of the subsidiary Company may write to the Company and provide their Email ID.

Directors and Key Managerial Personnel:

During the Financial year ended on 31st March, 2024 and up to the date of this report, the following changes took place in the Compositions of the Board of Directors and Key Managerial Personnel of your Company;

Directors Retire By Rotation:

In accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Mrs. Bela G. Shah, Executive Director (DIN: 01044910) retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment. The Board recommends her re-appointment for the approval of the members of the Company.

The disclosures required pursuant to Regulation 36 of the Listing Obligation and Disclosure Requirement Regulations, 2015 and Secretarial Standard is given in the Notice of AGM, forming part of the Annual Report and in the Corporate Governance Report, forming part of the Annual Report. Attention of the Members is also invited to the relevant items in the Notice of the AGM.

Declaration by Independent Director:

The terms and conditions of appointment of Independent Directors are in accordance with the Listing Regulations and also as per the provisions of the Companies Act, 2013 ("Act") read with Schedule IV to the Act.

The Company has received annual declaration from all the Independent Directors that they meet the criteria of independence as prescribed u/s 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure) Regulations, 2015 and there has been no change in the circumstances which may affect their status as Independent Director during the year.

Your Company has also received confirmation that Independent Directors are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge their duties with an objective independent judgment and without any external influence and that he/she is independent of the management. They have also complied with the Code for Independent Directors prescribed in Schedule IV to the Act and Code of Conduct for directors and senior management personnel formulated by the company.

All the Members of the Board and the Management Committee have affirmed their compliance with the Code of Conduct as on 31st March, 2024 and a declaration to that effect, signed by the chairman, is attached and forms part of this Report.

All the Independent Directors have applied to Indian Institute of Corporate Affairs for inclusion of their names in the data bank and submitted the declaration in this regards to the Company.

Statement regarding Opinion of the Board with regard to Integrity, Expertise and Experience (including the proficiency) of the Independent Directors Appointed during the year:

The Board of Directors are collectively responsible for selection of a member on the Board. The Nomination and Remuneration Committee of the Company follows a defined criterion for identifying, screening, recruiting and recommending candidates for election as a Director on the Board. Board of directors is of opinion that Independent Directors of the Company possesses requisite qualification, experience and expertise which will help in the development of the Company.

Annual Return:

Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013, the Annual Return as on 31st March, 2024 is available on the Company's website on https://www.shreeaiit.com/investors-relation

Directors' Responsibility Statement:

Pursuant to Section 134(5) of the Companies Act, 2013 your Directors confirms based on the representations received that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The Directors have in consultation with Statutory Auditors, 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 had taken proper and sufficient care for the 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 had prepared the annual accounts on a going concern basis;

(e) The Directors had laid down adequate internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the Financial Year Ended on 31st March, 2024; 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.

Internal Financial Controls:

Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. Review of the internal financial controls environment of the Company was undertaken during the year which covered verification of entity level control, process level control, identification, assessment and definition of key business processes and analysis of risk control matrices etc.

During the period under review, effectiveness of internal financial controls was evaluated. Reasonable Financial Controls are operative for the business activities of the Company and no material weakness in the design or operation of any control was observed. The internal financial controls with references to the Financial Statements are commensurate with the size and nature of the business of the Company.

Company's Policy on Directors' Appointment and Remuneration:

Pursuant to provisions of Section 134(3) read with Section 178 of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Board of Directors, on recommendation of the Nomination and Remuneration Committee, has adopted a policy for appointment and payment of remuneration to Directors / KMP(s) and other Senior Executives of the Company. The policy is placed on website of the Company at www.shreeajit.com.

The Nomination and Remuneration Committee also recommends appointment and remuneration of Directors / KMP(s) and other Senior Executives of the Company, based on expertise and experience. The Committee also ensures that the remuneration is sufficient to attract, retain and motivate best managerial talents.

Particulars of Loans, Guarantees or Investment:

Pursuant to Section 186 of the Companies Act, 2013 and rules made thereunder, particulars of the loan given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security are provided in the notes to the Financial Statements, if any.

Particulars of Contract or Arrangement Regarding Related Party:

During the Financial Year 2022-23, the Company has entered into contract / arrangement / transaction with related parties under Section 188 of the Companies Act, 2013, details of which, as required to be provided under Section 134(3)(h) of the Companies Act, 2013 read with Rule (8)(2) of the Companies (Accounts) Rule, 2014 are disclosed in Form No. AOC-2 and the same forms part of this report. The policy on materiality of related party transaction is placed on website of the Company.

Further, Related Party Disclosure required pursuant to Schedule V of Listing regulation is not applicable to the Company, as there is no such transaction during the year.

Material Changes and Commitments Affecting Financial Position of the Company:

There are no material changes and commitments affecting the financial position of the Company which have occurred between end of the financial year of the Company and the date of this Directors' Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo:

The relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given as Annexure to this Report.

Change in Nature of Business:

There has been no change in the nature of Business of the Company during the financial year under review.

Corporate Social Responsibility:

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII as amended from time to time, a Corporate Social Responsibility (CSR) Committee of the Board is in place comprising of the Managing Director and two Independent Directors of the Company. The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy), from time to time indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities. The Annual Report for the year 2023-24 on CSR activities is annexed with this report. The detailed CSR policy is placed on the website of the Company at https://www.shreeaiit.com/uploads/policies/all/CSR Policy 23 02 2022.pdf

Establishment of Vigil Mechanism & Whistle Blower Policy:

The Company has established a vigil mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct and ethics of the Company. It provides for adequate safeguard against the victimization of employees who avail the mechanism and are allowed direct access to the Chairman of the Audit Committee and Ethics Counselor of the Company. The whistle blower policy is placed on the website of the Company at https://www.shreeajit.com/uploads/policies/all/Whistle_Blower_Policy.pdf No personnel have been denied access to the audit committee.

Performance Evaluation:

Pursuant to the provisions of Section 134 (3) (p), 149(8) and Schedule IV of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time, annual performance evaluation of the Directors as well as of the Audit Committee, Nominations and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility (CSR) Committee of the Board has been carried out.

The performance evaluation of the Independent Directors was carried out by the entire Board and the Performance Evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors.

Particulars of Remuneration:

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 made there under, in respect of employees of the Company is as follows:

1. ( i ) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year:

* Remuneration was drawn for the part of the year only, hence it is not comparable with previous year #Payment commenced during the current year, hence it is not comparable with Median remuneration

Note: Non-executive/ Independent Directors are not paid any remuneration except the sitting fees for attending meetings of the Board and Committees thereof.

(ii) The percentage Increase/(Decrease) in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year:

Note: *Remuneration was drawn for the part of the year only, hence it is not comparable with previous year #Remuneration commenced during the current year, hence it is not comparable with previous year Note: Non-executive/ Independent Directors are not paid any remuneration except the sitting fees for attending meetings of the Board and Committees thereof.

(iii) Percentage increase in the median remuneration of employees in the financial year: 10.65%

(iv) The number of permanent employees on the rolls of the Company: 274

(v) Average percentile increase already made in the salaries of employees other than managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

(vi) Affirmation that the remuneration is as per the remuneration policy of the Company: YES 2. Statement pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ended 31st March, 2024:

* Mr. Prakash D. Patel's Gross Remuneration amount is from the period till 29-03-2023.

# Mr. Goutam Majumder's Gross Remuneration amount is from the period 05-03-2024

Risk Management:

Pursuant to section 134(3)(n) of the Companies Act, 2013 and relevant regulations of Listing Regulations, 2015, the Company has included appropriate procedures to inform the Board about the risk assessment and minimization procedures.

The Board periodically revisits and reviews the overall risk management plan for making desired changes in response to the dynamics of the business.

The Company is addressing various risks impacting the paper industry. Some of the risks to which the Company is exposed are as under.

Financial Risks:

The Company's policy is to actively manage its foreign exchange risks.

Commodity price risks:

The Company proactively manages risks of price fluctuation of raw materials through forward booking and inventory management. The Company's reputation for quality product mitigates the impact of price risk on finished goods.

Regulatory risks:

The Company is exposed to risks attached to various statutes and regulations. The Company is mitigating these risks by engaging competent person in each functional area and through regular review of legal compliances carried out from time to time.

Human resources risks:

Retaining the existing talents and attracting new talents are major risks. These risks are mitigated by regular interaction with concerned employees and providing congenial working conditions.

Public Deposit:

Your company has not accepted any deposit from the public within the meaning of Chapter V of the Companies Act, 2013, and rules made thereunder.

Significant and Material Orders Passed by the Regulatory / Judicial Authority:

During the financial year under review, no significant and material orders were passed by the Regulators or Courts or Tribunals that would impact the going concern status of the Company and its future operations.

Statement of Deviation or Variation:

4 Disclosure pertaining to statement on deviation or variation in connection with raising of funds from public is not applicable to the Company as the proceeds made from the public issue has been fully utilized.

Notes: The details of funds received on allotment of 35,71,133 Equity shares are as under:

Auditors' and Auditors' Reports:

A) Statutory Auditor:

Your Company has, at the 28th Annual General Meeting of the Company held on 4th August, 2023, appointed M/s. G. B. Laddha & Co. LLP, Chartered Accountants (Firm Registration Number-120352W/W-100033) as Statutory Auditors of the Company to hold office up to the conclusion of the 33rd Annual General Meeting at a remuneration as may be fixed by the Managing Director in consultation with the said Auditors.

There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their report for the financial year ended March 31, 2024. No frauds have been reported by the Auditors under sub-section (12) of Section 143 of the Companies Act, 2013.

The notes on financial statements referred to in the Auditors Report are self-explanatory and do not require further explanation by the Board ofDirectors as provided under section 134 of the Act.

B) Secretarial Auditor:

Pursuant to Section 204 of Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014 your Company had appointed M/s Shilpi Thapar and Associates, Practicing Company Secretaries as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2023-24.

The report of Secretarial Auditor is annexed with this report. The report does not contain any qualification, reservation or adverse remark.

C) Internal Auditors

Pursuant to the provision of Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the Company had appointed M/s. Ernst & Young LLP (FRN: AAB 4343), Chartered Accountant in the Board of Directors' meeting held on 30/05/2023, to conduct Internal Audit for the financial year 2023-24.

D) Cost Auditor:

Section 148 of the Companies Act 2013 read with Rules made thereunder mandates every Company belonging to category prescribed in the Rules to undertake a Cost Audit. The company is not required to mandatorily appoint Cost Auditors and maintain cost records as per section 148(1) due to nature of business activities of the Company.

E) Annual Secretarial Compliance Report:

The Company has undertaken an audit for the financial year 2023-24 for all applicable compliances as per SEBI Regulations and Circulars / Guidelines issued thereunder.

The Annual Secretarial Compliance Report dated 08.05.2024 was issued by Ms. Shilpi Thapar of M/s Shilpi Thapar and Associates, Practicing Company Secretaries, Ahmedabad and the same was submitted to the stock exchange within 60 days of the end of the financial year. Secretarial Standards:

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India in respect of Meetings 1

of Board of Directors and General Meeting respectively.

Maintenance of Cost Records:

The Maintenance of cost records has not been specified by the Central Government under Section 148(1) of the Companies Act, 2013.

Insider Trading Regulations and Code of Disclosure:

The Board of Directors have accepted the Code of Practices and Procedure for Fair Disclosure of Unpublished Price Sensitive Information and Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insider in accordance with the requirement of SEBI (Prohibition of Insider Trading) Regulations, 2015, which is available on website of the Company at https://www.shreeajit.com/uploads/policies/aU/Code'of'fair'disclosure-upsi'from'01'04'2019.pdf Details of application made or any proceedings pending under Insolvency and Bankruptcy Code, 2016:

There was no application made or proceedings pending under Insolvency and Bankruptcy Code, 2016 during the period under review.

The details of difference between amount of the valuation done at the time of one- time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof:

There has been no instance of one'time settlement during the year.

Policy on Determination of Materiality of Event / Information:

The Company has adopted Policy for determining materiality of Events/Disclosures that mandates the Company to disclose any of the events or information which, in the opinion of the Board of Directors of the Company is material in the terms of requirement of Regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, which is available on the website of the Company https://www.shreeajit.com/investors-relation.

Website of your company:

Your Company maintains a website www.shreeajit.com where detailed information of the Company and specified details in terms of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 has been provided.

Acknowledgement:

The Directors wish to express their gratitude to the State and Central Governments, lending Financial Institutions, Banks & Stock Exchange for their continued support during the year. The Directors wish to convey their thanks to the valued shareholders, customers, dealers and suppliers for their continued patronage during the year under review and record their appreciation of the contribution made by all the employees during the year.