Somany Ceramics Ltd

Board's Report

Dear members,

Yours Directors have pleasure in presenting the 56th Board's Report together with the Annual Audited Financial Statements of the Company for the year ended 31 March, 2024.

FINANCIAL HIGHLIGHTS

FINANCIAL REVIEW

(Thefinancial discussion is based on Standalone Financial Statements)

Your Company witnessed a challenging year and experienced a very slow market demand environment. Despite a weak market demand particularly in the second half of the financial year, the revenue increased by 3.8% to Rs.2,53,448.07 Lakhs from Rs.2,44,270.07 Lakhs in the previous financial year. The Profit before Interest, Depreciation and Tax, Profit before Tax (PBT) after Exceptional items and Profit after Tax (PAT) for the year under review were Rs.19,723.94 Lakhs, Rs.14,403.79 Lakhs and Rs.10,377.09 Lakhs respectively.

On the Balance Sheet front, your Company's Net Worth decreased to Rs.72,316.84 Lakhs in 2023-24 as compared to Rs.78,320.80 Lakhs in 202223 primarily on account of buyback of equity shares. The Company's total debt decreased to Rs.1,401.39 Lakhs in 2023-24 as compared to Rs.17,612.91 Lakhs during 2022-23 on account of repayment of term loan and reduction in short term borrowings. The Net block (including capital work-in-progress) of your Company decreased to Rs.45,735.62 Lakhs during 2023-24 as compared to Rs.46,247.79 Lakhs during 2022-23.

The long-term investment of your Company increased to Rs.30,716.34 Lakhs in 2023-24 from Rs.13,159.78 Lakhs in 2022-23 primarily due to investments in equity shares and preference shares of Somany Max Private Limited and Somany Piastrelle Private Limited. During the year under review, Somany Max Private Limited has set up a manufacturing plant of large format tiles/ slabs.

There was reduction in net current assets to Rs.1,433.74 Lakhs during 2023-24 from Rs.27,500.48 Lakhs during 2022-23 primarily on account of the reduction in surplus cash which was deployed by your Company towards the buyback of equity shares of the Company and increased trade payables.

CONSOLIDATED FINANCIAL STATEMENTS

As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the consolidated financial statements have been prepared in accordance with applicable Accounting Standards. The audited consolidated financial statements together with Auditors' Report forms part of this Annual Report.

The consolidated net profit of your Company was Rs.9,688.94 Lakhs in the year under review compared to Rs.7,149.16 Lakhs in the previous year.

Access to Capacity

During the year under review, your Company added capacity of 4 msm per annum of slabs/ large format tiles in Somany Max Private Limited, Subsidiary Company, which is a state-of-the-art plant and our first line with CONTINUA+ cutting edge technology. It was a greenfield project and post successful commissioning; it commenced commercial production in January, 2024. As a result, the access to tile capacity increased to ~80 million square meters (msm) divided amongst its own plants (33.45 msm), subsidiaries/associates (28.12 msm) and other outsourcing tie- ups (~18 msm).

In the Bathware segment, your Company had manufacturing capacity of 0.78 million pieces per annum of sanitaryware and 1.13 million pieces per annum of bath fitting items in its subsidiaries.

Capital Expenditure

Your Company continued to invest in expanding and upgrading its plant and machinery and infrastructure. Gross block of fixed assets (including capital work-in-progress) increased by Rs.4,552.11 Lakhs during the financial year as compared to Rs.5,130.64 Lakhs in the 2022-23 on account of addition in fixed assets.

Branding and Distribution

Reflecting on the 2023-24 financial year, we embraced lessons from the past and forged ahead with optimism. Despite the ever-changing market dynamics, we remained vigilant, guiding our strategies with a blend of caution and determination.

This financial year began on a high note as our VC Shield tiles received the prestigious Superbrand status. This rare accolade is a testament to the unigue and patented technology, endorsed by millions of satisfied customers.

To bolster our brand's presence and engage our target audience, we implemented a comprehensive 360-degree strategy. This involved a focused approach using television and digital channels to increase awareness and consideration, alongside outdoor and hyperlocal marketing efforts to drive conversion.

We started off the financial year 2023-24 with a campaign in the India Premier League (IPL), associating with Lucknow Super Giants franchise team, as their official partner with our logo on the caps and helmets. We did an aggressive social media campaign and also aired our brand television commercial on connected TV. With around 40 days of activities, we created array of posts, from contest announcements to match schedules and winner celebrations. Our campaign reach skyrocketed to an impressive 10 million reach and 90 million impressions on CTV.

During the year under review, with a grand launch at Mumbai, we unveiled our highly anticipated 15mm collection of luxury slabs, COVERSTONE 15. This was followed up with extensive BTL activities and outreach programs, innovative displays, sampling and several meets were also conducted to bring influencers and channel partners on board.

To enhance product awareness, we launched two TVCs and five products films featuring Bollywood superstars Salman Khan and Varun Sharma in the year. These advertisements showcased our premium bathware collection and SOMANY Max Coverstone 15, along with five digital films on EZYfix Adhesive, VC Shield Tiles, Slip Shield Tiles, Temp Shield, and Durastone. The campaign spanned across TV, digital, social media, and outdoor platforms, successfully reaching our target audience, and attracting new prospects.

Our strategy centered around reinforcing our presence in the news genre, securing a commanding share of voice spanning both Hindi Speaking Markets (HSM) and the vibrant southern markets of Tamil Nadu, Andhra Pradesh/ Telangana, and Kerala, culminating in a combined outreach of 64.7 million across pan India.

In the digital sphere, our aggressive campaigns focused on strategic targeting on YouTube and leveraging affinity targeting with Meta platform. Our always-on campaigns on social, display, and search, as well as performance marketing, have yielded good results. We initiated the digital marketing transformation process, working on WhatsApp integration, CRM integration, and hyperlocal marketing.

Furthermore, we strategically positioned ourselves in highly visible locations across seven selected airports to enhance brand imagery and create impactful outdoor advertising.

In the Bathware segment, comprehensive marketing support was consistently provided throughout the year, with a significant emphasis on below-the-line (BTL) efforts. We implemented branding initiatives in over 1000 stores and established 'Shop in Shop' (SIS) zones in more than 100 stores nationwide, creating dedicated display areas for bathware products. Additionally, we also actively participated in six exhibitions events across India. During the year we have also launched our retailer and sub dealer loyalty program "Rishtey" for Bathware which has seen significant enrolment and engagement throughout the year.

Our initiatives extended beyond marketing, with impactful social awareness campaigns such as National Tiles Day and Women's Day celebrations, highlighting our commitment to sustainability and recognizing the contributions of women in architecture.

Economy

Indian economy demonstrated its resilience amidst the various challenges at global level, which is largely attributed to higher public sector investment, robust financial sector & growth in non-food credit. This is further added by better performance in key sectors like manufacturing, mining, service industry, etc. As a result, Indian economy is expected to grow by 7.6% in 2023-24 as compared to 7.0% in 2022-23. Further, the focused and sizable infrastructure spent coupled with a host of initiatives to attract investments, improve governance, garner support for necessary reforms and instill hope among the people. Through a strong belief in 'Nation-First' principles, the Government effectively navigated national and international challenges. Building on this foundation of resilience and resolve, it is now augmenting efforts to bolster the strength and vitality of the Indian economy.

Indian economy is expected to maintain its growth momentum going forward and anticipated to grow at a consistent growth of 6.7% annually from 2024 to 2031, as per report by CRISIL. The stable interest rate is expected to decline in the near future subject to the inflation target and accordingly, the declined interest rate is likely to boost the growth rate. The remarkable improvement in unemployment rate taking it to historic low of 3.2% in 2022-23 coupled with substantial progress in infrastructure are signaling a continued upward trend of Indian economy and laying a robust path towards the third largest economy in the world.

Industry

India's ceramic tile industry has garnered global recognition due to its remarkable growth in export activity by registering more than tenfold increase in 10 years, taking the total tiles volume export to 590 million sguare meters in 2023 against 55 million sguare meters in 2013.This expansion has been consistent across all continents, highlighting the industry's increasing global presence.

The Government of India is actively involved in this endeavor, focusing on improving road networks, urban transport, water supply, housing, power infrastructure, smart cities, and urban management. These developments significantly impact the residential and commercial construction markets, consequently driving growth in the Indian ceramic tiles market in the foreseeable future.

The rapid urbanization in India would propel the growth of Indian real estate and tiles industry. This is a focal point for Indian Government as well and they are actively involved in this endeavor and relentlessly focusing on road network, urban transport, water supply, power infrastructure, housing units, urban management, etc. The urban population in India is expected to grow from 36% in 2023 to 50% in 2030. The Indian ceramic industry is on track to become the world's largest ceramic producer in the coming years. It has already established itself as a significant global player in the ceramic tile market, ranking second only to China in terms of manufacturing, consumption, and export.

The ceramictiles market in India is on a steady rise, driven by the resurgence of the construction sector following a slow demand environment. The construction industry plays a pivotal role in driving the expansion of the ceramic tiles market, which is aided by a number of initiatives taken by the Government such as Pradhan Mantri Awas Yojana (PMAY), Smart Cities Mission, allowing upto 100% FDI in specific segments in addition to some other measures like increase in limit of tax benefit on housing loan interest, reduction in stamp duty fees on registration, etc.

DIVIDEND

Based on the Company's performance during the period under review, your Board of Directors recommend a final dividend @ 150% i.e. Rs.3 per equity share of Rs.2/- each (face value) similar to the Dividend of 150% i.e. Rs.3 per equity share as in the previous year. This represents a payout ratio of 11.85% as against 14.1% in the previous year. This recommendation is subject to the approval of the Members at the ensuing 56^th Annual General Meeting ("AGM") of the Company.

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Dividend Distribution Policy is available on the website of the Company at the web link: https:// d3joggurzlvobr.cloudfront.net/investorrelations/d/i/dividend_distribution_ policy_scl.pdf.

RESERVES

During the year under review, no amount has been transferred to any reserve.

PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

SHARE CAPITAL

During the year under review, the Company had completed the Buyback of 14,70,588 fully paid-up Equity Shares of face value of Rs. 2 each ("Equity Shares") on a proportionate basis, through the tender offer route through Stock Exchange at a price of Rs.850/- per Equity Share payable in cash for an aggregate consideration of Rs.1,24,99,99,800/- (Indian Rupees One Hundred and Twenty-Four Crores Ninety Nine Lakhs Ninety Nine Thousand Eight Hundred only).

As on 31 March, 2024, the Authorized Share Capital of the Company stood at Rs.32,30,00,000/- divided into 16,15,00,000 equity shares of Rs. 2/- each.

The Issued, Subscribed and Paid up Equity Share Capital of the Company as on 31 March, 2024 was Rs.8,20,07,240/- divided into 4,10,03,620 equity shares of Rs.2/- each.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

During the year, the Board of Directors reviewed the affairs of its subsidiaries and associate Companies. In accordance with Section 129(3) of the Companies Act, 2013, the consolidated financial statements of the Company, incorporating financials of its subsidiaries and associate Companies, except for M/s Clean Max Ananta Private Limited (as stated in Annexure-1), which forms part of this Annual Report, have been prepared.

During the year under review, the Company has acquired 49% shareholding of Clean Max Ananta Private Limited ("CMAPL"), thereby CMAPL became the Associate of the Company w.e.f. 12 March, 2024.

Furthermore, your Company has disinvested its entire equity shareholding in its subsidiary company namely, Somany Fine Vitrified Private Limited ("SFVPL") with effect from 1 July, 2023 vide agreement dated 26 August, 2023, thereby SFVPL ceased to be subsidiary company.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements along with related information of the Company and audited accounts of each of its subsidiaries, are available on Company's website at https:// www.somanyceramics.com/. These documents will also be available for inspection at the registered office of the Company at 2, Red Cross Place, Kolkata - 700001, India between 3:00 p.m. and 5:00 p.m. in working days till the date of ensuing Annual General Meeting (AGM).

The statement required under Section 134 of the Companies Act, 2013 in respect of the Subsidiary, Associates and Joint Venture Companies in the form AOC-1 is provided at Annexure - 1 to this report, which comprises performance and financial position of each of Subsidiaries, Associates and Joint Venture. Refer para on Subsidiary Companies in the Corporate Governance Report for additional details.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All contracts/ arrangements/ transactions entered by the Company during 2023-24 with related parties were on an arm's length basis and in the ordinary course of business. During the year, pursuant to approval of shareholders dated 25 August, 2023, under Regulation 23 of the SEBI Listing Regulations, your Company entered into Material Related Party Transactions with its Subsidiary Company i.e. M/s Sudha Somany Ceramics Private Limited ("SSCPL"). Further, approval of the Audit Committee was sought for all related party transactions. Certain transactions which were repetitive in nature were approved through omnibus route.

All related party transactions were in compliance with the applicable provisions of the Companies Act 2013 and SEBI Listing Regulations. Details with respect to transaction(s) with the Related Party(ies) entered into by the Company during the reporting period are disclosed in the accompanying Financial Statements and the details pursuant to clause (h) of Section 134(3) of Act and Rule 8(2) of the Companies (Accounts) Rules, 2014are given in Form AOC-2 which is annexed as Annexure - 2.

Your Directors draw attention of the shareholders to the financial statements which set out related party disclosures. A Policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website https://d3joggurzlvobr.cloudfront.net/ investorrelations/r/p/rpt_policy_w.pdf.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Disclosure pursuant to Section 134(3)(g) of the Companies Act, 2013 regarding Particulars of Loans, Guarantees and investments covered under Section 186 of the Companies Act, 2013 are provided in the notes to Financial Statements (Standalone) forming part of this Annual Report.

RISK MANAGEMENT

The Company has Risk Management framework in place in accordance with Section 134(3)(n) of the Companies Act, 2013. Risk Management Policy of the Company is also formulated and necessary controls have been reviewed and put in place from time to time to strengthen it further.

The Risk Management system is quite elaborative and is established to identify, assess and prioritize risks that need to be minimized, monitored and mitigated. These measures help in reducing and controlling the impact of adverse events and maximize the opportunities of realization. Major risks are identified systematically and mitigated on a continuous basis.

The Risk Management Policy as approved by the Board has been uploaded on the Company's website https://d3joggurz1vobr.cloudfront. net/investorrelations/r/i/risk_management_policy_scl_-_website.pdf.

INVESTOR EDUCATION & PROTECTION FUND (IEPF)

Pursuant to Sections 124 and 125 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), the amount of dividend, if not claimed for a period of seven years from the date of transfer to Unpaid Dividend Account of the Company, are liable to be transferred to Investor Education & Protection Fund.

Further, all the shares in respect of which dividend has remained unclaimed for seven consecutive years or more from the date of transfer to Unpaid Dividend Account shall also be transferred to the demat account of IEPF Authority. The said requirement does not apply to shares in respect of which there is a specific order of Court, Tribunal or Statutory Authority, restraining any transfer of the shares.

In the interest of the shareholders, the Company sends periodical reminders to the shareholders to claim their dividends in order to avoid transfer of dividends/shares to IEPF Authority. Notice in this regard was also published in the newspapers and the details of unclaimed dividends and shareholders whose shares are liable to be transferred to the IEPF Authority, are uploaded on the Company's website.

In light of the aforesaid provisions, the unpaid/ unclaimed dividend which was declared for the year ended 31 March, 2017 is due for transfer to IEPF on or after 25 September, 2024.

During the period under review, the Company transferred 26,803 Equity Shares of Rs.2/- each against dividend of the year 2016, which remained unclaimed for a period of seven consecutive years, to Investor Education and Protection Fund pursuant to Section 124 (6) of the Companies Act, 2013 within the scheduled time.

Further, a Dividend amount of Rs.6,43,644/- which remained unclaimed against dividend of the year 2016, was transferred to IEPF pursuant to Section 124 of the Companies Act, 2013 within the scheduled time.

STATEMENT ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARDS

Your Directors state that they have devised proper systems to ensure compliance with the provisions of applicable Secretarial Standards i.e. Secretarial Standard on Meetings of the Board of Directors ("SS-1") and on General Meetings ("SS-2") as issued and amended, from time to time by the Institute of Company Secretaries of India ("ICSI") in terms of Section 118(10) of the Act and that such systems are adequate and operating effectively.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of the knowledge and belief of the Directors of the Company and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3) (c) and Section 134 (5) of the Companies Act, 2013:

a) In the preparation of the annual accounts for the year ended 31 March, 2024, the applicable accounting standards read with requirements set out under Schedule III to the Act, had been followed with proper explanation and there are no material departures from the same;

b) The Directors had selected such accounting policies, applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March, 2024 and of the profit of the Company for the year ended on that date.

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 have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The list of Directors and Key Managerial Personnel at the end of the reporting period is as under:

Mr. Amit Sahai was appointed as Chief Executive Officer - Tile Business by the Board of Directors in their meeting held on 23 May, 2023.

Mr. Siddharath Bindra (DIN: 01680498), shall complete his second and final term as an Independent Director of the Company on 25 May, 2024.

Mr. Salil Singhal (DIN:00006629) and Mr. Ravinder Nath (DIN: 00062186) shall complete their second and final term as Independent Director(s) of the Company on 18 August, 2024.

Subseguent to the end of financial year under review, the Board of Directors in their meeting held on 15 May, 2024 has approved the appointment of Mr. Manit Rastogi (DIN: 00370998) as an Additional Director (Category: Non Executive - Independent Director) of the Company. The appointment of Mr. Manit Rastogi is for a period of 5 years with effect from 15 May, 2024 to 14 May, 2029 which is subject to the approval of shareholders in the ensuing Annual General Meeting.

The disclosures required pursuant to Regulation 36 of the SEBI Listing Regulations and the Secretarial Standards on General Meeting ('SS-2') are given in the Notice of 56th AGM.

DECLARATION OF INDEPENDENCE

All Independent Directors of the Company have given requisite declarations under Section 149(7) of the Companies Act 2013, ("Act") that they meet the criteria of independence as laid down under Section 149(6) of the Act alongwith Rules framed thereunder, Regulation 16(1)(b) of SEBI Listing Regulations and have complied with the Code of Conduct of the Company as applicable to the Board of Directors and Senior Managers. In terms of Regulation 25(8) of the SEBI Listing Regulations, the Independent Directors have confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. The Company has received confirmation from all the Independent Directors of their registration on the Independent Directors Database maintained by the Indian Institute of Corporate Affairs, in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The Independent Directors of the Company have complied with the Code for Independent Directors as prescribed in Schedule IV to the Act. In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are persons of high integrity and repute. They fulfill the conditions specified in the Act as well as the Rules made thereunder and are independent of the management.

BOARD EVALUATION

Pursuant to the provisions of the Act and SEBI LODR, 2015 evaluation has been carried out by the Board, Nomination and Remuneration Committee (NRC) and by the Independent Directors. The Company has devised a formal process for annual evaluation of performance of the Board, its Committees and Individual Directors including Independent Directors. The process provides that the performance evaluation shall be carried out on annual basis.

During the year, the Board has carried out an annual evaluation of its own performance, individual Directors including Independent Directors (excluding the director being evaluated) and its Committees. Board evaluation was carried out on the basis of questionnaire, prepared after considering various inputs received from the Directors, covering various aspects revealing the efficiency of the Board's functioning such as Development of suitable strategies and business plans, size, structure and expertise of the Board and their efforts to learn about the Company and its business, obligations and governance.

Performance evaluation of every Director was carried out by Board and Nomination and Remuneration Committee on parameters such as appropriateness of qualification, knowledge, skills and experience, time devoted to Board deliberations and participation in Board functioning, extent of diversity in the knowledge and related industry expertise, attendance and participations in the meetings and workings thereof and initiative to maintain high level of integrity & ethics.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and the Chairman was evaluated, taking into account the views of Executive and Non Executive Directors.

The performances of Committees were evaluated on parameters such as whether the Committees of the Board are appropriately constituted, Committees has an appropriate number of meetings each year to accomplish all of its responsibilities, Committee Members maintain the confidentiality of their discussions and decisions. Committee conducts a self-evaluation at least annually and make periodically reporting to the Board along with its suggestions and recommendations.

Independent Director's performance evaluation was carried out on parameters such as Director upholds ethical standards of integrity, the ability of the Director to exercise objective and independent judgment in the best interest of Company, the level of confidentiality maintained. The Directors expressed their satisfaction with the evaluation process.

The Board found the evaluation satisfactory and no observations were raised during the said evaluation in current year as well as in previous year.

NOMINATION AND REMUNERATION POLICY

Your Company has formulated the nomination and remuneration policy ("NRC policy") for its Directors, Key Managerial Personnel and other Employees of the Company. This Policy sets out the guiding principles for Nomination and Remuneration Committee of the Company for recommending to the Board the appointment and remuneration of the Directors, Key Managerial Personnel, Senior Management and other employees of the Company, the Policy also includes criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178.

The Nomination and Remuneration Committee shall identify and ascertain the integrity, qualification, positive attributes, expertise and experience of the person for appointment as Director, KMP or at Senior

Management level and recommend to the Board their appointment based upon the need of the Company.

The NRC policy is available for the stakeholders on the website of the Company and same is accessible at web link Nomination and Remuneration Policy.

MEETINGS OF THE BOARD

During the year, Five (5) meetings of Board of Directors were held, i.e., on 23 May, 2023,10 August, 2023, 26 October, 2023, 08 November, 2023 and 01 February, 2024. For details, please refer to the Report on Corporate Governance, which forms a part of this Annual Report.

COMMITTEES OF THE BOARD

During the year, Three (3) meetings of Nomination and Remuneration Committee, Three (3) meetings of Stakeholders Relationship Committee, Five (5) meetings of Audit Committee, Four (4) meetings of Corporate Social Responsibility Committee, Twelve (12) meetings of Share Transfer Committee, Two (2) meetings of Company Administrative Committee and Three (3) meetings of Risk Management Committee were held, the details of which are given in the Corporate Governance Report forming part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee of the Company consists of Mr. Rameshwar Singh Thakur, as Chairman of the Committee and Mr. Salil Singhal, Mr. Vineet Agarwal and Mr. Ghanshyam Girdharbhai Trivedi as members of the Committee.

Mr. Ambrish Julka, Company Secretary, acts as secretary to the Audit Committee.

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

AUDITORS Statutory Auditor

M/s. Singhi & Co., Chartered Accountants, having Firm Registration No.302049E, were re-appointed at the 54th Annual General Meeting (AGM) held on 23 September, 2022, for a term of 5 years from the conclusion of 54th AGM till the conclusion of the 59th AGM to be held in the year 2027.

The observations of the Auditors, if any, are explained wherever necessary, in the appropriate notes to the accounts. The Statutory Auditor's report does not contain any qualifications, reservations, adverse remarks or disclaimers, which would be required to be dealt with in the Boards' Report.

Pursuant to provisions of the Section 143(12) of the Companies Act, 2013, the Statutory Auditors has not reported any incident of fraud during the year under review.

Secretarial Auditor

M/s Pinchaa & Co., Company Secretaries, having Unique Code Number (U.C.N.) P2016RJ051800 was appointed to conduct Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year ended 31 March, 2024. The Secretarial Audit Report for the financial year ended 31 March, 2024 is annexed and marked as Annexure - 3 to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Pursuant to provisions of the Section 143(12) of the Companies Act, 2013, the Secretarial Auditor has not reported any incident of fraud during the year under review.

Further, the Board has re-appointed M/s Pinchaa & Co., Company Secretaries, having U.C.N. P2016RJ051800 as Secretarial Auditor of the Company for the 2024-25.

Internal Auditors

Your Board of Directors, during the year under review, has re-appointed M/s. Grant Thorton Bharat LLP (LLPIN: AAA-7677), to act as the Internal Auditors of the Company for the financial year 2023-24 pursuant to Section 138 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the Company has placed a copy of the Annual Return as at 31 March, 2024 on its website at https://www.somanyceramics.com/ investor-relation/mgt-7.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has in place a Corporate Social Responsibility Policy ("CSR policy") in accordance with the provisions of Section 135 of the Companies Act, 2013 read with The Companies (Corporate Social Responsibility Policy) Rules, 2014 on recommendation of Corporate Social Responsibility Committee ("CSR Committee") and approval of the Board of Directors of the Company.

The CSR Committee undertakes CSR activities in accordance with its (CSR Policy) which is uploaded on the Company's website at www.somanyceramics.com at the web link: https://d3joggurzlvobr. cloudfront.net/investorrelations/c/o/corporate_social_responsibility_ policy_revised_16-06-2021.pdf.

The 2% of the average net profit, as calculated pursuant to the provisions of Companies Act, 2013, to be spent for CSR expenditure in the financial year 2023-24 was Rs.225.59 Lakhs, whereas total amount spent by the Company on CSR activities was Rs.225.68 Lakhs. The detailed report on CSR activities is enclosed as Annexure - 4 to this report.

INTERNAL CONTROL SYSTEM

The Company has an effective Internal Control System in place considering the size, scale and complexity of the operations. The internal control is supplemented by the detailed internal audit program, review by management and the Audit Committee and documented Policies, SOPs, Guidelines and Procedures. The Internal Audit monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all the locations of the Company and also concurrently reviewing the major activities at transaction level.

INTERNAL FINANCIAL CONTROL

The Company has an adequate Internal Financial Control (IFC) System in accordance with the Section 134(5)(e) of the Companies Act, 2013 for ensuring the orderly and efficient conduct of its business including adherence to company polices safeguarding of its assets, prevention & deduction of frauds and errors, accuracy & completeness of accounting records and timely preparation of reliable financial information. The standard controls defined in the IFC framework are reviewed by the Internal Auditors, External Consultants and Management concurrently to strengthen the existing processes and activities of the Company by way of formulating new guidelines and incorporating necessary changes in the SOP when needed.

HUMAN RESOURCE (HR)

We, at Somany Ceramics Limited, have always tried to provide an immersive experience for our employees. Our Vision of being the 'best employer in the tile industry' has become a motto and a way of life for us. While we continue to choose the best fit and refine our talent, we have introduced quite a few initiatives this year to provide our employees a better environment to thrive in.

Revolutionizing Learning & Development

A significant change came about with the evolution of our Learning & Development practices.

• Aagman, our induction program, in-spite of winning the On-Boarding Program of the Year Award at the 13^th Edition Future of L&D Summit & Awards, 2023 by UBS Forums, saw further upgrades. Being the first major milestone in the employee lifecycle, we thought it prudent to make it a memorable experience where not only knowledge is earned, but bonds are formed. Introducing the Aagman whatsapp group also allowed its participants to interact and build bridges even after being miles apart. It also helped resolve their queries and concerns on the spot thereby acting in a more convenient form of communication.

• Further, we have automated the feedback and assessment processes, which has made the analysis of the responses quicker, easier and more accurate. We have also introduced the 30-60-90 days post induction assessment to help improve our on-boarding process. These assessments have proven resourceful in identifying gaps between what we offer and what are employees need.

• We have also introduced the Somany Awareness Series which is a quick-learning initiative. These easy-to-grasp video clips are designed to enhance the understanding of platforms and processes. These videos have delved into the intricacies of E-Campus, have shed light on assessing, identifying, reviewing learning needs and will further cover the effectiveness of training evaluation.

• The Product Mastery sessions introduced for Bathware and Coverstone-15 are aimed to provide sales team with knowledge about the Features, Advantages, and Benefits (FAB) of the products, Unigue Selling Points (USPs), and the competitive advantages of the Company's products compared to others in the market.

• We also prioritize Safety training for our workers and staff across all our Plant sites. Our safety training sessions encompasses wide range of topics, such as working at heights, administering first aid, operating forklifts, identifying hazardous conditions among others.

Recognizing Excellence

Each year, as we celebrate the exceptional contributions of our employees, we bestow the Best Employee Award upon those demonstrating outstanding achievements in our Plants, recognizing their efforts that have never gone unnoticed. Additionally, our appreciation extends to those employees and workers who have consistently upheld perfect attendance, displaying steadfast reliability and dedication to their respective roles and our organization.

Furthermore, the Best Employee Award also goes to our Sales Frontliners whose outstanding performance and dedication have been truly commendable. This award is presented across our Tiles, Bathware, and Adhesives units, where the best of the best are honored from each region. Our exemplary leadership is also identified and awarded with the Best State Head and Best Regional Head.

This past year, we also extended our gratitude to 192 employees honored with Long Service Awards for their enduring commitment to the

Organization. These collective achievements underscore the strength and resilience of our team, driving us forward as we continue to uphold our values and pursue excellence in all endeavors.

Engaging Excellence

This year saw a surge in our employee engagement initiatives as we delved into the bliss of festivities. Festivals like Diwali, Christmas and Holi saw resounding zeal for fun, inclusivity and camaraderie. Women's Day Celebration was a significant occasion dedicated to honoring the remarkable women contributing to our team in various capacities. These extraordinary individuals came together for an exclusive celebration, commemorating their brilliance and achievements. Further, Kalakriti, the children's day painting competition, saw better participation than ever before with over 200 children participating across all our locations.

Driving Excellence

The Suggestion Scheme at our plant sites saw new vigor as employees and workers gave new suggestions for process improvement, safety measures, cost reduction, and productivity enhancement. This was aimed to harness the collective intelligence and experience of our employees for operational excellence.

It promoted inclusivity, welcoming contributions from all levels of the organization. In addition, departmental heads were encouraged to motivate their teams to actively participate, ensuring at least two suggestions per department per month. Overall, the suggestion scheme continues to help facilitate operational improvements and foster employee involvement and collaboration, contributing to refining the employee experience.

As part of our ongoing commitment to enhancing efficiency and sustainability, we have introduced an online Leave Management System (LMS) to facilitate leave applications for our workers. This strategic initiative has not only modernized our leave application process but also minimized our reliance on paper-based procedures. This shift away from traditional paper forms underscores our dedication to embracing digital innovation and fostering a culture of adaptability within our organization.

Further, one of our most prized initiatives over the years has been the Leave Donation Policy. This policy allows employees to donate leaves to their peers in need. We have always encouraged employees to have a "sharing is caring" attitude and help each other wherever possible. During the year, the employees donated 288 leaves, which benefited 5 employees of the Company.

Empowering Tomorrow's Leaders

We have initiated education and community engagement through our Student Industrial Visit Program. This initiative, designed to bridge academic theory with real-world practice. The Company welcomed over 700 students from esteemed institutions in and around Kadi and Kassar. These visits offer students invaluable exposure to our manufacturing processes, operations, and corporate culture. By fostering these connections, we not only inspire the next generation but also increase our brand's visibility within the academic community.

Our Apprentice program has also been gaining momentum. Through the Government Apprentice Scheme, we provide opportunities to all those who are enthusiastic to gain hands-on experience in our industry. Currently, there are six female apprentices participating in this program at the Kadi plant and 10 in the Kassar plant, contributing their skills and enthusiasm to our team while gaining valuable professional experience. This initiative not only empowers the youth by equipping them with practical skills but also enriches our workforce with diverse perspectives and talents.

As we reflect on the strides we have made in nurturing our workforce and cultivating a culture of excellence, we are filled with pride and gratitude for the journey we've embarked on together. Our commitment to being the best employer in the tile industry isn't just a lofty goal; it's a testament to our unwavering dedication to our employees' growth, well-being, and success. With every initiative, every milestone, and every success, we reaffirm our belief in the power of our people and the strength of our collective vision.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has a Vigil Mechanism/ Whistle Blower Policy in line with Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in terms of Section 177(9) of the Companies Act, 2013. The policy enables the stakeholders (including Directors and employees) to report their concern about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct.

The Policy provides adequate safeguards against victimization of Director(s)/ employee(s) and enables direct access to the Chairman of the Audit Committee in exceptional cases. The protected disclosures, if any, reported under this Policy are appropriately and expeditiously investigated by the Chairman. The details of the Whistle Blower Policy are also explained in the Corporate Governance Report and the Policy is also available on the website of the Company at the weblink: https:// d3joggurzlvobr.cloudfront.net/investorrelations/v/i/vigil_mechanism_ whistle_blower_policy_revised_16-06-2021.pdf.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report forms integral part of this Annual Report.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, R&D, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 forms part of this Report as Annexure - 5.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided at Annexure - 6.

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names of employees and other particulars of the top ten employees and employees drawing remuneration in excess of the limits as provided in the said rules are provided at Annexure- 7.

Somany Ceramics Employee Stock Plan 2021

Somany Ceramics Employee Stock Plan 2021 was approved by the shareholders of the Company on 07 April, 2022 through Postal Ballot for grant of 4,23,794 Options. Out of the said total options, 3,50,102 grants were granted to 33 eligible employees on 29 April, 2022 in First Grant and 1,01,107 options were granted to 13 eligible employees on 07 February, 2023 in the second grant.

During the year under review, due to resignation of few eligible employees, 16,329 options lapsed/forfeited from first grant and 15,003 options lapsed/forfeited from second grant under the Somany Ceramics Employee Stock Plan 2021.

Somany Ceramics Employee Stock Plan 2023

The Nomination and Remuneration Committee and Board of Directors of the Company in their respective meetings held on 23 May, 2023 approved the Somany Ceramics Employee Stock Plan 2023 (hereinafter to be referred as "Somany Ceramics Employee Stock Option Plan 2023" or the "Plan" or "Scheme") for grant of 12,74,226 Options to Eligible Employees/Directors of the Company and/or group companies including Subsidiary or Associate Companies and recommended the same to the Shareholders of the Company for their approval. The Plan was also approved by the shareholders of the Company at the 55th Annual General Meeting held on 25 August, 2023. As per Regulation 12(3) of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the Company obtained in-principle approval from the stock exchanges prior to the grant of options.

The Nomination and Remuneration Committee granted 1,36,576 options to 26 eligible employees of the Company on 08 November, 2023.

During the year under review, due to resignation of an employee, 2,839 options were lapsed / forfeited from the first grant under the Somany Ceramics Employee Stock Plan 2023.

The certificate from the Secretarial Auditor of the Company certifying that the scheme is being implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and in accordance with resolution passed by the Members in general meeting.

With regard to the above, the disclosures as stipulated under the SEBI Regulations and Companies Act, 2013 as on 31 March, 2024 as provided in Annexure - 8 to this report. The details are also available on the website of the Company at the weblink: ESOP Disclosure FY 2023-24

CORPORATE GOVERNANCE

Your Company has been following the principles and practices of good Corporate Governance. A separate report on Corporate Governance and a certificate from the Statutory Auditors confirming compliance with the Corporate Governance requirements forms part of this Report as Annexure - 9.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In compliance with the SEBI Listing Regulations, the Company has prepared a Business Responsibility and Sustainability Report for the financial year 2023-24 which includes non - financial disclosures from an Environmental, Social and Governance ("ESG") perspective and are sought under Nine (9) Principles of National Guidelines on Responsible Code of Conduct for measuring the performance in areas of business responsibility and sustainability and the same forms part of this Annual Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITIONAN DREDRESSAL) ACT, 2013

Your Company continues to follow robust policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace. The Company has a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under. "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013". The Company has complied with the provision relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the period under review, the Company has not received any complaint of sexual harassment

OTHER DISCLOSURES

I. There were no significant material orders passed by the Regulators / Courts during the financial year 2023-24 which would impact the going concern status of the Company and its future operations.

II. There were no material changes and commitments in terms of Section 134(3)(l) of the Companies Act, 2013, affecting the financial position of the Company.

III. The maintenance of cost records as specified by the Central Government under sub-Section (1) of Section 148 of the Companies Act, 2013 is not applicable to the Company.

IV. There are no proceedings initiated/ pending against your Company under the Insolvency and Bankruptcy Code, 2016 which materially impact the business of the Company.

V. There has been no change in the nature of business of the Company.

VI. There was no instance of one-time settlement with any Bank or Financial Institution.