Davangere Sugar Company Ltd

Dear Members

Your Directors' present the 53rd Annual Report of the Company highlighting the business and operations of the Company and the Audited Financial Statements for the Financial Year ended 31st March, 2024.

The highlights of the standalone financial results are as under:

(In Lacs)

The Company's financial performance for the year ended March 31, 2024 is summarized below: The Company achieved total income of INR 22296.72 Lacs for the year ended 31st March 2024 as against INR 28058.43 Lacs for the previous year. The EBITDA for the year under review stood at INR 5176.50 Lacs as compared to INR 5637.03 Lacs for the previous year, while the Net Profit stood at INR 1223.72 Lacs as compared to INR 1321.55 Lacs for the previous year. Analysis of operating performance is covered under Management Discussion and Analysis which forms part of this Report.

There were no changes in the nature of business of the Company during the year under review. However, in order to expand the business and monetize the subsidies laid down by the Government of India for the Sugar Industry, the Management commenced commissioning of Molasses based Ethanol unit in April 2021 at a total cost of Rs. 99.31 Crores. The commissioning of the plant is completed and the commercial production is started on 01^st June, 2022.

During the year under review, for the Financial Year 2023-24, your Company does not propose transferring any amount to General Reserve. The amount of INR 1223.72 Lacs is proposed to be retained as surplus in the Profit and Loss Account.

To retain the profits for future growth of the Company, Your Directors do not recommend any dividend for the year ending of on 31st March, 2024.

During the year under review, there was no change in the Authorized Share Capital of the Company. The Authorized Share Capital stands at INR 10,000 Lacs divided into 10 Crores Equity Shares of Rs. 10/- each.

However, during the year under review, there was no change in the authorized or paid-up share capital of the Company.

During the year under review, there was no Bonus issue of equity shares.

The Company has not bought back any of its securities during the year under review.

During the financial year under review the company has not issued any shares with differential voting rights nor granted stock option, nor Sweat Equity.

F) PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES: N.A.

There was no right issue of shares during the year.

There are no significant, material orders passed by the regulators or Courts or Tribunals, which would impact the going concern status of the company and its future operations.

The company does not have any subsidiaries, joint ventures or Associate Company.

M/s. DGMS & Co., Chartered Accountants (Firm Registration No. 0112187W) were appointed as Statutory Auditors of the Company at the 50th Annual General Meeting (AGM) held on 29th September 2021, for a term of 5 years to hold office from the conclusion of the 50^th AGM till the conclusion of 55^th AGM.

The Notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. There are no qualifications or observations made by the Statutory Auditor in the said report. During, FY 2023-24, the Statutory Auditors had not reported any matter under Section 143(12) of the Act and therefore, no detail is required to be disclosed under Section 134(3) of the Act.

The Audit Reports dated May 24, 2024 issued by M/s. DGMS & Co, Chartered Accountants, and Statutory Auditors on the company's standalone financial statements for the financial year ended 2023-24 is a part of Annual Report.

Pursuant to the provisions of Section 204 of the Act, the Board had appointed M/s. Shivam Sharma and Associates, Practicing Company Secretaries, Mumbai (Membership No. ACS A35727, COP No. 16558), to conduct Secretarial Audit for the financial year 2023-24. The Secretarial Audit Report for the financial year ended 31st March 2024 is annexed herewith at Annexure I to this Report. There are no qualifications or observations made by the Secretarial Auditor in the said report. During FY 2023-24, the Secretarial Auditors had not reported any matter under Section 143(12) of the Act.

Pursuant to the provisions of Section 148 of Companies Act, 2013 and rules made thereunder, The Board of Directors, on the recommendation of the Audit Committee, has appointed Mr. Krishna Murthy, Bangalore Cost Accountants (Firm Regn No. FCMA7658) as the Cost Auditor to audit the cost records for the financial year ending 31st March 2025. Remuneration payable to the Cost Auditor is subject to approval by the members of the Company. Accordingly, a resolution seeking members' approval for the remuneration payable to Mr. Krishna Murthy, Bangalore Cost Accountants, forms part of Notice convening 53^rd AGM of the Company, along with relevant details of the proposed remuneration.

The Cost Accountants have confirmed that their appointment is within the limits of Section 141(3)(g) of the Act and free from any disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Companies Act, 2013. In terms of Section 148 of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, it is stated that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Act.

Company has made and maintained its Cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014.

Company has appointed M/S B Gangadhara and Co., Chartered Accountant, Davangere, (Membership No. 024094) as Internal Auditor of the Company, to conduct internal audit and to issue report thereon from financial year 2022-23 to the financial year 2024-25 and to review internal controls and operating systems and procedures as per the scope of the audit. The Internal Audit Reports of the company are reviewed by the Audit Committee on monthly basis. The Internal Auditors send the quarterly audit observation to the company and the same was presented to the Audit Committee, during the year.

Mr. Shamanur Shivashankarappa Ganesh was re-appointed as the Managing Director of the Company for a period of five years with effect from 24 September 2019. The present term of Mr. Shamanur Shivashankarappa Ganesh comes to an end on 23rd September 2024.The Board based on the recommendation of the Nomination and Remuneration recommends his reappointment at the forthcoming Annual General Meeting for a further period of five years effective from September 24, 2024 to September 23, 2029. Brief Resume Mr. Shamanur Shivashankarappa Ganesh (DIN: 00451383), Director is circulated to the members as part of this Annual report. On the recommendation of the Nomination and Remuneration Committee, the Board has appointed Mrs. Vinita Dilip Modak (DIN: 10763274) as an Additional Director in Independent Category with effect from 06. 09.2024. The appointment of Mrs. Vinita Dilip Modak as Independent Director for shareholders' approval is included in this 53rd AGM. On the recommendation of the Nomination and Remuneration Committee, the Board has appointed Ms. Hima Bindu Sagala (DIN: 09520601) as an Additional Director in Independent Category with effect from 06. 09.2024. The appointment of Ms. Hima Bindu Sagala as an Independent Director for shareholders' approval is included in this 53^rd AGM.

Pursuant to the requirements of the Companies Act, 2013 and Articles of Association of the Company Mr. Abhijith Shamanur (DIN: 03451918), Director retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. During the year 2023-24, there is no change in the composition of the Board of Directors. The Board of directors and KMP consists of:

*Smt. Rekha Ganesh has resigned as a Director w.e.f 04^th May 2024. Mrs. Swathi Shamanur was appointed as an Additional Non-Executive Director by Board of Directors in their meeting held on 19^th April 2024 and was regularized as a Director in Extra-Ordinary General Meeting of the Company held on 15^th May, 2024.

Details of KMPs:

*Mr. Ganeshrao Virupakshappa resigned as Chief Financial Officer w.e.f 07th February, 2024 and Mr. Onkarappa P. was appointed as Chief Financial Officer w.e.f 30th April, 2024.

During the year under review, your Company has not accepted any deposits from public within the meaning of Sections 73 and 74 of the Companies Act, 2013 (the "Act") and the Companies (Acceptance of Deposits) Rules, 2014.

Information as per the Companies Act, 2013 and the rules framed there under relating to conservation of energy, technology absorption, foreign exchange earnings and outgo forms part of this Report and is annexed hereto as Annexure II.

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules 2014, the Annual Return of the Company for FY 2023-24 is available on the website of the Company at https://davangeresugar.com/financials/.

During the Financial Year 2023-24, Six (6) Board Meetings were conducted on 30^th May, 2023, 28^th July, 2023, 14^th August, 2023, 6^th November, 2023, 14^th February, 2024, 5^th March, 2024.

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

(a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with no material departures;

(b) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31^st March, 2024 and of the profit of the Company for the year ended on that date;

(c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) that the Directors have prepared the annual accounts on a ‘going concern' basis;

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

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

Committees of the Board

The Board has currently four Committees namely - Audit Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee, and Nomination and Remuneration Committee. The terms of reference of the Board Committees are in compliance with the provisions of the Companies Act, 2013, SEBI LODR Regulations, and are also reviewed by the Board from time to time. The role and composition of these Committees, including the number of meetings held during the financial year and the related attendance are provided in the subsequent paragraphs.

Particulars of loans, guarantees given, securities provided and investments made are provided in the notes to the financial statements. During the year under review, there were no loans, guarantee or investment requiring the Compliance of Section 186(3) of the Companies Act, 2013.

Pursuant to the provisions of the Act and Listing Regulations, the Board of Directors has undertaken an evaluation of its own performance, the performance of its Committees, and of all the individual Directors based on various parameters relating to roles, responsibilities, and obligations of the Board, effectiveness of its functioning, the contribution of Directors at meetings and the functioning of its Committees. The performance evaluation of the Chairman and Non-Independent Director was carried out by the Independent Directors in their separate meeting. The Board of Directors expressed their satisfaction with the evaluation process.

The meeting of Independent Directors of the Company was held on 14^thFebruary, 2024, to discuss matters as per the provisions of Companies Act, 2013 and the Listing Regulations. The Board hereby confirms that the Company has received necessary declaration from each of the independent directors under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations.

The company has devised a policy naming (Nomination & Remuneration Policy) for performance evaluation of Independent Directors, Board, Committees and other individual directors which includes the criteria and process for the performance evaluation of the Executive/ Non-executive directors and Committees and the Board as a whole. The policy is uploaded on the website of the company under Investor section at https://davangeresugar.com/policies-and-codes/

The Board has on the recommendation of the Nomination & Remuneration Committee, framed a Nomination and Remuneration policy namely "Nomination & Remuneration Policy" in line with the requirement of Section 178 of the Companies Act, 2013. The policy inter alia provides the procedure for selection, appointment and remuneration of Directors and Key Managerial Personnel, including criteria for determining qualifications, positive attributes, and independence of Directors.

Pursuant to the provisions of section 134(3)(p) the Companies Act, 2013, the Board of directors of the company is committed to get its performance evaluated in order to identify its strength and areas in which it may improve its functioning. In this regard, the Nomination and Remuneration Committee has established the process for evaluation of the performance of Directors, including the Independent Directors.

The company has devised a policy naming (Nomination & Remuneration Policy) for performance evaluation of Independent Directors, Board, Committees and other individual directors which includes the criteria and process for the performance evaluation of the Executive/ Non-executive directors and Committees and board as a whole. The policy is uploaded on the website of the company under Investor section at https://davangeresugar.com/policies-and-codes/.

During the year under review as per the policy for the performance evaluation, formal annual evaluation of the performance of the Directors, including independent directors, the board and its committees was made by the Nomination & Remuneration Committee in their respective meetings.

Contracts and Arrangements with Related Parties

All Contracts/arrangements entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis referred in form AOC-2 annexed hereto as Annexure III. The details of transactions with related parties are given in notes to the financial statements. Details showing the disclosure of transactions with related parties as required under IND AS-24 and 2A of Schedule V of SEBI Listing Regulations are set out in the financial statements.

The Company's Policy on Related Party Transactions may be accessed on the Company's website at https://davangeresugar.com/corporate-governance/

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage.

The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended as Annexure IV to this Report.

The Company has adopted a Risk Management Policy which is reviewed on a periodic basis in order to recognize, assess and reduce exposure to risks wherever possible, identify steps to mitigate risks and to identify risk owners for all types of risks. The Company's Risk Management Policy is based on the philosophy of achieving substantial growth while mitigating and managing risks involved.

The Company's internal control systems with reference to the financial statements are adequate and commensurate with the nature of its business and the size and complexity of its operations. Periodic audits and checks are conducted and the controls to prevent, detect and correct any irregularities in the operations have been laid down by the Company.

As on the date of the Report no application is pending against the Company under Insolvency and Bankruptcy Code, 2016 and the Company did not file any application under IBC during the F.Y. 2023-24.

During the year under review there has been no one-time settlement of loans taken from Banks and Financial Institution.

Every company having net worth of Rs. 500 Crore (Rupees Five Hundred Crore) or more, or turnover of Rs. 1,000 Crore (Rupees One Thousand Crore) or more or a net profit of Rs. 5 Crore (Rupees Five Crore) or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

The Company has met this criterion for the Financial Year 2023-24 year also similarly as previous Financial Year as the net profit of the company exceeds Rs. 5 Crore (Rupees Five Crore). Your Company is committed to Corporate Social Responsibility (CSR) by catering to the needs of the weaker sections of the society.

The CSR Policy of the Company may be accessed on the Company's website at https://davangeresugar.com/policies-and -codes/. The report on the CSR activities is appended at Annexure V to the Board's Report. The details relating to the composition, powers, roles, terms of reference etc. of CSR Committee are given in detail in the Corporate Governance Report, which forms part of this Annual Report.

Management discussion and Analysis Report for the year under review, as required under Regulation 34 read with Schedule V the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 (SEBI LODR 2015), is forming part of this Annual Report and the same is marked as Annexure VI.

In terms of Regulation 17(8) of the Listing Regulations, the CEO and CFO have certified to the Board of Directors of the Company with regard to the financial statements and other matters specified in the said regulation for the financial year 2023-24. The certificate received from the CEO and CFO is attached herewith and the same is marked as Annexure VII.

The Company has listed its shares on the National Stock Exchange of India Limited (NSE) with effect from 25^th January, 2024, vide NSE letter dated 23^rd January, 2024.

The Company affirms that the annual listing fees for the year 2023-24 to The Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India has been duly paid. As on date there are no outstanding dues.

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, the company has established a vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, genuine concerns, actual or suspected fraud or violation of the company's Code of Conduct.

The mechanism provides adequate safeguards against victimization of Directors and employees who avail the vigil mechanism. In exceptional cases, Directors and employees have direct access to the Chairman of the Audit Committee. The detailed disclosure of the Vigil Mechanism & Whistle Blower Policy is available at https://davangeresugar.com/policies-and-codes/ under Investor desk.

The Board of Directors has code of practices and procedures for fair disclosure of unpublished price sensitive information (UPSI) in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015. Under this code the company lays down guidelines and procedures and principles to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation.

The policy has been formulated to regulate, monitor and ensure reporting of deals by Designated Persons and connected persons to maintain the highest ethical standards of dealing in Company securities.

Pursuant to amendments in the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 vide the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Company adopted the new "Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information"("Fair Disclosure Code") incorporating a policy for determination of "Legitimate Purposes" as per Regulation 8 and Schedule A to the said regulations w.e.f. 1st April, 2019.

The Revised Insider Trading Code or Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information (UPSI), is available on our website at https://davangeresugar.com/policies-and -codes/.

The Board has formulated a code of Conduct for the Board Members and Senior Management of the company, which has been posted on the website of the company. It is affirmed that all the directors and senior management have complied with the code of conduct framed by the company and confirmation from all the directors, KMP and senior management has been obtained in respect of the F.Y. 31st March 2024.

The Company has complied with the requirement of constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act,2013 ("the Act") and Rules made there under. During the year, there were no complaints received by under the Act.

Your Company is committed to good corporate governance aligned with the best corporate practices. In compliance with Regulation 34 read with Schedule V of Listing Regulations, a detailed report on Corporate Governance forms part of this Annual Report. A Certificate from the Practicing Company Secretary confirming compliance of the conditions of Corporate Governance as stipulated under the Listing Regulations is appended as Annexure VIII to this Report.

Pursuant to Regulation 34(3) and Schedule V, Para C, Clause (10)(i) of SEBI (LODR) Regulations,2015, Certificate of non-disqualification of Directors as on 31^st March, 2024 has been received from Practicing Company Secretary and annexed as Annexure IX of the Directors' report.

After the date of the Balance sheet there were following material changes in the Company, a. shareholders approved the subdivision of Equity share of Nominal value of Rs. 10/- (Rupee Ten only) each fully paid up into 10 Equity shares of Rs. 1/- (Rupee one only). b. Further, Ms. Swathi Shamanur was appointed as Additional director with effect from 19^th April, 2024. c. The authorized share capital of the Company was increased from Rs. 100,00,00,000/- (Rupees One Hundred Crores only) to 150,00,00,000/- (Rupees One hundred and Fifty crores only) d. Ms. Rekha Ganesh resigned from the Board with effect from 04^th May, 2024.

The Board's Report and Management Discussion & Analysis may contain certain statements describing the Company's objectives, expectations or forecasts that appear to be forward-looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company is not obliged to update any such forward-looking statements. Some important factors that could influence the Company's operations comprise economic developments, pricing and demand and supply conditions in global and domestic markets, changes in government regulations, tax laws, litigation and industrial relations.

Appreciation & Acknowledgements

The Board wishes to place on record its gratitude for the assistance and co-operation received from the financial institutions, banks, government authorities, customers, vendors and farmers, cane growers and finally to all its members for the trust and confidence reposed on the Company. The Board further wishes to record its sincere appreciation for the significant contributions made by employees at all levels for their competence, dedication and contribution towards the operations of the Company.