cosmo films ltd share price Directors report

Your directors are pleased to present their 46^th Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31 March 2023

1. SUMMARY FINANCIAL RESULTS

The Financial Results of the Company for the year ended 31 March 2023, were as follows:

 

 

 

(Rs in Cr)

	Standalone		Consolidated
Particulars	Year Ended March 31, 2023	Year Ended March 31, 2022	Year Ended March 31, 2023	Year Ended March 31, 2022
Net Sales	2,742	2,824	3,065	3,038
Other Income	58	46	52	48
Profit before Interest, Depreciation and Tax	396	525	434	620
Finance Cost	52	37	55	40
Depreciation	69	58	75	63
Profit before Tax	275	430	304	517
Provision for Taxation
- Current Tax	48	75	57	80
- Deferred Tax	19	42	09	40
-Tax adjusted for earlier years	(6)	-	(6)	-
Profit After Tax	214	313	244	397
Earnings per Equity Share
Basic (Rs)	80	117	91	148
Diluted (Rs)	78	114	89	145

2. PERFORMANCE SNAPSHOT

During the FY23, on consolidated basis the Company registered sales of f 3,065 crores vs f 3,038 crores last year. Consolidated EBITDA for the year was f 434 crores as against f 620 crores in FY22 primarily due to margin pressure in BOPP & BOPET industry due to commissioning of several new production lines during FY23. Despite challenges, your Company has significantly outperformed the industry with two- third of the revenue coming from the specialty films, which could withstand the margin pressure.

On Standalone basis, the Company registered sales of f 2,742 crores vs f 2,824 crores last year. Standalone EBITDA for the year changed to f 396 crores against f 525 crores in FY22 primarily for the reasons explained above.

As on 31 March 2023, Return on Capital employed stands at 16% and Return on Equity is 20%. The financials remain strong with Net Debt/EBITDA at one time.

During this financial year, your Company started commercial production of specialized BOPET Line which has a total installed capacity of 30,000 MT per annum. This is the worlds largest line for shrink labels and heat control films.

This year, the Company has been successfully rebranded as Cosmo First Ltd. The Companies new name exemplifies its unwavering commitment to prioritise customers and stakeholders in all that we do.

The Company has recently entered into an agreement to source renewable power on group captive basis. Accordingly, about 40% of power requirement for Companys largest plant shall be from renewable sources. In near future, the Company is targeting close to 50% of its power requirement from renewable sources.

The global flexible packaging industry in FY21 was approximately $ 1,002.4 Billion¹ and is expected to reach $ 1,275 Billion by 2027. The flexible packaging market, which accounts for more than 60% of the total market, is mainly used for food, personal care, pharmaceutical, household care, and industrial purposes. The global flexible packaging market is expected to grow at a CAGR of 4.8%² from $ 248.9 Billion in 2022 to $ 315.5 Billion in 2027. Western Europe, North America, Central & East

Source: 1. Global Newwire

2. Markets and Markets

3. Technavio Report

Asia, and South East Asia & Oceania account for 85% of the global market. The Asia-Pacific region has a significant share in the global packaging industry and is expected to continue to grow with a CAGR of 4.3% over the period FY22 - FY27.

The flexible packaging market in India is estimated to grow at a CAGR of 12.6% between 2022 and 2027³.

With increasing long term demand potential for flexible packaging, the Company has planned close to 75% capacity addition in flexible packaging business in phases starting from FY23. While specialized BOPET line got commissioned during FY23, the CPP line and BOPP line are expected to get commissioned within next two years in phases. Both the lines will be the worlds largest production capacity lines with lower cost of production.

The Companys focus shall continue to be on improving speciality films, R&D efforts particularly on sustainability which would yield results in coming years. These actions would continue to de- commoditize business model and would contribute in long term sustainable growth. The Companys speciality films sales stand at 62% during FY23. On BOPET line as well, the company is looking to kick off few speciality products which includes window films, security films, PET-G films, and many others.

The Company is currently having eight registered patents; three in pipeline and another eight are being applied.

The Indian pet care industry is at about Rs 5k crores. On account of rising nuclear families, doubleincome households, and change in lifestyle, urbanization, and increasing pet ownership this market is expected to grow at the rate of 25%. There is no large scale organized players in India offering end to end comprehensive solution. The average spending on pets by Indian families is increasing significantly. Accordingly, the Company launched its Pet care division Zigly in Sept 2021 with simultaneous launch of website, mobile van and its flagship store in Delhi. With 15 experience centers operational as on March 2023, the Company targets to have 100 experience centres in next couple of years.

In Speciality Chemicals the Company has three verticals i.e. masterbatch, coating chemicals and adhesive. While masterbatch and coating chemicals have been operational during the year, adhesive is expected to commence commercial production from FY24. In each of these segment, the Company plans to cater to niche speciality focused either to address current problem area for the Industry or significantly better product compared to currently available. The India masterbatch industry size is 500k mt and it is growing at the rate of 11%. The global industry size of adhesives is USD 52 billion with a growth rate of 5% . The size of Indian adhesive industry is USD 3.5 billion with a growth rate of 8% to 10%. The annual capacity of the Company for masterbatch is 10KMT, adhesives is 2.5KMT and Coating Chemicals is 5KMT. The Company targets to achieve 7%-8% of Companys consolidated revenue from speciality chemicals in 3-5 years with 25% ROCE.

Growth

The Company is targeting to add close to 75% capacity for flexible packaging by March 2025 in phases, which will work as key growth engines for the coming years. The capacity additions are specialized BOPET line, BOPP line and CPP line. The Specialized BOPET line got commissioned during Sept 2022. The Company is targeting complimentary growth from Specialized BOPET Line in medium term i.e. Heat Control Film, Shrink labels and other high end specialty. This will partially substitute imports as well.

Work on BOPP and CPP lines has commenced. Both the lines will be worlds largest production capacity lines. The CPP Line will promote sustainability as it will offer mono-layered structure. The capacity additions i.e. Specialized BOPET Line, BOPP and CPP lines will allow Company to further expand its specialty sales.

To fuel the growth in speciality chemicals, the Company is going to launch adhesive during FY24 for already known customer base. In petcare segment Zigly, the future plans are to significantly increase the experience centres to 100+ in a couple of years besides promoting online business.

3. SUSTAINABILITY

The Company is working on several sustainability projects. The roof top solar power plants have been installed for all manufacturing units. The Company has recently entered into an agreement to source renewable power on group captive basis. It will contribute to 40% of power requirement of companys largest plant. In coming years, the Company expects close to 50% of its power requirements to come from renewable sources.

The Company has taken several steps to minimise the waste generation. Out of the total waste generated, 77% has been used reused and 22% has been re-processed. The remaining 1% was safely disposed through incineration method.

Initiatives have been taken for installing Wet Scrubber for Thermopack Boilers to improve resource efficiency and reduce impact due to emissions, effluent discharge, waste generated. Wet scrubber is used to reduce the amount of air pollution. In wet scrubbing processes, solid particles are removed from a gas stream by transferring them to a liquid. The liquid most commonly used is water.

Several other sustainability initiatives are as under:

• Offer mono layered structure for ease of recycling

• Partnering with some of the best global brands to offer structure rationalization & recyclability solutions.

• Invest in R&D and grow its speciality film portfolio offering sustainable solutions for a better tomorrow.

• Offer Oxo-Biodegradable Films

• Use of Water Based Coatings

• Innovated heat resistant BOPP film to facilitate mono material structure.

• Both BOPP and CPP films offer better yield, hence enabling reduced consumption of plastics.

• UV stabilized Synthetic Paper can be used to replace PVC in outdoor promotional applications for duration requirements up to one year.

• Offer a suitable substitute for aluminium foil in form of its Ultra-High Barrier Films.

• Focus on reducing Green House Gas missions, green energy at plants, waste reduction, water treatment etc.

• Constant monitoring of parameters like noise, illumination, ventilation, air quality etc.

• Rain water harvesting and reuse of effluent treated water

• Reutilization of reprocessed granules from waste material as input for film production,

• Continuous efforts to reduce water usage, waste generation and GHG emissions.

• Working on 3R principles i.e. Reducing waste, reusing and recycling resources and products

• Manufacturing environment friendly, sustainable polymers, which are easily recycled and reused in a variety of ways.

These steps will not only contribute to the environment but will also rationalize costs in coming quarters

4. EXPORTS

The Exports for the financial year are Rs 1,268 Crores which is 46% of total sales. The Company exports to 80+ countries across the globe.

5. DETAILS OF SUBSIDIARIES

The Company has ten subsidiaries including step down subsidiaries. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standards issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiaries.

Consolidated Financial Statements form part of this Annual Report. Statement containing the salient feature of the financial statement of the Companys subsidiaries in Form AOC-1, is enclosed to this Annual Report.

In terms of provisions of Section 136 of the Companies Act, 2013, the Company place separate audited accounts of the Subsidiary Companies on its website at https://www.cosmofirst.com/ disclosure-under-regulation

The subsidiaries of Cosmo First Limited as on 31 March 2023, are listed hereunder:

• CF (Netherlands) Holdings Limited B.V.

• Cosmo Films Japan, GK

• Cosmo Films Singapore Pte Limited

• Cosmo Films Korea Limited

• Cosmo Films Inc.

• CF Investment Holding Private (Thailand) Company Limited

• Cosmo Films Poland SP. Z.O.O.

• Cosmo Speciality Chemicals Private Limited

• Cosmo Speciality Polymers Private Limited

• Cosmo Global Films Private Limited*

incorporated as wholly-owned subsidiary on 09 January 2023

Subsidiarys EBITDA stood at Rs. 38 Crores against EBITDA at Rs. 94 Crores last year.

The performance of the overseas subsidiaries is under pressure from last year primarily for two reasons. One is reduced gap between the India raw material price index and US raw material price index and second is weakening of foreign currencies against the US dollar, particularly in Japan and Korea. The margin pressure in the US is due to the lower gap between the two-price index. However, this is expected to improve in FY24.

The vision behind establishing Cosmo Speciality Chemicals Private Limited was providing the most competitive quality products through innovations based on sustainable science. Its operational highlights are as follows:

• The subsidiary has achieved Rs 159 Cr of sales.

• Company has reached close to 75% capacity utilization on masterbatch line and the complementary adhesive business for the packaging segment is planned to be launched soon. This would add to topline and bottom line from next year.

• New R&D laboratories are operational for coating chemicals and Adhesive developmental work. The Companys R&D has successfully completed the development of several coating chemicals .

• Masterbatch production unit is fully operational and has successfully produced various master batches for in-house and external customers. Its consumption is growing continuously. Some recently developed masterbatches include white masterbatch, anti-stat (with 30% concentration), master batch for blown films etc.

• Adhesive line had been delayed due to delay in government approvals. The Company will start test marketing soon and shall commence commercial production in FY24.

6. SHARE CAPITAL

Pursuant to the approval of shareholders through postal ballot dated 11 June 2022, the authorized share capital of your Company increased from Rs 25,00,00,000/- (Rupees Twenty-Five Crores) to Rs 60,00,00,000/- (Rupees Sixty Crores).

During the year under review, your Company, had issued and allotted Bonus Equity Shares in the proportion of 1:2 (i.e. one equity shares for every two equity shares) to the eligible Members whose names appeared in the Register of Members / list of beneficial owners as on the record date fixed for this purpose. Consequently, the paid- up share capital of the Company increased from Rs 18,17,27,150/- to Rs 27,25,90,720/-.

Subsequently, the Company bought back 10,09,345 equity shares (3.70% of the paid up equity capital) through the "Tender Offer" route at a price of Rs. 1070/- per share. Consequently, the paid-up equity share capital has reduced from Rs 27,25,90,720/- to Rs 26,24,97,270/- divided into 2,62,49,727 equity shares of Rs 10/- each. Consequent to the same, the paid up share capital of the Company stands reduced to Rs 26,24,97,270/- as on 31 March 2023.

7. RESERVE

The Company has not transferred any amount to Reserve during the Year.

8. RETURN TO SHAREHOLDERS

Rewards (Dividend/Buyback) (% to PAT)

The Board of Directors of the Company recommended Equity dividend of Rs 5/- (50%) per share for the year ended 31 March 2023 amounting to Rs 13.12 Crores.

Previous Year Company declared total dividend of Rs 35/- (350%) per Equity Share of Rs 10/- each. First Interim Equity Dividend of Rs 25/- (250%) per share and Second Interim Equity Dividend of Rs 10/-(100%) per share on 16 September 2021 and 25 January 2022 respectively.

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") the Dividend Distribution Policy is available on the Companys website at https://www.cosmofirst.com/investors/policies- and-code-of-conduct

Besides Dividend, during this financial year the Company allotted Bonus Equity Shares in the ratio of 1:2 and bought back 10,09,345 equity shares (3.70% of the paid up equity capital) through the "Tender Offer" route at a price of Rs 1070/- per share. Details given above at point no 6.

9. RESEARCH AND DEVELOPMENT (R&D)

The Company takes pride in its continuous research and development which focus on providing innovative solutions as opposed to simply producing commodity films. With these consistent efforts in research and development activities, Cosmo is well placed to benefit from accelerated growth and drive new product development globally. Cosmo First understands that innovation is not just an option but a necessity for staying competitive in todays ever-changing market. The Company believes that continuous and sustainable innovation is the key to adding value to society, and it is essential for the growth and prosperity of the organisation. Cosmo First has made innovation a part of its everyday work and is committed to exploring new and exciting ways to improve products and services. From its innovation centres and labs to its 30+ team of researchers, Cosmo First strives to keep innovation at the core of its business.

Cosmo Firsts Innovation Centre is a state-of-the- art facility that boasts world-class laboratories, serving as a vital asset to the companys operations. The centre is equipped with cutting- edge equipment and manned by a team of highly qualified professionals dedicated to sustainable and economically viable science. The Innovation Centre serves as a hub for research and development, providing the necessary resources and infrastructure for the companys innovative endeavours. The Company takes great pride in this facility, knowing that it plays a crucial role in driving its continued growth and success.

Analytical laboratory

The analytical lab at Cosmo Firsts facility is at the forefront of material characterisation, thanks to its state-of-the-art equipment. The lab is well-equipped to perform microscopic analysis, which allows researchers to understand the finer details of the materials chemical and physical properties. In addition, the lab also boasts advanced thermogravimetric analysis (TGA) equipment, which enables scientists to investigate the materials thermal stability and degradation characteristics. By utilising these advanced techniques, the Company can accurately and comprehensively analyse the formulated/ synthesised materials, providing invaluable insights into their performance and behaviour.

Microscopic analysis

A high-resolution optical microscope (Leica) and a scanning electron microscope (Phenom, ICON) are used for microscopic analysis. With a resolution of up to nanometers, SEM is equipped with backscattered detectors and EDX (for elemental analysis). Through elemental analysis, these tools are used to analyse the surface attributes of materials such as size, shape and chemical identity.

Thermogravimetric analysis

Thermogravimetric (TGA) analysis is a technique for assessing a materials thermal stability in the presence of nitrogen and the ambient atmosphere. TGA is used to analyse the thermal stability of textile additives. TGA is attached to a mass spectrometer, allowing for the analysis of evolved gases using the MS detector and, as a corollary, chemical identification of unknown molecules is conducted using the library.

During the year under review, your Company incurred expenditure on Research and Development (R&D) of f 13 Cr.

10. CAPITAL EXPENDITURE

Your Company has four state of the art manufacturing facilities spread across India (three plants ) and Korea (one plant ), with a total installed capacity of -

• 196,000 MT per annum of BOPP films,

• 40,000 MT per annum of Thermal Lamination Films,

• 22,000 MT per annum of Metalized Films,

• 20,000 MT per annum of Coated Films,

• 10,000 MT per annum of CPP Films and

• 7000MT per annum of CSP Line.

• 30,000 MT per annum of BOPET Line

During the year, your Company started commercial production of specialized BOPET Line which has a total installed capacity of 30,000 MT per annum. This is the worlds largest line for shrink labels and heat control films.

During the year under review, your Company incurred capital expenditure of Rs 380.4 Cr as compared to Rs 283 Cr for FY22.

The capital expenditure incurred during FY23 shall facilitate enhanced sale of speciality films, sustainability initiatives and solar power as a source of energy.

11. CORPORATE GOVERNANCE

Cosmo is committed to maintaining best standards of Corporate Governance and has always tried to build the maximum trust with shareholders, employees, customers, suppliers and other stakeholders.

A separate section on Corporate Governance forming part of the Directors Report and the certificate from the Practicing Company Secretary confirming compliance of the Corporate Governance norms as stipulated in the Listing Regulations is included in the Annual Report in Annexure - A.

12. INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

The Internal Financial control is supplemented by an extensive program of internal audit conducted by in house trained personnel and external firm of Chartered Accountants appointed on recommendation of the Audit Committee and the Board. The audit observations and corrective action, if any, taken thereon are periodically reviewed by the Audit committee to ensure effectiveness of the Internal Financial Control System. The internal financial control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of persons.

13. RISK MANAGEMENT

Cosmo has a robust process in place to identify key risks across the organisation and prioritise relevant action plans to mitigate these risks. The Company has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) approving the Companys Risk Management Framework and (b) Overseeing all the risks that the organization faces such as strategic, financial, liquidity, security, regulatory, legal, reputational and other risks that have been identified and assessed to ensure that there is a sound Risk Management Policy in place to address such concerns / risks. The Risk Management process covers risk identification, assessment, analysis and mitigation. Incorporating sustainability in the process also helps to align potential exposures with the risk appetite and highlight risks associated with chosen strategies.

The risk management procedure is reviewed by the Audit Committee and Board of Directors on regular basis at the time of review of quarterly financial results of the Company. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis.

A report on the various risks that may pose challenge to your Company are set out as a part of Management, Discussion and Analysis section of this report. Details of the composition of the Risk Management Committee, Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report.

14. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy establishing vigil mechanism, to provide a formal mechanism for the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy without fear of reprisal. The policy is accessible on the Companys website at https://www.cosmofirst. com/investors/policies-and-code-of-conduct

15. DIVERSITY OF THE BOARD

The Company believes that diversity is important to the work culture at any organisation. In particular, a diverse Board, among others, will enhance the quality of decisions by utilizing different skills, qualifications and professional experience for achieving sustainable and balanced development.

16. DIRECTORS

(a) Chairman

Mr. Ashok Jaipuria, is the Chairman & Managing Director of the Company. The tenure of Mr. Ashok Jaipuria, Managing Director of the Company will expire on 1 April 2024. The Board of Directors in its meeting held on 29 May 2023, on the recommendation of the HR, Nomination & Remuneration Committee and subject to the approval of Members of the Company reappointed him for a further period of five years w.e.f. 02 April 2024.

(b) Appointment and Re-appointment- Other Directors

Mr. Pratip Chaudhuri, Non-Executive NonIndependent Director retires by rotation and being eligible offer himself for re-appointment at the ensuing Annual General Meeting.

Mr. Anil Wadhwa, Independent Director of the Company was appointed for a tenure of five years from 23 May 2018 to 22 May 2023. The Board of Directors in its meeting held on 11 May 2023, on the recommendation of the HR, Nomination & Remuneration Committee and subject to the approval of Members of the Company re-appointed him for second term of five years commencing from 23 May 2023

Ms. Alpana Panda, Independent Director of the Company was appointed for a tenure of five years from 15 May 2019 to 14 May 2024. The Board of Directors in its meeting held on 29 May 2023, on the recommendation of the HR, Nomination & Remuneration Committee and subject to the approval of Members of the Company re-appointed him for second term of five years commencing from 15 May 2024.

The details of the proposed appointment/ reappointment of Directors are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of 46^th Annual General Meeting (AGM) of your Company.

(c) Status of Other Directors

Mr. A. K. Jain is acting as Whole time Director of the Company. His present tenure of five years is from 01 October 2019 to 30 September 2024.

Mr. H. K. Agrawal, is acting as Independent Director of the Company. His present tenure of five years is from 25 July 2019 to 24 July 2024.

Mr. H. N. Sinor, is acting as Independent Director of the Company. His present tenure of five years is from 22 May 2020 to 21 May 2025.

Mr. Rakesh Nangia, is acting as Independent Director of the Company. His present tenure of five years is from 10 November 2020 to 09 November 2025.

Mr. Arjun Singh, is acting as Independent Director of the Company. His present tenure of five years is from 27 October 2021 to 26 October 2026.

(d) Independent Directors Declaration

The Company has received necessary declaration from each Independent Director under section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and Regulation 16 of Listing Regulations.

17. STATEMENT OF BOARD OF DIRECTORS

The Board of Directors of the Company are of the opinion that the Independent Directors of the Company appointed/re-appointed during the year possesses integrity, relevant expertise and experience (including the proficiency) required to best serve the interest of the Company. The Independent Directors have confirmed compliance of relevant provisions of Rule 6 of the Companies (Appointments and Qualifications of Directors) Rules, 2014.

18. KEY MANAGERIAL PERSONNEL

During the year under review, there was no change in KMP of the Company. The following personnels continue as KMPs as per the definition under Section 2(51) and Section 203 of the Companies Act, 2013:

1. Mr. Ashok Jaipuria, Chairman & Managing Director

2. Mr. A. K. Jain, Director - Corporate Affairs

3. Mr. Pankaj Poddar, Chief Executive Officer

4. Mr. Neeraj Jain, Chief Financial Officer

5. Ms. Jyoti Dixit, Company Secretary

19. FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

The Company follows a well-structured induction programme for orientation and training of Directors at the time of their joining so as to provide them with an opportunity to familiarise themselves with the Company, its management, its operations and the industry in which the Company operates.

At the time of appointing a Director, a formal letter of appointment is given to him/her, which inter alia explains the role, function, duties and responsibilities expected of him/her as a Director of the Company. The Director is also explained in detail the Compliance required from him/ her under the Companies Act, 2013, the Listing Regulations and other relevant regulations and affirmation taken with respect to the same.

The induction programme includes:

1) For each Director, a one to one discussion with the Chairman and Managing Director to familiarise the former with the Companys operations.

2) An opportunity to interact with the CEO, CFO & Company Secretary, business heads and other senior officials of the Company, who also make presentations to the Board members on a periodical basis, briefing them on the operations of the Company, strategy, risks, new initiatives, etc.

The details of the familiarisation programme may be accessed on the Companys corporate website at https://www.cosmofirst.com/ disclosure-under-regulation

20. REMUNERATION POLICY

Your Company is driven by the need to foster a culture of leadership with mutual trust. Cosmos remuneration policy, which is aligned to this philosophy, is designed to attract, motivate, retain manpower and improve productivity by creating a congenial work environment, encouraging initiative, personal growth and teamwork besides offering appropriate remuneration package. Pursuant to the applicable provisions of the Companies Act, 2013 and the Listing Regulations, the Board, in consultation with its HR, Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and Individual Directors, including Independent Directors.

Members can download the complete remuneration policy on the Companys website at https://www.cosmofirst.com/invest.ors/policies- and-code-of-conduct

Disclosure of details of payment of remuneration to Managerial Personnel under Schedule V(C)(6) of Listing Regulations forms part of the Corporate Governance Report.

21. PERFORMANCE EVALUATION OF THE BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS

In terms of provisions of Companies Act, 2013 read with the Rules issued thereunder and Listing Regulations, the Board has adopted a formal mechanism for evaluating the performance of its Board, Committees and individual Directors, including the Chairman of the Board. Further, a structured performance evaluation exercise was carried out based on criteria such as:

• Board/Committees composition;

• Structure and responsibilities thereof;

• Ethics and Compliance;

• Effectiveness of Board processes;

• Participation and contribution by members;

• Information and functioning;

• Specific Competency and Professional Experience /Expertise;

• Business Commitment & Organisational Leadership;

• Board/Committee culture and dynamics; and

• Degree of fulfilment of key responsibilities, etc.

The performance of Board, Committees thereof, Chairman, Executive and Non-Executive Directors and individual Directors is evaluated by the Board/ Separate meeting of Independent Directors. The results of such evaluation are presented to the Board of Directors.

22. BOARD AND COMMITTEE MEETINGS Diversity of Board/Committees

ED: Executive Director; NED: Non-Executive

Director; ID: Non-Executive Independent Director

During FY23, Six (6) meetings of the Board of Directors and Four (4) Audit Committee meetings were held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations.

Details of the composition of the Board and its Committees and of the Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report.

There have been no instances of non-acceptance of any recommendations of the Audit Committee by the Board during the Financial Year under review.

23.AUDITORS

(a) Statutory Auditors

M/s. S.N. Dhawan & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 000050N/N500045) were appointed as the statutory auditors of the Company in the 43^rd Annual General Meeting held on 07 August 2020, to hold office for a period of five consecutive years from the conclusion of the 43^rd Annual General till the conclusion of the 48^th Annual General Meeting to be held in the year 2025. The Statutory Auditors have confirmed they are not disqualified from continuing as Auditors of the Company.

There are no observations (including any qualification, reservation, adverse remark or disclaimer) of the Auditors in their Audit Report that may call for any explanation from the Directors. Further, the notes to accounts referred to in the Auditors Report are self-explanatory.

During the year, the Auditor had not reported any matter under Section 143 (12) of the Companies Act, 2013, therefore no detail is required to be disclosed under Section 134(3) of the Companies Act, 2013.

(b) Cost Auditors

Mr. Jayant B. Galande, Cost Accountants were appointed as Cost Auditors of the Company for the FY23. In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost Auditors is required to be ratified by the shareholders, the Board recommends the same for approval by shareholders at the ensuing AGM.

In terms of the Section 148 of the Companies Act, 2013 (‘the Act) read with Rule 8 of the Companies (Accounts) Rules, 2014, it is stated that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

During the year, the Auditor had not reported any matter under Section 143 (12) of the Companies Act, 2013, therefore no detail is required to be disclosed under Section 134(3) of the Companies Act, 2013.

(c) Secretarial Auditors

The Company had appointed M/s. BLAK & Co., Company Secretaries, New Delhi, to conduct its Secretarial Audit for the FY23. The Secretarial Audit report is annexed herewith as Annexure - B to this report. There are no qualifications, reservations or adverse remarks made by Secretarial Auditor in his report. During the year, the Auditor had not reported any matter under Section 143 (12) of the Companies Act, 2013, therefore no detail is required to be disclosed under Section 134(3) of the Companies Act, 2013.

24. RELATED PARTY TRANSACTION

With reference to Section 134(3) (h) of the

Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Companies Act, 2013, entered into by the Company during the Financial Year, were in the ordinary course of business and on an arms length basis. The details of the related party transactions as required under Accounting Standard are set out in Note No. 44 to the standalone financial statements forming part of this Annual Report.

As per the Listing Regulations, all related party transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit

Committee has been obtained for the transactions which are of unforeseen and repetitive nature. The transactions entered into pursuant to the omnibus approval are presented to the Audit Committee by way of a statement giving details of all related party transactions. The Company has developed a Related Party Transactions Policy for the purpose of identification and monitoring of such transactions and can be accessed on the Companys website at www.cosmofirst.com.

No Material Related Party Transactions (i.e. one thousand crore or ten per cent of the annual consolidated turnover of the listed entity as per the last audited financial statements, whichever is lower) were entered during the year by your Company except the sale to its wholly owned subsidiary- Cosmo Films Inc. As per Listing Regulations, transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval are exempt from obtaining shareholders approval. The disclosure of Related Party Transactions as required under section 134(3)(h) of the Companies Act, 2013, in Form AOC - 2 is attached as Annexure - C.

25. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

Pursuant to regulations 34 of the Listing Regulations, Managements Discussion and Analysis Report for the year is presented in a separate section forming part of the Annual Report.

26. BUSINESS RESPONSIBILITY AND

SUSTAINABILITY REPORT

Pursuant to regulations 34 of the Listing Regulations, Business Responsibility and Sustainability Report for the year is presented in a separate section forming part of the Annual Report.

27. DEPOSITS

The Company has not accepted deposit from the public within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

28. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The details of energy conservation, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014 is annexed herewith as Annexure - D to this report.

29.PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company have duly complied with the provision of Section 186 of the Companies Act, 2013 during the year under review. The details of loans, guarantees and investments are covered in the notes to the Financial Statements.

30.SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, no significant / material orders were passed by the regulators or the Courts or the Tribunals impacting the going concern status and the Companys operations in future.

31. CHANGE IN NATURE OF BUSINESS, IF ANY

There was no change in the nature of business during the year under review.

32. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING FINANCIAL POSITION OF THE COMPANY

There were no other material changes / commitments affecting the financial position of the

Company or that may require disclosure, between 31 March 2023 and the date of Boards Report.

33. LISTING WITH STOCK EXCHANGES

The Company confirms that it has paid the Annual Listing Fees for the year FY23 to the NSE and the BSE where the Companys equity shares are listed.

34. ANNUAL RETURN

Pursuant to the provisions of section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the website of the Company at the link: https://www. cosmofirst.com/investors/notifications-notices.

35.INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Details of Unclaimed Dividend and Shares transferred to IEPF during FY23 are given in Corporate Governance Report.

36. CORPORATE SOCIAL RESPONSIBILITY

As a socially responsible Company, Cosmo is committed to increasing its Corporate Social Responsibility (CSR) impact with an aim of playing a bigger role in sustainable development of our society. In pursuit of this objective, a Corporate Social Responsibility (CSR) Committee had been formed by the Company which oversees and facilitates deliberation on the social and environmental consequences of each of the decisions made by the Board.

The Company has in place a Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The initiatives undertaken by your Company during the year have been detailed in CSR Section of this Annual Report. The Annual Report on CSR activities in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, is set out herewith as Annexure - E to this Report.

37.PROMOTION OF WOMENS WELL BEING AT WORK PLACE

Cosmo First has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the said act. There have been no complaints of sexual harassment received during the year.

38. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is also enclosed as Annexure - F to this Report.

The information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 pertaining to the top ten employees in terms of remuneration drawn and their other particulars also form part of this report. However, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Companies Act, 2013, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

39. EMPLOYEE STOCK OPTIONS

The Company has an Employee Stock Option Plan for the Employees of the Company and its Subsidiaries named as Cosmo Films Shares Based Employee Benefit Scheme, 2021 ("CF SBEB Scheme"). The Plan is in compliance with the SEBI (Share Based Employee Benefits) Regulations 2014 and is administered by the HR, Nomination and Remuneration Committee of the Board constituted by the Company pursuant to the provision of Section 178 of the Companies Act, 2013 and Listing Regulations.

The details of the CF SBEB Scheme form part of the Notes to accounts of the Financial Statements in this Annual Report and also available on our website at www.cosmofirst.com.

40. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of knowledge and belief and according to the information and explanations obtained by them, hereby confirm that:

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

II. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates are made so as to give a true and fair view of the state of affairs of the Company as of 31 March 2023 and of the profits of the Company for the year ended on that date.

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 of the Company have been prepared on a going concern basis.

V. Proper Internal Financial Controls were in place and that the Financial Controls were adequate and were operating effectively.

VI. Systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

41. AWARDS & ACCOLADES

During the Year, Company has bagged:

• Featured as one of the Top 10 Companies from India in Forbes Asia Best under A Billion 2022 list

• Ranked as one of Indias Fastest Growing Companies by BW Business World Magazine

• Cosmo First grabbed "Most enterprising Business Award" by prestigious Entrepreneur Magazine

• Zigly bagged the "Top 100 D2C Brands" of the year by the Retailer Magazine.

• Cosmo Speciality Chemicals won the Award for "20 Most Promising Chemical Companies in India 2022" by Innovative Zone Magazine.

42. SECRETARIAL STANDARDS

During the FY23, the Company has complied with applicable Secretarial Standards issued by the Institute of the Company Secretaries of India.

43. ACKNOWLEDGEMENT

Your Directors would also like to extend their gratitude for the co-operation received from financial institutions, the Government of India and regulatory authorities, and the governments of the countries we have operations in. The board places on record its appreciation for the continued support received from customers, vendors, retailers and business partners, which is indispensable in the smooth functioning of Cosmo. Your Directors also take this opportunity to thank all investors and shareholders, and the stock exchanges for their continued support. Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. Their contribution to the success of this organization is immensely valuable.

	For and on behalf of the Board of Directors
Date: 29 May 2023	Ashok Jaipuria
Place: New Delhi	Chairman