Heranba Industries Ltd

To,

The Members,

Your Directors have pleasure in submitting their 32^nd Annual Report of the Company together with the Audited Statements of Accounts for the year ended March 31,2024.

The summarized standalone results of your Company are given in the table below:

('Rs in Crore except per share)

The Board of Directors has recommended a final dividend @ ' 1.25 (Rupees One and Paise Twenty Five) per equity share of the face value of ' 10.00 (Rupees Ten) each (i.e. 12.5% of the face value) for the financial year ended March 31,2024, subject to approval of the shareholders at the ensuing 32^nd Annual General Meeting (AGM). Dividend, if approved by the Shareholders at the enusing Annual General Meeting will absorb ' 5.00 Crore (approx). The Final Dividend shall be paid within 30 days of its declaration at the 32^nd AGM.

Revenue from Operations stood at Rs.1,274.75 Crore in FY24 as compared to Rs.1,324.38 Crore in FY23. EBITDA stood at Rs.126.99 Crore during the year with EBITDA margin at 9.96% in FY24. Profit After Tax stood at ' 66.35 Crore in FY24 as compared to Rs.110.11 Crore in FY23.

The Company's FY24 revenues stood at Rs.1,274.75 Crore restricted by unfavourable global economic scenario, inventory build-up in the system and sluggish demand from key export regions. However, we have witnessed decent traction for our formulation products in both domestic and export markets. The EBITDA margins remained muted during FY24 due to lower price realization in export markets and falling prices in finished goods. Despite of a challenging year, Heranba's Balance Sheet continues to remain strong.

The Management Discussion and Analysis Report for the year under review, as stipulated under SEBI (LODR) Regulations is given separately and forms part of this 32^nd Annual Report of the Company.

The Company does not have any funds as contemplated under Section 125 of the Act lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF). However, the Company has unclaimed dividend pertaining to financial years 2020-21,2021-22 and 2022-23 as mentioned below:

The Company is in process to intimate all the shareholders who have not claimed dividend on shares.

As on March 31, 2024, the Authorized share capital of the Company stood at Rs.45,00,00,000/- (Rupees Forty Five Crore Only) divided into 4,50,00,000 (Four Crore and Fifty Lakh) equity shares of Rs.10/- (Rupees Ten) Each.

As on March 31, 2024, the issued, subscribed and paid up Equity share capital of your Company stood at Rs.40,01,34,670/- (Rupees Forty Crore One Lakh Thrity Four Thousand Six Hundred Seventy Only) divided into 4,00,13,467 (Four Crore Thirteen Thousand Four Hundread And Sixty Seven) Equity shares of Rs.10/- (Rupees Ten) each.

As on March 31, 2024, the entire share capital of the Company has been dematerialized.

There is no changes in the capital structure of the Company during the year.

During the year under review, the Company availed the working capital credit facilities from the Bankers as per the business requirements. Your Company has been regular in paying interest and in repayment of the prinicipal amount of the aforesaid facilities.

Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations') requires the top 1000 listed entities, based on market capitalization calculated as on March 31 of every Financial Year, to formulate a Dividend Distribution Policy and disclose the same in the Annual Report and on the website of the Company.

The Board of Directors of the Company has adopted a Dividend Distribution Policy, which aims to ensure fairness, sustainability and consistency in distributing profis to the Shareholders. The Policy is attached as “AnnexureT and is also available on the website of the Company i.e., www.heranba.co.in under the Investors Relations-Section.

However the Company is out of purview of top 1000 listed entities based on market capitalization calculated as on March 31 2024.

All contracts/arrangements/transactions entered into with Related Parties during the Financial Year were in the ordinary course of business and on an arm's length basis. There were no Materially Related Party Transactions i.e. transactions exceeding 10% of the annual turnover as per the last audited financial statements. The Compnay has not entered into any transaction with its Promoters, Directors, Key Managerial Personnel or other designated person which may have potential conflict with the interest of the Company at large.

All Related Party Transaction are placed on a half yearly basis before the Audit Committee for approval/ratification/noting etc.

The Audit Committee has reviewed the related party transactions as mandatorily required under relevant provisions of the Listing Regulations.

The said transactions are in the ordinary course of business and at arm's length basis. The Company had taken omnibus approvals for indicative transactions proposed during the financial year ended March 31,2024.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website may be accessed on the Company's website.

All The particulars of contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 are attached herewith in “Annexure-M" in Form No. AOC-2.

Further Suitable Disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements in the Annual Report.

The internal financial controls with reference to the Financial Statements commensurate with the size and nature of business of the Company. Further Directors have personally overviewed the adequacy of internal controls and also appointed Mr. Kamal Dharewa, Chartered Accountant of M/s KD Practice Consulting Pvt. Ltd. as the Internal Auditor to manage the internal controls of the Company.

In addition to Internal Audit, the Company has implemented well established internal financial practices, tool for mitigating risk in order to ensure adequate internal financial control commensurate with the size of the Company.

Cash and Cash Equivalent as at March 31, 2024 was ' 12.06 Crore. The Company's working capital management is based on a well-organized process of continuous monitoring and control on Receivables, Inventories and other parameters.

All properties and insurable interests of the Company including buildings, plant and machinery and stocks have been fully insured. The Company has obtained the Director & Officer (D&O) policy for its Directors and Officers.

As on the date of this report, the Credit Rating as provided by CRISIL Rating Limited (A Credit Rating Agency "CRISIL'¹) on the Total Bank Loan Facilities of Heranba Industries Limited are as under:

The Company has a Vigil Mechanism/Whistle Policy under which it established a Whistle Blower Policy/Vigil Mechanism.

This policy seeks the support of employees, channel partners and vendors to report Significant deviations from key management policies and report any non-compliance and wrong practices,

e.g., unethical behavior, fraud, violation of law, inappropriate behavior/conduct etc.

The Vigil Mechanism/Whistle Blower policy cover serious concerns that could have grave impact on the operations and performance of the business of Heranba Industries Limited. A Vigil (Whistle Blower) mechanism provides a channel to the employees and directors to report to the management concerns ethical behavior, actual or suspected fraud or violation of the code of conduct mechanism provides for adequate safeguards against victimization of employees and Directors to avail of the mechanism and provide for direct access to the Chairman of the Audit Committee in exceptional cases.

The policy neither releases employees from their duty of confidentiality in the course of their work nor can it be used as a route for raising malicious or unfounded allegations against people in authority and/or colleagues in general.

The detailed Vigil Mechanism/Whistle Blower Policy of the Company is uploaded on the Company's website may be accessed on the Company's website.

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all senior management personnel in the course of day to day business operations of the Company. The Company believes in "Zero Tolerance” against bribery, corruption and unethical dealings/ behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "code of conduct for Board of Directors and Senior Management Personnel”. The Code has been posted on the Company's website www.heranba.com.

The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure.

All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard. A Certificate from the Managing Director to this effect form part of this report and annexed as Annexure-III.

Pursuant to the SEBI (Prohibition of insider trading) Regulations, 2015, the Company has formulated and adopted a Code for Prevention of Insider Trading.

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession

of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

All Board Directors and the designated employees have confirmed compliance with the Code.

The Company is maintaining the Structual Digital Database (SDD) internally with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database in compliance with SEBI (PIT) Regulations, 2015.

Your Company maintains the highest level of transparency, accountability and good management practices through the adoption and monitoring of corporate strategies, goals and procedures to comply with its legal and ethical responsibilities.

The Board has also evolved and adopted a Code of Conduct as per SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 based on the principles of good Corporate Governance and Best Management Practices. The Code is available on the Company's website i.e. www.heranba. co.in under "Investors Relation- Corporate Governance” Section.

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate Report on Corporate Governance along with the Practising Company Secretary's Certificate confirming compliance with Corporate Governance norms is annexed to this Report.

The Business Responsibility & Sustainability Report (“BRSR”) for the year under review, as stipulated under SEBI (LODR) Regulations is given separately and forms part of this 32^nd Annual Report of the Company.

In terms of SEBI (LODR) Regulations, the Certificate signed by Mr. Raghuram K. Shetty, Managing Director and Mr. Rajkumar Bafna, Chief Financial Officer of the Company was placed before the Board of Directors along with Annual Financial Statement for the financial year ended March 31,2024 at its meeting.

Heranba Industries Limited is exposed to risks such as Natural Disaster, Occupational health & safety hazards, Supply Chain Risk, Quality of Products, Business dynamics Risks, Business Operations Risks, liquidity risk, Interest rate risk, Credit Risks, Logistic Risks, Pollution Free Environment Risk, Market Risks/ Industry Risks, Human Resource Risks, Disaster Risks, System Risks and Legal Risks, Data Protection Risk, Credit risk and Operational risk that are inherent in the agrochemical Industry.

The Company has adopted the systematic approach to mitigate the risk associatited with the objectives, operations, revenues and regulations.

By strictly following the regulatory norms and Guidelines, the Company effectively manages the risks and has a focused Risk Management monitoring in place.

The Company has a Risk Management Committee to monitor the risk associated with the Company. The said Committee from to time discussed risk and mitigation measure adopted to mitigate the risk. The Committee recommend from time to time Board the necessary measures to mitigate the risk.

A detailed Risk Management Policy is available Company's website www.heranba.co.in.

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

During the Year under review the Board has made the total expenditure under CSR of ' 4.05 Crore for FY 2023-24 whereas the total Amount required to be spent was ' 4.05 Crore for the financial year 2023-24. The detailed Report on CSR Activities as per Annexure-IV.

During the year under review, Share Purchase Agreement dated November 08, 2023 (“Share Purchase Agreement”)

was executed among the Promoter Sellers, Other Selling Shareholders of Daikaffil Chemicals India Limited (“Daikaffil”- Target Company) and Mikusu India Private Limited (Mikusu- Acquirer Company), a wholly owned subsidiary Company of Heranba, along with Heranba Industries Limited (“Heranba”) (Person acting in concert).

Pursuant to the said Share Purchase Agreement, Mikusu acquired 29,08,719 (Twenty Nine Lakh Eight Thousand Seven Hundred and Nineteen) Equity Shares, which constitutes 48.48% (Forty Eight point Forty Eight percent) of the Equity and Voting Share Capital of Daikaffil from the Promoter Sellers and Other Selling Shareholders of Daikaffil.

As Mikusu is 100% Wholly owned Subsidiary Company of Heranba and the Mikusu has a defacto control on Daikaffil being the single largest shareholder who has controlling votes at the AGM of the Company. Hence, Daikaffil is considered as the Subsidiary Company of Mikusu and in turn a Step-Down Subsidiary of Heranba Industries Limited.

As on March 31, 2024, the Company has two 100% wholly owned subsidiary companies namely Mikusu India Private Limit and Heranba Organics Private Limited. The Company has one Step-Down Subsidiary Company namely Daikaffil Chemicals India Limited.

A Statement containing the basic financial details of the aforesaid subsidiary companies in Form AOC-I is annexed as Annexure-V.

At the ensuring Annual General Meeting, Mr. Sadashiv K. Shetty (DIN: 00038681) and Mr. Raghuram K. Shetty (DIN: 00038703),

would retire by rotation and being eligible for the re-appointment, offers themselves for re-appointment.

During the year under review, the Non-Executive Directors of the Company had no material pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/Committee of the Company.

Details of the Directors seeking appointment/reappointment including a profile of these Directors, are given in the Notice convening the 32^nd Annual General Meeting of the Company.

Based on the confirmations received, none of the Directors are disqualified for appointment under Section 164(2) of Companies Act, 2013.

Pursuant to Section 2(51) read with Section 203 of the Companies Act, 2013 read with Rules made thereunder, the following person has been designated as Key Managerial Personnel of the Company under the Companies Act, 2013:

(a) Mr. Sadashiv K. Shetty, Chairman;

(b) Mr. Raghuram K. Shetty, Managing Director;

(c) Mr. Shriraj S. Shetty, Wholetime Director;

(d) Mr. Raunak R. Shetty, Wholetime Director;

(e) Mr. Rajkumar Bafna, Chief Financial Officer;

(f) Mr. Abdul Latif, Company Secretary.

There is no changes among the KMP during the year.

The Company has received necessary declaration from each independent director 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 read with rules framed thereunder and SEBI (LODR) Regulation.

In the opinion of the Board, the independent directors are, individually, person of integrity and possess relevant expertise and experience.

In terms of regulation 25(8) of the Listing Regulations, they have confirmed that they are not aware of any circumstances or situation which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Based on the declarations received from the independent directors, the Board has confirmed that they meet the criteria of independence as mentioned under regulation 16(1)(b) of the Listing Regulations and that they are independent of the management.

The Company has the Evaluation Policy, Remuneration Policy and The criteria for determining qualifications, positive attributes and independence of a director. Based on the above policies and criteria, the Nomination and Remuneration Committee evaluated the performance of Individual directors. The Independent Directors at their separate meeting, also reviewed the performance of the Non-Independent Directors and Board as a whole and also review the performance of the Chairman and further assessed the quality of flow of the information between the Board and Management. In addition to the above evaluation, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of its Committees of the Board of Directors. The performance of Individual Director vis-a-vis Board and Committees found satisfactory.

In terms of the provisions of Section 178(3) of the Act, the Nomination & Remuneration Committee is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The Nomination & Remuneration Committee is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personal and other employees. In line with this requirement, the committee along with the approval of the board has revised the said policy.

None of the Directors on the Board of the Company for the Financial Year ending on March 31, 2024 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority. Practising Company Secretary's Certificate confirming the above is annexed herewith as Annexure-VI.

The Members of the Company at the 30^th Annual General Meeting ('AGM') held on Wednesday, July 27, 2022 approved the appointment of Messrs. Natvarlal Vepari & Co., Chartered Accountants (Registration No. 106971W), as the Statutory Auditor of the Company for a period of 5 (five) years from the conclusion of 30^th Annual General Meeting ("AGM”) till the conclusion of the 35^th (Thirty Fifth) AGM.

Pursuant to the provision of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and the Companies (Cost Records & Audit) Rules, 2014, the Company maintains the cost records & accounts in respects of products manufactured by the Company which needs to be audited by the Cost Auditor.

In compliance to the above, the Board of Directors has appointed Mr. Paresh Jaysih Sampat, Cost Accountants, as the Cost Auditors of the Company for the financial year ended March 31, 2024. As required by the Act, the remuneration of the

Cost Auditor has to be ratified by the Members and accordingly the resolution relating to the Cost Auditors is being placed before the Members for their ratification.

In compliance of the provisions of Section 204 of the Companies Act, 2013, your Directors have appointed M/s. K. C. Suthar & Co., Practicing Company Secretary, as Secretarial Auditor of the Company for the financial year under review.

The Secretarial Audit Report issued in the Form MR-3 given by the Company secretary in practice is annexed with the report as Annexure-VII.

The Secretarial Audit Report does not contain any qualification(s), reservation(s), adverse remark(s) or disclaimer(s).

The Company has complied with the applicable secretarial standards issued by the Institute of Company Secretaries of India.

There were no qualifications, reservations or adverse remarks made by the Auditor in his report made for the financial year under review.

There were no qualifications, reservations or adverse remarks made by the Secretarial Auditor in his report made for the financial year under review.

There were no frauds which are reported to have been committed by employees or officers of the Company. The statutory auditors of the Company have vide their report of even date confirmed that no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

The details of the various meetings of the Board and its committees are provided in the Corporate Governance Report.

The details of the various committes constituted by the Board are provided in the Corporate Governance Report.

There has been no change in the Nature of Business during the year under review. Further no material changes or commitments have occurred between the end of the financial year and the date of this report which affect the financial statements of the Company.

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

The Company has neither accepted nor renewed any deposits from public during the year nor has any outstanding Deposits in terms of Section 73 of the Companies Act, 2013. Further there were no Deposits which are not in compliance of the requirements of Chapter V of the Act.

Details of Loans, Guarantees and Investments covered under the provision of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

The extracts of Annual Return [MGT-9] pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 has been placed on the website of the Company and can be accessed at www.heranba.co.in.

The Statement of Disclosure of Remuneration under Section 197 of the Companies Act, 2013 read Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure-VIII.

The Shares of the Company are continued to be listed on the BSE Limited ("BSE”) and National Stock Exchange of India Limited ("NSE”).

Listing Fees till date have been duly paid to BSE and NSE, where Company's shares are Listed.

The Managing Director and Whole-Time Directors except Mr. Raunak R. Shetty of the Company are not in receipt of any remuneration and/or commission from any subsidiary Company, as the case may be.

Mr. Raunak R. Shetty, Whole-Time Director of the Company are in recipt of remuneration of ' 2 Lakh Per month from Mikusu India Private Limited, a wholly owned subsidiary Company of your Company. The above remuneration are in accordance with the provision of the Companies Act, 2013.

M/s Bigshare Services Private Limited, 1^st Floor, Bharat Tin Works Building, Opp Vasant Oasis, Makwana Road, Andheri (East), Mumbai-400 059, Tel No.: +91 22 6263 8200 is the Registrar and Share Transfer Agent of the Company for the physical and Demat shares. The members are requested to contact directly for any requirements.

In terms of Regulation 39 of the Listing Regulations, details of the equity shares lying in the Unclaimed Suspense Account are as follows:

The voting rights on the shares in the suspense account as on March 31,2024 shall remain frozen till the rightful owner claims the shares.

The Company has adopted a policy on prevention, prohibition and Redressal of Sexual harassment at workplace and has duly constituted an Internal Complaints Committee in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. No case of child labour, forced labour, involuntary labour, sexual harassment and discriminatory employment was reported during the FY 2023-24. The Company has a policy on sexual harassment under which employees can register their complaints against sexual harassment. The policy ensures a free and fair enquiry with clear timelines.

There were no significant or material orders passed by the Regulators, Courts or Tribunal which impact the going concern status of the Company and the Company's operations in future.

The activities of R & D consist of improvement in the process of existing products, decrease of effluent load and to develop new products and by-products.

The management is committed to maintain the quality control and it is the strength of the Company. AH raw material and finished products and materials at various stages of process pass through stringent quality check for the better result and product.

The Companies (Disclosure of Particulars in Report of Board of Directors) Rules 1988 require the disclosure of particulars regarding Conservation of Energy in Form-A and Technology Absorption in Form-B as prescribed by the Rules.

The details are as follows:

The technology required for the Company is available indigenously.

(' in Crore)

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:

(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 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 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; and

(e) 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 were no proceedings, either filed by the Company or against the Company, pending under the Insolvency and Bankruptcy Code, 2016 as amended, before the National Company Law Tribunal or other Courts as of March 31,2024.

During the year, there were no transactions requiring disclosure or reporting in respect of matters relating to:

a. issue of equity shares with differential voting rights as to dividend, voting or otherwise;

b. issue of shares (including sweat equity shares) to employees of the Company under any scheme;

c. raising of funds through preferential allotment or qualified institutional placement;

d. instance of one-time settlement with any bank or financial institution.

Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors deeply appreciate the committed efforts put in by employees at all levels, whose continued commitment anddedication contributed greatly to achieving the goals set by your Company. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

For Heranba Industries Limited