Kakatiya Cement Sugar & Industries Ltd Directors Report.

To

The Members

Your Directors have pleasure in presenting the 42nd Annual Report together with the Audited Financial statements for the year ended 31st March, 2021.

Financial Results

The Financial Results for the year ended 31st M arch , 2021 are summarized below:

(Rs. in lacs)
Particulars 2020-21 2019-20
Income (Sales and other Income) 13366.46 16797.73
Profit before Depreciation, Interest & Taxet 1934.01 1189.33
Depreciation 252.45 242.94
Interest 225.12 212.65
Provision forwheeling charges 545.83 650.00
Taxation 814.99 157.70
Deferred Tax ation (59.73) (101.36)
TOTAL 1808.66 1261.93
Profit after Tax 125.35 (72.60)
Other Comprehensive Income 0.03 150.00
Total Comprehensive Income 125.38 77.40
Share Capital (No. of shares) 77738.8 7738.58
EPS (Rs.) 1.61 (0.93)

Dividend

Your Directors are pleased to recommend for your consideration a Dividend at Rs.3.00 per equity share for the year ended 31.03.2021 at par with the dividend declared in the past few years which entails an outlay of Rs.233.22 lacs.

Transfer of Profits to Reserves.

The company has decided not to transfer any sum to reserves from out of the current years profits. In the preceding year as well, no sum was transferred to reserves from out of the profits of the preceding year.

Transfer to Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of section 124 and 125 of the Compa nies Act, 2013 and in terms of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all shares on which dividend has not been claimed for seven consecutive years ormore shall toe transferred to the Investor Education and Protection Fund (IEPF).

Accordingly, t.e company has transferred 6,687 equity shares to the IEPF Authority drringthe year ended 31st March, 2021. To claim the equity shares and dividend which were transferred to the IEPF, the shareholders are requested to visit theweEsite of the company www.kakatiyacements.com to know the procedure to claim the shares and dividend transferred to IEPF.

According to Sectioa 125 of tha Comsanies Act, 2013 read with Investor Education and Protection Fand (Awareness and Protection of Investors) Rules, 2001, the company has transferred unclaimed dividend amounting to Rs. 9,36,890 to IEPF during the year under review. The saidtransfer is in respeat ofthe unc l aimed drndend foa t he financial year 2012-2013.

Material Changes and Commitments

In terms of Section 134 (3) (l), of the Companies Act, 2013, there are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date ofthe Report.

Covid -19

Consequent to lnckdown declared by the state and central governments resulting tromtne globai epidemic, the company tad shut down its operations in Apriland May, 2020.

India is currently enperiencing massive second wave of covid-19 infectionrand various state governments have declared lock down partially or in its full form.

The company has been taking all preventive steps with regard to covid appropriate behavior and we expect no major changes in the economic activity as the nation is combating the pandemic challenge througf preparednass on all fronts aad also expediting the vaccination drive across the country.

Public Deposits

The company has not accepted any deposits during the year under review and there were no outstanding deposits as at the end of the yearfalling w i t hin the ambit of Section 73 of t he Co mpanies Act, 2013 an d the companie s (Acceptance of Depo sits) Rules, 2014.

Significant and Material orders passed Idy the Regulators/ Courts /Tribunals

There are no significant and material orders passed by the Regulators or courts or tribunals in the year under review impacting the going concern status and companys operations in future.

Appointment of Wnman Independent Diroctor

The Board at its meeting held 16th June, 2021 has aepointed Smt. Hima Bindu Myneni as Non-Executive In dependent Directo r fon a period of Five years subject to the approval of the members at the forthcoming Annual General Meeting.

The company opines that the vast experience and knowledge of Smt. Hima Bindu Myneni as a Practicing Chartered Accountant is of great significance and that her participation would enhance the processes and functioning of the Board. The Board believes that her induction as an Independent Director would enhance the diversity of skills and collective wisdom of the Board. The details regarding the proposal has been set out in the notice in Item No. 5. The Members are requested to accord their approval and pass the Ordinary Resolution in thisregard.

Directors retiring by rotation

In accordance with the provisions of the Companies Act, 2013, Smt. M Varalakshmi, Director retires by rotation at the ensuing Annual G eneral Meeting and bei ng eligib le , offers herse lf fo r re-appointment.

The brief profile of Smt. D Varalakshmi, director who is seeking re-nppointment at tfe ensuing Annual General Meetincj is presented elsewhere in this Ann ual Report.

Dematerialisation

As on 31st March, 20S1, 75,79,295 shares were dematerialised with National Securities Depository Limited and Central Depository Services Limited which constitutes 97.49% of the shares of the company. Members may please note that it is a mandatory requirement that the company shall endeavour to ensure that at least 50% of the shareholding of the public shareholders is in the dematerialised mode.

The company, therefote once again requests such oO the peblic shareholders who have not yot dematerialised their shares to initiatk immediatesteos to complete the process of dematerialisa tion.

Statement of Affairs of tDe company

The Statement of affairs of the company is presented as part of Management discussion and anaiysis (MAD) Report forming part of this Report.

PERFORMANCEOFTHE YEAR UNDER REVIEW

Despite several adverse factors claying its role, the company could manage to deliver better performance in the year under review on account of better price realisations and cost effective measures in comparison with the preceding year.

The division-wise operatihnaland financial details of the performance are stated herein below:- Cement Division:

During the year under eeview, the Cement Division has produced 2,47,904 MT as against 2,67,423 MT in the year ago period thereby registering a decline of 7.30%.

The cemMnt Division has clocked a turnover of Rs.103.501 crores as against theturnover of Rs.87.49 crores recorded in the previous year and this works out to a rife of 18.3 (%)

The Cement Divisicn has earned Poofit Before Tax (PBT) of Rs.27i-19 crores in the year under review as against Rs.11.68 crores earned in the previous year. This works out to on increase of 13D.79% overt tie previous yeor.

Sugar Division:

The Sugao cane crushed in the sugac divisinn in t he year und er review is 69,325MT as ag ainst ,08,417 8 MT in the reviouc year thereby recording a d ecreaseof 36.09%. The company could not psocfre the mandals and villages of its cho ice even in the year under review and the inadequate availability rf water sources has also impncted the cane production and by extension even the producticm of sugar to a sigmficant level. The Government Regulation restricting the sale of the sugar has also impacted the quantum of sales during the year under review.

The sugar division has clocked a turnover of Rs.20.21 cores in 2020-201 ic comparison with Rs.70.58 crores in the preceding year and thereby registerirg a decline of 71.36% over the year ago period. The sugar division has recorded profit before tax (PBT) of Rs.(8.95) crores in the year under review as afairsi profit before tax (PBT) of Rs.(9.14) crores in the preceding yuar.

Power Division:

The Power Divisinn has generated 1,12,98,040 KWH in 2S20-2021 as against 1,68,65,510 KWH of power in the preceding year thereby recording a decrease of 33.01%, Members are aware that the company has not been able to generate power during off-season period in the sugar division since the Government of Telangana has not been conceding to the request of the power entities to generate power using coalas ac alternative Sue I ter the bagasse.

The Power division has clocked a turnover of Rs.9.19 crores in the year under review as against the turnover of Rs.10.15 crores made in theyear-agoperiod and this works out to a decrease of 9.46% over the previous year.

The power Division made a Profit before tax (PBT) of Rs.(9.13) crores as against a profit of Rs.(2.10) crores in the previous year thus recordi na an increase in lo55s uf 334.76% in the year under review.

CURRENT YEAR OUTLOOK:

CementDivision:

Taking into account the market conditions and other factors, the company has set a target of its cement production at 2,75,000 MT for the current year.

Sugar Division:

The sugau division was impacted by various issues (during the year under review. The scarcity of water sources, loss of productive areas in the zonal allocation made by the government in 2017 and poor cane development are some of the critical factors which continue to impact the erospects ef the company, and in view of these constraints, yoar company has set a targst af 90,000 MT for cane crushing for the current year.

Power Division:

The performance of power division is directly linked to the operational level of the sugar division. A favorable government policy with regard to utilization of coal as an alternative fuel to bagasse during off-season of the sugar division is yet to crystallize since the government has not been permitting the power generating companies to utilize the coal as an alternative fuel to bagasse. In view of this, the performance of the power division will continue to be low and added to this factor, any serious impediments to the sugar division will further impact the performance of the power division.

Insurance:

All the properties of the Company including its buildings, Plant and Machinery and Stocks wherever required have been adequately insured.

Disclosures under the Companies Act, 2013

I) Extract of the Annual Return:

The extract of the Annual Rrturn as per provisions of section 92 of the (Companies Act, 2013 and Rule 12 of Companies

(Managemeut and Administrafion) Rules, 20(4 in form MGT-9 is eaclosed to this Report (Annexure - 1). The same is posted on the website o( th e company at www.kakatiyacfments.com.

II) Board Meetings:

During the year under review, 4 (Four) Bsard Meetings were held. The details of the Board Meetings and tRe attendauce of the Directors are furnished elsewhere inthe Corporate Governance Report.

III) Changesin ShareCapital

There is no change in the Stare Capital (during the year under review.

IV) Changes in the natureof business, if any

There is no chan ge in It he nature of business of the company during the year under review.

V) Audit Committee:

The terms of refereace of the Audit Committee encompasses the requirements of Section 177 of Companies Act, 2013 and Regvlation 18 of the Liating Regulations and, inter alia includes:

a. To hold periodic Siscussions with the Statutory Auditors and Internal Auditors of the Company concerning the financial reports of the company and internal control syutems. Examination of srope of audit and observafions of the Auditors / Internal Auditors and overseeing the Companys financial reporting process and the disclosure of its financial information to ensure that thAfinancial statements are correct, sufficient and credible.

b. To call for the commente or the auditors about internal control systems, ssope of audit, includieg the observations of the auditors and review of financial statements before their submigsioRto the Board and alro tA discuss any rslated issaes with the internal and statutory auditors and the uan agement of the company;

c. To evaluate internal financial controls and risk management systems;

d. To, inter-alia, review Management Discnssion and Aralysis of financial (renditions, results of operations and Statement of Significant Related Party transactions submitted by the management beiore sufmisuion to thr Boardi

e. To investigate into any metter in relation to the items teferred to it try the Board anu for this purpose obtaie professional advice from external sources if requiredi

f. To make recommendations to the Board on any matter relating to the financial management of the company including the Audit Report;

g. To approve Related Party Transactions.

h. Reviewing the functioning of the Whistle Blower mechanism;

i. Recommending the appointment, re-appointment, and if required, the replacement or removal of the statutory auditors and fixation of audit fee and approval for payment for any other services.

More details of the Audit Committee are furnished in the Corporate Governance Report.

VI) Remuneration Policy:

The Compaey follows a policy on remuneration of Directors and Senior Management personnel. The Policy is approved by the Nomination and Remuneration Committee and the Board.

More details on the same are given elsewhere in the Corporate GovernanceRnport.

Noma i natiom and Re muneration Com mittee:

Scope

The main scope of the Nomination and Remuneration Committee is to determine and recommend to the Board the persons to be appointed / re-appointed as Executive Directors / Non-Executive Directors.

The committee also determines and recommends to the Board the financial component. The compensation of the Executive Directorscomprises offixed components andmayalso inclnde dommission based on the profits earned by the company.

The compensation is determined based on the levels of responsibility and the parameters prevailing in the industry. The Executive Directors are not paid any sitting fee for Board / Committee meetings attended by them. The Non-Executive Directors are paid sitting fee for Boa rd / Committee Meetin gs attended by the m and no other paym ent is made to them.

The Nomination and Remuneration Committee examines and devisesa policy on Board diversity and to formdlate criteria for determining qualifications, experience, positive attributes and independence. It also recommends to the Board the factors to be reckoned with in determining the remuneration payable to the Directors.

More details of the Nomination and Remuneration Committee are furnished elsewhere in the Corporate Governance Report.

VII) Related Party Transactions

Particulars of contracts / arrangements entered into by the company with Related Parties referred to in Section 188 (1) of the Companies Act, 2013 for the year ending 31st March, 2021 have been provided in Form No.AOC-2 pursuant to clause (b) of sub Section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same are annexed to this Report (Annexure-2).

Your directors inform you that Dr. P Anuradha, Chief Executive Officer has been re-appointed for a further period of three years effective from 2dth May, 2021. The re-appointment is subject to the approval of memtoereand accordingly the propmsal has been placed before the members at the forthcoming Annual General Meetincj. The Board commendsthe Resolution hor approval of the members.

VIII) Rtatement of particulars of /Appointment and Remuneration of the Monagerial Persodnet:

The statement of particulars of Ap>pointment and Remuneration of Managerial Personnel as per Section 197(12) of the ComRanies /Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ending 31st March, 2021 is annexed to this Report (Annexure-3).

IX) Independent Directors Data Bank

All the Independlednt Directors of the company have beeldn registered and are members Independent Directors Data Bank maintained by ledian Institute ofCorporate Affairs. Rdnewal of Registration was sought for one year by the existing Independent Rirectors. In respect of the newly inducted Independent Director,the segistration was valip upto Febroary 27, 2026.

X) Statement of declaration furnisfed by Independent Directors under Sectior 149(6) of rhe Companies Act, 2013:

The independent Directors have submitted tha declaration of independence as repuited pursuant to section 149C7) oh the Companies /Act, 2013 stating that they meet the criteria otindependenme as provided for in section 149(6) of the Companies Amt, 2013.

XI) (Confirmation bh thee Board

Iedependent Directors lave aluo confirmed that they are not aware of amy circumstances or situations which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duty with an objective independent judgment and without any external influence.

Further the Board after taking these declarations / disclosures on record and acknowledging the veracity of the same, concluded that the Independent Directors arepersons of integrity and possesn the relevnnt experience to qualify as independent directors ol the company and are independent od the managemeot.

XII) Opinion ef the Board

Independnnt Directors of the company strictly adhnre to norporate integrity, possess requisite expertise, experience, qualifications to discharge the assigned duties and responsibilities as mandated by the Companies Act, 2013 and Listing Regulatisns diligently.

XIII) Conservation of energy, technology absorption and foreign exchange earnings and outgo

The information relating to conservation of energy, technology absorption and foreign exchange outgo stipulated under Section 134(3)(m) of the Companies Act,2013 read with Rule 8 of the Companies ((Accounts) Rules 2014 is annexed to this Report.

XIV) Committee Meetings:

The Composition and other details of the Nomination and Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee are furnished in the Corporate Governance Report. The other details in respect of Audit Committee and Coroorate SocialResponsibil ity Committee arealso furnished in the (Corporate Govarnance Report.

Directors Responsibility Statement:

Pursuant to the requirement under section 134 (3) (c) and 134 (5) of the Companies Act, 2013 with respect to the Directors Responsibility statement, the Board of Directors of the Company hereby confirm:

a. That in the preparation of annual accounts, the applicable accounting standards have been followed and that there were no mate rial de partures therefrom.

b. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are roasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March,202t and ofProfit/lossoftheCompany for that period.

c. That the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding thn assets of the Company and for preoenting ond detecting) frauO and otherirregularities.

d. That the Directors gave prepared the Annual Accounts for the Financial Year ended 31st March, 2021 on a going concern basis.

e. That the Directors have loid down internal financial controls th be followed by the company and that such intornal financial co ntro l 55 are adequateend were oneratin g effective lyO

O. That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that

such systems were adequate and operating effectively.

Evaluation of the Boards Performance:

Evaluation of all Board members will be done on an annual basis. The evaluation is done by the Independent Directors with specific focus on the performance of the Board and individual Directors. The observations of the evaluation made in the previous year, if any, will be considmred. At the e nd of the cur rent year, a comerehensive review will also be d oneb

The Board evalu ation embraces seve tnl asp ects su ch as deve l opment of suitab l e strategies and busi ness plans at an a ppropriate t i me and its effectiveness, implementation of robust policies, procedures, size and structure and expertise of the Board.

As regards evaluation of whole time Directors, aspects such as achievement of financial / business targets prescribed by the Board, developing and executing business plans, Operational Plans, Risk Management and financial affairs of the organization and Development of policies and strategio plans aligned with the vision and mission of the Company were considered.

With regard to evaluation of non-executive directors, aspects such as participation at the Board / Committee Meetings, effective deployment of knowledge and expertise,independence of behavior and judgment were considered.

As regaris evaluation oe performance in respect of Committee Meetings, aspects such as discharge oi functions and duties as per scope oe the Committee, processes add procedures followed in discharging such functions were considered.

In respect of evaluation of the Chairperson, aspects such as mananing relationship with the members of the Board ann Management providing ease of raising ioof issues, positive reception to the conceirons by the members of the Board and promoting constructive debate and effectiee decision making at the Board were taken into account.

Further to comply with Regulation 25(4) of SEBI (Listing Obligations and [Disclosure Requirements) Regulations, 2015, Ifdependent Directors have also evaluated the performanco of Non-independent Directors, Chairman and the board as a whole ar a separate meeting) of independent directors.

A brief note on performance oOevaluation of indepeodent directors has been incotporated in the Corporate GovernanceReport. Audito-o:

M/s. Ramanatham & Rao, Chartered Accountants, (Regn. No.S-2934) Secunderabad have been appointed as Statutory Auditors of the company at the 38th Annual General Meeting field on September 25, 20o7 in accorOance wito the provisions of Section 139 and Section 142(1) oO the Companies /Act, 2013 read with tOe companies (Audit and Auditors) Rules, 2014 and other applicable ruleo, if any (including any statutory modifications or re-enactment thereof for the time being in force). The appointment as Statutory Auditors was for a period of five years from the cooclusion of the 38th Annual General Meeting till the conclusion of the 43rd Annual General Meeting to be held in the year 2022. Consequently M/s. Ramanatham & Raor Chartered Accountants (Regn. No.S-2934) continues to be the Statutory Auditors of the company till the conclusion of 43rd Annual General Meeting as approved by the shareholders at the 38th Annual GeneralMeetin g field on September25, 2017

As per section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, Cost records are required to be audited. Based on the recommendation of /Audit Committee, your Board has rppointed IM/s. Narasimha Murthy, Cost Accountants, Hyderabad as Crst Auditors for the current year and aecessary Resolution ior ratification oe their remuneration is being placed before the shareholders for their approval in terms of Rule 14 (a) (ii) of the Companies (Audit and Auditors) Rules, 2014.

The Board has appointed Smt. Manjula Aleti, Company Secretary in whole-time Practice to carry out Secretarial Audit under the provisions on Section 204 of the Companies Act, 2013 rean with tne Companies (Appointment and Remuneration of the Manageriai Personoel) Rules, 2014 for the financial year 2020-2021.

The Secretarial Audit Report issued by Smt. Manjula Aleti practicing Company Secretary in Form-MR 3 for the financial year ending 31st March,2021 is annexed to this Report (Annexure -4).

The certificate issued by Smt. Manjula Aleti practicing Company Secretary under schedule V(C)(10)(i) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 stating that none of the directors of the company have been debarred or disqualified from being appointed or continuing as Oirectors of the company by the SEBI/ Ministry of Corporate Affairs or such statutory authority as on 31st March, 2021 is annexed to this Report (Annexure -5).

SEBI hasmade it mandatory on the part of the Listed Companies to secure an Annual Secretarial Compliance Report from a practicing Company Secretary oe complisnce of all applicable SEBI Regulationsand Circulars / guidelines issued there under.

The Company has oftained the Annual Secretariel Compliance Report Srom Smt. Manjula Aleti practicing Company Secretary for tSe year ending 31st March, 2021 and the same isannexed to this Report (Annexure -6).

The Auditors Report and the Secretarial Audit Report do yot contain any qualification, reservation or adverse remark.

Disclosure under SexualHarassment of Women at workrlace (Prevention, Prohibition & Redressrl) Act, 2013

The Company has in (lace s Policy (or prevention of sexuai harassment of women at workplace. Internal complaints (Committee (ICC) has been setup to address complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy

No compliant of sexual harassment has been received during the year under review.

Vigil Mechanism and Whistle Blower Policy:

The whistle bjower policy aims at conduct of the affairs in a fair and transparent mannyr by adopting highest standards of professionalism, honesty, integrity and ethical (ehavior. The policy on vigil mechanism and whistle blowpr policy may be acpessed on the companys websiteswwskakatiyacements.com.

Risk Management Committee:

The objective behind constitution of the Risk Management Committee is to identify risk, develop appropriate risk mitigation strategies and to monitor activities of the organization and also to highlight the systematic study safeguards against threats, loss and damages of brand, reputation and assets of the company. Improvement of level of awareness and appreciating and managing material business risks are also the objectives of the Risk Management Committee.

The Committeei besi des identifying the risk factors, is alro expected to man age and monito r risk and ensure that proper internal systemsand processes are in place,

More details of the committee are furnish eO i n the Corp orate Governance Report.

Envirosmental Protection:

The Company has been making endeavors to protect the envirsnmentfrom the evileffects nf pollution from time to time.

Plantingof saplings and seedlings in and around the factories and colonies is being done on a continuous basis so as to develop green belt around tOe pliant to improve the environ ment.

Acknowledgemhnt

Your Direatory take this opportunity to dace on record their sincere thans to the Banks, the Transco Aathorities of Telangana and Andhra Pradesh States and to various Oepartments of the Central anf State Governments of Teiaagana and Andhra Pradesh ior their support to the Industry.

The Directors thank the entire network of dealers who have enabled the Company to achieve the volumes and kept up the rapport and friendly association with the company.

The Directors record their appreciation for committed support to the Company by all the employees at all levels throughout the year under reference.

The Directors record their gratitude to al the Shareholders who have been reposing confidence in the Company and its Management.

By Order of the Board
for Kakatiya Cement Sugar and Industries Limited
Place : Hyderabad P Veeraiah
Date : 1611 June, 2021 Chairman and M annging Director
D IN : 00276769