Andhra Cements Ltd

The Members

The Directors of your Company are pleased to present the Eighty Sixth (86^th) Annual Report together with the Audited Financial Statements of the Company for the Financial Year ended 31^st March, 2025.

Summary of the financial results of the Company for the year under report are as under:

(Rs. in lakhs, unless otherwise stated)

There were no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the company to which the financial statements relates and the date of the report.

The Authorised Share Capital of the Company is Rs. 500 crores comprising of 40,00,00,000 equity Shares of Rs. 10/- each amounting to Rs. 400 crores and 1,00,00,000 preference Shares of Rs. 100/- each amounting to Rs. 100 crores.

The paid-up equity share capital of the Company as at 31^st March, 2025 is Rs. 92,17,21,400/- divided into 9,21,72,140 Equity Shares of Rs. 10/- each.

During the period under review, your Company has not issued any shares with differential rights, sweat equity shares and equity shares under employee's stock option scheme expect the above allotments. Your Company has also not bought back its own shares during the period under review.

No Dividend is recommended in view of the losses during the year and non-availability of any carry forward surplus.

No transfer to any reserve is proposed in view of the losses during the year.

During the year under review, after successful implementation of Resolution Plan, the Company re-commenced its Plant Operations/Grinding Operations from 12^th April, 2023 at its Sri Durga Cement Works and the plant operating successfully and the company's other Plant Visaka Cement Works (VCW) unable to operate during the year, as the plant falls under city limits, making it difficult to run the operations and logistic issues.

Your Board of Directors at its meeting held on 24^th January, 2024 has approved a proposal for the modernization/expansion project to enhance the clinker manufacturing capacity from 1.65 MTPA to 2.30 MTPA and the cement grinding capacity from 1.82 MTPA to 3 MTPA and also to install a new 6 stage preheater system along with necessary modifications / replacement of the existing equipment's to be in line with the enhanced facilities and to optimize the fuel cost at its Dachepalli unit.

The new 6 stage preheater construction project work is under progress as per the schedule. With the casting of final slab of the preheater during first week of March 2025, entire civil works pertaining to the preheater got completed. The fabrication work is under progress as per the schedule and around 70% of the fabrication works pertaining to the preheater has been completed till date. The erection work is also taking place simultaneously and around 40% of the erection work has been completed till date. All core equipment's related to the preheater has started reaching to the site. Based on the orders issued it is expected that all major equipment's will reached the site shortly.

The estimated cost of the project to implement the above said facilities will be around Rs.47,401 lakhs and the same will be met through equity/internal accruals and borrowing from banks/institutions.

Further, your Board of Directors at its meeting held on March 28, 2024 had also approved a proposal for raising funds for an amount not exceeding Rs.180 crores to part finance the above expansion and for upgradation as detailed above and also to achieve the Minimum Public shareholding of 25%, through Issue of Equity Shares of the Company on a Rights basis to the existing shareholders of the company in accordance with the

provisions of the Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The company has received the necessary approvals from the concerned authorities for the Rights Issue and is valid till December 16, 2025.

Due to the prevailing capital market conditions, the company is not in a position to move forward with the proposed fund raising through Rights Issue. Your company will take necessary steps to initiate the rights issue to fulfill the minimum public shareholding within the stipulated time in accordance with the regulations.

As per the provisions of the Companies Act, 2013 and Regulation 34 of the SEBI LODR Regulations, Companies are required to prepare financial statements to be laid before the Annual General Meeting of the Company. Accordingly, the financial statements along with the Auditors' Report thereon, forms part of this Annual Report.

As per section 136(1) of the Companies Act, 2013 the Financial Statements are available at the Company's website i.e www.andhracements.com.

During the year under report the following changes took place in the Board of the Company:

1. Mrs. S. Rachana, director is retiring by rotation at this AGM and eligible for re-appointment.

2. During the year under report, the Board met 6 times, the details whereof are given in Report on Corporate Governance. The meetings of Board of Directors were held on 14^th May, 2024, 18^th July, 2024, 28^th September, 2024, 23^rd October, 2024, 24^th January, 2025 and 28^th March, 2025.

3. All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI LODR Regulations.

4. Pursuant to the provisions of the Companies Act, 2013 and the SEBI LODR Regulations, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the Committees constituted by it. The manner in which the formal annual evaluation has been carried out has been explained in the Report on Corporate Governance.

5. The Board has on the recommendation of the Nomination & Remuneration Committee adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. A gist of the policy is available in the Corporate Governance Report.

6. Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013. As required under Regulation 25(7) of the SEBI LODR Regulations, the Company has programmes for familiarization for the Independent Directors. The Board of Directors is of the opinion that all the Independent Directors possess requisite qualifications, integrity, experience and expertise in industry knowledge and corporate governance and they hold highest standards of integrity.

Pursuant to Section 134(3)(p) of the Companies Act, 2013 and Regulation 25(4) of The SEBI (LODR) Regulations, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the management and the board, performance of the Board as a whole and its Members and other required matters. Pursuant to Regulation 17(10) of THE SEBI (LODR) Regulations, Board of Directors have evaluated the performance of Independent Directors and observed the same to be satisfactory and their deliberations beneficial in Board/Committee Meetings.

The Company had formulated a code of conduct for the Directors and Senior Management personnel and the same has been complied.

All Related Party Transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. During the year, the Company had entered into a contract/ arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transaction.

The policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board may be accessed on the Company's website at https://www.andhracements.com/ACL-Policy%20on%20Related%20Party%20 Transactions.pdf.

The details of Related Party Transactions as required under IND AS-24 are provided in the accompanying financial statements forming part of this Annual Report. Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as “Annexure-A” to this Report.

There are no significant and material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Cost records are required to be maintained by the Company under Section 148 (1) of the Companies Act, 2013. Accordingly, such accounts and records made and maintained.

As the members are aware in accordance with the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) were appointed as Statutory Auditors of the Company, however they have tendered their resignation, which resulted into casual vacancy, the Board of Directors of the Company recommended appointment of M/s. B S R and Co, Chartered Accountants (Firm Registration No. 128510W) as Statutory Auditors of the

Company to fill the casual vacancy caused by the resignation of M/s. Deloitte Haskins & Sells, Chartered Accountants, to hold the office from 15-05-2025 until the conclusion of 86^th AGM. Accordingly, based on the recommendations of the Audit Committee, the Board has recommended for approval of the shareholder at the ensuing AGM, for the appointment of M/s. B S R and Co, Chartered Accountants (Firm Registration No. 128510W) as Statutory Auditors of the Company from 15-05-2025 till conclusion of this AGM and for a term of 5 years from the conclusion of 86^th AGM till the conclusion of the 91^st AGM. The resolution along with explanatory statement for statutory auditor appointment has been included in the Notice of ensuing Annual General Meeting.

The Board of Directors of the Company have on the recommendation of Audit Committee, appointed M/s. Narasimha Murthy & Co, Cost Accountants (Firm Regn No. 000042) Cost Auditors of the Company for the Financial Year 2025-26 for auditing the Cost Records relating to the product ‘Cement'. In this regard, they have submitted a certificate certifying their independence and their arm's length relationship with the Company. The Resolution for ratification of their remuneration has been included in the Notice of the ensuing Annual General Meeting.

Secretarial Audit Report for the financial year ended on 31^st March, 2025, issued by M/s. B S S & Associates, Company Secretaries, in form MR-3 forms part of this report and marked as “Annexure-B”.

The said report does not contain any qualification or observation requiring explanation or comments from Board under section 134(3)(f)(ii) of the Companies Act, 2013.

The Board of Directors of the Company have on the recommendation of Audit Committee, appointed M/s. B S S & Associates, Company Secretaries (Firm Registration No. 3744) as Secretarial Auditors of the Company for a term of 5 consecutive years with effect from the conclusion of this Annual General Meeting till the conclusion of the 91^st Annual General Meeting of the Company to be held in the year 2030. The Resolution for the appointment has been included in the Notice of the ensuing Annual General Meeting and other terms of appointment are disclosed as a part of the explanatory statement to the notice.

The Auditors” Report does not contain any qualifications, reservations or adverse

remarks and it is an unmodified one.

Annual Return in Form MGT-7 for the year ended 31^st March, 2025 is available on the

company's website and link for the same is https://www.andhracements.com/

During the year under review, there were no Loans, Guarantees and Investments made/ given as per the provisions of Section 186 of the Companies Act, 2013.

During the year under review, Securities of the Company not suspended from trading. RISK MANAGEMENT

The Company has formulated a Risk Management Policy. The Risk Management Policy, which inter-alia:

a) define framework for identification, assessment, monitoring, mitigation and reporting of risks.

b) ensures that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e to ensure adequate systems for risk management.

The Risk Management policy of the Company is available at the Company's website.

In view of absence of required profit/net worth/turnover, the provisions of the Companies Act, 2013 relating to Corporate Social Responsibility are not applicable to the Company.

A Report on Corporate Governance as stipulated by Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report along with the required Certificate from the Practicing Company Secretary confirming compliance with conditions of Corporate Governance.

As required under Regulation 34(2)(c) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion & Analysis Report on operations and financial position of the Company has been provided in a separate section which forms part of this Annual Report.

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, the Directors, based on the representation received from the operating management, certification by MD and CFO to the Board of Directors and after due enquiry, confirm that in respect of the Audited Annual Accounts for the year ended 31^st March, 2025 that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and that there were no material departures;

b) the Directors had, in consultation with the 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 for the year ended 31^st March, 2025 and the 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 proper internal financial controls to be followed and that such internal financial controls were adequate and were operating effectively; and

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

The Company has in terms of the provisions of Section 177(9) of the Companies Act,

2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules,

2014 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, formulated Whistle Blower Policy and Vigil Mechanism for Directors and employees under which protected disclosures can be made by a whistle blower. Said policy is available on the companies web site: https://www.andhracements.com/ ACL-Whistle%20Blower%20Policy.pdf.

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Auditors of the Company for insufficiency or inadequacy of such controls.

The information about internal financial controls is set out in the Management Discussion & Analysis Report which forms part of this Report.

No frauds were reported by the Auditors under Sub-Section 12 of Section 143 of the Companies Act, 2013 read with the Rules made there under.

The Company is actively engaged in the business of manufacturing of cement and clinker.

There were no change in the nature of business and activities during the year. DETAILS OF REVISION OF FINANCIAL STATEMENT OR THE REPORT

There is no revision of financial statement or the Report.

The Company doesn't have any subsidiaries or joint ventures or associate Companies during the year.

The requirement to disclose the details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 (“the Act”) read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the details relating to deposits as also requirement for furnishing of details of deposits which are not in compliance with Chapter V of the Act, is not applicable.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules forms part of this Annual Report and is provided as “Annexure- C” in this report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided as “Annexure- C” to this Report.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Second Amendment Rules, 2015 (as per the notification dated 4^th September, 2015), is annexed herewith as “Annexure-D”

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC). ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. During the year under review, no complaints were received by the Company.

During the financial year 2024-25, no funds were raised through Rights Issue, Preferential Issue etc.

During the year under review, the Company has not failed to implement any Corporate Action.

The details w.r.t. Credit Rating have been given in the Report on the Corporate Governance, which forms part of the Annual Report.

Details relating to future outlook, treats and opportunities have been given in detail in the Management Discussion and Analysis Report, which is part of the Directors Report.

All the properties of the Company have been adequately insured.

Your company is committed to keep the pollution at its plant with in the acceptable norms and as part of this commitment, it has, inter-alia, an adequate number of bag filters in the plant and comply with all required pollution control norms.

The Board has an Audit Committee, Nomination and Remuneration Committee, Stakeholder's Relationship Committee and Risk Management Committee. The composition and other details of these committees have been given in the Report on the Corporate Governance, which forms part of the Annual Report.

There was no such instance arose to transfer any amount to the Investor Education and Protection Fund.

The Company has appointed a Nodal Officer under the provisions of IEPF Regulations, the details of which are available on the Company website at https:// www.andhracements.com/Nodal%20Officer%20Contact%20details.pdf.

Your company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time and that such systems are found to be adequate and operating effectively.

No application has been admitted or any proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016.

A Certificate as stipulated under Schedule V (E) of the SEBI Listing Regulations from a Practicing Company Secretary regarding compliance with the conditions of Corporate Governance is attached to this Report along with our report on Corporate Governance.

Statement in this report and its annexures describing the company's projections, expectations and hopes are forward looking. Though these are based on reasonable assumptions, their actual results may differ.

The Board places on record its sincere appreciation and gratitude to various Departments and Undertakings of the Central Government, and State Governments, Financial Institutions, Banks and other authorities for their continued co-operation and support to the Company. The Board sincerely acknowledges the faith and confidence reposed by the Shareholders in the Company.

For and on behalf of the Board