Kanoria Chemicals & Industries Ltd Directors Report

TO THE SHARE HOLDERS

Your Directors have pleasure in presenting the Sixty Fifth Annual Report, along with the Audited Accounts of the Company for the financial year ended 31^st March 2025.

Detailed information on the performance of your Company appears in the Annual Report. A discussion on the operations of the Company is given in the section titled The Year in Review. Some of the statutory disclosures, however, appear in this Report. This Report, read along with the other sections, provides a comprehensive overview of the Companys performance and plans.

FINANCIAL RESULTS

The financial performance of the Company for the year ended 31^st March 2025 is summarized below:

(Rs. in million)

Particulars	2024-2025	2023-2024
Total Income	6,925.54	6,021.01
Profit before Finance Costs, Depreciation & Amortization, Exceptional items and Tax	535.78	316.93
Finance Costs	160.70	115.36
Depreciation and Amortization	199.68	182.73
Profit before Exceptional Items and Tax	175.40	18.84
Exceptional Items	449.86	-
Profit/(Loss) from continuing operations before Tax	(274.46)	18.84
Tax Expenses	114.32	(5.71)
Profit/(Loss) from Continuing Operations after Tax	(388.78)	24.55
Profit/(Loss) from discontinued operations before Tax	(2.75)	(51.71)
Gain related to sale of discontinued operations	27.82	-
Tax expenses of discontinued operations	16.09	(16.02)
Profit/(Loss) after tax from Discontinued Operations	8.98	(35.69)
Profit/(Loss) for the year	(379.80)	(11.14)
Other Comprehensive Income for the year, net of Tax	(0.72)	(0.66)
Total Comprehensive Income for the year	(380.52)	(11.80)

STATE OF COMPANYS AFFAIRS

During the year under review, the operational performance of the Companys chemical plants located in Ankleshwar, Vizag, and Naidupeta remained stable and efficient. All plants operated at healthy levels, contributing to increased manufacturing output leading to higher revenue and operating profits. The imposition of anti-dumping duty in May, 2024 on import of Pentaerythritol (one of the Companys key product) from a few countries also resulted in higher margins in the product and for the Company. While the situation has improved to some extent, we remain cautious with the cheap imports of Hexamine produced by the Company.

The Company remains firmly committed to its long-term strategic roadmap, Vision-2030, aimed at driving sustainable growth, leveraging economies of scale and expanding product offerings across domestic and international markets. In line with this vision, the Company successfully commissioned its 345 TPD Formaldehyde plant at Ankleshwar in September 2024, taking the total Formaldehyde production capacity to 1400 TPD across all manufacturing locations. Further, a Hexamine plant with 18 TPD capacity was also commissioned at Ankleshwar in September 2024, increasing the total Hexamine capacity to 52 TPD. These initiatives strengthen the Companys leadership position in the Indian market.

At the time of writing, the Company has started construction of a new Triacetin plant, as well as a multi-purpose plant for manufacturing Pentaerythritol Derivatives and other specialty chemicals. Several other product and process innovations are also underway to diversify the product portfolio and cater to emerging application areas. Notably, capacity augmentation and technology upgrades were undertaken at the Pentaerythritol and Resin plants to increase throughput and improve product quality. The Resin business has seen sustained demand from core segments, prompting further investment in capacity expansion, which is currently underway.

The returns from the erstwhile Solar Power Division have not been commensurate with the investments and risks involved in it. The Company therefore, divested the Solar Power Division on a slump sale basis based on a resolution of its Board of Directors passed by circulation on 3^rd May, 2024.

No material changes and commitments have occurred after the close of the financial year 2024-25 till the date of this Report, which affect the financial position of the Company.

A brief description of the operations of the subsidiaries of the Company appears later in this Report.

DIVIDEND

The Board of Directors has not recommended any dividend for the financial year ended 31^st March 2025.

The Dividend Distribution Policy as approved by the Board may be accessed on the Companys website at the following link: https://a.storyblok.com/f/209886/x/fd9ac34653/dividend-distribution-policy.pdf

TRANSFER TO RESERVES

The Company has not transferred any amount to Reserves for the financial year ended 31^st March 2025.

CREDIT RATINGS

Care Ratings Limited has reviewed and rated the Long-term Bank facilities of the Company as CARE BB+ Stable, Rating Action : Downgraded from CARE BBB and removed from Rating watch with Negative Implications, Stable outlook assigned from the existing rating of CARE BBB (RWN) and rating for the short-term bank facilities as CARE A4+, Rating Action: Downgraded from CARE A3+ and removed from Rating watch with Negative Implications from the existing rating of CARE A3+ (RWN) on account of recent developments including operational and financial performance of the Company for FY24 (Audited) and 9MFY25 (Unaudited) and revocation of order received from Gujarat Pollution Control Board (GPCB) regarding closure of Industrial Plant at Ankleshwar, Dist. Bharuch and resumption of operations of the plant from 10^th October, 2024.

CONSOLIDATED FINANCIAL STATEMENT

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) and provisions of the Companies Act, 2013 (“Act”), the audited Consolidated Financial Statement for the year ended 31^st March 2025 has been annexed with the Annual Report.

DEPOSITS

During the year under review, the Company has not accepted any deposits from the public and that as at the end of the year there were no outstanding deposits under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.

INTERNAL FINANCIAL CONTROL

The Company has in place adequate internal financial controls with respect to financial statements. The Companys Internal Control Systems are commensurate with the nature, size and complexity of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information. The policies and procedures adopted by the Company ensure prevention and detection of frauds and errors, accuracy and completeness of the records and timely preparation of reliable financial statements. No reportable material weakness in the design or operation was observed during the year.

DIRECTORS

During the year under review, following changes took place in the Directorships:

Shri Amitav Kothari (DIN: 01097705), Shri A Vellayan (DIN: 00148891) and Shri Hemant Kumar Khaitan (DIN:00220049) ceased to be a Director of the Company on end of their second term as Independent Director on 4^th September, 2024.

At the 64^th Annual General Meeting held on 16^th September, 2024, the Shareholders approved the appointment of Shri Hemant Kumar Khaitan as a Non-Executive Non-Independent Director with effect from 4^th September, 2024, liable to retire by rotation.

The Board are of the view that the contribution given by Shri Hemant Kumar Khaitan to Board processes and his knowledge, experience and performance, his continued association would benefit the Company.

At the 64^th Annual General Meeting held on 16^th September, 2024, the Shareholders approved the appointment of Smt. Meeta Makhan (DIN: 07135150) and Shri Sumanta Chaudhuri (DIN: 01998420) as Independent Directors of the Company, for a period of 5 consecutive years with effect from 4^th September, 2024, not liable to retire by rotation.

The Board is of the opinion that Smt. Meeta Makhan and Shri Sumanta Chaudhuri are persons of integrity, expertise, and are competent and proficient to serve the Company as Independent Directors.

Shri Saumya Vardhan Kanoria (DIN: 02097441), was re-appointed as the Whole-Time Director of the Company for a period of 3 (three) years with effect from 1^st April,2025. His re-appointment was approved via Postal Ballot dated 10^th May, 2025.

Except the above, there has been no change in the Board of Directors during the Financial Year ended March 31, 2025.

Smt. Madhuvanti Kanoria (DIN:00142146) retires by rotation at the ensuing AGM under the applicable provisions of the Act and being eligible, offers herself for re-appointment as a Director of the Company.

Additional information, pursuant to the Listing Regulations and Secretarial Standard on General Meetings (SS2) of ICSI in respect of Directors seeking appointments and re-appointment is given in the AGM Notice of the Company.

Further, as declared by them, none of the Directors of the Company is disqualified from being appointed as a Director, as specified in section 164(2) of the Companies Act, 2013 and rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules 2014 or is debarred or disqualified from being appointed or continuing as Director of companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority.

The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act and Regulation 16 (1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In the opinion of the Board, the said Directors fulfill the conditions for appointment/re-appointment/continuation as Independent Directors as specified in the Act and the Listing Regulations and they are also independent of the Management.

KEY MANAGERIAL PERSONNEL

Smt. Neha Saraf resigned as the Company Secretary and Compliance Officer of the Company with effect from the close of business hours on 15^th December 2024. Upon recommendation of the Nomination and Remuneration Committee, the Board of Directors in its meeting held on 13^th November 2024, approved the appointment of Smt. Pratibha Jaiswal (ACS 33981) as Company Secretary and Compliance Officer of the Company with effect from 16^th December, 2024. Save and except as stated above, there are no other changes in the KMPs during the year.

STATEMENT OF INTEGRITY, EXPERTISE AND EXPERIENCE OF INDEPENDENT DIRECTORS

All the Independent Directors of the Company have been registered and are members of Independent Directors Databank maintained by Indian Institute of Corporate Affairs at Manesar (IICA). They have confirmed their compliance with Rules 6 (1) and 6 (2) of the Companies (Appointment and Qualification of Directors) Rules, 2014 as amended. In the opinion of the Board, the Independent Directors of the Company have vast experience, expertise and integrity and their continued association would be of immense benefit to the Company.

PERFORMANCE EVALUATION

The Company has framed the criteria for performance evaluation of Independent Directors, the Board, the Board Committees and other individual Directors. Criteria for performance evaluation of the Chairman & Managing Director, Executive Director and Non-Independent Directors have also been framed.

The criteria, among others includes factors such as preparation, participation, engagement, personality and conduct, value addition, strategic planning and vision, team spirit and consensus building, leadership quality, understanding and focus on key business issues, independent thinking and judgment, quality of analysis, experience and business wisdom, management qualities, awareness, motivation, integrity, ethics and receptivity. The criteria for evaluating the Boards functioning/effectiveness inter alia includes its structure, strategic review, business performance review, internal controls, process and procedures.

The evaluation forms containing the criteria as framed were circulated and on the basis of responses, the Board evaluated the performance of individual Directors, its own performance and that of its Committees. The Independent Directors in their separate Meeting also carried out the performance evaluation of the Chairman & Managing Director, Executive Director and other non-independent Directors as well as the Board of the Company. The Directors expressed overall satisfaction on the performance and functioning of the Board, its Committees and the Directors. No action was required to be taken on the previous years observations and also no action is required to be taken on this years observations.

FAMILIARISATION PROGRAMMES

The Board Members are provided with necessary documents, reports and internal policies to enable them to familiarize with the Companys procedures and practices. Periodic presentations are made at the Board and Board Committees, on business and performance updates of the Company. Relevant statutory changes encompassing important laws are regularly made available to the Directors. Efforts are also made to familiarize the Directors about the Company, their roles, rights, responsibility in the Company, nature of the industry in which the Company operates, business model/ procedures/ processes of the Company, etc. through various programmes including plant visits. The details of the familiarization programmes for Independent Directors are put on the website of the Company and can be accessed at the link: https://a.storyblok.com/f/209886/x/8933adf8b1/familiarisation-programme-for-independent-directors.pdf

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

During the financial year 2024-25, the Company held 4 (four) Meetings of the Board of Directors. The details of the Meetings and attendance of each of the Directors thereat are provided in the Report on Corporate Governance forming part of the Annual Report.

AUDIT COMMITTEE

The Audit Committee of the Company comprises of Smt. Meeta Makhan, Shri Suhana Murshed and Shri Sidharth Kumar Birla, Independent Directors and Shri Rajya Vardhan Kanoria, Chairman & Managing Director of the Company. Smt. Meeta Makhan is the Chairperson of the Committee. During the financial year 2024-25, the Company held 4 (four) Meetings of the Audit Committee. The details of the Meetings and attendance of each of the Members thereat are provided in the Report on Corporate Governance forming part of the Annual Report.

The terms of reference of the Committee have also been provided in the Corporate Governance Report.

There has been no such incidence where the Board has not accepted the recommendation of the Audit Committee during the year under review.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee of the Company comprises of Smt. Suhana Murshed, Independent Director, Shri Saumya Vardhan Kanoria, Whole-Time Director and Hemant Kumar Khaitan, Director of the Company. Smt. Suhana Murshed, is the Chairperson of the Committee. The Committee met once during the year under review, details of which are provided in the Report on Corporate Governance forming part of the Annual Report.

The terms of reference of the Committee have also been provided in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee of the Company comprises of Shri Sidharth Kumar Birla, Shri Sumanta Chowdhury and Smt. Meeta Makhan, Independent Directors, and Shri R. V. Kanoria, Chairman & Managing Director of the Company. Shri Sidharth Kumar Birla is the Chairman of the Committee.

The Committee met four times during the year under review, details of which have been provided in the Corporate Governance Report.

The terms of reference of the Committee have also been provided in the Corporate Governance Report.

The Board of Directors of the Company, based on the recommendation of the Nomination and Remuneration Committee, has formulated the Nomination and Remuneration Policy, which contains the matters with regard to criteria for appointment of Directors and determining Directors independence and policy on remuneration for Directors, Senior Managerial Personnel and other employees, and the same may be accessed at the Companys website at https://a.storyblok.com/f/209886/x/d31aa193a6/nomination-and-remuneration-policy.pdf

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee of the Company comprises of Smt. Madhuvanti Kanoria, Director, Shri R.V Kanoria, Managing Director and Smt. Meeta Makhan, Independent Director. Smt. Madhuvanti Kanoria is the Chairperson of the Committee.

The Committee met twice during the year under review, details of which have been provided in the Corporate Governance Report.

The terms of reference of the Committee have also been provided in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

The Company acts as a good Corporate Citizen, and in keeping with its philosophy, always strives to conduct its business in an inclusive, sustainable, socially responsible and ethical manner. The Company has in place a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company. The Corporate Social Responsibility Policy of the Company enables it to continue to make a responsible contribution towards the welfare of society.

The Company will undertake the CSR activities as are enumerated in Schedule VII of the Act. However, primarily the Companys focus will be on the following areas:

• Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation.

• Promoting education, including special education and employment enhancing vocational skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

• Rural Development activities/projects.

• Promoting gender equality, Empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens.

• Ensuring environmental sustainability and ecological balance.

• Social economic development and relief and welfare of the scheduled caste, tribes, other backward classes, minorities and women.

The Company may also take other CSR activities as may be prescribed under the applicable statute from time to time. In addition, the Company may take such other appropriate activities for the society, from time to time, as may be thought fit by the CSR Committee and approved by the Board.

During the year, the Company has spent an amount of Rs. 1.40 million as CSR expenditure during the financial year 2024-25 against the Budget of Rs. 1.40 million.

Two percent of average net profit of the company as per sub-section (5) of section 135 was Rs. 1.32 million.

There is no unspent amount towards CSR expenses.

The Annual Report on the CSR activities, pursuant to Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is provided as Annexure to this Report.

The CSR Policy may be accessed on the Companys website at https://a.storyblok.com/f/209886/x/656982d5c3/corporate-social-responsibility-policy.pdf

RISK MANAGEMENT COMMITTEE

The Risk Management Committee of the Company comprises of Shri R.V. Kanoria, Managing Director, Shri S.V Kanoria, Whole-Time Director, Shri Sidharth Kumar Birla, Independent Director and Shri N.K. Nolkha - Group Chief Financial Officer. Shri R.V. Kanoria is the Chairman of the Committee. The Committee met twice during the financial year 2024-25, details of which have been provided in the Corporate Governance Report. The terms of reference of the Committee have also been provided in the Corporate Governance Report.

RISK MANAGEMENT

The Companys management systems, organizational structures, processes, codes of conduct together form the basis of risk management system that governs and manages associated risks. The Risk Management Committee of the Company assesses the significant risks that might impact the achievement of the Companys objectives and develops risk management strategies to mitigate/minimize identified risks and designs appropriate risk management procedures. The Board does not foresee any risk which may threaten the existence of the Company.

COMMITTEE OF DIRECTORS

The Committee of Directors of the Company comprises of Shri R.V. Kanoria, Managing Director, Shri S. V. Kanoria, Whole-Time Director, Shri H.K. Khaitan, Non-Executive Director, Smt. Meeta Makhan and Smt. Suhana Murshed, Independent Directors. Shri R. V. Kanoria is the Chairman of the Committee. The Committee met once during the year under review, details of which are provided in the Report on Corporate Governance forming part of the Annual Report.

The terms of reference of the Committee have also been provided in the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis is a part of the Annual Report.

SUBSIDIARIES

A) APAG

The combination of global trade uncertainty, the threat of low cost Asian alternatives, and the need to straddle the ICE and electric propulsion technologies (causing higher development costs allocated over similar volumes) continued to challenge the western automotive OEMs. Cost competitiveness, and consequently, demand was hampered.

With free capacity as a result of lower demand, many of APAGs large customers insourced programmes. The remainder passed on OEM pressure for price reductions. This had a negative effect on margins for the company in the current year and will affect top line in the years ahead as insourcing initiatives consumnate. Moreover, OEMs pulled back on new development endeavours and APAGs ECU R&D division was faced with inadequate programme work.

This situation, however, was common across peers and resulted in the closure or consolidation of several similarly-sized competitors. This activity opens up future opportunities for the company even if with higher price pressure as competitors are now larger and enjoy more purchasing power in component negotiations.

To capitalise on this opportunity and to rebuild trust among customers and suppliers, APAG has found a strategic investor. The investment in the company will infuse cash to pay off debts and strengthen the balance sheet. This should restore customer confidence especially in a sector where many competitors are no longer reliably stable and help win business to avoid shrinkage and slowly return to growth. It should also help improve credit insurance availability for APAG debts at the companys suppliers and allow improved payment terms and liquidity. The investor brings access to the Indian market as well where APAGs expertise is becoming relevant with luxury and ADAS features emerging in Indian OEM offerings.

Operationally APAG took steps to continue to be competitive in the changing landscape. Back office functions were shifted to India at lower employee compensation. The ECU R&D team was rationalised in Europe and North America and grown in India - both to reduce costs in the face of lower demand and to adapt to opportunities in India. Strategic Procurement is also being shifted to India over the next 8-10 months to tap potentially reduced prices in the local market where the distribution network for electronic components supports foreign country sourcing.

With these big strategic moves for operational efficiency, the strengthening if the balance sheet, and the access to the Indian market; the company is making every endeavour to successfully traverse the difficult market and return to growth.

B) KAT

The Companys integrated denim manufacturing unit in Ethiopia, Africa is operating through its wholly owned subsidiary, Kanoria Africa Textiles plc (“KAT”) incorporated in Ethiopia.

For the past half century, Ethiopia tightly controlled the official value of its currency The Birr. That changed in July 2024, when unmanageable debts and dwindling foreign reserves forced the Ethiopian government to liberalize the exchange rate regime. The local currency Birr has been devalued from 56 Birr per USD to 130 Birr per USD by the time we close financial year 2024-25 on 31^st March 2025. The Company has relied mainly on domestic sales due to the unavailability of foreign exchange in the country and the Central banks policy of compulsory conversion of foreign currency into Birr for the past few years. The Revenue of the company, which is mainly in Birr, has increased by 21% in terms of the local currency in the current financial year, but has fallen 31% in terms of USD. Businesses in the country have suffered due to huge exchange losses, and the GDP of the country has fallen from USD 207 billion to USD 100 billion within three months after devaluation, as one-time adjustment.

There are some silver linings. The devaluation has opened up the possibility of export. Also, not having to wait for foreign currency for procuring raw materials and essential spares will improve productivity. The recent tariff war may create new opportunities with lower tariffs for Africa, thus fueling demand for apparel and consequently fabric from Ethiopia.

PARTICULARS OF INVESTMENTS MADE, LOANS, GUARANTEES GIVEN AND SECURITIES PROVIDED

Details of investments made, loans given, guarantees given and securities provided as covered under the provisions of Section 186 of the Act are given in the Note Nos. 6 and 38 of the Standalone Financial Statements.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All contracts/arrangements/transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on arms length basis and were approved by the Audit Committee, Board of Directors, and also shareholders approval was also obtained by passing a resolution through postal ballot dated 10^th May 2025. None of the transactions with any of the related parties were in conflict with the Companys interest. No Material RPTs, as per the materiality threshold, were entered during the year by the Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for financial year 2024-25 and hence does not form part of this report.

The Policy on Related Party Transactions as approved by the Board may be accessed on the Companys website at https://a.storyblok.com/f/209886/x/a6ceffe01e/policy-on-related-party-transactions.pdf

STOCK EXCHANGE(S)

The Equity Shares of your Company are listed on two stock exchanges:

• National Stock Exchange of India Limited, Exchange Plaza, Plot no. C/1, G- Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051.

• BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001.

The annual listing fees for the year 2024-25 have been paid to both the stock exchanges where the shares of your Company are listed.

CHANGE IN THE NATURE OF BUSINESS

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

VIGIL MECHANISM

The Company promotes ethical behavior in all its business activities and has put in place a mechanism of reporting illegal or unethical behavior. In compliance with provisions of Section 177(9) of the Act and the Listing Regulations, the Company has in place a Whistle Blower Policy for its Directors, employees and any other stakeholder to report concerns about unethical behavior, actual or suspected fraud or violation of applicable laws and regulations and the Companys Codes of Conduct or policies and leak or suspected leak of unpublished price sensitive information of the Company. The concerns may be reported to the Audit

Committee through the Nodal Officer and, in exceptional cases, may also be reported to the Chairman of the Audit Committee. The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice. During the year under review, no employee was denied access to the Audit Committee.

The Whistle Blower Policy of the Company may be accessed on the Companys website at https://a.storyblok.com/f/209886/x/56e0c1521e/whistle-blower-policy.pdf

CORPORATE GOVERNANCE

The Company adheres to good governance practices. Corporate Governance at KCI extends to all stakeholders and is embodied in every business decision. The Company places prime importance on reliable financial information, integrity, transparency, empowerment and compliance with the law in letter and spirit. While Management Discussion and Analysis Report appears in the Section titled the Year in Review in the Annual Report, the Corporate Governance Report and the Certificate from the Auditors of the Company confirming compliance of the conditions of Corporate Governance are annexed hereto and form a part of the Directors Report.

There is a conscious effort to ensure that the values enshrined in the Codes of Conduct for the Directors and Senior Management Personnel and the Employees respectively, are followed in true spirit across all levels of the Company.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31^st March 2025 may be accessed on the Companys website at www.kanoriachem.com

AUDITORS AND AUDITORS REPORT

The Members had appointed M/s. Singhi & Co., Chartered Accountants (Firm Registration No. 302049E), as the Statutory Auditors of the Company at the 62^ndAnnual General Meeting, to hold office as such, for a term of 5 years till the conclusion of the 67^th Annual General Meeting.

The Auditors Report for the financial year ended 31^st March 2025 does not contain any qualification, reservation or adverse remark.

FRAUD REPORTING

During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3) (ca) of the Act.

COST AUDITORS

Pursuant to Section 148 of the Act, the Board, on the recommendation of the Audit Committee, has approved the appointment of M/s N. D. Birla & Co., Cost Accountants (Firm Registration No. 000028), Ahmedabad, as the Cost Auditors for conducting the audit of the cost records of the Company for the financial year ending on 31^st March 2025, at a remuneration of Rs. 1,65,000/- (Rupees One Lakh Sixty Five Thousand only) plus applicable taxes and reimbursement of travelling and other incidental expenses to be incurred in the course of cost audit.

SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s Vinod Kothari & Co., Practicing Company Secretaries (UIN: P1996WB042300), to conduct Secretarial Audit of the Company for the financial year 2024-25. The Secretarial Audit Report for the financial year 2024-25 is provided as an Annexure to this Report. The Report does not contain any qualification, reservation or adverse remark.

SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the Financial Year ended 31^st March, 2025 for all applicable compliances as per the Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by M/s Vinod Kothari & Co., Practicing Company Secretaries, has been submitted to the Stock Exchanges within 60 days from the end of the Financial Year.

INTERNAL AUDITORS

The Board of Directors of the Company has appointed M/s. Pawan Gupta & Co. as Internal Auditors to carry-out extensive Internal Audit of the Company for the Financial Year ended 31^st March, 2025.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, the Statutory Auditor, Internal Auditor and Secretarial Auditor have not reported any instances of frauds committed in the

Company by its Directors or Officers or Employees to the Audit Committee under Section 143(12) of the Companies Act, 2013 and therefore details of the same in this Report is not applicable.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO

As required under Section 134 of the Act and the rules framed thereunder, the statement containing necessary information in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo is provided in the Annexure to this Report.

EMPLOYEES INFORMATION AND RELATED DISCLOSURES

As required under Section 197(12) of the Act read with the Rules 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures of remuneration and other details/particulars of the Directors and employees of the Company are provided in the Annexure to this Report.

SAFETY AND ENVIRONMENT

The Company remains steadfast in its commitment to sustainable development and to provide a safe, healthy, and environmentally responsible workplace. Our integrated Environment, Health, Safety and Sustainability (EHSS) strategy is centered on continuous improvement through advanced technologies, pollution control, conservation of natural resources, and waste minimization and recycling. Safety continues to be a core organizational value, and our unwavering goal of achieving zero injuries reflects our deep commitment to protect the well-being of our employees.

The Companys Alco Chemical Division facilities, located in Ankleshwar, Vizag, and Naidupeta have consistently adhered to Environment, Health, Safety, and Quality standards, resulting in their certification under ISO 9001:2015 (Quality Management Systems), ISO 14001:2015 (Environment Management Systems and practices), and ISO 45001:2018 (Occupational Health and Safety Management Systems). Additionally, all Divisions hold RC 14001:2015 certification, indicative of their commitment to implementing Responsible Care management systems aimed at addressing community concerns associated with products and operations. Notably, the Companys Ankleshwar and Vizag units proudly display the Responsible Care Logo. This emblem symbolizes the Companys exceptional performance in safety, environmental stewardship, community engagement, and sustainability practices.

The Company has a documented Environment Health & Safety Policy that is communicated within the Company and made available to all interested parties. With the view to achieve Zero Accidents status the Company has developed health and safety procedures as well as safety targets and objectives.

Risk mitigation plans are periodically reviewed by a centralized EHS team, and proactive measures such as Hazard and Operability Study (HAZOP), Hazard Identification and Risk Analysis (HIRA), and Quantitative Risk Assessment (QRA) are routinely conducted to identify and address potential hazards. The implementation of methodologies like 5S and Kaizen has further enhanced workplace safety and encouraged employee participation in identifying improvements related to waste management, process safety, and environmental performance. Regular safety observations are shared across locations, and compliance monitoring is an integral part of our operational governance.

The Company reaffirms its strong commitment to sustainable development through the pursuit of well-defined, ambitious goals supported by a robust Environment, Health, Safety, and Sustainability (EHSS) framework. This commitment is exemplified by the strategic adoption of renewable energy solutions, including wind and solar power, across all manufacturing facilities, as well as the integration of the "reduce, reuse, and recycle" philosophy into core operations. Notable advancements include the commissioning of a Phenol Recovery Plant at the Ankleshwar unit and the deployment of Ion-Exchange technology at both Ankleshwar and Vizag for efficient waste stream management in the Hexamine production process. In addition to this, the company is also introducing Electro Oxidation process to reduce Ammonical Nitrogen from Hexamine Effluent.

To further mitigate environmental impact, the Company is actively transitioning from coal to biomass as a renewable fuel source for steam generation at the Ankleshwar site. In addition, energy conservation measures such as the implementation of the Smart PO system at Ankleshwar, a hydro turbine at Naidupeta, and the introduction of the IRIS platform for intelligent energy monitoring have delivered measurable efficiency gains. The Company also continues to invest in robust environmental monitoring infrastructure and advanced safety training programs focused on emergency preparedness, process safety management, and behavioral safety. These efforts refect our holistic and responsible approach to environmental stewardship and workplace safety, aligning our operations with global best practices while supporting national and global sustainability goals.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS

The Companys Human Resource initiatives embody the core values of trust, transparency, respect, and dignity, which are deeply integrated into our workplace culture. Through well-defined HR policies, we continue to foster a collaborative, inclusive, and performance-driven environment that encourages teamwork, innovation, and continuous improvement at all levels of the organization by meeting the expectations of Business Acumen.

In pursuit of our strategic objective to evolve as a strengths-based and future-ready organization, we further enhanced our performance management and employee recognition systems. These initiatives aim to identify, reward, and nurture individual talent in alignment with our corporate vision and mission.

As part of our ongoing commitment to Vision-2030, the Company significantly expanded its learning and development programs. A wide range of internal and external training interventions were conducted, focusing on technical upskilling, leadership development, digital competencies, and behavioral effectiveness. Special emphasis was placed on building capacity to enable employees to adapt to evolving business needs and industry best practices.

The Company also reinforced its focus on employee well-being and engagement through several initiatives promoting mental health awareness, work-life balance, and physical wellness, thereby fostering a motivated and resilient workforce.

Industrial relations remained cordial throughout the year across all operational sites, contributing to a stable and cooperative working environment.

In addition to our internal development efforts, the Company actively pursued its social responsibility goals through various CSR initiatives. These included contributions towards education, healthcare, environmental sustainability, and community development programs. The Company remained committed to making a positive and measurable impact in the communities in which it operates, in line with our values and long-term sustainability objectives.

DIRECTORS RESPONSIBILITY STATEMENT

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

a) that in the preparation of the annual financial statements for the year ended 31^st March 2025, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2025 and of the profit of the Company for the year ended on that date;

c) that 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:

d) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and are operating effectively; and

f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of Section 124 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 and rules made thereunder, unclaimed dividend amount of Rs. 577,548/- of the Company for the Financial Year ended March 31, 2017 has been transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the Companies Act, 2013.

During the year 23,521 equity shares were transferred to IEPF

The details are provided at the website of the Company at https://www.kanoriachem.com/investors/unpaid-dividend/

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

The Company has constituted Complaints Redressal Committees across all its locations, to consider and resolve sexual harassment complaints reported by women. During the year under review, no complaint was filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and that there was no complaint pending at the end of the year. The Company regularly conducts awareness programs for its employees.

The following is a summary of sexual harassment complaints received and disposed off during the year:

Sl. No. Particulars	Status of the No. of complaints received and disposed off
1 Number of complaints on Sexual harassment received	Nil
2 Number of Complaints disposed off during the year	Not Applicable
3 Number of cases pending for more than ninety days	Not Applicable
4 Number of workshops or awareness programme against sexual harassment carried out	The Company regularly conducts necessary awareness programmes for its employees
5 Nature of action taken by the employer or district officer	Not Applicable

CONSTITUTION OF INTERNAL COMPLAINTS COMMITTEE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has constituted Complaints Redressal Committees across all its locations, as required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has not received any complaints during the year.

INSURANCE

All properties and insurable interests of the Company have been fully insured.

COMPLIANCE WITH SECRETARIAL STANDARD

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

PREVENTION OF INSIDER TRADING CODE

As per SEBI (Prohibition of Insider Trading) Regulation, 2015, the Company has adopted a Code of Conduct for Prevention of Insider Trading. The Company has appointed Smt. Pratibha Jaiswal, Company Secretary as Compliance Officer under the said Regulations. The said Code has been complied during the year under review.

RECONCILIATION OF SHARE CAPITAL AUDIT

The Practicing Company Secretarys quarterly Certificate with regard to reconciliation of Share Capital Audit as required under the SEBI Listing Regulations is submitted to BSE and the NSE and is also placed before the Board of Directors.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS

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

GENERAL

i. No material changes and commitments affecting the financial position of the Company have occurred from the close of the financial year ended 31^st March, 2025 till the date of this Report.

ii. During the year under review, the Company has not issued sweat equity shares.

iii. During the year under review, the Company has not issued shares with differential voting rights.

iv. The Company has not revised any of its financial statements or reports.

v. During the year under review, no application has been made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 against the Company.

vi During the year under review, there were no instance of one-time settlement with banks or financial institutions and hence the differences in valuation as enumerated under Rule 8 (5) (xii) of Companies (Accounts) Rules, 2014, as amended, do not arise.

ACKNOWLEDGEMENTS

Your Directors acknowledge with gratitude the commitment and dedication of the employees for their untiring personal efforts as well as their collective contributions at all levels that have led to the growth and success of the Company. The Directors would like to thank other stakeholders including lenders and business associates who have continued to provide support and encouragement.

	For and on behalf of the Board,
	R. V. Kanoria
Place: New Delhi	Chairman & Managing Director
Date: 5th August, 2025	DIN: 00003792