Kothari Fermentation & Biochem Ltd Directors Report

Dear Members,

Your directors are pleased to present the 36th (Thirty-Sixth) Annual Report on the business and operations of Kothari Fermentation and Biochem Limited ("the Company"), together with the Audited Financial Statements for the financial year ended March 31,2026.

1. FINANCIAL HIGHLIGHTS

Particulars	2025-26	2024-25
Turnover	11,213.19	11,423.10
Profit before Finance Charges and Depreciation (PBDIT)	723.94	1,196.51
Finance Charges	369.93	358.62
Depreciation	700.24	644.03
Profit/(Loss) before Tax	(346.23)	193.86
Current Tax	-	30.19
Deferred Tax	(47.30)	82.68
Net Profit/(Loss) after Tax	(298.93)	80.99

2. BUSINESS OPERATIONS AND STATE OF THE COMPANYS AFFAIRS

During the year under review, the Company achieved production of 16,102 MT as compared to 15,280 MT in the previous year, recording higher production by 5.38% compared to the previous year. The turnover of the Company was Rs.11,213.19 lakhs during the financial year 2025-26 as compared to Rs.11,423.10 lakhs during the previous financial year, representing a marginal reduction of 1.84%.The Company incurred a net loss after tax of T298.93 lakhs during the financial year 2025-26 as against a net profit after tax of T80.99 lakhs during the financial year 2024-25.

The operational performance of the Company during the year and its future outlook are comprehensively covered in the Management Discussion and Analysis Report, which forms a separate section of the Annual Report.

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

3. DIVIDEND AND TRANSFER TO RESERVES

In view of the financial performance of the Company, the Board of Directors has not recommended any dividend for the financial year 2025-26. No amount Is proposed to be transferred to the reserves. Further, no amount was outstanding in the Unpaid Dividend Account as at March 31,2026.

4. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Retirement by Rotation

In accordance with the Articles of Association of the Company and Section 152(6) of the Companies Act, 2013 ("the Act"), Mr. Pramod Kumar Kothari (DIN: 00086145), Chairman and Managing Director of the Company, is liable to retire by rotation and, being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting. His retirement and subsequent re-appointment shall not constitute a break in his tenure of service as Managing Director of the Company.

Changes in Directors and Key Managerial Personnel

The following changes took place in the Board of Directors and Key Managerial Personnel of the Company during the financial year ended March 31,2026:

Name	DIN/ Membership No.	Designation	Nature of Change	Effective Date
1. Dr. Rajiv Agarwal	07079724	Independent Director	Resignation	August 13,2025
2. Mr. Varun Kumar	05202005	Independent Director	Appointed asan Additional Directorin the Independent category and subsequently appointed as an Independent Director with the approval of the Members	As Additional Director on August 13, 2025; Membersapproval on September 30,2025
3. Ms. Shivani Kamra	A72631	Company Secretary and Compliance Officer	Appointment	April 1,2025
4. Mrs. Silky Gupta	A57285	Company Secretary and Compliance Officer	Resignation	April 1,2025

The Company has made the requisite statutory filings in respect of the above changes in accordance with the applicable provisions of the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations").

A brief profile of Mr. Pramod Kumar Kothari, including the nature of his expertise in specific functional areas and the names of the entities in which he holds directorships, as required under the SEBI Listing Regulations and Secretarial Standard on General Meetings, is provided in the Notice convening the ensuing Annual General Meeting. The Board recommends his reappointment.

5. INTERNAL FINANCIAL CONTROLS ANOTHEIR ADEQUACY

The Company has in place internal financial controls commensurate with its size, scale and complexity of operations. The internal control framework includes policies and procedures, information technology systems, delegation of authority, segregation of duties, internal audit and management review mechanisms. The controls were tested during the year under review and no reportable material weakness in their design or operation was observed.The management periodically reviews the controls to ensure that they remain adequate and effective in light of changes in the business environment.

6. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, the Directors, to the best of their knowledge and belief, confirm that:

i. in the preparation of the annual accounts for the financial year ended March 31, 2026, the applicable accounting standards had been followed and there were no material departures requiring explanation;

ii. the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2026 and of the loss of the Company for the year ended on that date;

iii. 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 of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors had prepared the annual accounts for the financial year ended March 31,2026 on a going-concern basis;

v. the Directors had laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and operating effectively; and

vi. the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

7. CERTIFICATIONS

The Companys food safety management system was certified under ISO 22000:2018 on December 9, 2024. Further, the Company holds a valid Food Safety and Standards Authority of India (FSSAI) License, issued under the provisions of the Food Safety and Standards Act, 2006. The license reflects the Companys commitment to maintaining high standards of food safety, quality, and regulatory compliance.

8. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts, arrangements and transactions entered into by the Company with related parties during the year under review were in the ordinary course of business and on an arms-length basis.The Company did not enter into any materially significant related-party transaction with Promoters, Directors, Key Managerial Personnel or other designated persons that may have had a potential conflict with the interests of the Company at large.

Accordingly, there were no transactions required to be reported in Form AOC-2. Details of related-party transactions are disclosed in Note No. 34 forming part of the financial statements in accordance with the applicable accounting standards, the Act and the SEBI Listing Regulations.

9. AUDITORS AND AUDITORSREPORTS

A. Statutory Auditors

Pursuant to Section 139 of the Act, the Members appointed M/s Kothari Kuldeep and Co., Chartered Accountants, as Statutory Auditors of the Company fora term of five consecutive years from the conclusion of the 32nd Annual General Meeting until the conclusion of the 37th Annual General Meeting to be held in 2027. Accordingly, no further action is required in this regard at the ensuing Annual General Meeting.

The notes to the financial statements are self-explanatory. The Statutory Auditors Report does not contain any qualification, reservation, adverse remark or disclaimer. Further, no fraud was reported by the Statutory Auditors under Section 143(12) of the Act during the financial year 2025-26.

B. Internal Auditor

Pursuant to Section 138 of the Act, M/s RADAM & Associates, Chartered Accountants, were appointed by the Board of Directors, upon the recommendation of the Audit Committee, as Internal Auditors of the Company for the financial year 2025-26. The scope and coverage of the internal audit were approved and periodically reviewed by the Audit Committee.

C. Secretarial Auditor and Secretarial Standards

Pursuant to Section 204 of the Act, the rules made thereunder and Regulation 24A of the SEBI Listing Regulations, M/s Priyanka Saxena & Associates, Practising Company Secretaries, were appointed as Secretarial Auditors of the Company for a term of five years from the conclusion of the 35th Annual General Meeting until the conclusion of the 40th Annual General Meeting.

The Secretarial Audit Report for the financial year ended March 31,2026 forms part of this Report as Annexure A. The Report does not contain any qualification, reservation, adverse remark or disclaimer requiring an explanation by the Board. Further, no fraud was reported by the Secretarial Auditor under Section 143(12), read with Section 143(14), of the Act during the financial year 2025-26.

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

10. CORPORATE GOVERNANCE

The Company is committed to maintaining high standards of corporate governance and has complied with the applicable corporate governance requirements prescribed under the SEBI Listing Regulations. The quarterly corporate governance reports required under Regulation 27(2) were filed with the Stock Exchange within the prescribed timelines. Pursuant to Regulation 34(3), read with Schedule V of the SEBI Listing Regulations, a separate Corporate Governance Report, together with the requisite certificate on compliance, forms part of the Annual Report.

11. CORPORATE SOCIAL RESPONSIBILITY

Based on the audited financial statements forthe immediately preceding financial year and the applicable provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Corporate Social Responsibility provisions were not applicable to the Company during the financial year 2025-26. Accordingly, the Company was not required to constitute a Corporate Social Responsibility Committee or incur expenditure on Corporate Social Responsibility activities during the year under review.

12. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as required under Regulation 34(2)(e) read with Schedule V of the SEBI Listing Regulations, is presented as a separate section forming part of the Annual Report.

13. VIGIL MECHANISM AND WHISTLE-BLOWER POLICY

Pursuant to Section 177(9) of the Act, the rules made thereunder and Regulation 22 of the SEBI Listing Regulations, the Company has established a Vigil Mechanism and formulated a Whistle-Blower Policy for Directors and employees to report genuine concerns. The mechanism provides adequate safeguards against victimisation and direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. Further details are provided in the Corporate Governance Report. No complaint was received under the Vigil Mechanism during the financial year 2025-26.

14. PREVENTION OF SEXUAL HARASSMENT AT THE WORKPLACE

The Company has adopted a policy for the prevention, prohibition and redressal of sexual harassment at the workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made thereunder.The Company has constituted an Internal Committee in accordance with the said Act. No complaint of sexual harassment was received during the year. Further disclosures have been made in the Corporate Governance Reports.

15. RISK MANAGEMENT

The Company has established a risk-management framework to identify, assess, monitor and mitigate risks that may adversely affect its operations and to identify opportunities that may support sustainable growth. The Company has formulated a Risk Management Policy and the processes and procedures for implementation of the policy are periodically reviewed. The policy is available on the Companys website at: https://www.kothariyeast.in/investor-files-v2/policies/risk management policies.pdf The Companys assets are adequately insured against risks considered necessary by the management, and the insurance requirements are reviewed periodically.

16. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Board has adopted a Nomination and Remuneration Policy, as recommended by the Nomination and Remuneration Committee, in accordance with Section 178 of the Act and Regulation 19 of the SEBI Listing Regulations. The Policy sets out, inter alia, the criteria for determining qualifications, positive attributes and independence of Directors and the principles governing the remuneration of Directors, Key Managerial Personnel and Senior Management. The relevant disclosures are provided in the Corporate Governance Report. The Policy is available on the Companys website at: https://www.kothariveast.in/investor-files-v2/policies/nomination-remuneraion-%26-board-diversitv.pdf The particulars of remuneration required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexure B to this Report.

17. ANNUAL PERFORMANCE EVALUATION

In accordance with the criteria and manner of evaluation specified by the Nomination and Remuneration Committee, the Board carried out an annual evaluation of its own performance, the performance of its Committees and the performance of individual Directors. The Independent Directors evaluated the performance of the Chairman, the Non-Independent Directors and the Board as a whole. The performance of each Committee was evaluated by the Board based on the evaluation reports received from the respective Committees. The outcome of the evaluation process was discussed by the Board, and appropriate feedback was provided.

18. OTHER STATUTORY DISCLOSURES

a) Number of Board and Committee Meetings

During the year under review, ten meetings of the Board of Directors, seven meetings of the Audit Committee, one meeting of the Stakeholders Relationship Committee and three meetings of the Nomination and Remuneration Committee were convened and held. Further details, including attendance, are provided in the Corporate Governance Report.

Pursuant to Clause Vll(1) of Schedule IV to the Act and Regulation 25(3) of the SEBI Listing Regulations, the Independent Directors held a separate meeting on February 13,2026.

b) Deposits

During the year under review, the Company did not accept any deposit covered under Chapter V of the Act.

c) Share Capital and Employee Benefit Securities

There was no change in the issued, subscribed and paid-up share capital of the Company during the year under review. The Company did not issue equity shares with differential rights, sweat equity shares or shares under any employee stock option scheme during the year. Further, no voting rights were exercised directly or indirectly by employees in respect of shares held under any scheme, and no shares were held by a trustee for the benefit of employees.

d) Audit Committee

The Company has duly constituted an Audit Committee, whose detailed composition and powers are provided in the Corporate Governance Report. There were no recommendations of the Aud it Committee which have not been accepted by the Board during the financial year.

e) Annual Return

Pursuant to Sections 92(3) and 134(3)(a) of the Act, the draft Annual Return of the Company for the financial year ended March 31, 2026, in Form MGT-7, is available on the website of the Company at https://www.kothariveast.in/investor- folders/annual-reports

f) Cost Records

Based on the assessment of the products manufactured by the Company and the applicable thresholds, the maintenance of cost records as specified by the Central Government under Section 148(1) of the Act is not applicable to the Company. The Company nevertheless maintains cost information and records for internal control and strategic-management purposes.

g) Significant and Material Orders

No significant or material order was passed by any regulator, court or tribunal during the year under review that would impact the going-concern status of the Company or its future operations.

h) Material Changes and Commitments

There were no material changes or commitments affecting the financial position ofthe Company between the end of the financial year and the date of this Report.

i) Loans, Guarantees, Securities and Investments

During the financial year 2025-26, the Company did not grant any loan, give any guarantee, provide any security or make any investment covered under Section 186 ofthe Act.

j) Subsidiaries, Associates and Joint Ventures

The Company does not have any subsidiary, associate company or joint venture. Further, no entity became or ceased to be a subsidiary, associate company or joint venture of the Company during the year under review.

k) Proceedings under the Insolvency and Bankruptcy Code, 2016

During the year under review, no application was made, and no proceeding was pending against the Company under the Insolvency and Bankruptcy Code, 2016.

l) One-Time Settlement with Banks or Financial Institutions

During the year under review, the Company did not enter into any one-time settlement with any bank or financial institution. Accordingly, the disclosure relating to the difference between the valuation undertaken at the time of onetime settlement and the valuation undertaken while availing loans from banks or financial institutions is not applicable.

m) Compliance with the Maternity Benefit Act, 1961

The Company has complied with the applicable provisions ofthe Maternity Benefit Act, 1961. Eligible women employees were extended the statutory benefits prescribed under the said Act, as applicable.

n) Declaration by independent Directors

The Company has received declarations from all Independent Directors confirming that they meet the criteria of independence prescribed under Section 149(6) ofthe Act and Regulation 16(1) (b) ofthe SEBI Listing Regulations and that they have complied with the requirements of Regulation 25(8) of the SEBI Listing Regulations. The Independent Directors have also confirmed that they are not aware of any circumstance or situation that exists or may reasonably be anticipated that could impair or impact their ability to discharge their duties with objective independent judgement and without any external influence.

o) Integrity, Expertise and Proficiency of Independent Directors

In the opinion of the Board, the Independent Directors possess the requisite integrity, expertise, experience and proficiency required for the effective discharge of their duties.

p) Commission from Flolding or Subsidiary Companies

The Company does not have any holding or subsidiary company. Accordingly, the disclosure under Section 197(14) of the Act is not applicable.

19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section I34(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is set out in Annexure C to this Report.

ACKNOWLEDGEMENT

The Board of Directors places on record its sincere appreciation for the continued support and confidence of the Members of the Company. The Board also acknowledges the dedication and cooperation of the employees at all levels, which have been a source of strength to the Company.

The Directors further express their gratitude for the continued support, guidance and cooperation extended by the Companys customers, auditors, legal advisers, consultants, bankers, dealers, vendors, government authorities and other stakeholders.