Kohinoor Foods Management Discussions


(Rs. In Million)

The following report should be read in conjunction with the audited financial statements and notes for the year ended March 31, 2022 and the audited financial statements and notes for the year ended March 31,2021. This report contains forward looking statements, which may be identified by their use of words like plans, expects, will, anticipates, believes, intends, projects, estimates or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, market position, expenditures, and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

Company-InGeneral

Synonymous with the fine taste of India in its absolute authentic form, the sole objective of Kohinoor Foods Limited, since its inception, has been to make the world experience the true Indian flavor. The Company offers an extensive range that caters to consumers need in all parts of the world - a wide variety of Basmati Rice, Ready to Eat Curries & Meals, Readymade Gravies, Cooking Pastes, Chutneys, Spices and Seasonings to Frozen Breads, Snacks & Paneer (Indian Cottage Cheese), healthy grains, edible oils. Today, the most powerful brand of the Company "Kohinoor" is a household name in the countries like USA, UAE, Canada, Australia, Middle East, Singapore, Japan, Mauritius & other European countries. As of now, the brand Kohinoor is known worldwide.

Your Directors have pleasure in presenting the 33rd Annual Report and the Audited Annual Accounts of the Company for the Financial Year ended 31st March, 2022.

Financial Overview

The financial highlights for the year ending 31st March, 2022 are asunder:

Particulars FY22 FY21
Total Turnover 1034.83 443.53
Profit/(Loss) Before Interest, Depreciation and Tax (PBIDT) 31.12 (16.39)
Profit/(Loss) Before Tax (55.06) (32.60)
Less: Tax Expense 7.98 18.86
Profit/(Loss) After Tax (63.04) (51.46)
Total Comprehensive
income for the year (61.90) (50.99)

The Boards Report has been prepared based on the stand alone financial statements of the Company.

Operations

During the Year, your company focused on the restructuring of the company operations due to various constraint faced due to financial crisis, various measures have been taken for reduction of the cost of operation. Despite of the factors faced by the company during the year you company remain committed to providing world class quality product to its consumer, focused in improving operational efficiencies across its functions and enhancing its reach to the global consumers.

For the financial year under review 2021-22, the contribution made by Rice to the Companys business is INR 720.87 million as against INR 73.34 million in previous year while as the Food Business stood at INR 236.93 million as against INR 304.84 million in the last financial year.

The year saw an increase of 882.91 % in Rice business in sales in value terms in comparison to last year sales. Sales market was down due to instability in country such as current pandemic Covid-19 / lock downand the financial constraint faced by the Company.

Impact of Covid-19 Pandemic

Details of the impact of Covid-19, have been provided in the notes to financial statements forming part of this report.

Subsidiaries / Joint Venture

USA Operations

Kohinoor Foods USA Inc. was incorporated in year 2000 in the state of New Jersey, USA, as a wholly owned subsidiary of Kohinoor Foods Limited (KFL), India, to cater to the markets of US & Canada. The brand Kohinoor1 is well known in USA for its quality rice and food items.

However during the current year this company did not carry any business as their as no export sales for KFL India to US & Cananda.

Food Business

During the year 2021-22, in processed & packaged food products the company did the business of around INR 236.93 million as against INR 304.84 million in the previous year. The food factory has continued its operation effectively in spite of the liquidity problem which improved our production & revenues from food business.

UK, Australia, USA, Canada are major markets for our range processed & packaged food products.

Overview - Ready to Eat Industry

Ready to eat food market size is expected to grow at a compound annual rate of 9.00% in the forecast period 2021 to 2028. The changing consumer preferences towards convenient food associated with various food delivery apps is the factor for the ready to eat food market in the forecast period of2021 to 2028.

Ready to eat food is a kind of packaged cooked food which does not need further processing to make sure the quality. It can be frozen, is shelf-stable and involve minimal heating or are served hot. Some food requires being stored in the refrigerator until used but some need special handling to guarantee quality of food.

The major growing factor towards ready to eat food market is the changing food consumption behaviour amongst consumers. The prime factor driving the demand for ready to eat food is the increased willingness to spend on such food along with the lack of time to cook at home is a result of the rapid urbanization. Furthermore, the growing millennial and working women population is also heightening the overall demand for ready to eat food market over the forecast period of 2021 to 2028. Moreover, the consumers are demanding for on the go convenience food, which also serves as a foremost driver for increasing the demand for ready to eat food market at a global level. In addition, the improving consumer lifestyle, rapid urbanization and high disposable income are also lifting the growth of the ready to eat food market.

This type of food has been on the rise for several years now, and shows no signs of slowing down. Some of the reasons for this include busy lifestyles, the growing number of single-person households, and the increasing popularity of takeout and delivery services.

There are a number of different types of ready-to-eat food available, from pre-packaged meals to frozen pizzas to takeout containers. And while most people think of unhealthy options when they hear the term "ready-to-eat," there are actually many healthy choices available as well. In fact, some stores are now specializing in healthy pre-made meals that can be eaten on the go.

Product launches are important, but for a ready-to-eat (RTE) food company, its all about the product.

"Asuccessful product launch is paramount to the success of a ready- to-eat food company," said Harry Balzer, vice president of The NPD Group, a market research company. "The challenge for these companies is to create products that will resonate with consumers and stand out in what is an increasingly competitive marketplace."

There are many factors that go into a successful product launch. The most important one, though, may be creating a product that consumers want. Thats not always easy to do, but its essential if a company wants to be successful.

Todays consumers want products that are healthier, customized, and natural, without sacrificing health goals, flavors, or ingredients. Above all, such items must help people to keep up with their demanding schedules. Manufacturers and retailers must reach out to consumers who are increasingly rushed forthe time while also having high expectations forfood quality, flavors, and forms.

More premium ready-to-eat food items are already on the market, ranging from world cuisine-inspired ready-meals to pre-made charcuterie boards and deli-style snacks. Given that consumers have an abundance of on-demand options in many aspects of their lives, a morediverse array of upgraded ready-to-eat food items is obvious.

The growing number of working women has encouraged households to move towards ready-to-eat food to replace regular lunch and dinner.

Previously, women were limited to their homes and had a certain responsibility as housewives, but as society changed, they began to seek employment. There has been an increase in the ready-to-eat food sector as a result of the rise in working couples who are busy with their careers and have little time to spend on domestic tasks. Women, in particular, were left with little time to manage home tasks and maintain a sense of balance

People eat at home and avoid eating out, but there have been many changes in everybodys lifestyle over the last two decades, including an unexpected increase in the number of working women, which has resulted in urbanization, an increase in per capita income, a shortage of time, a change in lifestyle, and a tremendous increase in the level of the middle-income group. All of these factors have influenced working womens purchasing habits, causing them to gravitate toward ready-to-eat foods. As a result, as the number of working women increases, this trend is likely to continue in the coming years, boosting the ready-to-eatfood market.

Hindrance caused the growth of this market due to the rising awareness of health concerns related to the use of artificial preservatives in food products

To reduce the risk of deterioration due to microbial interactions and improve food quality, ready-to-eat foods use a variety of natural and chemical preservatives. However, not all preservatives are harmful.

Natural preservatives, which are used to keep food fresh are safe for our health. Artificial or chemical preservatives, which are meant to keep foods from being contaminated, are the ones that cause health issues. These preservatives are synthesized and manufactured artificially. On product labels, these are frequently referred to as additives.

One of the probable side effects of preservatives is that they can cause breathing difficulties such as asthma and bronchitis. They can cause issues in young children, such as hyperactivity. Artificial preservatives, when consumed in large quantities, can weaken cardiac tissues, which is particularly dangerous for the elderly. They could include the cancer-causing food chemicals BHA and BHT. Because preservatives contain fatty acids, they may cause obesity in some people. As a result, taking into account the negative consequences of artificial preservatives found in ready-to-eat foods could stifle the markets growth.

The U.S.A. is a dominant market region in the global market for ready-to-eat food due to improved technology and preservatives practices

The U.S leads the ready-to-eat food market in the North American region as well as worldwide because of its large market share along with the various technological innovations, busy lifestyles, and high disposable incomes. It is anticipated to emerge as a major consumer of ready-to-eat meals due to its growing popularity among working- class consumers and students. North America holds 38% of the market share of which the United States enjoys a major 65% share in the market-dominating in the region with a market value of over USD 44460 Mn.

Indias growing population and increase in working-class consumers have assisted the growth of the market segment

India ready to eat food market is estimated to generate high sales revenues in the market owing to the top-selling categories are smoked fish and precooked meat which is been mostly consumed in Kerala and goa underpinned by rising expatriate population and tourists visit is expected to proliferate the demand for ready to eat food and this driver acts as growth proliferating factor is estimated to secure the substantial growth of India ready to eat food market, as a result, is projected to spur the massive growth of the entire Asia Pacific ready to eat food market in the coming timeframe.

Rising urbanization increased middle-class disposable income, and changing food habits of Indian consumers all contribute to the markets expected growth. Furthermore, the increased desire for quick food, as well as the freshness and nutritional content of these items, is helping the Indian ready-to-eat food market to rise.

Basmati Rice

The present Indian Rice market both in terms of local consumption as well as in exports is very bullish. In the last 2 years, after the dipping of sales figures during the Covid Lockdown era, the rice market has aggressively bounced back.

In Basmati alone, India has produced nearto 5 million tons of superior quality of rice and the exports have surpassed 4 million tons in the last fiscal.

It is a positive sign for the Indian rice industry more so for the basmati variant that consumption graph is on the up in almost all the quality rice eating countries; the consumption graph in some of the traditional markets such as Iran, Saudi Arabia & Iraq etc. may not be growing very fast but there is no slide down as well. The emerging markets for Indian basmati especially North America and Africa is ever consuming in larger numbers.

Besides basmati rice, the non - basmati LG Rice too is adding good volumes; in the last harvest the traditional LG rice growing countries such as Vietnam, Indonesia, Philippines and Thailand either had drought like conditions or floods, with which the Indian LG Rice took the center stage and India became the major sourcing end for LG Rice too. More so in 100% Broken rice that China imports in large volumes due to failure of crops in far east countries had no other alternative but to approach Indian rice millers and exporters for it.

The Rice Industry in India in conclusion is yet to see its peak; the markets abroad are positively responding and this growth trajectory shall remain unhindered for couple of more years ahead if not decades ahead.

Risks & Concerns

The Company has received Notices from the Banks under section 13(2) of The Securitization and Reconstruction of Financial Assets and Enforcement of Security InterestAct, 2002, in the month of July, 2018 to May, 2019 and in the month of February 2020 to September 2020. The Company has replied to said notices and negotiating with different workable options. The Oriental Bank of Commerce and Punjab National Bank have served notice of Wilful Defaulter. The Company/Directors have replied to the said notices. The Company has also approached Banks with suitable resolution plan for their consideration, which the consortium has sanctioned.

The Banks have filed petition against Company before Honble NCLT Bench Chandigarh, the company is contesting the matter and the petition is yet to be admitted.

The Company has received an ex parte interim order from Debt Recovery Tribunal-Ill, Delhi dated 25/06/2020 restraining the company from transferring/ alienating or otherwise dealing with, or disposing off or encumbering or creating any third party interest with

respect of the hypothecated assets/immovable properties of the Company until further orders. The company is contesting the matter against the ex parte interim order.

The Company has received a Notice through speed post from DRT- II, New Delhi. The Lead Bank has filed an OANo. 300 of2022 before DRT 2 Delhi against the Company under section 19(4) of the Act. The matter is listed before the registrarfor completing of pleading on 03/08/2022. The Company is in process of filing suitable reply of the aforesaid notice with the respective Honble courts/ Authorities/ offices in due course

The observations of the Auditor with regard to the management assessment of the companys ability to continue as going concern in view of the liquidity problems/decrease in business. The management of the company believes that it can continue as a going concern, based on the Resolution plan and after of one time settlement submitted to the Banks by company and the interest shown by prospective investors in the company.

Macro-economic factors like recession, subdued demand and political uncertainty may affect the business of the Company and the industry at large as well. The Company is aware that uncertainties in business offer opportunities as well as downside risks and thus has identified and put in place mitigation tools for the same. Some key risk areas are:

Procurement risk

In a country like India, where more than 60 per cent of the area under cultivation is not irrigated, farm production is highly vulnerable to fluctuations in rainfall. Beside production risk, Indian farmers also face high market risk. Farm harvest prices in the country show high inter and intra year volatility. Price variation is quite pronounced in the regions and commodities where price support mechanism is not operative. Further adequate availability of key raw materials at the right prices is crucial for the Company. Being a generic natural product with low yield concentrated in a small region of the World, production of Basmati depends on the vagaries of nature. Therefore, any disruption in the supply due to a natural or other calamity or violent changes in the cost structure could adversely affect the Companys ability to reach its consumers with the right value proposition. However, we are ready with plans that might help us at such times. However, the Companys long term relationship with farmers built on trust ensures constant supply and thus over the years it has not faced any procurement problems. Also, adequacy of irrigation facilities in the Basmati producing regions mitigates these uncertainties.

High working capital requirement: Basmati rice requires to

beaged for 9-12 months before selling, leading to huge working capital requirements. This results in low ROCE for the industry. Combating this risk, efficient working capital management system has been set in place by the Company and cash flow is monitored on daily basis.

Intense competition from unorganized sector: Another characteristic of this industry is the presence of unorganized sector offering basmati in loose unbranded form which intensifies competition. The Company is moving towards branded products and has invested significantly in building a strong brand which helps in differentiating their product.

Dividend

Your Directors do not recommend any dividend forthe financial year 2021-22.

Re-Appointment/ Resignation of Directors

In accordance with the provisions of the Companies Act, 2013, Mr. GurnamArora (holding DIN-00010731), Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Your Directors recommend this resolution for approval of the members.

Further the Mr. Vijay Burman, Independent Directors, ceased to be director of the company due to sudden demise on 10.06.2021 and the necessary intimation is submitted to the exchange and form has been filed in this regard.

Mr. Kamal Deep Chawla, CFO of the Company, resigned, due to some personal reason, from the Company w.e.f., the close of business hours on 29-03-2022. The Board in its meeting held on 24th March 2022 placed the invaluable contributions and achievements of Mr. Kamal Deep Chawla, as a CFO of the Company and a valued member of the Board.

The Board in its meeting held on 24th March 2022, appointed Mr. Chashu Arora, Member of ICAI, who possess the requisite qualification, as the CFO of the Company with effect from 30th March, 2022, to perform the duties of a CFO, of the Company.

Subsidiary, Joint Ventures and Associate Companies

Kohinoor Foods Limited enjoys its global presence and has well managed to build a premium brand name for its quality in Rice Branding and Ready to Eat Food and with a view of expansion and diversification; it has created subsidiary companies for facilitating these operations in various countries.

A statement containing the performance and highlights of Financial Statements of subsidiary, associate and joint venture companies is provided in FormAOC-1 attached to the Financial Statements forms part of this Report and hence not repeated here for the sake of brevity.

In accordance with section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. The Financial Statements have been prepared on the historical cost convention on going concern basis and on accruals basis unless otherwise stated. The name of companies which have become or ceased to be subsidiary or joint venture or associate companies, if any, have been mentioned in the notes to the accounts. The financial statements of Kohinoor Foods Limited ("Holding Company of KFL") together with its subsidiaries (hereinafter collectively referred to as "Group") are consolidated to form Consolidated Financial Statements (CFS). Consolidated Financial Statements consolidate the financial statements of KFL and its Wholly Owned Subsidiaries.

The parent company has not received audited financial statement from its Joint venture Company, Rich Rice Raisers LLC. The Management considers that the parent company is not in position to exercise control over this entitiy. Hence the results of Joint Venture Company have not been considered in the Consolidated Financial Statements. Rich Rice Raisers LLC, in which, KFL hold 25% shareholding, has closed its operation.

KFL was holding 20% share in Al Dhara Kohinoor LLC and Al Dhara Kohinoor Industries LLC. Al-Dahra Kohinoor LLC has exercised the call option, which KFL has accepted. Upon completion of the formalities the shareholding of the parent company in both of these associates has been reduced to NIL and they are not considered as Associates Companies.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statement, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www.kohinoorfoods.in/investor. These documents will also be available for inspection during business hours at our Registered Office.

Further these Financial Statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the Ind AS) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. These financial statements for the year ended March 31,

2022 are prepared under Ind AS. For all periods up to and including the year ended March 31, 2017, the financial statements were prepared in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as Previous GAAP) used for its statutory reporting requirement in India immediately before adopting Ind AS.

Furtherthe Policy for determining material subsidiaries as approved by the Board may be accessed on the Companys website at the link: www.kohinoorfoods.in/investor

The details of business operations / performance of major subsidiaries are as below:

Indo European Foods Limited

Indo European Foods Limited ("IEFL") a wholly owned foreign subsidiary company, (Last Year) which was incorporated and domiciled in the U.K. and is the manufacture and marketing if specialist rice products, cooking, sauces, ready meals and savoury snacks having its registered office at Kohinoor House, Langer Road, Felixstowe, Suffolk, IP112BW.

The Company had obtained approval from its members vide postal ballot meeting held on 10.01.2021 and the Board in its meeting held on 30.03.2021 approved a strategic disinvestment in its Wholly Owned foreign Subsidiary, M/s Indo European Foods Limited (UK), situated outside India to M/s. Herba Foods S.L.U.

Internal Control System

The Company has in place adequate internal control systems that facilitates the accurate and timely compilation of financial statements and management reports, ensures regulatory and statutory compliance, and safeguards investor interest by ensuring the highest level of governance. The control system ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly.

A CEO and CFO Certificate provided by Jt. Managing Director and CFO, included in the Corporate Governance Report confirms the existence of effective internal control systems and procedures in the Company Internal audit function evaluates the adequacy of, and compliance with policies, plans, regulatory and statutory requirements. The Internal Auditors directly report to the Boards Audit Committee, thus ensuring the independence of the process. It also evaluates and suggests improvement in effectiveness of risk management, controls and governance process. The Audit committee and Board provides necessary oversight and directions to the Internal audit function and periodically reviews the findings

and ensures corrective measures are taken. In the opinion of the management and the internal auditors, there exists adequate safeguard against fraud and negligence within the Company.

Our Offices as well as the manufacturing facilities endorse the highest health, safety, security and environmental standards.

Internal Financial Controls

The Company has in place well defined and adequate Internal Financial Controls which are tested from time to time for necessary improvement, if any required.

Listing at Stock Exchange

The Equity Shares of the Company are listed with BSE Limited and National Stock Exchange of India Ltd (During the Year Status: Suspended - Due to penal reasons) your Company have applied for revocation of suspension of Trading of Securities of the Company and the Suspension of Trading has been revoked with effect from 06/04/2022 vide Circular ref. No. 0368/2022 Dated 29/03/2022. The annual listing fee for the Financial Year 2022-23 has been paid by the Company.

Corporate Governance

Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as stipulated by the Stock Exchanges. Pursuant to SEBI (LODR), Regulation, 2015, a report on the Corporate Governance, Certificate regarding Compliance, Secretarial Audit Report and Jt. Managing Director (CEO) and CFO certification along with the Auditors Certificate has been made part of the Annual Report.

Auditors

M/s. Rajender Kumar Singal & Associates LLP, Chartered Accountants (Firm Registration No. 016379N), who were reappointed as the Statutory Auditors of the Company for a period of five years from the conclusion of Twenty Ninth Annual General Meeting held on 28th September, 2018 until the conclusion of the fifth Annual General Meeting to be held in the year 2023, have resigned as the Statutory Auditors of the Company w.e.f. August 12, 2021 due to commercial reasons. The Board, at its meeting held on August 12,2021, on the recommendation of the Audit Committee, accepted the resignation tendered by the Statutory Auditors.

Further, the Audit Committee and the Board, at their respective meetings held in August 12, 2021 placed on record their appreciation to M/s. Rajender Kumar Singal & Associates LLP, Chartered Accountants (Firm Registration No. 016379N) for their contribution to the Company with their audit processes and standards of auditing.

Appointment of M/s. N C Raj & Associates

Pursuant to the provision of Section 139 of the Companies Act, 2013, the Company was required to fill the casual vacancy caused by the resignation of M/s. Rajender Kumar Singal & Associates LLP, Chartered Accountants (Firm Registration No. 016379N) as Statutory Auditors of the Company. Accordingly, the Shareholders of the Company in its 1st Extra-Ordinary General Meeting for their commendation of the Board of Directors and Audit Committee, have approved the appointment of M/s. N C Raj & Associates, Chartered Accountant (FRN: 002249N) as Statutory Auditors of the Company to fill the casual vacancy caused due to the resignation M/s. Rajender Kumar Singal & Associates LLP, as Statutory Auditors of the Company, till the conclusion of ensuing 32nd Annual General Meeting of the Company to be held in the Year 2021 and that they shall be eligible for re-appointment in the upcoming 32nd Annual General Meeting of the Company to be held in the year 2021, and that they shall conduct the Statutory Audit for the period ended 31st March, 2022, on such remuneration as may be fixed by the Board of Directors in consultation with them.

This is to further note that to appoint M/s. N C Raj & Associates, Chartered Accountant (FRN: 002249N), Statutory Auditors of the Company, to holds office from the conclusion of ensuing Annual General Meeting to the conclusion of Fifth Annual General Meeting to be held till the year 2026. The Board of Directors has received their consent and they have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits and they are not disqualified for re-appointment.

The Board pursuant to the provisions of Section 139,142 and other applicable provisions of the Companies Act, 2013 and on the recommendation of the Audit Committee has considered the appointment of M/s. N C Raj & Associates, Chartered Accountant (FRN: 002249N), as Statutory Auditors of the Company to hold office from the conclusion of ensuing Annual General Meeting till the conclusion of Fifth Annual General Meeting to be held in the year 2026. The Members in its Extra-ordinary General meeting held on 10-11 -2021 approved appointment as Statutory Auditors.

Auditors Report

The Company has received the Auditors Report duly signed by M/s N C Raj & Associates, Chartered Accountants, New Delhi, and took note on the same. Further as mentioned in the Auditors Report, attention is drawn (Emphasis of Matters) to notes to the Financial Statements, the same has not been reproduced for the sake of brevity as the remarks given by the Auditors are self-explanatory,

however the Board has discussed the same in details as had been provided in the notes to the Financial Statements.

Cost Auditors

The Cost Auditor M/s Cheena and Associates appointed as Cost Accountants of the Company for the year 2021-22 and has completed the audit of the cost record of the Company. The Cost Audit Report does not contain any qualification, reservation or adverse remark.

The Board pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013 and Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), has approved the appointment of M/s Cheena & Associates, Cost Accountant Firm to conduct the audit of the cost records of the Company for the financial year ending on March 31, 2023 and remuneration to be paid subject to rectification by shareholders.

Secretarial Audit

The Board of Directors pursuant to the Provision of Section 204 of the Companies Act, 2013, has appointed M/s. MANK and Associates, Company Secretary Firm, (having FCS No. 10248 and CP No. 19684) to conduct Secretarial Audit of the Company for the Financial Year2022-2023.

Secretarial Audit Report

The Secretarial Auditor M/s MANK and Associates, Company Secretaries, appointed for the year 2021-22 and has completed the secretarial audit of the Company. The Secretarial Audit Report as received from the Practicing Company Secretary is annexed to the Annual Report as Form No.-MR-3. As per the Secretarial Audit Report the Company has complied with all the applicable acts, laws, rules and regulations and does not contain any qualification, reservation or adverse remark.

Internal Auditor

The terms of M/s. N N A & Co, Chartered Accountants, New Delhi, who was appointed as Internal Auditor of the Company for the Financial Year2021-22 expired on 31st March, 2022.

Your Directors on the recommendation of the Audit Committee have approved their appointment in the Board Meeting dated 30th May, 2022, forthe financial year2022-23.

Deposits

During the year under review, the Company has not accepted any deposit under Chapter V of the Companies Act, 2013.

Share Capital of the Company

The Company has allotted 58,14,000 share warrants at a premium of Rs. 66/- per share to the promoters on preferential basis on 04th October, 2018, out of these, 18,30,000 share warrants have been converted into equity shares on 04th October, 2018. After allotment, the Company has filed application for listing of 18,30,000 equity shares to the Stock Exchanges (NSE & BSE). The final listing approval of further issue under Preferential Issue of 18,30,000 equity shares was granted by Exchanges on October 18,2021 and the above equity shares of the Company are listed on the Exchanges from October 18,2021 as per the details given below.

Security Description Symbol Series No. of securities Distinctive Numbers Lock - in upto date
Equity shares of Rs. KOHINOOR / EQ 1830000 35241531 31 -
10/ - each allotted 512559 to Oct -
on conversion of 37071530 2024
warrants issued on
preferential basis

* The above Equity Shares shall be admitted to dealings once the suspension on equity shares of the Company is revoked

Forfeiture

During the year under review, for the remaining 39,84,000 Convertible Warrants into Equity Shares, the company has neither received any request for conversion of Share warrants into Equity Shares, nor have received any balance sums payable on such conversion option being exercised by any of the Share Warrant holder within 18 month of issue of such warrants. Therefore as per SEBI (ICDR) Regulations, 2009, the consideration therefore paid by such Warrant Holders at the time of issuance of share warrants stand forfeited.

Board Meetings

The Board is headed by an executive Chairman. As on 31st March 2022, the Board of Directors consisted of Six Directors, including Chairman, Joint Managing Directors, Woman Director, Independent Director and others.

Seven (7) Board Meetings were held during the year 2021-22, i.e. on 20th July 2021,12th August 2021,13th September 2021,14th October 2021, 12th November 2021, 14th February, 2022 and 24th March, 2022 and the gap between two meetings did exceed 120 days as per relaxation granted under the Ministry of Corporate Affairs (MCA) vide its General Circular No. 11/2020 dated 24th March, 2020.

Further the Mr. Vijay Burman, Independent Directors, ceased to be director of the company due to sudden demise on 10.06.2021 and the necessary intimation is submitted to the exchange and form has been filed in this regard.

Audit Committee Meetings

During the year under review, the Audit Committee met Five (5) times i.e. on 20th July, 2021,12th August, 2021,12th November, 2021, 14th February, 2022 and 24th March, 2022 and the gap between two meetings did exceed 120 days as per relaxation granted under the Ministry of Corporate Affairs (MCA) vide its General Circular No. 11/2020 dated 24th March, 2020. The minutes of the meetings of the Audit Committee are noted by the Board.

Further the Mr. Vijay Burman, Independent Directors, ceased to be director of the company due to sudden demise on 10.06.2021 and the necessary intimation is submitted to the exchange and form has been filed in this regard.

Nomination and Remuneration Committee

During the year under review, the Nomination and Remuneration Committee met Three (3) times i.e. on 20th July, 2021, 12th August, 2021 and 24th March, 2022. The minutes of the meetings of the Nomination and Remuneration Committee are noted by the Board.

Further the Mr. Vijay Burman, Independent Directors, ceased to be director of the company due to sudden demise on 10.06.2021 and the necessary intimation is submitted to the exchange and form has been filed in this regard.

Remuneration Policy

On the recommendation of the Nomination and Remuneration Committee, the Board has formulated Remuneration Policy for appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration.

The Remuneration Policy of the Company forms part of this Report and may be accessed on the Companys website on the link: www.kohinoorfoods.in/investor.

Whistle Blower Policy/Vigil mechanism

The Company has established a vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected, fraud or violation of the Companys code of conduct or ethics policy or any other grievances, the details of which are given in the Corporate Governance Report. The Whistle Blower Policy may be accessed on the Companys website on the link www.kohinoorfoods.in/investor.

Particulars of Loan Given, Investment made, Guarantees given and Securities Provided

Particulars of loans given, investments made, guarantees and securities provided under section 186 of the Companies Act, 2013 are provided in the notes of standalone Financials statement and well within the limit approved by the Shareholders of the company.

Present status of litigations

During the Financial Year 2021-22 the Company went through some litigations in taxation, banking and rice business. Brief of the litigations is mentioned below:

Contingent and Other particulars:-

Following appeals are lying pending for hearing before the CIT(A), New Delhi/ Income Tax Appellate Tribunal, New Delhi / Honble Delhi High Court against the tax demand raised in impugned Income Tax Assessment Orders as per details given below

AY Tax Interest Total
2002-03 to 2008-09 2,98,02,984 1,05,99,772 4,04,02,756
2010-11 23,31,25,126 13,47,86,187 36,79,11,313
2011-12 8,35,76,737 7,80,20,413 16,15,97,150
2012-13 12,74,97,842 10,19,98,998 22,94,96,840
2013-14 4,06,82,760 2,64,38,560 6,71,21,320
2014-15 7,98,04,661 4,53,84,536 12,51,89,197
2016-17 2,75,78,339 1,29,05,465 4,04,83,804
Total 1,03,22,02,380

As per the advice received from legal experts and on the basis of merit of the case, there is a high probability that the aforesaid impugned orders will be set aside and the demand will be deleted. Accordingly, management is of the view that no provision in respect of the above demands is required to be made in the books of accounts.

An appeal has been filed with CIT(A) on 11-08-2021 against an order passed towards addition of Rs. 79156582/- against transfer pricing adjustment in respect on A.Y 2017-2018 although there is no liability on the company since no demand has been raised by the department, but, this has impacted in the reduction of losses

by the above amount.

An appeal has been filed with CIT(A) on 07-12-2021 against an order passed towards addition of Rs. 286054453/- against transfer pricing adjustment in respect on A.Y 2018-2019 although there is no liability on the company since no demand has been raised by the department, but, this has impacted in the reduction of losses by the above amount.

An appeal before the Sales Tax Commissioner - Appeals, New Delhi is lying pending in respect of Sales Tax demand of Rs.1,22,00,000/- on sale of REP Licenses made in earlier years.

Following appeals are also lying pending before the Appellate Authorities/Tribunal, Haryana as mentioned in coloumn.4 against the impugned VAT Assessment Orders/Revision Order passed by the assessing authorities as mentioned in column. 3 of the table given below

Particulars Demand raised (Rs.) Assessing Authority Appellate Authority
(Col.1) (Col.2) (Col.3) (Col .4)
Sales Tax Murthal - AY 2008-09 7,32,34,793 Revision- Faridabad Tribunal- Chandigarh
Sales Tax - Murthal - AY 2009-10 7,71,901 Revision- Faridabad Tribunal- Chandigarh
Total 7,40,06,694

Note : The Appellate Authority has remanded back the above cases to Revision Authority, Rohtak/Assessing Authority, Sonipat

Appeals are lying pending before the Dy. Excise & Taxation Commissioner-Appeal, Punjab against the Order received from Excise and Taxation Deptt., Punjab in respect of Year 2009-10 and 2010-11 demanding a sum of Rs.4,50,41,414/- towards the cess imposed by the State Govt, on exports. The company has challenged the validity of imposition of cess on export in its appeal as the same is not permissible under article 286 of the Constitution of India. Further demand has been raised for Rs. 5,41,073/- after completing the Sales Tax assessment for AY 2011-12 against which appeal has been filed.

An appeal before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi is lying pending against the order of Commissioner of Central Excise (Appeals), Delhi -III in respect of additional excise duty of Rs. 42,90,580/- demanded by the Excise department in connection of dispute over classification of goods - food product produced at Bahalgarh Factory- as per the Central Tariff Act. As the matter is still pending before the Tribunal, no provision in the books of accounts have been made.

During the financial year 2016-17, the company has received an order from Hon.ble Central Excise and Service Tax Appellate Tribunal, New Delh (CETSTAT) against the order passed by Commissioner of Service Tax (Adjudication), New Delhi demanding a service tax of Rs.2,59,25,214/-. The Honble CETSTAT vide its order dated 16/02/2017 has granted major relief of Rs.2,50,12,963/-against the aforesaid demand.

VAT-Delhi had raised the demand of 7,26,93,315/- against pending F forms in respect of years 2015-2016 & 2016-2017. Pending F forms were related to six quarter out of the above, for five quarter all F forms were submitted and an order dated 16-082022 has been received, nullifying the demands of these quarter. For quarter one for the year 2016-2017 F forms are pending there a demand of Rs. 22,62,888/- has been raised by VAT-Delhi. Appeal against the said order has been filed with VAT-Delhi.

The Company has received Notices from the Banks under section 13(2) of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in the month of July, 2018 to May, 2019 and in the month of February 2020 to September 2020. The Company has replied to said notices and negotiating with different workable options. The Oriental Bank of Commerce and Punjab National Bank have served notice of Wilful Defaulter. The Company/Directors have replied to the said notices. The Company has also approached Banks with suitable resolution plan for their consideration, which the consortium has sanctioned.

The Company has received Ex-parte Interim Order dated 25.06.2020 from Debt Recovery Tribunal-Ill, Delhi restraining the Company from transferring/ alienating or otherwise dealing with, or disposing off or encumbering or creating any third party interest with respect of the hypothecated assets/immovable properties of the Company until further orders. Further the Company has received summon under sub-section (4) of Section 19 of the Act, read with sub-rule (2A) of rule 5 of the Debt Recovery Tribunal (Procedure) Rules, 1993 in the aforesaid matter of ICICI Bank Limited V. Kohinoor Foods Limited and ORS to file written statement and to appear before Registrar on 26/09/2020. The Company is contesting the matter and filed its reply to lAand also filed reply to OA before DRT-III, Delhi vide IA No. 926/2020 and OA No. 276/2020, wherein the DRT has provided the next date of hearing on 31/08/2022.

The Company has received a Notice through speed post from DRT-II, New Delhi. The Lead Bank has filed an OA No. 300 of

2022 before DRT 2 Delhi against the Company under section 19(4) of the Act. The matter is listed before the registrar for completing of pleading on 03/08/2022. The Company is in process of filing suitable reply of the aforesaid notice with the respective Honble courts/Authorities/offices in due course

The Jt. Managing Director, Mr. Satnam Aroraof the Company, has received a summon/notice from the Directorate of Enforcement, Central Regional Office, Government of India, Chandigarh/New Delhi, to appear before them along with various document. The Director/authorized representative of the company is in process to appear and submit relevant documents before the authorities/ offices / department in due course.

A notice had been received from Central Bureau of Investigation, New Delhi in the name of The Director, Kohinoor Foods Limited to produce documents/information in person before them, pertaining to business transaction with two specified entities/party(ies) during the period 2013 to 2016. The Director/authorized representative of the Company Submited relevant do cuments before the authorities/offices/department in due course.

The Company has submitted its improved One Time Settlement (OTS) proposal with the Consortium Banks and the same is sanctioned by the Lead Bank and was presented at their respective consortium meeting. The promoters of the Company deposited the interest of the Sanctioned O.T.S. and requested another 90 days time to meet the requirements of the O.T.S., which is at present under consideration with the Consortium Lenders.

The Company has received Legal Notice from the Punjab National Bank, Hong Kong in regard to outstanding indebtedness due amount of US$ 6,074,243.81 (inclusive of interest up to date) payable within 14 days from the date of the letter. The matter is being taken up PNB Dubai and the Company has replied the Bank within the stipulated time and submitted its OTS proposal and has deposited the upfront amount USD 89,433.4/- towards One Time Settlement (OTS) Proposal and requested to process the Company OTS Proposal and forward the same to their Board/Head Office for approval, which is at present in consideration..

The Company has received an Arbitration Award by the Honble Arbitral Tribunal comprising of the sole arbitrator Mr. S G Shah Former Judge, High Court of Ahmedabad for its debtors the company has not received any amount, from the parties, on due date as Award. The Company has withdrawn the execution petitio

n of the award before the High Court, New Delhi in regard to recovery of the amount as per Award.

The Lead Bankers, Oriental Bank of Commerce (Now Punjab National Bank) has filed petition under Section 7 of Insolvency and Bankruptcy Code, 2016, before the Honble court of NCLT, Chandigarh Bench, which is not yet admitted.

The Board of Trustee of the port of Mumbai has filed a money suit for recovery of Rs. 9.64 Cr. towards alleged outstanding demurrage charges against which the Company has filed its counter claim of Rs. 10.88 Cr. towards the financial losses, interest on the investment, refund of the license fees, refund of the demurrage charges, compensation and damages etc. The matter is still pending.

M/s. Regal Kitchen Foods Limited filed an arbitration petition towards alleged outstanding, against which company is in process of filing its counter claim towards the financial losses. The Company has booked income towards the financial losses of Rs. 387 Lakhs, which is to be recoverable from M/s. Regal Kitchen Foods Limited. Case is filed in District and Session court Faridabad. The Company is in process of contesting and taking all suitable legal recourses in relation to the above matter in the other honble High Courts, District Court, Quasi Court of competent jurisdiction.

All other litigations are mentioned in the note on Contingent Liability in the Balance Sheet for the financial year 2021 -22.

Contract and Arrangements with Related Parties

In terms of Section 188 of the Act read with rules framed thereunder and Regulation 23 of the Listing Regulations, your Company has in place Related Party Transactions Policy for dealing with related party transactions. The policy may be accessed under the Corporate Governance section on the website of the Company at: http://kohinoorfoods.in/pdf/Policy-on- Related-Party-Transactions.pdf. All the related party transactions that were entered and executed during the year under review were on arms length basis and in the ordinary course of business and within permissible framework of Section 188 of the Act and Rules made thereunder read with Regulation 23 of Listing Regulations. There were no materially significant related party transactions made by the Company during the year that would have required the approval of the shareholders. The details of the transactions with the related parties are provided in the accompanying financial statements. There were no related party transaction made during the year that are required to be disclosed in the FormAOC-2.

Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earning and Outgo

The particulars as prescribed in sub-section (3) of Section 134 of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014 are enclosed as Annexure B to this Report.

Particulars of Employees and Related Disclosure

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are given as under:

i) There are no Employee, employed throughout the year and in receipt of remuneration of Rs. 1,02,00,000/- or more per annum.

ii) There are no Employee, employed part of the year and in receipt of remuneration of Rs. 8,50,000/- or more per month during any part of the year.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in the annexure-D to this report.

Having regard to the provisions of Section 136(1) read with its relevant proviso of the Companies Act, 2013, the Boards Report is being sent to the members without some annexures. The said annexures are available for inspection at the Registered/ Corporate Office of the Company during working hours and any member interested in obtaining such annexures may write to the Company Secretary and the same will be furnished free of cost.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013, the extract of the annual return in Form No. MGT - 9 is enclosed as Annexure C to this Report.

Managements Discussion and Analysis Report

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a Management Discussion and Analysis Report and a Report on Corporate Governance is attached in a separate section forming part ofthe Annual Report.

A Certificate from the Statutory Auditors of the Company regarding the Compliance by the Company of the conditions stipulated in Regulations Part C of Schedule V of the Listing Regulations is also attached with this report.

A declaration by the Managing Director pursuant to Regulations Part C of Schedule V of the Listing Regulations stating that all the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct, during the financial year ended 31 st March, 2022, is also attached with this report.

Directors Responsibility Statement

Pursuant to section 134(5) of The Companies Act, 2013, the Directors confirm that:

a) in the preparation of the annual accounts for the year ended 31st March, 2022, the applicable accounting standards read with requirements set out under Schedule III to the Act, had been followed and there are no material departures from the same;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates 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, 2022 and of the profit and loss of the Company for the year ended on that date;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concernbasis;

e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

Awards & Recognitions

Since its inception, the Company has been earning awards and recognition like consumer validated Super Brand Award (thrice in series), Readers Digest Most Trusted Brand award (4 times in a row), Power Brand Award, Guinness Book of World Record (for making Worlds Largest Biryani), National award for Export Excellence, Brand Equity Award & manyAPEDAawards.

Corporate Social Responsibility

As per provisions under Section 135 of the Companies Act, 2013, all companies having net worth of Rs. 500 crores or more, or turnover of Rs. 1,000 crores or more or a net profit of Rs. 5 crores or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) Committee of Board of Directors comprising three or more directors, at least one of whom should be an Independent Director and such Company shall spend 2% of the average net profits of the Company made during the three immediately preceding financial years.

Accordingly a detailed CSR Policy was framed by the Company with the approvals of the CSR Committee and Board. The Policy, inter alia, covers the following:

• Philosophy

• Scope

• List of CSR activities

• Modalities of execution of projects/programmes

• Implementation through CSR Cell

• Monitoring assessment of projects/programmes

CSR Policy gives an overview of the projects or programmes which are proposed to be undertaken by the Company in the coming years.

The composition of the CSR Committee

A Committee of the directors, titled Corporate Social Responsibility Committee, was constituted by the Board with the following members:

1. Mrs. Mani Chandra Bhandari (Chairperson)

2. Mr.SatnamArora

3. Mr.GurnamArora

4. Mr. Vijay Burman (cessation due to sudden demise on 10.06.2021)

As the Average net Profit/(Loss) of the Company for last three financial years prior to 2021-22 comes to average net loss and therefore the Company is not statutorily required to spent amount as prescribed for CSR expenditure.

Kohinoor also envisions to improve lives in communities we live around, protect workplace rights, respect people, support missions that help people have a better life, provide good jobs, world class quality products and a healthy environment to all of us around.

At Workplace, Kohinoor Foods maintain high standards for fair and dignified treatment of all the people who work for our Company. For all of its employees, it is not just a place to work, but like another home and everybody in it like a big family, closely bonded with each other.

Kohinoor Foods also believes that a Company is as good as the people who work for it - their combined talents; skills, knowledge, experience and passion make a company what it is.

Hence, Companys continuous goal is to inspire and motivate its people to hone their talents, increase their knowledge & skills and achieve extraordinary results at their workplace. In this endeavor we have offered subsidized meals to our employees at a very nominal cost.

Adherence to global human rights standards, No minor labour, Fair trade practices, complete Medical facilities for its people, Safe & sound working environment are the things that Kohinoor Foods take utmost care about.

The CSR Policy may be accessed on the Companys website at the link: www.kohinoorfoods.in/investor

Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance towards sexual harassment at the workplace. The Company has in place a Sexual Harassment Policy in compliance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Sexual Harassment Committee has been set up to redress complaints received regarding sexual harassment.

The Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Declaration by Independent Directors

The Company has received necessary declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulation, 2015.

Board Evaluation

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is mandatory that the Board shall monitor and review the Board Evaluation Framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. Schedule IV of the Companies Act, 2013 and Regulation 17 (10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria and framework adopted by the Board. In addition, the performance of Board as a whole and committees were evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of Board as a whole and performance of the Chairman was evaluated, taking into account the views of the Executive Directors and Non-Executive Directors. The evaluation process has been explained in the Corporate Governance Report section of the Annual Report.

Training of Independent Directors

The Company Secretary of the Company conducted a detailed training programme to provide/update the changes in the SEBI (LODR), Regulation, 2015/Companies Act, 2013 and other relevant act to the Independent Directors.

Further, the Company issues a formal letter of appointment to Independent Directors outlining their roles, responsibilities, functions and duties as an Independent Director. The format of the letter of appointment is available on the Companys website at the link: www.kohinoorfoods.in/investor

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employee of the Company under any scheme.

4. Issue of Employees Stock Option to employee of the Company under any scheme.

5. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

6. 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 except as disclosed in the Annual Report.

7. Business Responsibility Report as per Regulation 34 (2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, describing the initiatives taken by them from an environmental, social and governance perspective is not applicable to the Company, for the financial year 20202011 as per the SEBI Circular SEBI/LAD-NRO/GN/2015- 16/27 dated 22nd December, 2015 and Frequently Asked Questions issued by SEBI on SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 dated 29th January, 2016.

Acknowledgment

Your Directors would like to express their appreciation for the assistance and co-operation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors acknowledge with gratitude, the commitment and dedication of the employees at all levels that has contributed to the growth and success of the Company.

For and on Behalf of the Board
Sd /- Sd/-
Satnam Arora Gurnam Arora
Jt. Managing Director Jt. Managing Director
DIN:00010667 DIN:00010731
Place: Faridabad
Date: August 31,2022