K P R Mill Ltd

<dhhead>BOARD’S REPORT</dhhead>

Dear Members,

The Board of Directors takes pleasure in presenting the report on the operations and business of the Company along with Audited Financial

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Statements for the Financial Year ended 31 March, 2024.

FINANCIAL RESULTS (Rs in Lakhs)

REVIEW OF OPERATIONS

During the year under review, the Indian Cotton Textile Industry witnessed a multi-year low margins for the spinners on the back of high cotton prices; import duty on cotton, reduced demand from downstream apparel companies; increase in energy cost; piling up of inventories, severe competition from competing countries, etc. These factors impacted the prices of cotton yarn as well as the revenue considerably. However, overcoming the challenges with its inherent strengths; increased competitiveness; ability to meet the changing market trend; supportive Garment segment, KPR has generated a consolidated revenue of INR 6,127 Crores and a net profit of INR 805 Crores.

WAY FORWARD

After a year of turmoil last fiscal, the Indian cotton yarn spinning industry is expected to witness a breather this fiscal with the improved revenue growth & operating margins, gradual recovery in exports, lower cotton prices, evolving market conditions etc., reaffirming its status as a cornerstone of the textile ecosystem. KPR is well positioned to accelerate its growth level with its strong fundamentals, high competence, challenging ability; Modernisation and Expansions implemented.

EXPANSION AND MODERNISATION

To generate additional revenue, an exclusive vortex spinning mill at an outlay of 100 Crores has been established at Sathyamangalam, considering its ability to produce yarn at a greater speed, low maintenance costs and fully automated processing system.

To strengthen renewable power resource an additional investment of 100 Crores has been made in Roof-top Solar Power Plant. With this investment the capacity of Solar Power has reached 37 M.W.

To improve the quality and productivity further in spinning, we have modernized the Spinning Division with a total outlay of Rs 150 Crores.

DIVIDEND

Considering better performance and strong liquidity during the year, the Board of Directors have declared an Interim Dividend

@ 250% on equity shares (2.50 per Equity Share) at their meeting held on 05.02.2024. The Board at its meeting held on 02.05.2024 also has recommended a Final Dividend @ 250% on equity shares (2.50 per Equity share) thus aggregating to 500%

(5 per Share on Equity Share of the Face Value of 1 each), for the Financial Year 2023-24, subject to the approval of the Members of the Company at the 21 (Twenty First) Annual

General Meeting.

RESERVES

Your Directors do not propose to transfer any amount to the reserves.

FINANCE

Led by the successful financial planning, comfortable financial position continued during the year also. Some of the term loans availed were repaid.

SUBSIDIARY COMPANIES

The statements pursuant to Section 129(3) of the Companies Act, 2013 (Hereinafter referred to as the 'Act') in 'Form AOC 1' containing the details of following Wholly Owned Subsidiary Companies forms part of this Annual Report. However as required by the 'Act', we give below a brief report on their performance.

I. K.P.R. Sugar Mill Limited

II. KPR Sugar and Apparels Limited III. Jahnvi Motor Private Limited IV. Quantum Knits Pvt. Limited V. Galaxy Knits Limited VI. KPR Exports Plc VII. KPR Mill Pte. Ltd.

SUGAR AND COGEN

The year under review was a normal year for the Indian Sugar industry as a whole and is on track for steady growth in the current year too. Due to uneven and inadequate monsoon in key cane-growing regions, the overall sugar production during the year under review is lower. However, the deficit is expected to be marginal.

ETHANOL

India has achieved the target of blending 12% ethanol with petrol during the current ethanol supply year. Ethanol usage in India is set to rise due to increased demand for biofuel. According to a report, the period between 2023 and 2029 predicts significant growth in India's ethanol market, reaching a value of USD 4.15 billion with a CAGR of 9.16%.

The Government's directive not to use sugar cane juice / sugar syrup for ethanol is expected to have a divergent impact on the sugar industry in the current year. This is expected to be a temporary measure. The Government may restore the normal ethanol production from next year.

KPR SUGAR MILL LIMITED

The sugarcane crushing commenced in November 2023, produced 85,370.00 MT of Sugar. The Co-gen plant produced 1500.36 lakhs units of Power. Out of the above, 933.14 lakhs units were sold and 567.22 lakhs units were captively consumed.

During the year 37172 KL of Ethanol was produced, using Sugar Syrup and Molasses and the entire production was sold to Oil Marketing Companies. The expansion of Ethanol production capacity 240 KLPD with Zero Liquid Discharge System has been completed.

Considering better performance and strong liquidity during the year, the Board of Directors have declared an Interim Dividend

@ 250 per Equity Share at their meeting held on 22.07.2023. Subsequently, the Board in its meeting held on 27.01.2024 has also declared a second interim Dividend @ 190 per Equity Share on Equity Shares, thus aggregating to 440 per Share (on Equity Share of Face Value of 10 each), for the Financial Year 2023-24.

KPR SUGAR AND APPARELS LIMITED

The sugarcane crushing commenced in November 2023, produced 91,170 MT of Sugar. The Co-gen plant produced 1,701.93 lakhs units of power. Out of the above, 1,053.24 lakhs units were sold and 648.69 lakh units were captively consumed. During the year 57,130 KL of Ethanol was produced, using Sugar Syrup and Molasses and the entire production was sold to Oil Marketing Companies.

The Board of Directors have declared an Interim Dividend

@ 450 per Equity Share of Face Value of 10 each at their meeting held on 27.01.2024.

The future of the sugar industry appears to be bright and promising. India's sugar producers hope for freedom to sell at high prices in the days to come.

JAHNVI MOTOR PRIVATE LIMITED

During the year, the Company could sell 155 Audi Cars and earned a revenue of 102.34 Crores. Steady economic growth amid signs of moderating inflation, coupled with strong earnings, is fueling the demand at the higher end of the market and supporting sales of luxury vehicles. Local demand continues to be strong.

The Board of Directors have declared an Interim Dividend @ 10 per Equity Share of Face Value of 10 each at their meeting held on 22.07.2023.

QUANTUM KNITS PVT. LIMITED

The garment business has been consolidated for effective management.

GALAXY KNITS LIMITED

The Company has not yet commenced its operation.

K P R EXPORTS PLC (ETHIOPIA)

As informed in the earlier report, we have already approached the Ethiopian Authorities seeking their assistance to formally close the Apparel manufacturing unit at Ethiopia due to civil disturbance and to bring back capital materials therein. The same is being followed up.

KPR MILL PTE. LTD (SINGAPORE)

As the Company was established primarily for the purpose of marketing the products manufactured at Ethiopia and consequent on the closure of activities therein due to political turmoil, the Management of the Company has applied for strike off of the Company with Singapore authorities.

DEPOSITS

The Company has not accepted any deposits from public during the year under review.

DIRECTORS

Taking note of the completion of the second term of Five consecutive years by the Independent Directors of the Company viz, Mr.G.P.Muniappan (DIN:01653599), Dr.K.Sabapathy (DIN:00001794), Mr.A.M.Palanisamy (DIN:00112303) and

Mr.C.Thirumurthy (DIN:00001991) and the consequential cessation of their office in the Company with effect from 31 March 2024, the Board placed on record its sincere appreciation for the invaluable services rendered by them during their tenure.

Based on the recommendation of the Nomination & Remuneration Committee, the Board appointed the following Directors as Additional Directors in the capacity of Independent Directors of the Company for a term of five consecutive years w.e.f. 1 April, 2024 to 31 March, 2029 subject to the approval of Shareholders of the Company.

1. Mr. M. Alagiriswamy (DIN:02112350)

2. Mr. K.V. Ramananda Rao (DIN: 09170522)

3. Mr. K. Thangavelu (DIN: 08993868)

4. Mr. R. Sridharan (DIN: 00018356)

Pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, the aforesaid Directors hold the 'Independent Directors Data Bank Certificate' issued by the 'Indian Institute of Corporate Affairs'.

The Shareholders of the Company have also approved their appointment as Independent Directors of the Company by passing special resolution through postal ballot on May 02, 2024.

The Company has adequate Independent Directors in compliance with the Act and SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 (Hereinafter referred to as Listing Regulations). Familiarization Program on the Company and its operation was conducted for the Independent Directors. Requisite declaration from the Independent Directors of the Company under Section 149 (7) of the Act confirming that they meet with the criteria of their Independence laid in Section 149 (6) have been obtained.

The Board is of the opinion that the Independent Non-Executive Directors of the Company including those appointed during the year possess requisite qualifications, expertise and experience and they hold highest standards of integrity.

Mr. E.K. Sakthivel (DIN:01876822), Executive Director, retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

REMUNERATION CRITERIA

In pursuance of the Act the Company has Key Managerial Personnel. None of the Managing Directors or Whole Time Directors receives any remuneration or commission from the

Subsidiary Companies and the remuneration paid to them is within the purview of the provisions of Section 197 of the Act. The Company pays remuneration by way of salary, perquisites, commission etc., to its Chairman, Managing Directors and fixed monthly remuneration to its Executive Directors and Whole Time Director in line with the approvals accorded by the General Meetings and in pursuance of the recommendation of the Nomination and Remuneration Committee as per the guiding principles laid down in the Nomination and Remuneration Policy. The information as required by Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended and forms part of this report.

ANNUAL PERFORMANCE EVALUATION

In line with the criteria evolved by the Nomination and Remuneration Committee, the performance of all Directors, Committees, Chairman etc., have been evaluated pursuant to the provisions of the Act and the Listing Regulations.

COMMITTEES

As required by the provisions of the Act and Listing Regulations, the Company has already formed the following Committees, the details of which are disclosed in the Report on Corporate Governance forming part of this Report.

I. Audit Committee

II. Stakeholders Relationship Committee

III. Nomination and Remuneration Committee

IV. Corporate Social Responsibility (CSR) Committee

V. Risk Management Committee

POLICIES

In pursuance of the Act and the Listing Regulations, the following policies have been framed and disclosed on the Company's website www.kprmilllimited.com/policy/

I. Nomination & Remuneration Policy

The Web-link - https://kprmilllimited.com/file/wp-

content/uploads/2018/11/5.KPR-NR-Policy.pdf

II. Related Party Transaction Policy

III. CSR Policy

IV. Whistle Blower Policy consisting of Vigil Mechanism V. Policy on Determining Material Subsidiaries VI. Code for Fair Disclosure

VII. Risk Management Policy

VIII.Dividend Distribution Policy

The Web-link - https://kprmilllimited.com/file/wp- content/uploads/2018/11/DD-Policy.pdf

IX. Policy for Disclosure of Material Events / Information

X. Policy on Succession Planning for Board and Senior Management

RISK MANAGEMENT

Pursuant to Section 134(3) (n) of the Act & Regulation 17(9) of the Listing Regulations, the Company has a Risk Management Policy and has constituted a Risk Management Committee. The Risk Management Committee held its meetings on 06.06.2023 and 28.11.2023 in which all members were present.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

The Company has an established Vigil Mechanism for Directors and Employees to report concerns about unethical behaviors, actual or suspected fraud or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of Directors/Employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the Audit Committee. The Company has a Policy of Vigil Mechanism and has established a mechanism that any personnel may raise reportable matters. All suspected violations and reportable matters can be reported to the Chairman of the Audit Committee at e-mail id whistleblower@kprmill.com. The key directions / actions can be informed to the Chairman/ Managing Director of the Company. The Whistle Blower Policy has been reviewed by the Board of Directors and displayed in the Company's website.

CSR EXPENDITURE

During the year, in pursuance of the recommendations of the CSR committee, the Company has contributed 1590 Lakhs (2.02% of the average three years' net profit of the Company) towards implementing the CSR activities. Annual Report on CSR, as required by the Act, is appended. The CSR policy is available on the website of your Company at https://kprmilllimited.com/file/wp-content/uploads/2021/05/CSR-POLICY.pdf

BOARD MEETINGS

The Board of Directors met Five times during the financial year on

03.05.2023, 01.08.2023, 06.11.2023, 05.02.2024 and 21.03.2024 in the physical mode. The Composition of Board, procedure, venue, dates, time and other details are included in the Corporate Governance Report that forms part of this Report.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in annexing the Consolidated Financial Statements pursuant to the provisions of the 'Act' and the Listing Regulations. They are prepared in accordance with the Ind-AS prescribed by the Institute of Chartered Accountants of India, in this regard.

INVESTMENTS

The Company has duly complied with the provisions of Section 186 of the Act and as required therein the details of the Borrowings, Security, Investment etc., are annexed by way of notes to accounts.

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the financial year were only between the Holding Company and Wholly owned Subsidiary Companies at arm’s length basis in the ordinary course of business, whose accounts are consolidated with the Holding Company and placed before the shareholders at the General Meeting for approval. However, as per regulatory requirements an omnibus approval of the audit committee for such transactions has been obtained. The Company has not entered into any contract / arrangement / transaction with related parties which is required to be reported in Form No. AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act. Accordingly, reporting of the same in Form No. AOC-2 is not applicable to the Company. However, the details of all transactions with related parties have been disclosed in Notes to the Standalone Financial Statement forming an integral part of this Annual Report.

The Transactions as required under Indian Accounting Standards 'Ind AS-24' are reported in Note 40 of the Notes to Accounts of the Standalone Financial Statements as well as Note 39 of the Notes to Accounts of the Consolidated Financial Statements of your Company. The Company's Policy on dealing with related party transactions is available on the Company's website.

EMPLOYEE WELFARE

Fully recognizing that the quality of life of an employee is directly proportional to the company's overall health, KPR strives to keep its workforce physically and mentally happy ever since it commenced business through its distinctive HR practices. Adopting one of the best HR Policy, KPR reaps the benefits such as comfortable retention rate; enhanced morale & engagement; positive attitude with a sense of belonging; ability to attract the best talent; reduced attrition rate and increased competence to mobilise human force at times of need etc. The sustained higher education facilities and Career growth policy ensure the upliftment of Employees' livelihood considerably.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company upto the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance.

WORKPLACE

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and also for the matters incidental thereto. The Company has accordingly adopted the policy against Sexual Harassment of Women at Workplace, for the purpose of preventing, prohibiting and redressing sexual harassment of female employees at all the workplace within the Company which are based on fundamental principles of justice and fair play.

According to the notifications of Ministry of Corporate Affairs dated 31 July 2018, Internal Complaints Committee under the sexual harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, has been formed and complied with. Further, Anti Sexual Harassment Committee constituted at each unit shall be responsible for redressal of complaints related to sexual harassment. The details of all such Complaints and its proper redressal through prompt corrective steps are informed to the Top Management so as to ensure that suitable processes and mechanisms are put in place to ensure that issues of sexual harassment, if any, are effectively addressed. During the year, no complaints of sexual harassment was received by the Company from any of its Units.

AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act read with the Companies (Accounts) Rules, 2014 are provided in the Annexure to the Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(5) of the Act, the Board of Directors of the Company hereby state and confirm that;

I. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

II. The Directors have selected 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 of the Company for the year under review.

III. The Directors have taken proper and sufficient care for the maintenance of adequate 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.

IV. The Directors have arranged preparation of the accounts for the financial year ended 31.03.2024 on a going concern basis.

V. 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.

VI. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DISCUSSION AND ANALYSIS REPORT

Corporate Governance Report & Management Discussion and

Analysis Report are attached to this Report. Certificate from the Statutory Auditors of the Company confirming the compliance with the conditions of Corporate Governance as stipulated under Schedule V of the Listing Regulations is also attached to this report.

REPORT (BRSR)

In pursuance of Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report, containing the initiatives taken by the company from environmental, social and governance perspective, forms part of this Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The details of internal financial control and their adequacy are included in the Report of Management Discussion & Analysis, which forms part of this report.

RATIO OF REMUNERATION TO EACH DIRECTOR

Details / Disclosures of Ratio of Remuneration of Director to the median employee's remuneration as required by the Act and Companies Rules are appended.

DETAILS REGARDING ISSUE OF SHARES

During the year under review the Company has not issued any shares.

AUDITORS

In the 19 Annual General Meeting of the Company held on 23.08.2022 M/s. B S R & Co LLP, Chartered Accountants (ICAI Firm Regn. No.101248W/W-100022) were re-appointed as Statutory Auditors of the Company for a second term of five consecutive years from the Financial Year 2022-23.

AUDITORS’ REPORT

The Auditors’ Report to the Shareholders does not contain any qualification. There were no frauds reported by the Statutory Auditors under provisions of Section 143 (12) of the Companies Act, 2013 and rules made thereunder.

COST RECORDS

Pursuant to Section 148 of the Act, the Company is covered under the limits specified under this section and hence the Company has maintained proper books of accounts with all the particulars relating to the utilization of material, labour and to other items of cost.

COST AUDIT

In pursuance of Companies (Cost Records and Audit) Rules, 2014, the Company appointed Mr. B. Venkateswar, Cost Accountant (M.No:27622) as Cost Auditor of the Company to audit the cost records for the Financial Year 2023-24.

SECRETARIAL STANDARDS COMPLIANCE

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI). As required by the Act a Secretarial Audit Report issued by a Company Secretary in practice (PCS) a Peer Reviewed Unit in Form MR 3 is annexed with this report and it does not contain any qualification. Certificate from PCS that none of the Directors are debarred or disqualified forms part of this Annual Report. Annual Secretarial Compliance Report certifying compliance of SEBI Regulations has been obtained and filed with the Stock Exchanges.

ANNUAL RETURN

Pursuant to Section 92 of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return in the prescribed form is available on the Company's website:https://kprmilllimited.com/financial-result_annual-reports/

DETAILS OF DEMAT/UNCLAIMED SUSPENSE ACCOUNT

The status of unclaimed shares of the Company transferred to the demat account, 'K.P.R. Mill Limited - Unclaimed Shares Demat Suspense Account', in accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is as follows:

The Voting rights in respect of these shares will remain frozen till the time such shares are transferred from the Unclaimed Suspense Account to the concerned Shareholders.

MATERIAL CHANGES AND COMMITMENTS

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year as on 31.03.2024 and the date of this Report.

NO CHANGES IN THE BUSINESS

Your Directors would like to inform that Company is doing its regular business and there has been no change in its objectives.

GENERAL

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

(a) Significant or material order passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future;

(b) Pendency of any proceeding under the Insolvency and Bankruptcy Code, 2016 and

(c) Instance of one-time settlement with any bank or financial institution.

Disclosures under sub rule 5 (xi) and (xii) of rule 8 of Companies

(Accounts) Rules, 2014 are not applicable to the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude and express their appreciation for the assistances and co-operation received from the Bankers, Government Authorities, Customers, Vendors, and Members during the year under review. Your Directors also wish to thank the employees at all levels for their co-operation and dedication.