krbl ltd share price Directors report


DIRECTORS REPORT

To

The Members,

KRBL Limited 5190, Lahori Gate,

Delhi - 110 006

Your Directors are delighted to present the 29th (Twenty Ninth) Annual Report on Companys Business Operations along with the Audited Financial Statements (Standalone and Consolidated) for the financial year ended 31 March 2022.

1. RESULTS OF OUR OPERATIONS

The Companys financial performance for the year under review has been encouraging on the backdrop of challenging conditions. Key aspects of Consolidated and Standalone Financial Performance of the Company for the current financial year 2021-22 along with the previous financial year 2020-21 are tabulated below:

(Rs. in lacs, except as stated)

Particulars

Consolidated

Standalone

Year Ended 31 March 2022 Year Ended 31 March 2021 Year Ended 31 March 2022 Year Ended 31 March 2021
Revenue from operations 4,21,056 3,99,188 4,21,056 3,99,188
Other income 4,271 2,268 4,246 2,243
Total income 4,25,327 4,01,456 4,25,302 4,01,431
Operating expenditure 3,54,852 3,16,966 3,54,768 3,16,808
Earnings before interest, tax, depreciation and amortization (EBITDA) 70,475 84,490 70,534 84,623
Finance costs 1,340 2,359 1,340 2,359
Depreciation and amortisation expense 7,422 7,195 7,417 7,190
Profit before tax (PBT) 61,713 74,936 61,777 75,074
Tax expense:
Current tax 16,567 19,824 16,567 19,824
Deferred tax (794) (779) (794) (779)
Profit for the year 45,940 55,891 46,004 56,029
Other comprehensive income/(loss) for the year 71 596 39 630
Total comprehensive income for the year 46,011 56,487 46,043 56,659
Earning per share (Face Value of 1 each)
- Basic (In Rs.) 19.52 23.74 19.54 23.80
- Diluted (In Rs.) 19.52 23.74 19.54 23.80

2. STATE OF COMPANY AFFAIRS

Your Company is focusing on the strategic pillars of cost efficiency programs, innovation, brand building and distribution in order to sustain growth and profitability. While the inflationary environment continues to pose a challenge, your Company maintained a stable outlook on demand and showcased a strong performance during the financial year 2021-22 under review. The highlights of the performance on a consolidated basis are as under:

• Companys Revenue from operations stood at Rs.4,21,056 lacs (31 March 2021 Rs.3,99,188 lacs).

• Companys Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at Rs.70,475 lacs (31 March 2021 Rs.84,490 lacs).

• Companys Profit before tax (PBT) stood at Rs.61,713 lacs (31 March 2021 Rs.74,936 lacs).

• The Companys Profit after tax (PAT) stood at Rs.45,940 lacs (31 March 2021 Rs.55,891 lacs).

• Companys total comprehensive income for the year stood at Rs.46,011 lacs (31 March 2021 Rs. 56,487 lacs).

• Companys Return on Capital Employed (ROCE) stood at 15%.

• Net Worth of the Company increased by 10% to Rs.4,07,024 lacs (31 March 2021 Rs.3,69,251 lacs).

• The Company achieved 10% CAGR growth in net sales, 12% CAGR growth in EBITDA and 20% CAGR growth in Net Profit over the last decade.

• Earnings per Equity Share (EPS) for the year stood at Rs.19.52 (31 March 2021 f23.74).

• The dividend proposed by the Company on the profits earned in FY 2021-22 was 350 % (i.e. Rs.3.50 per equity share of face value of f1 each).

3. DIVIDEND

Premised on performance reported during the year along with strong financial position of the Company, the Board of Directors of the Company, in their meeting held on 27 May 2022, had recommended a Final Dividend @ 350% i.e. Rs.3.50 per equity share on 23,53,89,892 equity shares having face value of Rs.1 each for financial year 2021-22 absorbing a total dividend outgo of Rs.8239 lacs (excluding taxes). The proposed Dividend shall be paid subject to the approval of shareholders in the ensuing Annual General Meeting (hereinafter referred to as "AGM") of the Company. The Final Dividend as recommended by the Company is in accordance with the Dividend Distribution Policy of the Company framed pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations"). The Dividend Distribution Policy of the Company may be accessed on the Companys website at the weblink https://krblrice.com/policy-guidelines/ REVISED_DIVIDEND_DISTRIBUTION_POLICY.pdf

4. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE FINANCIAL YEAR

During the financial year 2021-22, no entity became or ceased to be the Subsidiary, Joint Venture or Associate of the Company.

5. TRANSFER TO RESERVES

During the year under review, there was no amount transferred to any of the reserves by the Company.

6. SHARE CAPITAL

The paid-up Equity Share Capital of the Company as on 31 March 2022 is Rs.2,354 lacs. There has been no change in the paid-up Equity Share Capital of the Company during the financial year. Further, the Company has no other type of securities except equity shares forming part of Equity Share Capital of the Company.

7. TRANSFER OF UNCLAIMED DIVIDEND/ SHARES TO INVESTOR EDUCATION & PROTECTION FUND AUTHORITY

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013, read with Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time) (IEPF Rules), all dividend which were unpaid or unclaimed for seven consecutive years or more are liable to be transferred to the Investors Education and Protection Fund (IEPF) Authority.

Accordingly, the Company transferred an amount aggregating Rs.7,60,446 to the Investor Education and Protection Fund during the financial year 2021-22. This amount was lying unclaimed with the Company for a period of seven years or more after the declaration of dividend for the financial year 2013-14.

Further, pursuant to the provisions of Section 124(6) of the Companies Act, 2013 read with the Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time) during the financial year 2021-22, the Company has transferred 3,748 equity shares which belonged to a total of 29 shareholders whose dividend has not been paid or claimed for seven consecutive years or more to the demat account of IEPF Authority i.e. INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY, MINISTRY OF CORPORATE AFFAIRS, bearing DP ID IN300708 and Client ID 10656671, being maintained with NSDL. Before transferring the above-mentioned shares, the Company had published a newspaper advertisement and had also sent individual letters to the concerned shareholders who hadnt claimed or encashed their dividend for seven or more consecutive years.

8. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this Financial Statement relates and till the date of this Report.

9. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There hasnt been any change in the nature of the business of the Company during the financial year 2021-22.

10. SEGMENT REPORTING

A separate reportable segment forms part of notes to the Financial Statements.

11. CASH FLOW STATEMENT

The Cash Flow Statement of the Company for the financial year ended on 31 March 2022 has been prepared in accordance with Ind AS 7. The ‘Statement of Cash Flows is attached and forms part of the Financial Statements of the Company.

12. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Pursuant to Regulation 25(7) of the SEBI Listing Regulations, the Company familiarizes its Directors about their role and responsibilities at the time of their appointment through a formal letter of appointment. Presentations and regulatory updates are regularly made available at the meetings of the Board and its various Committees on the relevant matters. All efforts are made to keep Independent Directors aware. The familiarization of Independent Directors may be accessed on the Companys website at the weblink https://krblrice.com/wp-content/ uploads/2022/06/Familiarization.pdf

13. SUBSIDIARY COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

The Company has two Subsidiaries viz., KRBL DMCC, Dubai (Comprises a step down Wholly Owned Subsidiary) and K B Exports Private Limited, India. There is no Associate Company within the meaning of Section 2(6) of the Companies Act, 2013. Further, there hasnt been any material change in the nature of the business of the Subsidiaries during the financial year 2021-22.

The Consolidated Financial Statements of the Company for the financial year 2021-22 are prepared in compliance with applicable provisions of the Companies Act, 2013, read with the Rules issued thereunder, applicable Indian Accounting Standards (Ind-As) and SEBI Listing Regulations. The Consolidated Financial Statements have been prepared by consolidating the audited Financial Statements of the Company and its Subsidiaries. Further, pursuant to the proviso of sub section (3) of section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the Financial Statements of Subsidiaries in the prescribed form AOC-1 is attached as ‘Annexure 1 and forming part of this Report.

Pursuant to the provisions of Companies Act, 2013, the Financial Statements of the Subsidiary Companies and the related information have also been made available for inspection by the members at the Corporate Office of the Company during business hours on all days except Sunday and Holiday, upto the date of ensuing AGM of the Company. Any member desirous of obtaining a copy of the said financial statements may write to the Company Secretary at the Registered Office/Corporate Office of the Company. The Financial Statements including the Consolidated Financial Statements, Financial Statements of Subsidiaries and all other documents are also available on the Companys website www.krblrice.com under the link Investor Relations.

14. BOARD OF DIRECTORS

Board Composition

As on 31 March 2022, the Companys Board has a strength of 9 (Nine) Directors including 2 (Two) Woman Directors. The Chairman of the Board is an Executive Director. The composition of the Board is as below:

Category Number of Directors % of Total Number of Directors
Executive Directors 4 44
Independent Non-Executive Directors 5 56

The detailed section on ‘Board of Directors is also given in the ‘Report on Corporate Governance.

Pursuant to the provisions of Section 149(13) of the Companies Act, 2013 and the Articles of Association of the Company, all Directors except Independent Directors are liable to retire by rotation. The Independent Directors of the Company are to hold office for 5 (Five) consecutive years starting from 14 September 2019 to 13 September 2024 (except for Ms. Priyanka Sardana who would hold the office for a period of 5 (Five) consecutive years w.e.f. 25 September 2019).

During the year, Mr. Alok Sabharwal, an Independent NonExecutive Director of the Company, ceased to be a Director on the Board of KRBL Limited w.e.f. the closure of business hours on 10 August 2021, due to the completion of his tenure. The Board placed on record their sincere appreciation for the guidance and contribution made by Mr. Alok Sabharwal during his tenure.

Declaration by Independent Directors

All Independent Directors of the Company have given their declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations. In the opinion of the Board, the Independent Directors fulfil the criteria of independence specified in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI Listing Regulations. The Independent Directors have also confirmed that they have complied with the Companys Code of Business Conduct & Ethics laid down for the Board of Directors, Senior Management Personnel and other Employees.

Retirement by rotation and subsequent re-appointment

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Article 126 of the Articles of the Association of the Company, all directors except Independent Directors shall be liable to retire by rotation and out of that, one-third of such directors shall retire from the office every year. The directors who shall retire by rotation at every AGM shall be those who have been longest in the office since their last appointment. Further, pursuant to the provisions of Section 149(13) of the Companies Act, 2013, the retirement of directors by rotation shall not be applicable to the Independent Directors.

Accordingly, Mr. Anoop Kumar Gupta (DIN: 00030160), the Joint Managing Director of the Company, being longest in his office amongst the Directors is liable to retire by rotation this year. However, being eligible, he has offered his candidature for re-appointment. This shall not constitute a break in the office of Mr. Anoop Kumar Gupta as Joint Managing Director of the Company.

Re-appointment of Executive Director for a period of 5 (five) years

The Members at the 24th Annual General Meeting of the Company held on 26 September 2017, had approved the re-appointment of Ms. Priyanka Mittal (DIN: 00030479) as a Whole Time Director of the Company for a period of five years with effect from 26 September 2017 till 25 September 2022. The Board of Directors had based on the recommendation of Nomination and Remuneration Committee and subject to approval of the Members, approved the re-appointment of Ms. Priyanka Mittal as Whole Time Director of the company, for a further period of five years w.e.f 26 September 2022 to 25 September 2027.

Brief resume of the Directors being re-appointed

As required, pursuant to the Regulation 36(3) of the SEBI Listing Regulations and Secretarial Standards-2 on General Meetings, the brief resume of Mr. Anoop Kumar Gupta and Ms. Priyanka Mittal seeking re-appointment, which inter-alia includes the particulars w.r.t. the experience and expertise, list of other Companies in which Mr. Anoop Kumar Gupta and Ms. Priyanka Mittal are holding Directorships, Committee Memberships/Chairmanships and Inter-se relationships with other Directors, is provided in the Notice calling AGM of the Company.

The Company is seeking approval of Shareholders for the reappointment of Mr. Anoop Kumar Gupta and Ms. Priyanka Mittal and the same is included in the Notice calling AGM of the Company. The Board recommends the re-appointment of Mr. Anoop Kumar Gupta and Ms. Priyanka Mittal in the ensuing AGM of the Company.

15. AUDIT COMMITTEE

In compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations, as on 31 March 2022, the Audit Committee of KRBL Limited comprises of the following 5 (Five) Members, out of which 4 (Four) Members are Independent NonExecutive Directors and 1 (One) is Executive Director:

Name Designation Category
Mr. Devendra Kumar Agarwal Chairman Independent NonExecutive Director
Mr. Anoop Kumar Gupta Member Executive & Joint Managing Director
Mr. Ashwani Dua Member Independent NonExecutive Director
Mr. Shyam Arora Member Independent NonExecutive Director
Mr. Vinod Ahuja Member Independent NonExecutive Director

The recommendation made by the Audit Committee from time to time were accepted by the Board of Directors. The details of the Terms of Reference, Number of Audit Committee meetings held during the year and attendance of Audit Committee Members at such meetings etc. are provided in the Report on Corporate Governance.

16. KEY MANAGERIAL PERSONNELS

The details of Key Managerial Personnels (KMPs) of the Company in accordance with the provisions of Section 2(51) and Section 203 of the Companies Act, 2013, read with rules framed thereunder are as follows:

S.No. Name of KMPs Designation
1. Mr. Anil Kumar Mittal Chairman & Managing Director
2. Mr. Arun Kumar Gupta Joint Managing Director
3. Mr. Anoop Kumar Gupta Joint Managing Director
4. Ms. Priyanka Mittal Whole Time Director
5. Mr. Ashish Jain Chief Financial Officer
6. Mr. Raman Sapra Company Secretary

During the year, Mr. Rakesh Mehrotra had retired from the position of Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. the closure of business hours on 31 October 2021 and Mr. Ashish Jain was appointed as Joint Chief Financial Officer under the category of Key Managerial Personnel of the Company w.e.f. 13 September 2021 and designated as Chief Financial Officer and Key Managerial Personnel w.e.f. 01 November 2021.

17. POLICY ON REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL, SENIOR MANAGEMENT PERSONNEL AND OTHER EMPLOYEES

The remuneration paid to the Executive Directors is in accordance with the Nomination and Remuneration Policy of KRBL Limited formulated in accordance with Section 134(3)(e) and Section 178(3) of the Companies Act, 2013 read with Regulation 19 of the SEBI Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof, for the time being in force). The salient aspects covered in the Nomination and Remuneration Policy has been outlined below:

i) To identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director, KMP or at any Senior Management level and recommend to the Board his / her appointment.

ii) To devise the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy relating to the remuneration for the Directors, Key Managerial Personnel, Senior Management Personnel of the Company.

iii) To devise the criteria for evaluation of performance of the Independent Directors and the Board of Directors.

iv) To evaluate the performance of the Members of the Board and provide necessary report to the Board for further evaluation of the Board. Further, to determine whether to extend or continue the term of appointment of an Independent Director, on the basis of the report of performance evaluation of the Independent Directors.

v) To recommend to the Board on all remuneration in whatever form, payable to the Directors, the Key Managerial Personnel and the Senior Management.

vi) To develop a succession plan for the Board and the Senior Management, and to regularly review the plan.

vii) To assist the Board in fulfilling all other responsibilities as may be expected from the Nomination and Remuneration Committee of the Company.

The full version of the Nomination and Remuneration policy of KRBL Limited may be accessed on the Companys website at the weblink https://krblrice.com/policy-guidelines/ nomination-renumeration-policy.pdf

18. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS HELD DURING THE FINANCIAL YEAR 2021-22

During the financial year 2021-22, 5 (Five) Meetings of the Board of Directors were held on 29 June 2021, 13 August 2021, 04 September 2021, 08 November 2021 and 12 February 2022. For details thereof, kindly refer to the section ‘Board Meetings and Procedures - Details of the Board Meetings held and attended by the Directors during the financial year 2021-22 in the Report on Corporate Governance.

19. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The ultimate responsibility for sound governance and prudential management of a company dawns with its Board. Hence, the Board must remain continually energized, proactive and effective.

The Board evaluated the effectiveness of its functioning and that of the Committees and individual Directors by seeking their inputs on various aspects of Corporate Governance.

The aspects covered in the evaluation include the contribution to and monitoring of the corporate governance practices, participation in the long-term strategic planning and the fulfillment of Directors obligations and fiduciary responsibilities, including but not limited to, active participation in the Board and Committee Meetings.

The Companies Act, 2013, not only mandates the Board and Directors evaluation but also requires the evaluation to be formal, regular and transparent. Subsequently, the SEBI Listing Regulations also contain the provisions regarding the requirement of performance evaluation of the Independent Directors by the entire Board of Directors.

Following the framework, as recommended by the Nomination and Remuneration Committee and approved by the Board of Directors, the Board of Directors of the Company in its meeting held on 12 February 2022, had carried out the performance evaluation process.

The Independent Directors of the Company met separately without the presence of the Non-Independent Directors and inter-alia reviewed the performance of the Members of Management, the Non-Independent Directors and the Board as a whole. Further, the performance of the Chairman of the Company and the Committees were also reviewed in this meeting. The performance review was conducted taking into consideration the views of the Executive and NonExecutive Directors.

In compliance with the provisions of the SEBI Listing Regulations, the Board of Directors has also evaluated every Independent Directors performance during the financial year.

The Board Members had submitted to the Nomination and Remuneration Committee, their response in the form of scaling from 5 (Excellent) to 1 (Performance Needs Improvement) for evaluating the entire Board, respective Committees of which they are members and of their peer Board Members, including Chairman of the Board.

The Nomination and Remuneration Committee has also evaluated every Directors performance.

The Directors expressed their satisfaction with the evaluation process.

It was further acknowledged that every individual Member and Committee of the Board contributed to the best of their abilities in the overall growth of the organization.

20. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions under Section 134(5) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, the Directors confirm:

i) that in the preparation of the Annual Accounts for the financial year ending on 31 March 2022, the applicable

Indian Accounting Standards (Ind AS) have been followed, and that there are no material departures;

ii) that appropriate accounting policies have been selected and applied consistently. Further, judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at 31 March 2022 and of the profit of the Company for the financial year ending on 31 March 2022;

iii) 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 or any other irregularities;

iv) that the Annual Financial Statements for the financial year ending on 31 March 2022 have been prepared on a going concern basis;

v) that 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

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

21. OPERATIONS, PERFORMANCE AND FUTURE OUTLOOK OF THE COMPANY

A detailed review of the operations, the performance and future outlook of the Company are being given separately under the head ‘Management Discussion and Analysis Report pursuant to Regulation 34 read with Part B of Schedule V of the SEBI Listing Regulations, the same is annexed and forming part of this Report.

22. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013, read with rules framed thereunder, the details of activities in the nature of Conservation of Energy, Research and Development, Technology Absorption, Adaptation and Innovation and Foreign Exchange Earnings and Outgo are attached as ‘Annexure 2 and forming part of this Report.

23. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013

The particulars regarding the remuneration of the Directors and the KMPs as per Section 197 of the Companies Act, 2013, read with rules framed thereunder, are attached as "Annexure 3" and forming part of this Report. In terms of the first proviso to Section 136(1) of the Companies Act, 2013, the report and accounts are being sent to the members and others entitled thereto, excluding the information on Employees remuneration particulars mentioned under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said information is available for inspection by the Members during business hours on all days except Sunday and Holidays. Any Member interested in inspecting the same may write to the Company Secretary at the Registered Office/Corporate Office of the Company.

24. ANNUAL RETURN

Pursuant to the provisions of Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 and Companies (Management and Administration) Rules, 2014, the draft Annual Return of the Company containing the particulars as prescribed under Section 92 of the Companies Act, 2013, in Form MGT-7, is available on the Companys website at the web link https://krblrice.com/fy-2022/annual-report/MGT-7_ Annual-Return_FY-2021-22.pdf

25. AUDITORS AND AUDITORS REPORT

I) STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013), were appointed as the Statutory Auditors of the Company by the Shareholders in the 25th AGM of the Company held on 20 August 2018 for a period of 5 years i.e. to hold office till the conclusion of the 30th AGM to be held in the calendar year 2023. The requirement to place the matter relating to ratification of appointment by shareholders at every AGM has been done away by the Companies (Amendment) Act, 2017 w.e.f. 07 May 2018.

The observations made by the Statutory Auditors in their Report on the Audit of the Financial Statements (Standalone and Consolidated) and the notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.

The Auditors Report on the Financial Statements (Standalone and Consolidated) contains a qualified opinion provided hereunder:-

Qualified Opinion in the Auditors Report on the Standalone Financial Statements:

As stated in Note 48(A)(4) to the Standalone Financial Statements, the Enforcement Directorate (‘ED) is investigating the Companys Joint Managing Director Mr. Anoop Kumar Gupta (‘JMD) under the Prevention of Money Laundering Act, 2002, for alleged involvement in Agusta Westland case. Further, the ED has filled criminal complaint and made certain allegations against the Company, KRBL DMCC (a subsidiary of the Company) and JMD. As further described in the said note, a review of the impact of allegations on the financial statement and its control environment was performed by an independent professional firm appointed by the Board of Directors and in our view as per their report, there is no conclusive evidence to ascertain impact of the aforesaid matter on the financial statement of the Company and its control environment. Pending the completion of ongoing investigation of the above matter by regulatory authorities, we are unable to comment on any adjustment that may be required to the standalone financial statements in this respect.

Qualified Opinion in the Auditors Report on the Consolidated Financial Statements:

As stated in Note 47(A)(4) to the Consolidated Financial Statements, the Enforcement Directorate (‘ED) is investigating the Holding Companys Joint Managing Director Mr. Anoop Kumar Gupta (‘JMD) under the Prevention of Money Laundering Act, 2002, for alleged involvement in Agusta Westland case. Further, the ED has filled criminal complaint and made certain allegations against the Holding Company, KRBL DMCC (a subsidiary of the Holding Company) and JMD. As further described in the said note, a review of the impact of allegations on the financial statement and its control environment was performed by an independent professional firm appointed by the Board of Directors and in our view, as per their report, there is no conclusive evidence to ascertain impact of the aforesaid matter on the financial statement of the Holding Company and its control environment. Pending the completion of ongoing investigation of the above matter by regulatory authorities, we are unable to comment on any adjustment that may be required to the consolidated financial statements in this respect.

The response of your Directors on the observation made by the Statutory Auditor is as follows:-

The Companys Joint Managing Director, Mr. Anoop Kumar Gupta (‘JMD), had been detained and released on bail by the Directorate of Enforcement (‘ED) pursuant to certain allegations against the Company, KRBL DMCC (a subsidiary of KRBL Limited) and JMD. As per criminal complaint filed it is alleged that M/s Rawasi Al Khaleej General Trading LLC (‘RAKGT) had received proceeds of crime of USD 24.62 million in AgustaWestland case during the period 2008-2010 which in turn had been transferred to KRBL Limited through KRBL DMCC. Basis the affidavit filed by Balsharaf Group (one of the Customer of the Company) in the Honble High Court of Delhi in the said matter, the amount of USD 24.62 million had been received by RAKGT in the account of Balsharaf Group. Pursuant to this, ED had attached 1,43,33,221 shares of Balsharaf Group held in KRBL Limited. Based on the opinion taken from the independent legal counsel, the management is of the view that since the investigation is still ongoing no adverse opinion can be drawn.

The Company had appointed an independent professional firm (‘IP) to review the aforesaid allegations, to assess the impact, if any, on the financial statement and control environment of the Company. Subsequent to the year ended 31 March 2022, the IP has issued a report to the Board of Directors with respect to the aforesaid review. The board of the directors has discussed and approved the report, and has responded to the observation contained therein, basis that no further action is proposed.

II) COST AUDITORS

As per Section 148 of the Companies Act, 2013 read with notification issued by Ministry of Corporate Affairs regarding the Cost Audit of power segment, the Company is required to conduct the audit of its Cost Records pertaining to power segment by a Cost Accountant in Practice. In this connection, considering the recommendation of Audit Committee, the Board of Directors had approved the re-appointment of M/s. HMVN & Associates, Cost Accountants, having their office at, 1011, Pearls Best Heights-II, C-09, Netaji Subhash Place, Pitampura, Delhi-110 034, as Cost Auditors of the Company to conduct the Cost Audit for the financial year 2022-23.

As required under the provisions of Companies Act, 2013, a resolution seeking members approval for the Ratification and confirmation of remuneration of Cost Auditors for the financial year 2022-23, forms part of the Notice calling AGM of the Company.

The Company is maintaining the requisite cost records pertaining to power segment whose turnover for the financial year 2021-22 is Rs.11,153 lacs (excluding interunit sale).

Further, the Cost Audit Report for the financial year 2020- 21 has been filed with Ministry of Corporate Affairs.

III) SECRETARIAL AUDITORS

As required under Section 204(1) of the Companies Act, 2013, read with rules framed thereunder, M/s. DMK Associates, Company Secretaries, having their office at, 31/36 Basement, Old Rajender Nagar, Delhi-110 060, was appointed to conduct the Secretarial Audit Function of the Company.

The Secretarial Audit Report for the financial year 2021- 22 as submitted by M/s DMK Associates in the prescribed form MR-3 is attached as ‘Annexure 4 and forming part of this Report.

The observations given by the Secretarial Auditors in its Secretarial Audit Report along with explanation to the same is as below:

It is observed that certain statutory requirements of general laws applicable on the companys units located at Alipur, Delhi have not been complied with, however as per information provided, it was informed that only sorting / grading / packing of rice activity are done at the said unit and the unit has no production capacity.

The Company is taking all necessary steps to comply with the observations of the Secretarial Auditors as mentioned in the Secretarial Audit Report.

IV) INTERNAL AUDITORS

The Company has appointed M/s. S S Kothari Mehta & Co., Chartered Accountants, having their office at Plot No. 68, Okhla Industrial Area, Phase-III, New Delhi-110 020, as the Internal Auditor of the Company to focus on Internal Audit functions of the Company. The independence of the audit and compliance is ensured by direct reporting of Internal Audit Team to the Audit Committee of the Company.

26. CORPORATE GOVERNANCE

At KRBL Limited, it is our firm belief that the essence of good Corporate Governance lies in the phrase ‘Your Company. It is ‘Your Company because it belongs to you - the Stakeholders. The Chairman and the Directors are ‘Your fiduciaries and trustees.

Your Company has periodically updated its corporate governance guidelines. We have also sincerely followed the best practices to boost the long-term shareholder value and also to respect the minority rights. We also perceive it our inherent responsibility to disclose timely and accurate information regarding our financials and performance, as well as the leadership and governance of the Company.

Your Company is devoted to benchmarking itself with best global standards for providing good corporate governance. The Companies Act, 2013 and the SEBI Listing Regulations have strengthened the governance regime in the Country. Your Company complies with the governance requirements provided under SEBI Listing Regulations.

The Board has also evolved and implemented a Code of Conduct based on the principles of good corporate governance and best management practices adopted globally. The Code is available on the Companys website at the weblink: https://krblrice.com/codes/Code-of-

Business-Conduct-and-Ethics.pdf A separate section titled ‘Report on Corporate Governance has been included in this Annual Report along with Secretarial Auditors Certificate on Corporate Governance.

The Company has also adopted the below mentioned policies and codes in line with the corporate governance requirements:

• Policy on Preservation of Documents and Archival.

• Policy on Sexual Harassment (Policy on POSH).

• Nomination and Remuneration Policy.

• Vigil Mechanism (Whistle Blower Policy).

• Corporate Social Responsibility Policy.

• Dividend Distribution Policy.

• Policy for Determination of Materiality for Disclosure of Event or Information.

• Policy on Related Party Transactions.

• Policy for Determining Material Subsidiaries.

• Policy on Board Diversity.

• Code of Practice and Procedure for Fair Disclosure of Unpublished Price Sensitive Information.

• Code of Conduct to Regulate, Monitor and Report Trading by Insiders.

• Code of Business Conduct and Ethics for the Board of Directors, Senior Management Personnel and Other Employees.

All the above-mentioned policies and codes are made available on the Companys website under the link https://krblrice.com/

27. CORPORATE SOCIAL RESPONSIBILITY (CSR)

KRBL Limited believes that sustainable business growth rests on the triple bottom line approach, the growth of our people, safeguarding the environment where we operate, and profit from our business operations. We also understand that the wellbeing of the community where we operate helps us grow our business and hence we value people around our operating facilities and promote inclusive growth.

We endeavour to serve society and achieve excellence. We emphasize on improving the quality of life and engage with the communities by ensuring environmental sustainability, promoting healthcare, education and other related activities.

Pursuant to Section 135 of the Companies Act, 2013, read with rules framed thereunder, the Company is having in place the Corporate Social Responsibility (cSr) Committee under the chairmanship of Mr. Anil Kumar Mittal, Chairman & Managing Director. The other Members of the Committee are Mr. Anoop Kumar Gupta, Joint Managing Director, Ms. Priyanka Mittal, Whole Time Director and Mr. Ashwani Dua and Mr. Vinod Ahuja, Independent Non-Executive Directors.

The Companys policy on CSR envisages expenditure in areas falling within the purview of Schedule VII of the Companies Act, 2013 and as permitted under the applicable laws. The detailed CSR policy is available on the Companys website at the weblink https://krblrice.com/policy- guidelines/policy-corporate-social-responsibility.pdf

The Annual Report on CSR activities is attached as ‘Annexure 5 and forming part of this Report.

28. BUSINESS RESPONSIBILITY REPORT (BRR)

In compliance with the SEBI Listing Regulations, the BRR disclosures are part of the Annual Report. It aims at describing KRBLs initiatives in discharging responsibilities from an Environmental, Social and Governance perspective. The BRR is attached as ‘Annexure 6 and forming part of this Report.

29. INTERNAL FINANCIAL CONTROL (IFC) SYSTEM AND THEIR ADEQUACY

Pursuant to the provisions of Section 134(3)(q) of the Companies Act, 2013 and Rule 8(5)(viii) of the Companies (Accounts) Rules, 2014, the term Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The Company has implemented an internal control system, commensurate with the size, scale and complexity of its operations. The Company has in place adequate controls, procedures and policies, ensuring orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

The effectiveness of the IFC System of the Company is assessed by way of reporting by the independent professional firm on the testing of its design and operating effectiveness for the Financial Year ended 31 March 2022, who have confirmed in their report that the Company has, in all material respects adequate IFCs and such IFCs were operating effectively as of 31 March 2022, based on IFC criteria established by the Company, considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls issued by the Institute of Chartered Accountants of India.

Further, Audit Committee interacts with the aforementioned independent professional firm, the Statutory Auditors and the Management in dealing with matters within its terms of reference. During the year under review, such controls were assessed and no reportable material weakness in the design or operations was observed. Accordingly, the Board believes that the Companys IFCs were adequate and effective during Financial Year 2021-22.

Kindly refer Statutory Auditors Report on IFC forming part of the Financial Statements which is with qualified opinion.

30. RISK MANAGEMENT

Risk management is integral to the Companys strategy and for the achievement of the long-term goals. With the continuation of the COVID-19 pandemic, the challenges of uncertain lockdowns, unlock phases, health hazards and

supply chain disruptions across the globe continued to impact the business. The Company has an elaborate Risk Management Framework, which is designed to enable risks to be identified, assessed and mitigated appropriately. The Board of Directors of the Company has constituted Risk Management Committee which has, interalia, been entrusted with the responsibility of Overseeing implementation/Monitoring of Risk Management Plan and Policy; and continually obtaining reasonable assurance from management that all known and emerging risks have been identified and mitigated or managed. The Board of Directors in consultation with the Risk Management Committee has also developed Risk Management Policy for the Company which articulates the Companys approach to address the uncertainties of elements of risk in its endeavour to achieve its stated and implicit objectives.

31. RATINGS

During the financial year 2021-22, the Company is holding various ratings, which are as follows:

• CARE: In September 2021, "CARE" has reviewed and assigned "[CARE] A1+" rating for Commercial Paper (CP) Limits of KRBL Limited.

• ICRA: In November 2021, "ICRA" has reviewed and assigned "[ICRA]AA- (Stable)" rating for Bank Limits on Long term scale, "[ICRA]A1+" rating for Bank Limits on Short term scale and Commercial Paper (CP) Limits of KRBL Limited.

32. DISCLOSURE ON DEPOSITS UNDER CHAPTER V

The Company has neither accepted nor renewed any Deposits during the financial year 2021-22 in terms of Chapter V of the Companies Act, 2013. Further, the Company is not having any Unpaid or Unclaimed Deposits at the end of the Financial Year 2021-22.

33. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company is committed in providing a protective environment at the workplace for all its women employees. The Company dedicatedly emphasised on creating a work environment where every woman employee is treated with dignity and respect, as mandated under "The Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013". The Company has in place a formal policy on the prevention of Sexual Harassment at the Workplace (Policy on POSH) and has also constituted an Internal Complaint Committee at all its respective locations in compliance with the requirement of the Act. The policy is available on the Companys website at the weblink https://krblrice.com/policy-guidelines/ SEXUAL%20HARASSMENT%20POLICY.pdf

The Company hasnt received any Complaints on Sexual Harassment during the financial year under review. The Internal Complaint Committees of the Company has also submitted its Annual Report on Sexual Harassment to Mr. Anoop Kumar Gupta, Joint Managing Director and also to the Concerned District Officers where the Committee locates, declaring that no Complaints were received during the financial year.

34. DEPOSITORY SYSTEM

The Companys shares are compulsorily tradable in electronic form. As of 31 March 2022, 99.95% of the Companys Paid-up Equity Share Capital representing 23,52,62,540 equity shares are in dematerialized form with both the Depositories.

The Company has established connectivity with both Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Considering the numerous advantages offered by the Depository System, members holding shares in physical mode are requested to avail the dematerialization facility with either of the Depositories.

The Company has appointed M/s. Alankit Assignments Limited, a Category-I SEBI registered RTA as its Registrar and Share Transfer Agent across a physical and electronic alternative.

35. CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES

During the year under review, there was no change in Capital Structure and Listing of Shares. The Companys shares are listed and actively traded on the below mentioned Stock Exchanges:-

I. National Stock Exchange of India Limited (NSE)

"Exchange Plaza" C-1, Block G,

Bandra-Kurla Complex,

Bandra (East), Mumbai - 400 051

II. BSE Limited (BSE)

Phiroze Jeejeebhoy Towers,

Dalal Street,

Mumbai - 400 001

36. PARTICULARS OF LOAN(S), GUARANTEE(S) OR INVESTMENT(S) UNDER SECTION 186 OF THE COMPANIES ACT, 2013

During the financial year 2021-22, the Company has neither made any investment(s) nor given any loan(s) or guarantee(s) or provided any security as prescribed under Section 186 of the Companies Act, 2013.

37. PARTICULARS OF LOAN(S) FROM DIRECTORS UNDER SECTION 73 OF THE COMPANIES ACT, 2013, READ WITH COMPANIES (ACCEPTANCE OF DEPOSITS) RULES, 2014

During the financial year 2021-22, the Company has availed loan of Rs.2,033 lacs from Directors. The declarations in writing to the effect that the amount is not being given out of funds acquired by them by borrowing or accepting loans or deposits from others has also been received by the Company from the concerned Directors.

38. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188(1) OF THE COMPANIES ACT, 2013

During the financial year 2021-22, the Company has entered into transactions with Related Parties. The transactions as entered into by the Company with the Related Parties were in the ordinary course of business and on an arms length basis are in accordance with the provisions of the Companies Act, 2013, read with the rules framed thereunder and SEBI Listing Regulations. Further, there were no transactions with Related Parties which qualify as Material Transactions under the SEBI Listing Regulations.

The Audit Committee of KRBL Limited has considered, approved and recommended to Board for Omnibus Approval and criteria for Omnibus Approval for entering into transactions with Related Parties for the financial year 2021-22, which was further approved by the Board. The transactions entered pursuant to the Omnibus Approval so granted and a statement giving details of all transactions with Related Parties are placed before the Audit Committee for their periodical review. The details of the Related Party Transactions as per Indian Accounting Standard (Ind AS) 24 are set out in Note 47 to the Standalone Financial Statements forming part of this Report.

Further, pursuant to the provisions of Section 188 of the Companies Act, 2013 read with rules framed thereunder, the disclosure of particulars of contracts/ arrangements with Related Parties in Form AOC-2 is attached as ‘Annexure 7 and forming part of this Report.

The Company has also adopted a Policy on Related Party Transactions, the same is also available on the Companys website at the weblink https://krblrice.com/ wp-content/uploads/2022/03/1 .-Policy-on-Related- Party-Transactions..pdf

39. DISCLOSURE ON VIGIL MECHANISM (WHISTLE BLOWER POLICY)

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, the Company has established a mechanism called ‘Vigil Mechanism (Whistle Blower Policy) for Directors and Employees to report unethical behavior, actual or suspected fraud or violation of the Companys code of conduct or ethics, policy and provides safeguards against victimization of employees who avail the mechanism. The policy permits all the Directors and Employees to report their concerns directly to the Chairman of the Audit Committee of the Company. The Company has not received any complaint from any Whistle Blower during the financial year 2021-22.

The Vigil Mechanism (Whistle Blower Policy) as approved by the Board is uploaded on the Companys website at the weblink https://krblrice.com/policy-guidelines/Vigil- Mechanism-(Whistle-Blower%20Policy).pdf

40. ENVIRONMENT, HEALTH AND SAFETY

The Company continues to focus on employee well-being, developing safe and efficient products and minimizing the environmental impact of our operations on society. The Company is conducting its operations in such a manner so as to ensure the safety of all concerned compliances of environmental regulations and preservation of natural resources.

For the safety and protection of Employees, the Company has formulated and implemented a policy on the prevention of Sexual Harassment at the Workplace with an effective mechanism of lodging complaints.

41. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERNS STATUS AND COMPANYS OPERATIONS IN FUTURE

No significant and material order has been passed by the regulators, courts and tribunals impacting the going concern status and the Companys operations in future.

42. DISCLOSURE ON MATERIAL LEGAL CASES

I) INCOME TAX DEMAND

During the year ended 31 March 2019, the Company had received assessment orders along with demand notices under Section 153A/143(3) of the Income-tax Act, 1961, with respect to assessment years 2010-11 to 2016-17, aggregating to Rs.126,920 lacs (including interest), which was contested by the Company before CIT (Appeals), New Delhi. The Honble CIT(Appeals) vide its order dated 11 March 2020, granted partial relief to the Company and reduced the said demand to Rs.9,883 lacs (including interest). The Company had already deposited an amount of Rs. 18,990 lacs, (net of refund), under protest, in respect of tax demand raised by the Income Tax Department (‘ITD).

Later, the Company and the ‘ITD had filed appeals before the Honble Income Tax Appellate Tribunal (Honble Tribunal), New Delhi, for the matters sustained and set-aside at the CIT (Appeals) levels, respectively. Further, the Company had also received penalty orders for AY 2010-11 to 201617 on the issues sustained by CIT(A) to the tune of $ 1 1,896 lacs, against which appeals was filed before CIT(A).

Subsequent to the year ended 31 March 2022, the Honble Tribunal vide its consolidated order dated 9 May 2022, has granted relief in favour of the Company reducing the liability to Rs.96 lacs (including interest) and has dismissed all the appeals filled by ITD. The sustained matter by the Honble Tribunal has been remanded back to the Income-tax officer for further review.

Simultaneously, CIT(A) has also quashed the demand of penalty, raised by the Assessing Officer of Rs.11,896 lacs. At the year end, the management has assessed Rs.96 lacs as contingent liability and is evaluating available legal remedies.

II) 9TH SUPPLEMENTARY COMPLAINT UNDER PMLA FILED BY THE DIRECTORATE OF ENFORCEMENT (ED)

The Companys Joint Managing Director, Mr. Anoop Kumar Gupta (‘JMD), had been detained and released on bail by the Directorate of Enforcement (‘ED) pursuant to certain allegations against the Company, KRBL DMCC (a subsidiary of KRBL Limited) and JMD. As per criminal complaint filed it is alleged that M/s Rawasi Al Khaleej General Trading LLC (‘RAKGT) had received proceeds of crime of USD 24.62 million in AgustaWestland case during the period 2008-2010 which in turn had been transferred to KRBL Limited through KRBL DMCC. Basis the affidavit filed by Balsharaf Group (one of the Customer of the Company) in the Honble High Court of Delhi in the said matter, the amount of USD 24.62 million had been received by RAKGT in the account of Balsharaf Group. Pursuant to this, ED had attached 1,43,33,221 shares of Balsharaf Group held in KRBL Limited. Based on the opinion taken from the independent legal counsel, the management is of the view that since the investigation is still ongoing no adverse opinion can be drawn.

The Company had appointed an independent professional firm (‘IP) to review the aforesaid allegations, to assess the impact, if any, on the financial statement and control environment of the Company. Subsequent to the year ended 31 March 2022, the IP has issued a report to the Board of Directors with respect to the aforesaid review. The board of the directors has discussed and approved the report, and has responded to the observation contained therein, basis that no further action is proposed.

The management of the Company is confident that the above stated matter will be resolved soon.

Since a complaint has been filed, it will take its legal recourse however, Neither KRBL nor anyone associated with it ever, directly or indirectly indulged in any unethical practice, whatsoever. KRBL always believes in the highest standards of corporate governance and transparency and is determined to take effective steps.

43. INDUSTRIAL RELATIONS

The Company has been successfully maintaining a healthy, cordial and harmonious industrial relations at all levels. Despite the severe competition, the enthusiasm and unstinting efforts of the Employees have enabled the Company to remain at the forefront of the industry. It has undertaken various measures to improve productivity across the organization.

The Company has continuously received co-operation and unstinted support from the distributors, retailers, stockists, suppliers and others associated with the Company as its Trading Partners.

The Directors wish to place on record their appreciation for the support. The Company will continue its endeavor to build and nurture strong bonding with its trade partners based on mutuality, respect and co-operation with each other and consistent with consumer interest.

44. SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards as issued by the Institute of Company Secretaries of India and as approved by the Central Government.

45. CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING

Pursuant to the Regulation 9 of the SEBI (Prohibition of Insider Trading) Regulations, 2015, KRBL Limited is having the Code of Conduct to Regulate, Monitor and Report Trading by Insiders. The said Code is available on the Companys website at the weblink https://krblrice.com/wp-content/ uploads/2022/02/Code-of-Conduct-to-Regulate-Monitor- Report-Trading-by-Insiders.pdf

46. APPRECIATION

It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in the future. The Board acknowledges with gratitude the cooperation and assistance provided to the Company by its Bankers, Financial Institutions, Government as well as NonGovernment Agencies. The Board wishes to place on record its appreciation to the contribution made by employees of the Company during the financial year under review. The Company has been successful in achieving impressive growth during the year, thanks to the competence, hard work, solidarity, cooperation and support of the employees at all levels. Your Directors give their sincere gratitude to the Customers, Clients, Vendors and other business associates for their continued support in the Companys growth journey.

The Board also takes this opportunity to express its sincere gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board of Directors
Anil Kumar Mittal
Place: Noida, Uttar Pradesh Chairman & Managing Director
Date: 08 August 2022 DIN-00030100