Kajaria Ceramics Ltd

Dear shareholders,

Your Directors are pleased to present the 38^th Annual Report together with the audited financial statements of your Company for the financial year ended 31^st March 2024.

Financial Results

The Company's financial performance for the financial year ended on 31^st March 2024 is summarised below:

(B in Crores)

Financial highlights and state of Affairs of the Company

The company achieved a commendable performance in considerable volatile environment. Our top line surpassed B 4,500 Crore during a period where tile offtake was tepid. The Company attained a year-on-year volume and revenue growth of 6% and 4% respectively, underscoring the resilience of the organisation and the strength of the brand.

Our focus on value addition and dedicated efforts towards cost optimisation helped overcome the price erosion owing to throttled demand. Your Company reported a Net Profit of B 422 Crore in FY24 – an increase of 23% over the previous year.

The State of Affairs of the Company is detailed in the ‘Management Discussion and Analysis' section, which forms part of this report.

Outlook

Having retained its position as the fastest-growing major economy for a consecutive year, India seems poised for another year of robust economic progress. The positivity in the external environment reduced inflation, and stable interest rates have strengthened consumer confidence and suggest a promising year.

The resurgence in the real estate sector is expected to gain momentum in the current year with a strong project launch pipeline for residential and commercial projects. Moreover, with economic prosperity cascading to tier 2 and 3 cities, considerable business opportunities should emerge from these locations.

Furthermore, the Government's sustained efforts on ideating and developing world-class infrastructure which is most prominently visible in airport development and railway station modernisation is expected to drive demand over the medium term. Accelerated investment by the private sector in infrastructure creation evidenced in extending hospital chains to Tier 2 and 3 cities should provide impetus to the demand for tiles and other products.

Mindful of the widening opportunities, we are making significant investments in augmenting capacities for all our product verticals. Moreover, we are also extending our footprint beyond the domestic boundaries to explore and capitalise on growth opportunities overseas.

Dividend

Your Directors have recommended to the shareholders a final dividend of B 6/- (i.e. 600%) per equity share of B 1/- each fully paid-up for the financial year ended March 31, 2024, if approved at the ensuing Annual General Meeting (‘AGM').

During the year 2023-24, the Company has also paid Interim Dividend of B 6/- (i.e. 600%) per equity share of B 1 each fully paid-up aggregating to B 95.55 Crores thereby making the total Dividend (Interim Dividend & Final Dividend) of B 12/- per equity share of B 1/- each fully paid-up (previous year B9/- per equity shares of B1/- each fully paid-up) aggregating to B 191.11 Crores.

Consolidated Financial Statements

The Company adopted Indian Accounting Standard (Ind-AS) from 1^st April, 2016 and accordingly, the Consolidated Financial Statements have been prepared in accordance with the Accounting Standard notified under Section 133 of the Companies Act, 2013 (‘the Act') and the relevant rules issued thereunder read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (‘the Listing Regulations') and the other accounting principles generally accepted in India. The Consolidated Financial Statements form part of the Annual Report.

There are no material changes and commitments affecting the financial position of the Company and also no change in the nature of business of the Company.

Holding, Subsidiaries, Associate, Joint Venture Companies and their performance

After the closure of the year 2023-24, Keronite Tiles Private Limited has become a subsidiary of the Company, on May 20, 2024.

A report on performance and financial position (Form AOC-1) of each of the subsidiaries / joint venture as per the Act is provided as Annexure-1.

Share Capital

As on 31^st March, 2024, the Authorised Share Capital of the Company is B 154,10,00,000 (Rupees One Hundred Fifty Four Crores Ten Lacs only) divided into 77,00,00,000 (Seventy Seven Crores) Equity Shares of B 1/- each (Rupee One Only) aggregating to B77,00,00,000 (Rupees Seventy Seven Crores Only) and 77,10,000 (Seventy Seven Lacs Ten Thousand) Redeemable Preference Shares of B 100/- each (Rupees One Hundred Only) aggregating to B 77,10,00,000 (Rupees Seventy Seven Crores Ten Lacs Only).

During the financial year 2023-24, the Company's paid up share capital has been increased by issue and allotment of 25,750 equity shares of B 1/- each pursuant to the Kajaria Employee Stock Option Scheme 2015. Accordingly, as on 31^st March, 2024, the paid-up and subscribed share capital of the Company is 15,92,58,300 equity shares of B 1 each.

The Company has not issued shares with differential voting rights or sweat equity shares during the financial year 2023-24. As on 31^st March, 2024, none of the Directors of the Company hold any instruments convertible into equity shares of the Company.

Employee Stock Option Scheme

Kajaria Employee Stock Option Scheme 2015 (‘ESOP Scheme 2015') was approved by the shareholders of the Company on 7^th September, 2015 for issue and allotment of options exercisable into not more than 10,62,000 equity shares of B 1 each (Originally the ESOP Scheme 2015 was for 5,31,000 equity shares of B 2 each) to eligible employees of the Company and its subsidiaries. The shareholders of the Company had further increased the stock options under the ESOP Scheme 2015 from 10,62,000 to 15,87,000 equivalent to 15,87,000 equity shares of B 1/- each by addition of 5,25,000 options on 24^th March, 2022.

The ESOP Scheme 2015 is administered by the Nomination and Remuneration Committee of the Board of Directors (‘the Board') of the Company. The exercise period for 4,58,000 options granted on 20^th October 2015 to the employees of the Company and its subsidiaries in 1^st Tranche has been completed on 19^th October, 2023.

The Company had further granted 8,37,600 options equivalent to 8,37,600 equity shares of B 1/- each to the eligible employees of the Company and its subsidiaries in 2^nd Tranche and 3^rd Tranche. Details regarding the ESOP Scheme 2015 are given at Note No. 43 to the financial statements.

In 2^nd Tranche and 3^rd Tranche under the ESOP Scheme 2015, total 86,500 equity shares of B 1 each (55,500 equity shares during the year 2023-24 and 31,000 equity shares during the year 2022-23) have been forfeited/lapsed due to resignation/ retirement of ESOP Option holders.

During the year under review, there are no material changes in the ESOP Scheme 2015 and the same is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (‘ESOP Regulations'). The disclosures under Regulations 14 of ESOP Regulations is uploaded on the Company's website viz.: https://www.kajariaceramics.com/ pdf/disclosure_pursuantfito_Reg_14_of_SEBI_SBEB_n_SE_ Reg_2021_for_FY_2023_24.pdf

Transfer to Reserves

During the year under review, there is no transfer of fund to the Company's General Reserve Account.

Directors' Responsibility Statement

In terms of the provisions of the Companies Act, 2013, the Directors confirm that:

i) In the preparation of the annual accounts for the year ended on 31^st March, 2024, the applicable accounting standards have been followed and no material departures have been made from the same;

ii) Appropriate accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31^st March, 2024 and of the profit of the Company for the period ended 31^st March, 2024;

iii) Proper and sufficient care has been taken 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;

iv) The annual accounts have been prepared on a going concern basis;

v) The Company is following up the proper Internal financial controls and such internal financial controls are adequate and are operating effectively; and

vi) The Company has devised proper systems to ensure the Compliance with the provisions of all the applicable laws and that such systems are adequate and operating effectively.

Corporate Governance

The Company has complied with the Corporate Governance requirements as stipulated under the Listing Regulations. A separate section on corporate governance, along with a certificate from M/s Chandrasekaran Associates, Company Secretaries confirming the compliance, is annexed and forms part of the Annual Report.

Management Discussion and Analysis Report

Management Discussion and Analysis on matters related to the business performance as stipulated in the Listing Regulations, is given as a separate section in the Annual Report.

Related Party Transactions

For all related party transactions, prior approvals of the Audit Committee and the Board of Directors, as may be required under the applicable laws, were obtained. Further, the omnibus approvals of Audit Committee and the Board of Directors, as may be required under the applicable laws, are usually obtained on yearly basis, which are of a foreseen and repetitive nature and such approval is in the interest of the Company. The transactions entered into, pursuant to the omnibus approvals so granted, were placed before the Audit Committee by way of a statement giving details of all related party transactions for its review. All related party transactions are disclosed in Note No. 40 to the financial statements. The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Act in the prescribed Form AOC-2 is annexed as Annexure- 2.

The Related Party Transactions Policy is uploaded on the Company's website i.e. https://www.kajariaceramics.com/pdf/ Related Party Transaction Policy.pdf

Corporate Social Responsibility Initiatives

In terms of provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 [‘the CSR Rules'], the Company has formulated a Corporate Social Responsibility Policy (‘CSR Policy') indicating the activities to be undertaken by the Company. The constitution of the Corporate Social Responsibility Committee (‘CSR Committee') is disclosed in the Annual Report on CSR Activities as an Annexure - 3 of this report.

The Corporate Social Responsibility (‘CSR') Policy may be accessed on the Company's website i.e. https://www. kajariaceramics.com/pdf/CSR_Policy.pdf

Your Company strives to make a difference in the lives of people with a special focus on neighbouring and local areas of the Company's manufacturing locations. Your Company has implemented various CSR programmes/projects which made positive impacts mainly in the areas of health, sanitation, social relief, environment, sports and education, etc. During the year under review, the CSR programmes/activities initiated by the Company includes taking steps for Swachh Bharat, preventive health care, constructing sanitation facilities in the schools, etc. near the manufacturing facilities, contributing to the education, social welfare, environment, sports, protection of national heritage, etc. These CSR initiatives are implemented directly and/or through trusts/societies/NGOs. These projects/ activities are also in accordance with Schedule VII of the Act.

The Annual Report on CSR activities as prescribed under the CSR Rules is set out asAnnexure-3, forming part of this Report.

During the year 2023-24, the Company has incurred CSR expenditures of B842.36 Lacs and B 60.24 Lacs are yet to be incurred to the ongoing CSR activity(ies)/project(s), as not fully completed during the financial year 2023-24. The said CSR activity(ies)/project(s) will be completed during the financial year 2024-25. Further, the excess CSR expenditures of B7.92 Lacs incurred in previous years has also been utilised towards the CSR obligations of the Company for the financial year 2023-24. Accordingly, the actual CSR obligation of the Company for the financial year 2023-24, was as under: ( B . in Lacs)

However, the Company has incurred B 902.60 Lacs [i.e. B 842.36 Lacs and B 60.24 Lacs] during the financial year 2023-24. Accordingly, the Company has incurred excess amount of CSR expenditures of B 1.52 Lacs, which would be available to set-off the CSR obligations of the Company as per the provisions of the Act read with CSR Rules.

The Company has also completed the ongoing CSR project/ activity of B 88.10 Lacs pertaining to the financial year 2022-23.

Risk Management

Your Company understands the importance of various risks faced by it and has adopted a Risk Management Policy which establishes various levels of accountability within the Company. The Company has also constituted a Risk Management Committee which ensures that the Company has appropriate and effective risk management systems which carries out risk identification, assessment and ensures that risk mitigation plans are in place. The Risk Management Committee identifies, from time to time, various risks to which the Company is subject to and has accordingly, aligned the concerned departments to take the necessary mitigating steps. Risk management has been inter-linked with the annual planning exercise where each function and business carries out fresh risk identification, assessment and draws up treatment plans.

A Risk Management Policy in terms of provisions of Section 134(3)(n) of the Act read with the Listing Regulations is in place and is uploaded on the Company's website i.e. https:// www.kajariaceramics.com/pdf/Risk_Management_Policy.pdf

Internal Control Systems and their adequacy

The Company believes in a strong internal control framework, which is necessary for business efficiency, management effectiveness and safeguarding assets. The Company has a well-defined internal control system in place, which is designed to provide reasonable assurance related to operation and financial control. The Management of the Company is responsible for ensuring that Internal Financial

Control has been laid down in the Company and that controls are adequate and operating adequately.

Internal Audit of the Company's operations are carried out by the Internal Auditors and periodically covers different areas of business. The audit scope, methodology to be used, reporting framework are defined well in advance, subject to consideration of the Audit Committee of the Company. The Internal Auditors evaluates the efficacy and adequacy of internal control system, its compliance with operating systems and policies of the Company and accounting procedures at all the locations of the Company. Based on the report of the Internal Auditors, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are placed before the Audit Committee of the Company. The Internal Audit also continuously evaluates the various processes being followed by the Company and suggests value addition, to strengthen such processes and make them more effective.

Internal Controls with respect to financial statements

The Company has an adequate system of internal financial control in place with reference to financial statements. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Directors and Key Managerial Personnel

Mr. H. Rathnakar Hegde has completed his tenure as the Independent Director of the Company on March 31, 2024 and accordingly, he ceased to be the Independent Director of the Company w.e.f. April 1, 2024.

Mr. Rajender Mohan Malla has been appointed as the Independent Director of the Company for the period of five consecutive years effective from April 1, 2024 upto March 31, 2029 and the shareholders of the Company have accorded their approval(s) through postal ballot on June 20, 2024 for appointment of Mr. Rajender Mohan Malla as the Independent Director of the Company.

The shareholders of the Company have also accorded their approval(s) through the postal ballot on June 20, 2024, for continuation of Mr. Dev Datt Rishi and Mr. Rajender Mohan Malla as the Non-executive Director and the Independent Director of the Company, respectively, even after attaining the age of seventy-five years.

Mr. Chetan Kajaria and Mr. Rishi Kajaria, who are liable to retire by rotation, have offered themselves for re-appointment(s) as the Director(s) at the ensuing AGM of the Company. The Board recommends for their re-appointment(s) in the ensuing AGM of the Company.

All Independent Directors of the Company have given declarations that they meet the criteria of independence as prescribed under Section 149(6) of the Act read with Regulations 16(1)(b) & 25(8) of the Listing Regulations and in the opinion of the Board of the Company, all Independent Directors of the Company have integrity, expertise, experience and proficiency as prescribed under the Companies (Appointment and Disqualification of Directors) Rules, 2014 read with the Companies (Accounts) Rules, 2014 (including amendment thereof ).

All Directors of the Company have also given declarations that they are not debarred from holding the office of Director by virtue of any SEBI order or any other such statutory authority as required under the Circular dated 20^th June, 2018 issued by BSE Limited and National Stock Exchange of India Limited.

Further, except as stated above there is no other change in the composition of the Directors and Key Managerial Personnel of the Company.

Performance Evaluation

The Board of the Company, on recommendation of the Nomination and Remuneration Committee and in line with the Nomination and Remuneration Policy of the Company, has carried out an annual performance evaluation of the Board as a whole, its Committees and all Directors including the Chairman.

The manner in which the annual performance evaluation has been carried out has been explained in the Corporate Governance Report.

Nomination and Remuneration Policy

On the recommendation of the Nomination and Remuneration Committee, the Board has framed a policy for selection and appointment of Directors, Senior Management including Key Managerial Personnel and their remuneration. The Nomination and Remuneration Policy includes the criteria for determining qualification, positive attributes, independence, etc. is placed on the Company's website, i.e. https://www.kajariaceramics. com/pdf/Nomination_Remuneration_Policy.pdf

Details of remuneration under Section 197 of the Act and read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is stated in Annexure- 4, which forms part of this report.

Statutory Audit

M/s Walker Chandiok & Co LLP, Chartered Accountants, (Firm Registration Number 001076N/N500013), the Statutory Auditors of the Company has given their report(s) on the financial statements (Standalone & Consolidated) of the Company for the financial year ended 31^st March, 2024, which form part of the Annual Report. There is no qualification, reservation, adverse remark, comments, observations or disclaimer given by the Statutory Auditors in their report(s). There were no frauds reported by the Statutory Auditors under the provisions of Section 143 of the Act.

M/s Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration Number 001076N/N500013), were re-appointed as the Statutory Auditors of the Company at the 36^th AGM of the Company held on 23^rd September, 2022, for second term of five consecutive years to hold office from the conclusion of the 36^th AGM of the Company till the conclusion of the 41^st AGM of the Company. Hence, the tenure of the existing Statutory Auditors of the Company would expire at the conclusion of the 41^st AGM of the Company.

M/s Walker Chandiok & Co LLP, Chartered Accountants are eligible to continue as the Statutory Auditors of the Company for the remaining term in accordance with the provisions of the Act read with rules made thereunder and applicable laws.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s Chandrasekaran Associates, Company Secretaries, Delhi were appointed as the Secretarial Auditors, to undertake the Secretarial Audit of the Company for the year ended 31^st March 2024. The Report of the Secretarial Audit is annexed herewith as Annexure- 5.

There are no qualifications, reservations, adverse remarks, comments, observations or disclaimer made by the Secretarial Auditors in their report. There were no frauds reported by the Secretarial Auditors under the provisions of Section 143 of the Act.

Disclosures under the Companies Act, 2013 and rules made thereunder: Annual Return

The Annual Return in Form MGT-7 is available at https://www. kajariaceramics.com/pdf/Annual_Return_Form_2023-24.pdf

Compliance of the Secretarial Standards

During the year under review, the Company has complied with the applicable provisions of the Secretarial Standard on meeting of the Board of Directors (‘SS-1') and the Secretarial Standard on General Meetings (‘SS-2') issued by the Institute of Company Secretaries of India.

Particulars of Loans, Investments and Guarantees

Particulars of Loans, Investments and Guarantees, covered under the provisions of Section 186 of the Act are given in the Notes Nos. 6, 7 and 40 to the Financial Statements.

Conservation of energy, technology absorption and foreign exchange earnings & outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under the Act are provided in Annexure - 6 to this report.

Meetings of Board

The Board of the Company met six (6) times during the financial year 2023-24 on 16^th May, 2023, 26^th July, 2023, 28^th August, 2023, 20^th October, 2023, 28^th December, 2023, 31^st January, 2024. Details of the meetings of the Board of Directors held during the financial year 2023-24 and attendance thereof are disclosed in the Corporate Governance Report.

Audit Committee

The Composition of Audit Committee is disclosed in the Corporate Governance Report. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has established a Vigil Mechanism for the Directors and Employees of the Company by adopting the Whistle Blower Policy to report about the genuine concerns, unethical behaviour, fraud or violation of Company's Code of Conduct and leakage/suspected leakage of Unpublished Price Sensitive Information with respect to the Company. The Whistle Blower Policy may be accessed on the website of the Company i.e. https://www.kajariaceramics.com/pdf/whistel_ blowing_policy.pdf

Maintenance of Cost Records

The Company is not required to maintain of cost records as per sub-section (1) of Section 148 of the Act.

Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal), Act, 2013

The Company has in place a Policy on Prevention of Sexual Harassment at the Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. This Policy may be accessed on the Company's website i.e. https://www. kajariaceramics.com/pdf/prevention_of_sexual_harassment_ at_workplace.pdf

Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, Contractual, Temporary and Trainees) are covered under this Policy. The Company has not received any sexual harassment complaints during the year 2023-24 nor any complaint is pending at the end of the year 2023-24.

Particulars of Employees

The information required pursuant to Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is attached as Annexure-7 to this Report.

Deposits

The Company has not invited/accepted any deposit within the meaning of Section 73 of the Act and the rules made thereunder.

Proceeding under Insolvency and Bankruptcy Code, 2016

No application or any proceeding has been filed against the Company under the Insolvency and Bankruptcy Code, 2016, during the financial year 2023-24.

Details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof

The Company has not made any one-time settlement, therefore, the same is not applicable.

Significant and material orders passed by the regulators or courts or tribunals

There is no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

Cautionary Statement

Statements in this Directors' Report & the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Company's operations include raw material/ fuel availability and its prices, cyclical demand and pricing in the Company's principle markets, changes in the Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

Appreciation and Acknowledgement

The Directors take this opportunity to express their deep sense of gratitude to the Banks, Central and State Governments and their Departments and the Local Authorities for their continued guidance and support.

Your Directors would also like to record their appreciation for the support and cooperation your Company has been receiving from its suppliers, dealers, business partners and others associated with the Company.

Your Directors place on record their sincere appreciation to the employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain as industry leader.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.