Parag Milk Foods Ltd Directors Report

Dear Members,

The Board of Directors (Board) is pleased to present the Integrated Annual Report of Parag Milk Foods Limited (Parag or Company or Your Company) for financial year (FY) 2025-26, which includes the Boards Report, Audited Standalone and Consolidated Financial Statements for the financial year ended March 31, 2026 (year under review or year or FY26). The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

Boards Report for the financial year ended March 31, 2026, together with the audited financial statements, provides an overview of the Companys affairs, financial performance, and significant developments during the year under review. The Report has been prepared in accordance with the applicable provisions of the Companies Act, 2013 (Act) and the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).

For the purpose of this report, Parag Milk Foods Limited together with its subsidiaries is referred to as the Parag Group or the Group.

OVERVIEW OF FINANCIAL PERFORMANCE

Key highlights of Standalone and Consolidated Financial Results of the Company for the financial year ended March 31, 2026, are as under: (H in Crore except per share data)

	Standalone		Consolidated
Particulars	FY 2025-26	FY 2024-25	FY 2025-26	FY 2024-25
Revenue from Operations	3,742.03	3,367.40	3,817.50	3,432.21
Other Income	35.43	26.60	53.46	40.25
Total Income	3,777.46	3,394.00	3,870.96	3,472.46
Earnings before Depreciation, Finance Costs, Exceptional Items and	296.86	279.59	310.24	292.93
Taxation
Less:- Depreciation and Amortisation Expense	60.40	59.68	70.74	67.22
Less:- Finance Costs	72.28	85.07	81.39	93.12
Profit before Tax and exceptional items	164.18	134.84	158.11	132.59
Exceptional Items	5.39	-	5.72	-
Profit / (Loss) Before tax	158.79	134.84	152.39	132.59
Less:- Tax expense
(1) Current Tax	0.45	-	0.45	-
(2) MA T (Credit) / Reversal	-	-	-	(1.19)
(3) Deferred Tax	7.46	11.30	16.89	14.99
Profit After Tax	150.88	123.54	135.05	118.79
Earnings per Share
Basic	12.36	10.36	11.06	9.97
Diluted	11.80	9.89	10.57	9.51

Note: Due to rounding off, numbers presented in the above table may not add up precisely to the totals provided in Financial Statements.

FINANCIAL PERFORMANCE AND STATE OF COMPANYS AFFAIRS

Standalone

The Companys revenue from operations for FY 2025-26 grew by 11.13% to H3,742.03 Crore, compared with H3,367.40 Crore recorded in FY 2024-25. Profit Before Tax (PBT) for FY 2025-26 stood at H158.79 Crore, reflecting an increase over H134.84 Crore reported in the previous financial year. Similarly, Profit After Tax (PAT) for FY 2025-26 rose to H150.88 Crore from H123.54 Crore in FY 2024-25. A detailed review of the Companys operational performance and financial position is provided in the Management Discussion and Analysis Report, which is included as part of this Integrated Annual Report.

Consolidated

The Company achieved Consolidated Revenue from Operations of H3,817.50 Crore during FY 2025-26, representing a growth of 11.23% compared to H3,432.21 Crore in the preceding financial year. This performance was driven by sustained momentum in the core product portfolio, led by Ghee, Cheese, and Paneer, which together recorded volume growth of 8% and value growth of 16% during the year. Consolidated Profit Before Tax for FY 2025-26 stood at H152.39 Crore, as against H132.59 Crore in FY 2024-25. Consolidated Profit After Tax amounted to H135.05 Crore, compared to H118.79 Crore in the previous year.

PERFORMANCE ANALYSIS, BUSINESS OUTLOOK AND HIGHLIGHTS

Brand Building & Integrated Marketing Strategy

The Company pursued a robust and comprehensive 360-degree brand building strategy during the year, combining the reach of traditional media with the precision of digital platforms. Anchored by high-impact television associations such as Kaun Banega Crorepati, Super Dancer, Sony Marathis Maharashtrachi Hasya Jatra, and the Zee Cine Awards, the Company ensured strong mass visibility across regional and national audiences. Complementing this, targeted digital campaigns and influencer collaborations, including partnerships with celebrated personalities.

Gowardhan and Go - Deepening Household Reach and Consumer Accessibility

Across its portfolio, each brand pursued a distinct yet cohesive positioning strategy. Gowardhan deepened its festive and household connect through initiatives such as the Gowardhan Khushiyan Gift Box and regional television presence on ABP Majha and TV9 Marathi. To broaden accessibility and drive trials, the brand introduced Gowardhan Cow Ghee in an affordable 20 ml sachet priced at H20, enabling deeper penetration across both urban and rural markets. Go Cheese reinforced its consumer relevance through strong on-screen associations and recipe-led influencer content, including collaborations with Farah Khan for amplified brand messaging across social media, extending reach to younger and digitally active consumer segments, while in-shop branding and visibility campaigns across general trade and modern trade channels drove notable consumer engagement at the point of purchase.

Pride of Cows - Reinforcing Premium and Single - Origin Positioning

Pride of Cows continued to strengthen its positioning as Indias most premium single-origin dairy brand through a dynamic multi-platform approach. Collaborations with celebrated names from the world of fashion and lifestyle, including Manish Malhotra and Falguni Shane Peacock, reinforced the brands luxury and aspirational appeal. Whats the SourceRs campaign further deepened consumer trust by highlighting the brands commitment to milk authenticity, traceability and purity.

Avvatar - Scaling Beyond Fitness into Lifestyle and Youth Culture

Avvatar, the Companys homegrown sports nutrition brand, made significant steps in expanding its consumer base beyond core fitness audiences. The association with Janhvi Kapoor as the brand ambassador lent strong lifestyle relevance, while collaborations with the Amazon Prime web series Rise and Fall, e-sports partnerships, and in-flight sampling through IndiGo and Akasa Air enabled meaningful trials across urban and youth. Sustained influencer-led campaigns further secured brand recall among health-conscious consumers seeking modern nutrition solutions.

Industry Presence and Global Visibility

At an organisational level, the Company strengthened its industry presence and global visibility through participation in prestigious exhibitions including the World Food Exhibition, Anuga, Indus

Food, and Catering Expo & Décor. Together, these initiatives reflect the Companys commitment to building purpose-driven, consumer-centric brands that resonate across diverse audiences, price points, and platforms - strengthening its position as a diversified and forward-looking dairy enterprise.

EXPANSION OF SUBSIDIARY

The Companys dairy farm, Bhagyalaxmi Dairy Farms Private Limited (Bhagyalaxmi), wholly owned subsidiary (WOS) of the Company, houses approx 5,000 cows, with an automated milking process. The Company is expanding Bhagyalaxmi, which supplies exclusively to our brand Pride of Cows and is expected to reach about 15,000 cows in coming four to five years. The Company has set up a wholly owned foreign subsidiary, Parag Foods Middle East FZE, in Dubai, UAE, to enhance its footprint across global markets and develop an integrated supply chain network for catering to international customers.

REVIEW OF OPERATIONS

The details of review of operations are elaborated in the Management Discussion and Analysis, which forms part of this Integrated Annual Report.

BRAND BUILDING: STRATEGY

The Company strives to be among the best-performing and most reputable dairy FMCG companies, earning the confidence of all stakeholders and emerging as a global provider of nutrition-focused products driven by quality and innovation.

EXPORT MARKET

The Company maintained a strong presence in international markets and continued to enhance the visibility of its Go and Gowardhan brands across multiple geographies. Through its export operations, the Company serves customers in several countries, including UAE, Singapore, Mauritius, Oman, Kuwait, Bahrain, Hong Kong, Philippines, Sri Lanka, Bangladesh, Maldives, Indonesia, Malaysia, USA, Israel, Nigeria, Nepal, and Bhutan. Building on this foundation, the Company also broadened its market reach in the UK, Germany, and other European countries through the export of its sweet product range. Exports accounted for 2.17% of the Companys revenue from operations during FY 2025-26.

PHILANTHROPIC ACTIVITIES

The Company has remained actively engaged in initiatives that contribute to the well-being of the community and continues to undertake philanthropic efforts in the following key areas:

Advancement of education

Supporting the welfare and development of children

Promoting the overall well-being of the community

DIVIDEND & RESERVES

Dividend Distribution Policy

Your Companys wealth distribution philosophy aims at sharing its prosperity with its shareholders, through a formal earmarking and disbursement of profits to its shareholders while retaining sufficient profits in the business for various purposes.

In terms of Regulation 43A of the Listing Regulations, your Company has formulated a Dividend Distribution Policy, with an objective to provide the dividend distribution framework to the stakeholders of the Company. The policy sets out various internal and external factors, which shall be considered by the Board in determining the dividend pay-out.

The policy is available on the website of the Company at https:// www.paragmilkfoods.com/policy.phpRsid=52.

Dividend

During the year under review, your company has paid final dividend for the financial year ended March 31, 2025, at 10% i.e. H1/- per equity share. Further, in accordance with the principles and factors enunciated in the above policy a Final Dividend at 11% i.e. H1.10/- per equity share of face value of H10/- each for the financial year ended March 31, 2026 has been recommended by the Board at its meeting held on May 7, 2026, subject to the Members approval at the ensuing 34 th Annual General Meeting (AGM) of the Company. The Final Dividend, if approved by the Members, shall be paid on or before 30 days of the date of the AGM, to the Beneficial owners in respect of shares held in dematerialized form as per the data as may be made available by the depositories as on the cut-off / record date fixed for this purpose.

If approved by the Members, the Company shall incur a cash outflow of H13.76 Crore towards dividend payment to all beneficial owners holding shares in electronic form as reflected in the records provided by the depositories as on the Cut-off/ Record Date, subject to any changes in the share capital of the Company as on the Cut-off / Record Date. Accordingly, the proposed dividend payout accounts for 9.12% of the Companys standalone net profit after tax. Your Company is in compliance with the Dividend Distribution Policy as approved by the Board. The Members are requested to note that pursuant to the provisions of the Income Tax Act, 2025, as amended, dividend paid or distributed by the Company shall be taxable in the hands of the Members. Your Company shall therefore deduct tax at source (TDS) (at the applicable rates) at the time of payment of the Dividend.

Unclaimed Dividends

The information relating to outstanding and unclaimed dividends declared by the Company is provided in the Corporate Governance Report, which forms part of this Integrated Annual Report.

Transfer to Reserve

During FY 2025-26, there was no amount proposed to be transferred to the Reserves.

SHARE CAPITAL

For FY 2025-26, the authorised share capital of the Company remained at H200 Crore, represented by 20 Crore equity shares of H10/-each.

During the period under review, 57,33,713 fully paid-up Equity Shares of face value H10/- each were issued and allotted to International Finance Corporation (IFC) pursuant to the exercise of the conversion option in respect of their entire holding of 10,860 Foreign Currency Convertible Bonds (FCCBs), pursuant to the FCCBs Subscription Agreement (as amended) entered by the Company with IFC in the year 2021. Accordingly, the Paid-up Equity Share Capital of the Company increased from H1,19,37,58,410 to H1,25,10,95,540 divided into 12,51,09,554 Equity Shares of Face Value of H10/- each.

Further, the Company witnessed strong investor confidence, reflected in the capital infusion of 40.30 Crore in May 2025, representing 25% of the Issue Price of the convertible share warrants. The fundraising round saw participation from prominent investor Mr. Utpal Sheth and members of the senior management team besides promoters. The proceeds were intended to reduce debt, augment working capital and support the Companys strategic growth initiatives.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE COMPANY

There have been no material changes and commitments, which affect the financial position of the Company, that have occurred between the end of the financial year to which the financial statements relate and the date of this report.

The Company did not undergo any change in the nature of its business.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

As on March 31, 2026, your Company has two Wholly Owned Subsidiaries namely Bhagyalaxmi Dairy Farms Private Limited and Parag Foods Middle East FZE. There were no material changes in the nature of the business of the subsidiaries. Further, the Company does not have any associate company, nor has it entered into a joint venture with any other company.

In accordance with Section 129(3) of the Act, a separate statement containing the salient features of the financial statements of our subsidiaries in prescribed Form AOC - 1 is enclosed as Annexure I to this report. The statement also provides details of performance and financial position of each of the subsidiaries.

In line with the requirement of the Listing Regulations, your Company has formulated a policy for determining material subsidiaries and the same is available on the Companys website at https://www.paragmilkfoods.com/policy.phpRsid=13.

Performance highlights of Bhagyalaxmi Dairy Farms Private Limited for FY 2025-26 is given below:

( Rs. in Crore)

Sr. No. Particulars	FY 2025-26	FY 2024-25
1. Total Revenue	197.47	142.10
2. Profit/(Loss) before Interest, Tax and Depreciation	16.21	(2.24)
3. Profit/(Loss) after Tax	(15.83)	(4.74)

Note: Performance highlights pertaining to Parag Foods Middle East FZE has not been included, as the entity is yet to commence its operations.

The financial statements of Bhagyalaxmi Dairy Farms Private Limited are available on the Companys website under the Financial Performance section at https://www.paragmilkfoods. com/investors.php.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of the Act, the audited Consolidated Financial Statements of the Company for the Financial year 2025-26, together with the Auditors Report forms part of this Integrated Annual Report. The said statement provides the details of the performance and financial position of subsidiaries and their contributions to the overall performance of the Company.

Further, in accordance with Section 129 of the Act and the Companies (Accounts) Rules, 2014, the Consolidated Financial Statements of the Company and its subsidiary have been prepared in the format and manner prescribed under Schedule III to the Act. These statements will be approved by the Members at the ensuing AGM.

Further a copy of the Audited Financial Statements of the subsidiary shall be made available for inspection at the registered office of the Company during business hours on any working day upto the date of AGM. According to Section 136 of the Companies Act, 2013, any shareholder interested in obtaining a copy of separate Financial Statements of the subsidiary shall make a specific request in writing to the Company Secretary at investors@parag.com.

CREDIT RATING

During the year under review, the Companys credit rating agency, India Ratings and Research Private Limited (India Ratings) vide its press release dated June 30, 2025, reaffirmed the credit ratings for Bank Facilities and assigned its rating in respect of the Non-Convertible Debentures (NCDs), as provided below:

Instrument Type	Ratings	J in Crore
Working Capital Limit	IND BBB/Stable/IND A3+	450
Term Loan	IND BBB/Stable	45
NCDs	IND BBB/Stable	105

Subsequent to FY 2025-26, India Ratings upgraded the credit ratings assigned to the Companys NCDs, Bank Loan Facilities and Term Loan on May 7, 2026, as provided below:

Instrument Type	New Ratings	J in Crore
NCDs	IND BBB+/Stable	81
Bank Loan Facilities	IND BBB+/Stable/IND A2	600

Further, the rating services of ICRA Limited (ICRA) in relation to the NCD Programme were discontinued at the request of the Company and upon receipt of the requisite no-objection certificate(s) from the lender(s) and in accordance with ICRAs policy.

All the press releases and rating letters issued by the respective rating agencies can be accessed on Companys website at https://www.paragmilkfoods.com/investors.php under Announcements section.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Board of Directors

Your Company actively seeks to adopt global best practices for an effective functioning of the Board and believes in having a truly diverse Board whose wisdom and strength can be leveraged for creating greater stakeholder value, protection of their interests and better corporate governance. Parags Board comprises eminent persons with proven competence and integrity, who bring in vast experience and expertise, strategic guidance and leadership qualities. As on March 31, 2026, the Board of Directors comprised of 8 Directors including 4 Independent Directors, 1 Non-Executive Non-Independent Director and 3 Executive Directors, details thereof are elaborated in the Corporate Governance Report, which forms part of this Integrated Annual Report.

In accordance with the requirements of the Listing Regulations, the Board has determined the essential skills, expertise, and competencies required of its directors, taking into account the nature and needs of the Companys business to ensure its effective governance and functioning. Details of these key skills, expertise, and core competencies are provided in the Corporate Governance Report, which is included as part of this Integrated Annual Report.

The Board is of the view that all Directors, including those appointed or re-appointed during the year, possess the necessary qualifications, experience, and expertise to discharge their responsibilities effectively and uphold the highest standards of integrity.

Pursuant to the provisions of the Act, Mr. Devendra Prakash Shah, Executive Chairman, is liable to retire by rotation at the ensuing AGM and, being eligible, has offered himself for reappointment. The resolution relating to his re-appointment is included in the Notice convening the ensuing AGM. His profile and other relevant particulars are set out in the annexure to the AGM Notice.

Changes in Board Composition

During FY 2025-26, the following changes took place in the composition of the Board of Directors:

A. A ppointment of Directors: I. I ndependent Director

The Members of the Company, vide resolutions passed through postal ballot, approved: i. Appointment of Ms. Namrata Garud for a term of 5 (five) consecutive years from May 2, 2025 upto May 1, 2030.

ii. Appointment of Mr. Milind Patil for a term of

5 (five) consecutive years from May 22, 2025 upto May 21, 2030. iii. Appointment of Mr. Amitabha Mukhopadhyay for a term of 5 (five) consecutive years from May 22, 2025 upto May 21, 2030.

In the opinion of the Board, Ms. Namrata Garud, Mr.

Patil and Mr. Amitabha Mukhopadhyay bring on board the required experience, integrity, expertise, and relevant proficiency which will add tremendous value to the Board in exercising their role effectively.

The requisite declarations and eligibility confirmations the provisions of the Act and the Listing Regulations were received from the above mentioned Independent Directors for considering their appointment as Independent Directors.

II. Executive Directors

The Members of the Company, vide resolutions passed through postal ballot, approved re-appointment of Mr. Devendra Shah as Executive Chairman, Mr. Pritam Shah as Managing Director and Ms. Akshali Shah as Executive Director, for a term of 5 (five) consecutive years effective from April 1, 2025.

Further, at the rd AGM held during FY 2025-26, Ms. Akshali33 Shah, whose term was liable to retire by rotation, was reappointed pursuant to provisions of the Act.

B. Retirement:

M r. Narendra Ambwani and Ms. Radhika Dudhat an Independent Directors of the Company with effect from May 26, 2025, and Mr. Nitin Dhavalikar with effect from July 28, 2025, upon completion of their respective two consecutive terms of five years as prescribed under the Act. The Board placed on record its sincere appreciation for leadership, guidance, and invaluable contributions made by Mr. Narendra Ambwani, Ms. Radhika Dudhat, and Mr. Nitin Dhavalikar, during their tenure with the Company.

Declarations by Independent Directors:

The Company has received necessary declaration from

Independent Director of the Company stating that: i. they meet the criteria of independence as provided in Section 149(6) of the Act read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) of the Listing Regulations; ii. they have registered their names in the Independent Directors Databank maintained by the Indian Institute of Corporate Affairs as required under Rule 6 (1) & (2) of the Companies (Appointment and Qualifications of Directors) Rules, 2014; and iii. As per Regulation 25(8) of the Listing Regulations, the Independent Directors have also confirmed that they are not aware of any circumstance or situation that exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Independent Directors have also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and Companys Code of Conduct for Directors and Senior Management Personnel. Based on the declarations received from the Directors, the Board confirms that there has been no change in the circumstances affecting their status as Independent Director of the Company. In the opinion of the Board, all the Independent Directors are competent, experienced, proficient and possess necessary expertise and integrity to discharge their duties and functions as Independent Directors.

KEY MANAGERIAL PERSONNEL (KMP)

In accordance with the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following are the Key Managerial Personnel of the Company:

1. Mr. Devendra Shah	- Executive Chairman
2. Mr. Pritam Shah	- Managing Director & Interim Chief Financial Officer (CFO)
3. Ms. Akshali Shah	- Executive Director
4. Mr. Virendra Varma	- Company Secretary and Compliance Officer

MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES the During FY 2025-26, the Board of the Company met five (5) times. The details of composition of the Board and its Committees, particulars of meetings and the attendance of the Directors/ Committee Members at the respective Meetings are included in the Corporate Governance Report, which forms part of this each Integrated Annual Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed under the Act and Listing Regulations.

The Board considers and reviews the recommendations submitted by the Audit Committee and, where necessary, seeks additional clarifications or information. During the year under review, all recommendations placed before the Board by the Audit Committee were duly considered and approved.

The Board has constituted following committees:

1. A udit Committee

2. N omination and Remuneration Committee (NRC)

3. S takeholders Relationship Committee (SRC)

4. R isk Management Committee (RMC)

5. C orporate Social Responsibility (CSR) Committee

6. Finance Committee

7. M anagement Committee

Information relating to all the Committees, including their composition and the meetings conducted during the year, are provided in the Corporate Governance Report forming part of this Integrated Annual Report.

AUDIT COMMITTEE

Information relating to the Audit Committee including composition is provided in the Corporate Governance Report, which forms an integral part of this Integrated Annual Report.

BOARD EVALUATION

The Board has carried out an annual evaluation of its own performance, Board Committees, and individual directors, in accordance with the provisions of the Act and Regulation 17(10) of the Listing Regulations and as prescribed in the Nomination and Remuneration Policy. The Boards performance was assessed by considering feedback received from all Directors against parameters including its composition and structure, the effectiveness of its processes, the flow of information, and its functioning. The evaluation of the Committees was carried out based on inputs from all the Directors, with due regard to factors such as Committee composition and the effectiveness of Committee meetings. The Company conducts the evaluation process through structured questionnaires, covering key aspects of the Boards functioning, including its composition and structure, the qualifications, experience and competencies of Directors, Board diversity, and the effectiveness of Board processes.

The Independent Directors at their separate Meeting held on March 16, 2026, reviewed the performance of the Chairman, Non-Independent Directors of the Company and overall performance of the Board as mandated by Schedule IV of the Act and the Listing Regulations. Based on the outcome of the Independent Directors evaluation process, the Board and the Nomination and Remuneration Committee, at their meetings held on May 7, 2026, considered the performance of the Board, its Committees, and each Director. The review of the Executive Chairmans performance is carried out based on comments and feedback from all Directors, excluding the Chairman, against established parameters such as leadership effectiveness, professional expertise, strategic guidance, approach to risk oversight, stakeholder engagement, and other managerial attributes. The assessment of the Independent Directors is carried out, with the concerned Director not participating in the evaluation of their own performance. During the year, the recommendations of the previous years Board evaluation were discussed with the Board, and individual feedback was provided. For more details on the Board Evaluation Process, please refer the Performance Evaluation section in the Corporate Governance Report, which forms part of this Integrated Annual Report.

Familiarisation Programme for Independent Directors

The Company conducts a Familiarisation Programme for its Independent Directors upon their appointment on the Board and on an ongoing basis throughout the year. The Companys familiarisation programme includes an overview of the business model of the Company and its subsidiaries, to acclimatise them with the processes, the environment in which the Company operates, the operational and financial performance of the Company, the significant developments taking place on a continuous basis and to assist them in performing their role as Independent Directors.

Specific sessions are organized with the members of executive management team and KMP to provide an in-depth perspective to the Independent Directors on various aspects of the Companys business and ways of working. Further, the Company also provides periodic insights and updates to the entire Board, including Independent Directors and other Non-Executive Directors, regarding business, innovation, ESG, human capital management, culture, Go-to-Market strategies, technology, etc. As part of the Board retreats held each year, the management conducts deep-dive sessions for the entire Board on core strategic priorities and other critical business matters.

In accordance with provisions of Regulation 25(7) and 46(2) of the Listing Regulations, particulars of the Familiarisation Programme, including the topics covered and details of the programmes conducted during the year under review are elaborated in the Corporate Governance Report, which forms part of this Integrated Annual Report and have also been placed on the website of the Company at https://www.paragmilkfoods.com/investors.php under Corporate Governance/Policy section.

Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel

In terms of Section 178 of the Act and Regulation 19 of the Listing Regulations, the Board of Directors of your Company, on recommendation of the Nomination and Remuneration Committee, had adopted a Nomination and Remuneration Policy for appointment and remuneration of Directors, Key Managerial Personal and other employees (Remuneration Policy). The Remuneration Policy, includes the criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under Section 178(3) of the Act, is made available on the Companys website at https://www. paragmilkfoods.com/policy.phpRsid=38.

DIRECTORS RESPONSIBILITY STATEMENT

The Board, having considered the internal financial control and compliance framework instituted and maintained by the Company, the audits conducted by the Internal, Statutory, Cost and Secretarial Auditors, including the statutory auditors examination of internal financial controls over financial reporting and the evaluations carried out by the Management and the relevant Board Committees, including the Audit Committee, is satisfied that the Companys internal financial controls were adequate and functioned effectively during FY 2025-26.

Pursuant to the provisions under Section 134(3)(c) of the Act, with respect to Directors Responsibility Statement for FY 2025-26, the Directors of the Company confirm that: a) in the preparation of the annual financial statements for the financial year ended March 31, 2026, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) the y have selected such accounting policies and 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 at the end of the financial year and of the profit and loss of the Company for that period; c) the y have taken proper and sufficient care maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the y have prepared the annual financial statements the Financial Year ended March 31, 2026 on a going concern basis; e) pr oper internal financial controls were in place and the financial controls were adequate and were operating effectively; and f) the y have devised proper systems to ensure with the provisions of all applicable laws and such systems were adequate and operating effectively.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS

Pursuant to the Members approval, your Company has implemented Parag Milk Foods Limited - Employee Stock Options Plan 2022 (ESOP scheme) during the period under review. There has been no revision in the ESOP scheme during the period under review. In accordance with the requirement under Regulation 14 read with Part F of Schedule I of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SBEB Regulations), the relevant disclosures has been uploaded on the Companys website and can be accessed under Annual Reports tab at https://www.paragmilkfoods.com/investors.php. M/s. N L Bhatia and Associates, Secretarial Auditors of the Company, have certified that the ESOP Scheme is in conformity with the SBEB Regulations and that the Company has complied with the relevant provisions of the Act.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an adequate and effective system of Internal Financial Controls to ensure orderly and efficient conduct of business operations. These controls ensure adequacy with reference to the Financial Statements, compliance with policies, safeguarding of assets, prevention and detection of frauds & errors and maintenance of accurate accounting records. Assurance regarding the effectiveness of these controls is derived from management reviews, self-assessment processes, continuous monitoring by departmental heads, and evaluations performed by the internal auditors.

The Companys internal financial control system over financial appliedreporting ensures that all transactions are authorised, recorded, and reported correctly in a timely manner in order to provide reliable financial information and to comply with applicable accounting standards which also commensurate with the size, volume and nature of business of the Company.

The Company believes that these systems provide reasonable assurancethe that the Companys internal financial controls are adequate and are operating effectively as intended. During the year under review, such controls were tested by the Statutory Auditors of the Company and no material weaknesses or significant deficiencies in the design or operations were observed and reported by the Statutory Auditors. Details of the internal controls for system are provided in the Management Discussion & Analysis Report which forms a part of this Integrated Annual Report.

In the opinion of the Audit Committee and the Board, the that Companys Internal Financial Controls are adequate and operating effectively, without any material weaknesses.

RISK MANAGEMENT GOVERNANCE

The Company regularly identifies uncertainties and after assessing them, devises short-term and long-term actions to mitigate any risk which could materially impact the Companys long-term plans. The Company incorporates these risk mitigation steps in its strategy and operating plans, ensuring that all identified risks are adequately addressed. This involves developing action plans to reduce the likelihood and impact of risks occurring, as well as contingency plans to manage risks if they do materialise. Further, we have established a well-defined and structured framework to systematically identify, assess and prioritise risks across our businesses and functions.

The Board defines the Companys risk framework including risk management policy and oversees management in managing and reducing risks across the business.

The Risk Management Committee assists the Board in overseeing the Companys risk management framework and monitoring managements efforts to identify, assess, and mitigate risks. Board has an overall responsibility for governance of Companys risk management. The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report, which forms part of this Integrated Annual Report. Through continuous monitoring and review, the Company ensures that its risk management practices remain effective and responsive to the changing business environment. This ongoing process helps to enhance the Companys resilience and ability to achieve sustainable growth.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company promotes highest standards of business ethics and integrity and ensures compliance to applicable laws. Company continues to believe in conducting its affairs in a fair and transparent manner by adopting highest standards of honesty, integrity, professionalism and ethical behaviour. The Company has established a Vigil Mechanism / Whistle-blower Policy in accordance with the provisions of Section 177(9) of the Act and Regulation 22 of the Listing Regulations with a view to provide a platform and mechanism for employees, Directors and other stakeholders of the Company to report actual or suspected unethical behaviour, fraud or violation of the Companys Code of Conduct, ethics, principles and matters specified in the policy without any fear of retaliation, and also provide for direct access to the Chairperson of the Audit Committee as the case may be, in exceptional cases.

During the year under review, one protected disclosure was received and addressed by the Company.

Further details on the functioning of this mechanism is included in the Corporate Governance Report forming part of this Integrated Annual Report. The policy is available on the Companys website and can be accessed at: https://www.paragmilkfoods.com/ policy.phpRsid=42

CORPORATE SOCIAL RESPONSIBILITY

An overview of the Companys CSR philosophy, the salient features of the CSR Policy, Composition of CSR committee and the CSR activities carried out during the year under review are presented in this Report as per the format prescribed under Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, and are annexed herewith as Annexure II to this report. CSR initiatives undertaken by the Company are aligned with its CSR Policy, which has been formulated in accordance with the provisions of the Act. The CSR Policy is available on the Companys website at https://www.paragmilkfoods.com/policy.phpRsid=53.

RELATED PARTY TRANSACTIONS

All transactions with related parties were reviewed and approved by the Audit Committee and were in accordance with the Policy on Related Party Transactions, formulated and adopted by the Company. Omnibus approval is obtained from the Audit Committee for the transactions which are of a repetitive nature and particulars of such transactions are placed before the Audit Committee on a quarterly basis. All contracts / arrangements / transactions entered by the Company during the year under review with related parties were in the ordinary course of business and on arms length pricing. Further, the Company had not entered into any contract, arrangement, or transaction with related parties that could be considered material under the Companys Policy on Related Party Transactions, the Act, or the Listing Regulations. Therefore, there were no material related party transactions requiring disclosure in Form AOC-2 pursuant to Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014 and Section 188 of the Act. Accordingly, disclosure in Form AOC-2 is not applicable. The Companys Policy on Related Party Transactions is available on the website of the Company at https://www.paragmilkfoods. com/policy.phpRsid=40.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS BY THE COMPANY

During the period under review, your company has complied with the requirements of Section 186 of the Act and the applicable Rules thereunder in respect of loans given, investments made and guarantees given & securities provided. Particulars of the same are provided in Note No. 6 and 7 to the Standalone Financial Statements, which form part of this Integrated Annual Report.

BUY BACK

The Company has not bought back any of its securities during the Financial Year ended March 31, 2026.

DEPOSITS FROM PUBLIC

During the year under review, the Company has not accepted any deposits from the public within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014, as amended. Further, no amount has been borrowed from the Directors of the Company.

Further, no amount on account of principal or interest on deposits from the public was outstanding as on March 31, 2026.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company is committed to create and provide a safe environment, which is free from discrimination and harassment including sexual harassment for all its employees. The Company has in place Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 (POSH Act), which mandates no tolerance against any conduct amounting to workplace sexual harassment. To promote awareness on the same, the Company conducts periodic online training at the time of induction and refresher programmes. This Policy applies to all employees, including permanent, contractual, temporary staff, and trainees at the Companys workplace or at client sites.

In accordance with the requirements of the POSH Act and the Rules framed thereunder, the Company has constituted Internal Complaints Committee(s) to address and resolve complaints pertaining to sexual harassment.

The Company prohibits and has zero tolerance towards any actions relating to workplace sexual harassment and it is dealt expeditiously and fairly through prompt and thorough investigation whenever any instance in this regard is reported, the details of which are as under:

No. of complaints received :	Nil
No. of complaints disposed off :	NA
No. of complaints pending :	NA
No. of complaints pending for more than 90 days :	NA

MANAGEMENT DISCUSSION AND ANALYSIS, CORPORATE GOVERNANCE REPORT AND BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34 read with Schedule V of the Listing Regulations, a separate section comprising Management Discussion and Analysis Report, Business Responsibility and Sustainability Report, and Corporate Governance Report is included in this Integrated Annual Report.

The Corporate Governance Report is accompanied by a certificate from a Practicing Company Secretary confirming compliance with the provisions relating to Corporate Governance under the Listing Regulations.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTFLOW

The Company continues to place strong emphasis on energy conservation, consistently adopting innovative measures to reduce wastage and enhance energy efficiency across its operations. The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, are provided in the prescribed format and are annexed as Annexure III to this report.

ANNUAL RETURN

Annual Return of the Company prepared as per Section 92(3) of the Act for the financial year ended March 31, 2026 in Form MGT-7, is available on the Companys website and can be accessed under Annual Reports tab at https://www.paragmilkfoods.com/ investors.php. In terms of Rules 11 and 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return shall be filed with the Registrar of Companies, within prescribed timelines.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosure with respect to the the ratio of remuneration of each Director to the median employees remuneration as per Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure IV to this report. The statement containing details of the top ten employees in terms of remuneration drawn and employees drawing remuneration in excess of prescribed amount, as required under

Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this Report. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Members, excluding the aforesaid statement. The statement is open for inspection and will be made available upon request by shareholder by writing at investors@parag.com.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

No significant and material orders were passed by any of the Regulators or Courts or Tribunals, which impact the going concern status and Companys operations in future.

COMPLIANCE WITH SECRETARIAL STANDARDS

Pursuant to Section 118(10) of the Act, the Company has complied with Secretarial Standards on Meetings of the Board of Directors (SS-1) and on General Meetings (SS-2) as amended and issued from time to time by the Institute of Company Secretaries of India.

AUDITORS

Statutory Auditors

Pursuant to the provisions of Section 139 of the Act, the Members at the 33 rd AGM held on September 29, 2025 approved the re-appointment of M/s. Sharp and Tannan, Chartered Accountants, Mumbai (Firm registration No. 109982W), as the Statutory Auditors of the Company for a second term of five consecutive years, from the conclusion of 33 rd AGM upto the conclusion of 38 th AGM. In terms of Section 139 and 141 of the Act and relevant Rules prescribed thereunder, M/s. Sharp and Tannan, Chartered Accountants have confirmed that they are not disqualified from continuing as an Auditors of the Company and hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Auditors Report for the financial year ended March 31, 2026 on the financial statements of the Company forms part of this Integrated Annual Report. The said report was issued by the Statutory Auditor with an unmodified opinion and does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.

Internal Auditors

Pursuant to provisions of Section 138 of the Act and the rules made thereunder, on the recommendation of the Audit Committee, the Board at its Meeting held on July 21, 2025 reappointed M/s. Deloitte Touche Tohmatsu India LLP, as Internal Auditors of the Company for a period of two financial years commencing from FY 2025-26.

An annual audit plan is prepared at the commencement of each financial year and is implemented upon obtaining the approval of the Audit Committee. The objective of the audit plan is to review the effectiveness and sufficiency of the Companys internal control framework, assess compliance with such controls, and examine the strength of internal processes, policies, accounting practices, and adherence to applicable statutory and regulatory requirements. Based on the findings and recommendations of the internal auditor, the concerned functional heads initiate and implement appropriate remedial measures within their respective functions.

Cost Auditors

Pursuant to the provisions of Section 148 of the Act, the Company is required to maintain cost records. It is hereby confirmed that the Company has duly maintained such cost records in compliance with the requirements of the said section.

Further, pursuant to Section 148 of the Act read with Rule 14 of the Companies (Cost Records and Audit) Rules, 2014, the cost records of the Company are required to be audited by a qualified Cost Accountant. During FY 2025-26, the Company filed the Cost Audit Report for FY 2024-25 issued by M/s. Harshad Deshpande and Associates, Cost Accountants, Pune (Firm Registration Number: 00378) with the Ministry of Corporate Affairs on August 18, 2025. The said report did not contain any qualification, reservation, adverse remark or disclaimer. No fraud was reported by the Cost Auditors and therefore, no details are required to be disclosed under Section 134(3)(ca) of the Act. The Board, upon the recommendation of the Audit Committee, has re-appointed M/s. Harshad Deshpande and Associates, Cost Accountants, Pune (Firm Registration Number: 00378) to conduct audit of the cost records of the Company for FY 2026-27. Accordingly, the Board of Directors recommends to the Members for approval of ratification of the remuneration payable to the Cost Auditors for FY 2026-27, at the ensuing AGM.

Secretarial Auditors

Members at 33 rd AGM has approved appointment of M/s. N L Bhatia & Associates, Practicing Company Secretaries (UIN: P1996MH055800), as Secretarial Auditors of the Company for a term of five consecutive years commencing from FY 2025-26 till FY 2029-30.

The Secretarial Audit Report issued by M/s. N L Bhatia & Associates pursuant to the provisions of Section 204 of the Act read with Rules made thereunder and Regulation 24A of the Listing Regulations, is set out in Annexure V to this Report. In compliance with Regulation 24A of the SEBI Listing Regulations, the Annual Secretarial Compliance Report issued by the Secretarial Auditor was submitted to the Stock Exchanges within the statutory timelines.

The Secretarial Audit Report and Secretarial Compliance Report for the financial year 2025-26, do not contain any qualification, reservation, or adverse remark.

No fraud was reported by the Secretarial Auditors and therefore, no details are required to be disclosed under Section 134(3) (ca) of the Act.

OTHER DISCLOSURES

Pursuant to the provisions of Companies (Accounts) Rules, 2014, the Company affirms that for the year ended on March 31, 2026:

No application has been made under the Insolvency and Bankruptcy Code 2016. Hence the requirement to disclose the details of the application made or any proceeding pending under the said code during the year along with their status as at the end of the financial year is not applicable.

There was no instance of one-time settlement with any bank or financial institution.

No shares with differential voting rights and sweat equity shares have been issued during the year under review.

The Company has complied with the provisions of the Maternity Benefit Act, 1961 and the rules made thereunder. The Company ensures a supportive work environment for women employees during pregnancy and maternity.

ACKNOWLEDGEMENTS

Your Board takes this opportunity to thank the employees for their dedicated service and firm commitment to the goals and vision of the Company. Our consistent growth was possible by their hard work, co-operation and support. Your Board also wishes to place on record its sincere appreciation and gratitude for the wholehearted support received from the governments of the countries in which the Company operates, members, farmers regulatory authorities, distributors, third party manufacturers, bankers and all other business associates. We look forward to continued support of all these partners in the future.

For and on behalf of the Board of
Parag Milk Foods Limited

Devendra Shah
Executive Chairman
(DIN: 01127319)

Mumbai
May 7, 2026