Gujarat Narmada Valley Fertilizers & Chemicals Ltd

To,

The Members,

Your Directors have immense pleasure in presenting this 48^th Annual Report on the Company's business and operations together with Audited Financial Statements (Standalone and Consolidated) for the Financial Year (FY) ended on March 31,2024.

FINANCIAL RESULTS AND STATE OF THE COMPANY'S AFFAIRS

During the year under review, the Company achieved remarkable performance on operational and financial fronts. The Company established total eighty (80) new records during the FY 2023-24, out of which forty four (44) records were established in production and thirty six (36) for sale / dispatch.

Financial Highlights on Standalone basis are summarized as follows:

(' in Crores)

COMPANY'S PERFORMANCE OVERVIEW 1.0 Operational Performance:

The Company has achieved remarkable production performance during the FY 2023-24. Day to day plant operations were closely reviewed and optimized to maximize profit.

During the year, several plants achieved over 100% capacity utilization level. Ammonia (6,36,948 MTs i.e. 142.97%), ASGP (3,74,979 MTs i.e. 101.45%), Urea (7,99,791 MTs i.e. 125.58%), M.F (41,008 MTs i.e. 179.86%), Formic Acid (31,663 MTs i.e. 160.56%), Acetic Acid (1,61,927 MTs i.e. 161.93%), ANP (1,86,970 MTs i.e. 131.21%), WNA-I (3,12,882 MTs i.e. 126.42%), WNA-II (1,23,695 MTs i.e. 123.70%), CNA-II (34,037 MTs i.e. 103.14%), CNA-III (50,503 MTs i.e. 101.01%), TDI-I, Bharuch (17,688 MTs i.e. 126.34%),TDI-II, Dahej (53,117 MTs i.e. 106.23%), EA (71,510 MTs i.e. 143.02%) and were among the plants that excelled in capacity utilization.

During the year, strategic optimization of various plant operations and product mix had been done keeping in line with price of raw materials so as to achieve cost reduction in all aspects.

TDI -11 Dahej plant was operated for 322 on-stream days with capacity utilization of 106.23%. Since commissioning in FY 2013-14, first time plant achieved name plate capacity of 50,000 MTPA with highest annual production of 53,117 MTs.

Sulphuric Acid Concentration plant was operated with in-house fabricated E31704 shell with PTFE sleeve of SS304L MOC. Major anxieties like hydrogenator reactor coil leakage, steamjacket failures in OTD distillation column, P-36202 line leakage, E-36811 tubes failure were successfully identified & resolved which averted long shut down. Existing VAM units are replaced with screw chillers, enhancing reliability in plant operation. Supply of desalinated water supply from GIDC has averted scarcity anxiety in summers.

2.0 Financial Performance:

During the FY 2023-24, both the bulk chemicals as well as complex fertilizers have witnessed substantial dents in realisation and margin as the cycle has turned from sellers to buyers' market.

During the FY 2023-24, two important developments took place (a) Employee Wage Settlement (b) Equity Share Buyback worth Rs. 802 crores including income tax.

Further, the results for full year is not fully comparable in view of the annual shutdown during the period which limited the availability of saleable volume.

The Board of Directors at its meeting held on May 28, 2024 has recommended dividend of Rs. 16.50/- per share (i.e. 165%). SALES

1.0 Industrial Products:

The Chemical industry as a whole and Company's Industrial Products market witnessed slump in demand of various chemicals due to recession like situation particularly in Europe due to ongoing war and weak international market. Despite such a situation, we could achieve, highest ever annual sales for some of our main products like TDI, Formic Acid, Ethyl Acetate etc. in FY 2023-24. GNFC's products have better resonance due to their application and use in different end use sectors. TDI, AN- Melt & TGU made 26%, 13% & 13% share of the turnover respectively in the FY 2023-24. Notable mention to Aniline, CNA, Formic Acid & TDI which have performed wel l in terms of sales volume & turnover compared to last FY 2022-23.

2.0 Fertilizers Business:

During the FY 2023-24, your Company has achieved total sales of 6.38 Lakh Metric Tonnes of Urea which was at par with previous year (i.e. 6.39 Lakh Metric Tonnes). Sales of Nitrophosphate (20-20-0) stood at 1.89 Lakh Metric Tonnes, higher to 1.28 Lakh Metric Tonnes in the FY 2022-23. Sales volume of Urea was kept to the levels of re-assessed capacity i.e. 6.37 Lakh Metric Tonnes to avoid loss in subsidy realization. Nitrophosphate was produced in higher quantum considering product priority in terms of viability. During the FY 2023-24, the Company retailed 69,088 MT Urea and 10,701 MT ANP through Narmada Khedut Sahay Kendras (NKSKs).

During the year, trading activities were also continued in Muriate of Potash (MoP), Di-Ammonium Phosphate (DAP), Ammonium Sulphate (AS), Single Super Phosphate (SSP) and City Compost. A total quantity of 34,068 Metric Tonnes of Fertilizers were sold during the FY 2023-24 against 31,018 Metric Tonnes sold in FY 2022-23. Besides, GNFC sold nonbulk agri inputs worth Rs. 95.56 Lakhs through NKSKs.

3.0 (n)Code Solutions - IT Division:

During the FY 2023-24, (n)Code Solutions - IT Division of the Company, continued to provide IT services such as e-Passport project, Digital Signature Certificates, PKI Solutions, e-Procurement and e-Auction services, Smart City/System Integration, Data Centre Operations, software/application development & support etc. Our commitment to innovation, excellence and customer satisfaction helped us achieve growth in almost every business vertical.

(n)Code Solutions registered a Profit Before Tax (PBT) of Rs. 45 Crores for the FY 2023-24, an increase of 25% from the previous year's PBT of Rs. 36 Crores. IT Division's total income for the FY 2023-24 was Rs. 143 Crores, showing an increase of 72% as compared to the income of the previous year at Rs. 83 Crores. (n)Code Solutions successfully managed al l business and support activities with full client satisfaction.

(n)Code Solutions successfully executed several prestigious projects in the last FY 2023-24. This includes ongoing implementation in the e-Passport initiative of the Government of India (GoI), "Ease of Doing Business" initiative for the Central Bureau of Narcotics (Ministry of Finance, Department of Revenue, Government of India), aimed at digitizing business processes and promoting ease of access and prompt service and Development and implementation of an online system ('Coal Distribution Management System') for distributing and allocating coal quota received from the Gujarat Mineral Development Corporation (GMDC).

Looking ahead, our aspiration is to expand our presence across India and enhance business convenience through our comprehensive range of software solutions. We are particularly focused on introducing innovative products such as e- Tender/e-Auction, E-sign, Digital Solutions, integrated Mining solutions etc. with efforts to penetrate the Enterprise Segment alongside the Government Segment. By leveraging the latest digital technologies, we remain committed to equipping our clients with the tools necessary to thrive in today's competitive marketplace.

An analysis of the Company's operational, sales and financial performance is presented under a separate section on "Management Discussion & Analysis (MDA)" forming part of this Report.

DIVIDEND

Keeping in view the Company's performance for the FY 2023-24, long term growth strategy and to ensure that the Shareholders get sustained return on their investments, your Directors have recommended a Dividend of Rs. 16.50/- per share (@ 165%) on 14,69,40,683 Equity Shares of Rs. 10/- each fully paid up, subject to approval of Shareholders at the Annual General Meeti ng. The Dividend payout works out to be Rs. 242.45 Crores. This amounts to 50% of the Net Profit of the Company for the FY 2023-24.

APPROPRIATIONS

Your Company has registered a Net Profit of Rs. 484.79 Crores for the FY 2023-24. After deducting therefrom Rs. 4.14 Crores, being the re-measurement loss on defined employee benefit plans and, adding thereto Rs. 5,115.16 Crores, being the balance of Statement of Profit & Loss brought forward from previous year, an amount of Rs. 5,595.81 Crores is available for appropriation. Out of this Rs. 466.26 Crores is appropriated towards payment of dividend for the FY 2022-23, Rs. 500 Crores is transferred to General Reserve, Rs. 331.03 Crores appropriated towards buy-back of shares, Rs. 150.10 Crores appropriated towards payment of tax on buy back of shares, Rs. 4.98 Crores appropriated towards buy back related expenses and Rs. 8.48 Crores is transferred to Capital Redemption Reserve. The balance amount of Rs. 4,134.96 Crores is proposed to be carried to Balance Sheet.

TRANSFER TO RESERVES

The Board of Directors has decided to transfer Rs. 250 Crores of profits of FY 2023-24 to General Reserve.

FERTILIZERS INDUSTRY - GOVERNMENT POLICY

Government Policies in respect of fertilizers have remained same during the FY 2023-24, except for a reasonability of MRPs in fertilizer governed through Nutrient Based Subsidy Policy. Department of Fertilizers issued guidelines on January 18, 2024 for reasonable profit in fertilizers under Nutrient Based Subsidy (NBS) policy with retrospective effect i.e. April 1,2023.

The DoF's initiatives viz. PM - Pranam (for soil improvement, promoting organic manures and reducing chemical fertilizers) and Namo Drone Didi (bringing technological improvements in agriculture through women empowerment) have gained momentum during the FY 2023-24. Besides, initiatives like One Nation One Fertilizers, Pradhan Mantri Kisan Samriddhhi Kendra are being strengthened.

NBS was announced on six monthly basis during the FY 2023-24. For GNFC's Nitrophosphate, the NBS Subsidy was Rs. 23,504/- per Metric Tonnes in first half and Rs. 13,568/- per Metric Tonnes during the second half of the year.

On-Going Projects / New Projects/ Revamp Schemes

Your Company is continuously looking for the growth opportunities and has initiated actions for implementation of various projects / revamp schemes as follows:

1. Formic Acid Capacity Enhancement:

GNFC implemented Formic Acid (FA) project to increase the capacity by 20 MTPD (6,800 MT per annum). Project was commissioned in April 2022 & required designed capacity was achieved in June 2022.

2. Concentrated Nitric Acid (CNA) - IV Plant:

GNFC implemented CNA-IV Project of the capacity of 150 MTPD. Project was commissioned in July 2023 and required designed capacity was achieved.

3. 04 MW Solar Power Plant Project:

To fulfil Renewable Purchase Obligation & for the captive use, GNFC is in the process of implementing 04 (Four) MW Solar Power Project at Charanka Solar Park. Project is expected to be completed by first quarter of the FY 2024-25.

4. Ammonia Plant revamp:

At present, Company is producing about 1,950 MTPD Ammonia from both fuel oil and natural gas route after installation of S-300 revamp. It is planned to increase the Ammonia production capacity from 1,950 MTPD to 2,100 MTPD by installation of Ammonia Make-up Gas Convertor Loop [AMUGL], in existing Ammonia Synthesis Loop (ASL). The Project will also increase the reliability of existing ASL.

This will increase Ammonia production by 50,000 MT per annum. Agreement has been signed with M/s. Topsoe, Denmark, the Technology Licensor for the providing Basic Engineering Package (BEP) & supply of propitiatory equipment & commissioning assistance.

Project shall be executed on EPC basis and is likely to be completed by first quarter of the FY 2027-28.

5. Coal based Captive Co-generation Power Plant (CCPP) at Dahej:

The Company has set up 100 MT/Hr. capacity gas based Boiler at TDI - II Dahej Complex to meet captive steam requirement, while power is being sourced from DGVCL Grid. There is large variation in gas prices.

The Board of Directors has already approved the implementation of coal based Captive Generation Power Plant (CCPP) Project having a capacity to produce 18 MW Power and 150 MT/ Hr. Steam in October 2022, in order to reduce cost of steam and power and to improve reliability of TDI-II Dahej Plant. LSTK Contract has been awarded to M/s. Thyssenkrupp Industries India Private Limited in October 2022.

Activities of Engineering, Procurement & Construction is going in full swing & Power Project is expected to be completed by April 2025.

6. Weak Nitric Acid-III (WNA-III) and Ammonium Nitrate-II (AN-II) Projects:

Your Company is planning to expand its capacity of WNA and AN considering the future market growth. NITs for WNA-III with capacity of 600 MTPD and AN-II with capacity of 480 MTPD have been floated. The offers for the same are under commercial evaluation stage and the investment approval is expected in near future.

Pursuant to the provisions of Sections 134(3)(c) read with 134(5) of the Companies Act, 2013 (as amended), your Directors confirm that-

(i) in the preparation of Annual Accounts for the financial year ended March 31,2024, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;

(ii) they had selected such accounting policies and applied them consistently and madejudgments 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 at end of the financial year on March 31,2024 and of the profit of the Company for that period;

(iii) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 (as amended) for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, if any;

(iv) they had prepared Annual Accounts on a going concern basis;

(v) they had laid down internal financial controls to be fol lowed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BUY-BACK OF EQUITY SHARES

During the year under review, the Company has completed Buy-back of 84,78,100 equity shares of face value of Rs. 10/- each at a price of Rs. 770/- per equity share ("Buy-back Offer Price") payable in cash for an aggregate maximum amount not exceeding Rs. 652,81,37,000/- (Indian Rupees Six Hundred Fifty Two Crores Eighty One Lakhs Thirty Seven Thousand only), excluding the transaction costs (such maximum amount hereinafter referred to as the "Buy-back Offer Size") which represents 7.90% and 7.80% of the aggregate of the Company's paid-up capital and free reserves as per the audited standalone financial statements of the Company as on March 31,2023 and audited consolidated financial statements of the Company as on March 31,2023 respectively, which is within the 10% statutory limit of the aggregate of the fully paid-up share capital and free reserves (including securities premium account) of the Company as per the audited standalone financial statements of the Company as on March 31,2023 or audited consolidated financial statements of the Company as on March 31,2023, respectively, whichever sets out a lower amount, from al l the shareholders/ beneficial owners of the Equity Shares of the Company, including promoters and members of the promoter group, as on a record date i.e. November 24, 2023 ("Record Date"), through the "Tender Offer" route, on a proportionate basis as prescribed under the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018.

DETAILS OF SUBSIDIARY / JOINT VENTURES / ASSOCIATE COMPANIES

The Company has Associate Company viz. Gujarat Green Revolution Company Limited (GGRCL). The Statements containing salient features of Financial Statements are given in Form AOC-1 as Annexure to the Consolidated Financial Statements and the same have not been repeated here for the sake of brevity.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129(3) of the Companies Act, 2013 (as amended), read with Regulation 33 of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, as amended (SEBI Listing Regulations), the Company has prepared Consolidated Financial Statements in respect of Associate Company viz. Gujarat Green Revolution Company Limited (GGRCL) for the FY 2023-24 and forms part of this Annual Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has not made any investment in other bodies corporate or given any Loan or Guarantee or provided any Security in connection with loan to any other body corporate or person during the FY 2023-24.

PARTICULARS OF CONTRACT OR ARRANGEMENT MADE WITH RELATED PARTY(IES)

The Policy for Related Party Transactions (RPTs) deals with review and approval of RPTs and the same is available on the Company's Website at web link https://www.gnfc.in/wp-content/uploads/2021/04/Related-Partv-Transactions-Policy.pdf. The Audit Committee has granted omnibus approval for RPTs, which are routine and repetitive in nature, based on the criteria approved by the Board of Directors within the overall framework of the said Policy. Al l RPTs under the omnibus approval are placed before the Audit Committee periodically for its review and approval.

The Company has not entered into any contract or arrangement with related parties, as referred to in Section 188(1) of the Companies Act, 2013 (as amended) during the FY 2023-24. Accordingly, the disclosure of RPTs in Form AOC-2, as required under Section 134(3)(h) of the Companies Act, 2013 (as amended), is not applicable to your Company. Details of Related Party as per Ind AS-24 is given in Note No. 37 to the Standalone Financial Statements.

Requisite details on RPTs have also been furnished in the 'Report on Corporate Governance' forming part of this Report. MEETINGS OF THE BOARD AND COMMITTEES THEREOF

(i) Board Meeting:

Four (4) meetings of the Board of Directors were held during the year.

(ii) Committees of the Board:

Presently, there are seven Committees of the Board:

1. Audit Committee (AC);

2. Stakeholders' Relationship Committee (SRC);

3. Nomination and Remuneration Committee (NRC);

4. Corporate Social Responsibility (CSR) Committee;

5. Risk Management Committee (RMC);

6. Project Committee (PC); and

7. Human Resource Development Committee (HRDC).

Details of composition of the Board and its Committees, which are mandatorily required to be constituted, major Terms of Reference of these Committees, Meetings held during the year and attendance of Directors at such Meetings are furnished in the 'Report on Corporate Governance' forming part of this Report.

All the recommendations made by the Audit Committee were accepted by the Board.

REMUNERATION POLICY FOR DIRECTORS / KEY MANAGERIAL PERSONNEL / SENIOR MANAGEMENT AND OTHER EMPLOYEES

The Company has formulated a Nomination, Remuneration & Evaluation Policy as required under Section 178 of the Companies Act, 2013 (as amended) and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is available on the Company's website at web link

https://www.qnfc.in/wp-content/uploads/2021/04/GNFC-NRC-Policy 11815.pdf. The details of remuneration paid to Directors / Key Managerial Personnel / Senior Management and other employees are furnished in the Report on Corporate Governance, forming part of this Report.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Company has carried out annual performance evaluation of the Board, its Committees and Individual Directors in line with the provisions of the Act, as amended and the SEBI Listing Regulations, as amended.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Chairman of the Company

Shri Raj Kumar, IAS, was nominated and appointed as Chairman of the Company by the Govenrment of Gujarat w.e.f. August 1,2023.

Retirement of Director(s) by Rotation

In terms of Section 152 of the Companies Act, 2013 (as amended), Shri Kamal Dayani, IAS will retire by rotation at this AGM and being eligible, offers himself for re-appointment.

Declaration by Independent Directors

In terms of Section 149(7) of the Companies Act, 2013 (as amended) and the SEBI Listing Regulations, the Company has received necessary declarations for the FY 2024-25, from all Independent Directors, to the effect that they meet with the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 (as amended) and Regulation 16(1)(b) of the SEBI Listing Regulations, as amended.

Change in Directorate

The information relating to change in Directorate during the year is furnished in the 'Report on Corporate Governance' forming part of this Report.

Your Directors place on record their deep sense of appreciation for the valuable services rendered by the outgoing Director(s) and take this opportunity to welcome the incoming Director(s).

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013 (as amended), read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('the Rules'), as amended, all unpaid or unclaimed dividends which were required to be transferred by the Company to the IEPF were transferred to IEPF Authority. The Company has also transferred 4,13,493 shares held by 6,266 Shareholders in respect of which dividend amount remained unpaid / unclaimed for a consecutive period of seven years or more to IEPF Authority within sti pulated ti me.

The detai ls of unpaid / unclaimed dividend and the shares transferred to IEPF Authority are available on the Company's website at web link - https://www.qnfc.in/about-us/share-holders/information-reqardinq-transfer-of-shares-to-iepf-authority

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Requisite detai ls have been furnished in the "Report on Corporate Governance" forming part of this Report.

RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has in place Risk Management Policy (RMP). Under this Policy, various risks pertaining to Operations & Maintenance of the Plants, financial and other organizational risks are assessed, evaluated and continuously monitored for taking effective steps for its mitigation.

In compliance with Regulation 21 of the SEBI Listing (Amendment) Regulations, 2018, the Board of Directors has constituted a Risk Management Committee (RMC) defining its Terms of Reference (ToR), i n its Meeting held on February 11,2019. The details as to the constitution of RMC and its major ToR included in the "Report on Corporate Governance" are forming part of this Report.

The Risk Management Report, inter-alia, containing major anxiety areas of risks and action plans for its mitigation and noteworthy risk management activities carried out by the Company is put up before the Meetings of the Audit Committee, RMC and the Board of Directors, from time to time, for its / their review.

The Company has adequate internal controls commensurate with the nature of business, size and complexity of its operations. Details of internal control system and its adequacy are furnished in "Management Discussion & Analysis Report", forming part of this Report.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013 (as amended), the Draft Annual Return in Form

MGT-7 as on March 31,2024 is available on the Company's website at https://www.qnfc.in/statistics-annual-report/#1661838618831-f3392cb8-b234

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the requi rements of Section 135 of the Companies Act, 2013 (as amended) read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended), the Company has constituted a Corporate Social Responsibility (CSR) Committee and formulated a CSR Policy. As a responsible corporate, the Company has been undertaking societal activities / projects directly as well as through its CSR arm - Narmadanaqar Rural Development Society (NARDES) in the major areas which are covered in the CSR Policy and Schedule-VII to the Companies Act, 2013 (as amended).

The Company's CSR Policy is available on the website of the Company at web link https://www.qnfc.in/wp-content/uploads/2021/04/CSR-Policy-Revised 17-05-2021.PDF

As per the provisions of Section 135 of the Companies Act, 2013 (as amended), the statutory amount (i.e. 2% of the average net profits of the last three Financial Years) that was required to be spent by the Company for various CSR activities/projects during the FY 2023-24 was Rs. 34.23 Crores. The Company had actually spent Rs. 22.70 Crores, towards various CSR Activities/Projects during the FY 2022-23 and transferred Rs. 11.53 Crores to Unspent CSR Account of FY 2023-24 as per Section 135(6) of the Companies Act, 2013 (as amended). During the FY 2023-24, no amount (being excess spending of previous FY) was available for set off in pursuance of sub-rule (3) of Rule 7 of the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Pursuant to Rule 12 of Companies (Accounts) Rules, 2014, the Company has filed statutory Form CSR-2 for the FY 2022-23 on April 6, 2024.

Annual Report on CSR activities as required under Rule 9 of the Companies (Accounts) Rules, 2014 read with Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 (as amended) is enclosed as Annexure - A to this Report.

VIGIL MECHANISM-CUM-WHISTLE BLOWER POLICY

The Company has formulated a "Vigil Mechanism-cum-Whistle Blower Policy" for its Directors and Employees to report their genuine concerns, details of which have been furnished in the "Report on Corporate Governance", forming part of this Report.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE

Management Discussion & Analysis on the business and operations of the Company and the Report on Corporate Governance together with the following are attached herewith and form part of this Annual Report:

• Declaration by Managing Director regarding compliance of the Company's Code of Conduct by the Board Members and Senior Management Personnel;

• Certificate by Practicing Company Secretary certifying:

(i) compliance of the conditions of Corporate Governance by the Company; and

(ii) that none of the Directors of the Company 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 Statutory Authority.

BUSINESS REPONSIBILITY AND SUSTAINABILITY REPORT

Business Responsibility and Sustainability Report (BRSR) is based on Environment, Social and Governance (ESG) norms and Sustainable Development Goals. Your Company has strived to actualize the principles of responsible business conduct in letter and spirit and is conducting its business in a manner that creates shared values for all Stakeholders whilst aiming to achieve the best targets on ESG fronts.

The BRSR is appended as Annexure - B forming part of this Report.

INFORMATION REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As required under Section 134(3)(m) of the Act, as amended read with Rule 8(3) of the Companies (Accounts) Rules, 2014, requisite information on conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is furnished in the enclosed Annexure - C forming part of this Report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

There were 2,134 permanent employees of the Company as of March 31,2024. The disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Companies Act, 2013 (as amended) and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the 'Rules') have been appended as Annexure - D forming part of this Report. Details of employee remuneration as required under the provisions of Section 197 of the Act, as amended and Rules 5(2) and 5(3) of the Rules are available to any Shareholder for inspection on request. If any shareholder is interested in obtaining a copy thereof, such shareholder may write to the Company Secretary, where upon a copy would be sent through email only.

AUDITORS AND AUDITORS' REPORT

Pursuant to the provisions of Section 139 and other applicable provisions of the Companies Act, 2013 (as amended) and relevant Rules made there under, the Shareholders of the Company had at their 45^th AGM held on September 23, 2021 appointed M/s. Suresh Surana & Associates LLP, Mumbai, Chartered Accountants, a member firm of RSM International as Statutory Auditors of the Company for a term of five (5) consecutive years, unti l conclusion of the forthcoming 50^th AGM to be held in the year 2026, on such remuneration as may be determined by the Board of Directors, based on the recommendation of the Audit Committee plus certification fees, applicable taxes and reasonable out of pocket expenses actually incurred by them during the course of Audit.

Notes to Financial Statements (Standalone and Consolidated) forming part of Audited Financial Statements for FY 2023-24 are self- explanatory and need no further explanation. The Auditors' Reports on Audited Financial Statements (Standalone and Consolidated) does not contain any Modified Opinions.

COST AUDITOR

As per Section 148 of the Act, as amended read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the Company is required to prepare, maintain as well as have the audit of its cost records conducted by a Cost Accountant and accordingly, it has made and maintained such cost accounts and records. The Board of Directors, on the recommendation of the Audit Committee, has appointed M/s. Dhananjay V. Joshi & Associates, Cost Accountants (Firm Registration No: 000030) as the Cost Auditor of the Company for the FY 2024-25 at a remuneration of Rs. 1,00,000/- (Rupees One Lakh only) p.a. plus out of pocket expenses and statutory levies.

M/s. Dhananjay V. Joshi & Associates, have confirmed that they are free from disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act and that the appointment meets the requirements of the Act. They have further confirmed their independent status and an arm's length relationship with the Company.

The remuneration payable to the Cost Auditor is required to be placed before the Shareholders in General Meeting for ratification. Accordingly, a resolution seeking Shareholders' ratification for the remuneration payable to M/s. Dhananjay V. Joshi & Associates, forms part of the Notice of 48^th AGM, forming part of this Annual Report.

SECRETARIAL AUDITOR

In pursuance of Section 204 of the Act and the Rules made thereunder, the Board of Directors, in its meeting held on August 7, 2023 had appointed CS J. J. Gandhi, Practicing Company Secretary of M/s. J. J. Gandhi & Co., Vadodara, as Secretarial Auditor for the FY 2023-24. The Secretarial Audit Report in Form MR-3 in respect of Secretarial Audit work carried out by him for the

FY 2023-24 is enclosed at Annexure - E forming part of this Report. The said Report does not contain any qualification, reservation or adverse remark.

DIVIDEND DISTRIBUTION POLICY

As per Regulation 43A of the SEBI Listing Regulations, Dividend Distribution Policy of the Company inter-alia, set-out the various parameters and circumstances that are to be taken into account while determining the distribution of Dividend to the Shareholders and / or retaining profits by the Company. The said Policy is enclosed at Annexure - F forming part of this Report and the same is also available on the Company's website at web link https://www.qnfc.in/wp-content/uploads/2021/04/Dividend-Distribution-Policy.pdf

DISCLOSURE ON COMPLIANCE OF SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI), New Delhi and approved by the Central Government.

DETAILS OF FRAUDS, IF ANY, REPORTED BY THE AUDITORS

During the year, there was no fraud reported by Auditors under Section 143(12) of the Companies Act, 2013 (as amended). FIXED DEPOSITS

The Company has not invited or accepted any fixed deposits during the year.

CHARGE

The Company, based on observation received from Secretarial Auditor during their Secretarial Audit, has replied that charges aggregating to Rs. 14.15 Crores are appearing as "Open" as of March 31,2024 which were executed with Banks (the lender) in relation to securing repayment of loan facility related to year 1985 to 1990. The Company is in process to obtain the No Objection Certificates from Banks. Once the same is received, the Company will file the "Satisfaction of Charge" with Registrar of Companies (ROC).

INSURANCE

The properties, insurable assets and interest of the Company such as Buildings, Plant & Machinery and Stocks, amongst others, are adequately insured. As required under the Public Liability Insurance Act, 1991, the Company has also taken necessary insurance cover.

INDUSTRIAL RELATIONS

The Industrial Relations within the Company remained cordial and harmonious throughout the year. It has helped the Company to achieve satisfactory performance on Operational and Financial fronts and in achieving targets.

Your Directors place on record their sincere appreciation for the dedicated and committed contributions made by all employees at all levels for the sustainable growth of the Company.

ACKNOWLEDGEMENTS

The Board of Directors wish to place on record their deep sense of gratitude for the kind support and guidance received from the Government of India and the Government of Gujarat. Your Directors also take this opportunity of extending their wholehearted thanks to all our Consumers, Dealers, Customers, Banks, Business Associates, SEBI, NSDL, CDSL, Stock Exchanges and other Agencies for their continued support and co-operation and valued Investors for strengthening their bond with the Company.