The Board of Directors (Board) is pleased to present the 32^nd Annual Report along with the summary of Audited Standalone and Consolidated Financial Statements of Parag Milk Foods Limited (Parag or Company or your Company) for the financial year (FY) ended March 31, 2024. The consolidated performance of the Company and its subsidiary has been referred to wherever required.

In Compliance with the applicable provision of the Companies Act, 2013 (the Act) and the Securities and Exchange Board of India (SEBI) (Listing Obligations & Disclosure Requirements) Regulations, 2015 (Listing Regulations), this Board''s Report is prepared based on the Financial Statements of the Company for the year under review, with respect to the Company and its Subsidiary Company. The consolidated entity has been referred to as Parag Group or Group in this report.

OVERVIEW OF FINANCIAL PERFORMANCE

The key highlights of Standalone and Consolidated Financial Results of the Company for the financial year ended March 31, 2024, are summarized as under:

(f in Million)

Particulars	Standalone		Consolidated
	FY 2023-24	FY 2022-23	FY 2023-24	FY 2022-23
Revenue from Operations	30,898.26	28,532.00	31,387.00	28,926.20
Other Income	87.55	351.62	252.09	451.57
Total Income	30,985.81	28,883.62	31,639.09	29,377.77
Earnings before Interest, Depreciation and Tax	2,073.71	1,741.17	2,223.47	1,634.93
Less :- Depreciation	557.05	540.73	602.53	572.75
Less:- Interest	688.19	528.57	762.38	551.56
Profit before Tax and Exceptional Items	828.47	671.87	858.56	510.62
Exceptional Items	-	-	-	-
Profit / (Loss) before tax	828.47	671.87	858.56	510.62
Less:- Tax expense
(1) Current Tax:	-	-	8.23	-
(2) MAT (Credit) / Reversal	-	-	-	-
(3) Deferred tax:	(90.88)	(13.04)	(55.50)	(21.92)
(4) Tax adjustment in respect of earlier years	-	-	-	-
Profit for the Period / Year After Tax (PAT)	919.35	684.91	905.83	532.54
Earnings per Share
Basic	7.83	6.52	7.71	5.07
Diluted	7.58	6.34	7.47	4.96

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 COMPANY''S AFFAIRS

Standalone

At Standalone level, the total Revenue from operations for FY 2023-24 increased by 8.29% to f30,898.26 Million against f28,532 Million in the Previous Year 2022-23. The Standalone Profit Before Tax for FY 2023-24 increased to f828.47 Million against f671.87 Million in the Previous Year 2022-23. The Standalone Profit after Tax for FY 202324 increased to f919.35 Million against f684.91 Million reported in the Previous Year 2022-23. The Operations and Financial Results of the Company are elaborated in the Management Discussion and Analysis Report, which forms part of the Annual Report.

Consolidated

Consolidated Revenue from Operations for FY 2023-24 stood at f31,387.00 Million reporting a growth of 8.51% as compared to f28,926.20 Million in FY 2022-23, driven by improvement in core categories of Ghee and Cheese which reported 3.5% growth. The Consolidated Profit Before Tax for FY 2023-24 increased to f858.56 Million from f510.62 Million in the Previous Year 2022-23. The Consolidated Profit After Tax for FY 2023-24 stood at f905.83 Million as compared to f532.54 Million in the Previous Year 2022-23.

PERFORMANCE ANALYSIS, OUTLOOK & BUSINESS HIGHLIGHTS

The Company started FY 2023-24 on a positive note with Consolidated income from operations stood at ^7,495.86 Million as compared to ^6,909.34 Million in Q1 FY 202223 growing by 8.5% YOY driven by strategic investment in marketing and brand building. Gross Profit, EBIDTA and Profit After Tax were higher compared on a quarter on quarter basis. The share of value-added Products for Q1 FY 2023-24 was 68.3% of total revenue, while that of liquid milk was 9.2%, for Skimmed Milk Powder was 18.8% and for New Age Business was 3.7% respectively. For Q2 FY 202324; the festive momentum started strong with healthy demand across the segments. Despite the high festive base of the last year, the core categories continued to post healthy volume and value growth driven by innovative branding and expanded distribution base. Consolidated Revenue from Operations for Q2 FY 2023-24 stood at ^7,981.58 Million as compared to ^6,648.40 Million in Q2 FY 2022-23 growing by 20.1% YOY. The share of value-added Products for Q2 FY 2023-24 was 66.6% of total revenue, while that of liquid milk was 9.4%, for Skimmed Milk Powder was 19.9% and for New Age Business was 4.1% respectively. The innovative brand integration with Kaun Banega Crorepati (KBC) had enabled PMFL to gain strong consumer connect and expand distribution reach.

For Q3 FY 2023-24; the consolidated revenue from operations grew by 8.8% on a YOY basis, at f8,008.4 Million. The growth came on the back of healthy growth in the ghee and the protein category. The softness in the milk prices coupled with improving product mix resulted in sharp expansion in the gross profit margin for the Company. The Gross profit for Q3 FY 2023-24 stood at f2,107.5 Million as against ^1,556.10 Million in Q3 FY 2022-23. The share of new age business was 8%, while for liquid milk being 9.1% and value-added products at 64% of total revenue, while that for Skimmed Milk Powder was 18.9% respectively. The core categories of Ghee and Cheese have seen continuous traction throughout the period and have posted a growth of 11.1% Y-o-Y.

Overall, the year posted a very strong momentum on demand across business verticals and FY 2023-24 posted consolidated revenue of ^31,387.00 Million. The outstanding performance was driven by widespread distribution reach, coupled with Brand building initiatives, premium pricing in flagship products and significant growth of new age business i.e. Brand Avvatar.

During the year under review, core categories of Ghee and Cheese have seen continuous traction throughout the year and have posted a growth of 3.5% Y-o-Y.

The protein portfolio consisting of the Premium Brand Avvatar, has been consistently growing at 100% CAGR for two years in a row. The overall protein portfolio has continued to record market share gains.

For FY 2023-24, the General Trade, Modern trade & E-commerce posted a growth of 3% Y-o-Y, 6% Y-o-Y, respectively.

The Company has bolstered its abilities in the rapidly growing new-age channels like Modern Trade and E-commerce, both of which have contributed to the overall growth of the Business of the Company. The Company has capitalized on the benign milk prices and expanded its gross margin profile along with premiumization and improvement in the value-added product portfolio. The Company continues to invest in brand building with the overall advertising & promotion spends at 4.2% for FY 2023-24 vs 2.5% in FY 2022-23.

BRAND BUILDING INITIATIVES & MARKETING HIGHLIGHTS

GOWARDHAN: The Company has strengthened its brand equity reach by adopting unique content-led impact marketing and branding campaigns. Continuing the momentum on the marketing innovation; the Company continued its effective collaboration with Kaun Banega Crorepati (KBC) for the second time. The association has enabled the Company to increase its consumer connect and strengthened the brand equity.

Further, the Company has forward integrated into traditional sweet segment under the brand ''Gowardhan''. Currently it has seven delectable sweets range namely Kaju Katli, Malai Pedha, Kesar Pedha, Kaju Pista Roll, Mawa Gujiya, Mysore Pak, and Malai Modak. With an estimated branded market size of ^7000-8000 crore, the Indian sweets market presents vast opportunities for growth and innovation.

GO CHEESE: The Company has strengthened its brand equity reach by adopting unique content-led impact marketing and branding campaigns. Continuing the momentum of marketing innovation; the Company collaborated with StarPlus on IPL to enhance visibility and awareness for Go Cheese. Here the brand was displayed every time the batsman played a four and the band displayed Har Four mein Go Cheese.

AVVATAR: The Company expanded the Avvatar portfolio with an addition of Mango Flavour - Avvatar Mango Rush.

OTHER INITIATIVES: The Company had also introduced various new products- Masala tadka chass, plain and mango lassi in pouches under fresh categories at pocket-friendly price points of f10-15 only.

EXPANSION OF SUBSIDIARY

The Company is expanding its Wholly Owned Subsidiary (WOS), Bhagyalakshmi Dairy Farms Private Limited (Wholly Owned Subsidiary / Bhagyalaxmi), which supplies exclusively to our brand Pride of Cows and is expected to reach over 15,000 Cows by FY 2026-27.

The Company also plans to incorporate a Foreign Wholly Owned Subsidiary (WOS) in Dubai, UAE. This will help the company to expand its reach and build seamless supply chain operations worldwide to cater the International Market.

REVIEW OF OPERATIONS

Strong network and steady relationship with 5 lakh farmers and more than 300 Bulk Milk Coolers (BMC) across India has helped our Company to stand strong during year under review. During the year, our Plant procurement purchase increased by 20% from 1.4 Million liters a day to 1.8 Million liters a day. The Company is built on the backbone of a robust network comprising of 29 strategically located Depots, 500 Super Stockists, 4500 Distributors. 4.6 lakh pan-India retail touch points which are expected to reach 13-15 lakh touch points by 2026-27.

The Company is optimizing its productivity to drive growth whereby:

• More than 70% of GT Business has been covered in sales force automation

• Leveraging vendors, re-negotiations, reverse auctions, office consolidation

• Depot & Cold Storage restructuring

• Beat planning in opportunity markets

The expansion would be driven by:

• Increasing distribution dominance in < 1 lakh towns

• Building Depots and infrastructure across India

• Aggressive outlet expansion

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

BRAND BUILDING: STRATEGY

The Company''s foremost strategic priority is to be one of the best performing, most trusted and respected dairy FMCG Companies across stakeholders.

EXPORT MARKET

Parag Milk Foods Limited continues to enjoy its presence and brand recall of Go and Gowardhan brands across several geographies through its exports to UAE, Singapore, Mauritius, Oman, Kuwait, Bahrain, Congo, Hong Kong, Philippines, Sri Lanka, Bangladesh, Maldives, Indonesia, USA, Nepal, Bhutan etc. It had also started expanding its reach in Qatar, Saudi Arabia, Malaysia. Our export sales has contributed 1.21% to the overall revenues.

PHILANTHROPIC ACTIVITIES

The Company has been efficacious in philanthropic activities for the Community as a whole and has continued to work in the following areas viz:

• Promoting Education i.e. Apprenticeship initiative through TeamLease Foundation

• Animal health and welfare

In addition to the above-mentioned areas, the Company has also undertaken certain impromptu efforts in the following areas during the year under review:

• Festival Feast Distribution & National Day Feeding Program;

• Hospital Food Relief Program;

• Essential Supplies Relief Initiative;

• Educational Plant Tour for Students; and

• Youth-focused IT courses.

DIVIDEND & RESERVES Dividend Distribution Policy

The Company has formulated Dividend Distribution Policy in accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and any amendments thereto for bringing transparency in the matter of declaration of dividend and for protecting the interest of investors.

The Company intends to maintain similar or better levels of dividend payout in future. However, the actual dividend payout in each year will be based on the profits and investment opportunities of the Company.

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

Dividend

The Board of Directors at its Meeting held on May 18, 2024, recommended a final dividend of f0.50/- per equity share i.e. 5% of face value of f10/- each for the financial year ended March 31, 2024, subject to approval of the shareholders at the ensuing 32^nd Annual General Meeting (AGM).

If approved, the dividend would result in a cash outflow of f59.69/- Million payable to those Shareholders whose names appear in the Register of Members as on the Book Closure / Record Date. The total dividend payout works out to 6.49% of the Company''s standalone net profit. In view of the amendment in the Income Tax Act, 1961 through the Finance Act, 2020, imposition of Dividend Distribution Tax (DDT) has been abolished. The dividend, if declared, at the ensuing AGM will be taxable in the hands of the Members of the Company and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income Tax Act, 1961.

The Dividend declared/recommended is in accordance with the Company''s Dividend Distribution Policy, which has been disclosed on the Company''s website, www. paragmilkfoods.com, as required under Regulation 43-A of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, as amended.

Unclaimed dividends

Details of outstanding and unclaimed dividends previously declared and paid by the Company are elaborated in the Corporate Governance Report, which forms part of the Annual Report.

Transfer to Reserves

During FY 2023-24, there was no amount proposed to be transferred to the Reserves.

SHARE CAPITAL

During FY 2023-24, the Authorised Share Capital of the Company was increased from f1,200 Million divided into 120 Million Equity Shares of Face Value of f10/- each to f2,000 Million divided into 200 Million Equity Shares of Face Value of f10/- each for the purpose of accommodating future issuance of securities by the Company.

Further, Paid-up Equity Share Capital increased from ^1,173.76 Million to ^1,193.76 Million consequent to allotment of 2 Million Equity Shares on February 14, 2024, to Ms. Akshali Shah, Member of Promoter Group pursuant to conversion of equal number of share warrants at a price of f93.75/- for each share warrant aggregating to f187.50 Million out of which f140.62 Million representing 75% had been received on exercise of option to convert these share warrants into Equity Shares.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE COMPANY

There have been no material changes or commitments that have affected the financial position of the Company between the close of FY 2023-24 and the date of signing of this report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has one Wholly Owned Subsidiary i.e. Bhagyalaxmi Dairy Farms Private Limited as on March 31, 2024. There were no material changes in the nature of the business of the subsidiary. During FY 2023-24, no new subsidiary was incorporated / acquired. The Company does not have any associate company, nor has it entered into a joint venture with any other company.

The Board of Directors at its Meeting held on May 18, 2024 approved the incorporation of a wholly owned subsidiary in Dubai, United Arab Emirates with a goal to increase Company''s product distribution to new markets, diversify the customer base and to ensure seamless supply chain operations worldwide.

Bhagyalaxmi Dairy Farms Private Limited

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of Financial Statements of the Company''s Subsidiary in Form AOC-1, is enclosed as ''Annexure I'' to this report.

Pursuant to Listing Regulations, the Company has formulated a policy for determining its ''material subsidiaries'' and the same can be accessed on the Company''s website at https://www.paragmilkfoods. com/policy.php?id=13.

Performance highlights of the Subsidiary for FY 2023-24 is given below:

Sr. No.	Particulars	FY 2023-24	FY 2022-23
1.	Total Revenue	1,161.94	902.83
2.	Profit before Interest, Tax and Depreciation	164.40	(106.17)
3.	Profit after Tax	1.12	(167.03)

The Board of the Company is comprised of eminent persons with proven competence and integrity. Besides the experience and their leadership qualities, they have a significant degree of commitment towards the Company and they devote adequate time to the Meetings and its preparation.

During the year under review and as on the date of the report, the composition of the Board consists of 8 Directors comprising of 4 Independent Directors, 1 NonExecutive Directors and 3 Executive Directors, details thereof are elaborated in the Corporate Governance Report, which forms part of the Annual Report.

In terms of the requirement of the Listing Regulations, the Board has identified core skills, expertise and competencies of the Directors in the context of the Company''s businesses for effective functioning. The list of key skills, expertise and core competencies of the Board of Directors are elaborated in the Corporate Governance Report, which forms part of the Annual Report.

In the opinion of the Board, all the directors, possess the requisite qualifications, experience and expertise and hold high standards of integrity.

Appointment / Re-appointment of Directors:

At the 31^st AGM held during FY 2023-24, Mr. Devendra Shah (DIN: 01127319) whose term is liable to retire by rotation, was re-appointed pursuant to provisions of the Companies Act, 2013. Other than this, no appointment / re-appointment of Directors was made during the FY2023-24.

In terms of the provisions of the Companies Act, 2013, Mr. Nikhil Vora (DIN: 05014606), Non-Executive (NonIndependent) Director of the Company, retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. A resolution seeking the re-appointment of Mr. Vora, forms part of the Notice convening the ensuing Annual General Meeting. The profile along with other details of Mr. Vora is provided in the annexure to the Notice of the Annual General Meeting.

Declarations by Independent Directors:

All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. In the opinion of the Board, the Independent Directors fulfill the conditions of independence specified in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and Company''s Code of Conduct for Directors and Senior Management Personnel. The Independent Directors of the Company have confirmed that they have registered their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of

Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Director of the Company and the Board is satisfied with the integrity, expertise and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board.

KEY MANAGERIAL PERSONNEL (KMP)

Pursuant to the provisions of Section 2(51) and Section 203 of the Act read with Rules framed thereunder, the following are the Key Managerial Personnel of the Company as on March 31, 2024:

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

Mr. Pritam Shah was provided with added responsibility of the office of Interim Chief Financial Officer and consequently his designation changed to Managing Director & Interim Chief Financial Officer w.e.f. April 29, 2023. In view of change in designation of Mr. Pritam Shah as Managing Director (MD) & Interim CFO, Mr. Surendra Malaviya was released from the office of Interim Chief Financial Officer w.e.f. April 28, 2023.

MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors of the Company met four (4) times during the FY 2023-24. The details of composition of the Board and its Committees, their Meetings held during the FY 2023-24 and the attendance of the Directors / Committee Members at the respective Meetings are elaborated in the Corporate Governance Report, which forms part of the Annual Report.

During the financial year under review, the Board accepted all the recommendations made by the Audit Committee. The Board evaluates the recommendations made by the Audit Committee and seeks further information as they may require. There were no instances where the Board has not accepted any recommendation from the Audit Committee.

Committees of the Board

The Board of Directors has the following Committees as on March 31, 2024:

(1) Audit Committee

(2) Nomination and Remuneration Committee (NRC)

(3) Stakeholders'' Relationship Committee (SRC)

(4) Corporate Social Responsibility Committee (CSR)

(5) Risk Management Committee (RMC)

(6) Finance Committee

(7) Management Committee

During the financial year under review, the Board at its Meeting held on August 5, 2023 constituted Management Committee comprising of following Directors of the Company:

(1) Ms. Akshali Shah - Executive Director (Chairperson);

(2) Mr. Devendra Shah - Executive Director (Member); and

(3) Mr. Pritam Shah, Managing Director & Interim CFO (Member).

The details of the Committees along with their composition, number of Meetings held and attendance at the Meetings are elaborated in the Corporate Governance Report, which forms part of the Annual Report.

BOARD EVALUATION

The Company believes in value for its shareholders through ethical processes & integrity. The purpose of Board feedback is to identify opportunities for enhancing the effectiveness of the Board as a whole. The Evaluation Policy and Criteria is duly approved by NRC. This process at the Company is conducted through structured questionnaires which covers various aspects of the Board''s functioning prepared after circulating the draft forms, covering various aspects such as structure of the Board, qualifications, experience and competency of Directors, diversity in Board, effectiveness of the Board processes, among others.

Evaluation plays a very important role in ensuring that the Company''s progress is monitored and timely inputs are given to enhance its performance and set the right direction for profitable growth fully complying with relevant regulatory requirements.

Pursuant to the provisions of the Act and Regulation 17(10) of Listing Regulations and as prescribed in the stated policy of the Board, the Board has carried out an annual performance evaluation of (i) the Directors (Independent and non-Independent); (ii) Board itself (as a whole); (iii) Committees and (iv) fulfillment of Independence criteria. The Board performance was evaluated based on inputs received from the Board Members after considering criteria such as Board composition and structure, effectiveness of Board/ Committee processes and information provided to the Board etc.

The performance of the Executive Chairman was evaluated after seeking the inputs from all the Directors other than the Chairman on the basis of the criteria such

as Chairman competency, value addition, leadership qualities, ease of communication, risk handling & mitigation, stakeholder relationship, personal attributes etc.

In terms of the requirements of the Act, a separate Meeting of the Independent Directors was held during the year. The Independent Directors at their Meeting held on March 21, 2024 reviewed the performance of the Chairman, Non-Independent Directors of the Company and overall performance of the Board and Committees as mandated by Schedule IV of the Act and Listing Regulations.

The Company also acted on feedback received from the previous year''s evaluation process. For more details on the Board Evaluation Process, please refer the ''Performance Evaluation'' section in the Corporate Governance Report, which forms part of the Annual Report.

Familiarisation Programme for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The Company already has an elaborate familiarization programme in place for effective induction of Independent Directors. The Board acknowledged this and reiterated the importance of rigorous execution of the induction process to ensure a smooth transfer and seamless integration of the new Board Member.

Pursuant to Regulation 25(7) and 46 of the SEBI Listing Regulations, the details of the familiarisation programme imparted to the Directors are elaborated in the Corporate Governance Report, which forms part of the Annual Report and are also available on the Company''s website i.e. www.paragmilkfoods.com under ''Investors'' tab.

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

The Board of Directors has formulated a Nomination and Remuneration Policy in terms of the provisions of subsection (3) of Section 178 of the Act and Regulation 19 of the Listing Regulations dealing with appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Personnel.

The policy covers criteria for determining qualifications, positive attributes, independence and remuneration of its Directors, Key Managerial Personnel and Senior Management Personnel.

The Nomination & Remuneration Policy is available on the website of the Company and the web-link of the same is https://www.paragmilkfoods.com/policy. php?id=38

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors including the audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by the Management and the relevant Board Committees including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and operating effectively during the FY 2023-24.

Pursuant to the requirements under Section 134(3) (c) of the Companies Act, 2013, with respect to the Director''s Responsibility Statements, your Directors make the following statements:

a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) t hat the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit and loss of the Company for the Financial Year ended March 31, 2024;

c) that the Directors had taken proper and sufficient care for the 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) that the directors had prepared the annual financial statements for the Financial Year ended March 31, 2024 on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS

The Board at its Meetings held on April 29, 2023 and August 5, 2023 and further the Members at the Annual General Meeting held on September 27, 2023, approved the followings by passing the required resolutions:

• I imiting the maximum number of Employee Stock Options (Stock Options) to be granted per employee in aggregate in any year, which shall not exceed 1,00,000 Stock Options;

• I ncrease the existing ESOP Pool and Equity Shares under Parag Milk Foods Limited Employee Stock Option Plan 2022 (ESOP 2022) from existing 5,00,000 (Five Lakh) Employee Stock Options to 25,00,000 (Twenty Five Lakh) Employee Stock Options; and

• Grant of Stock Options to the Employees of the subsidiary Company of the Company under ''Parag Milk Foods Limited - Employee Stock Option Plan 2022''.

Further, the Nomination and Remuneration Committee of the Company at its Meeting held on February 7, 2024, had approved the grant of 50,000 Stock Options to the eligible employees of the Company pursuant to Parag Milk Foods Limited - Employee Stock Option Plan 2022.

The details of the Stock Options granted under ESOP 2022 and the disclosures in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (SEBI SBEB Regulations) are annexed as ''Annexure II'' to this Report.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company''s internal control systems are commensurate with the nature of its business, and the size and complexity of its operations and such internal financial controls concerning the Financial Statements are adequate. The Audit Committee comprises of professionally qualified Directors, who interact with the statutory auditors, internal auditors and management in dealing with matters.

Internal Financial Control is an integrated part of the risk management process which in turn is a part of Corporate Governance addressing financial reporting risks. The Internal Financial Controls have been documented and embedded in the business processes. Your Company''s approach on Corporate Governance is elaborated in the Corporate Governance Report, which forms part of the Annual Report.

The Board reviews the internal processes, systems and the internal financial controls and accordingly, the Directors'' Responsibility Statement contains confirmation as regards to adequacy of the internal financial controls.

Assurances on the effectiveness of Internal Financial Controls are obtained through management reviews, self-assessment, continuous monitoring by departmental heads as well as testing of the internal financial control systems by the internal auditors during the course of their audits.

The Audit Committee and the Board are of the opinion that the Company has sound Internal Financial Control and it is operating effectively and no material weaknesses exist during the FY 2023-24. The details with respect of internal financial control and their adequacy are elaborated in the Management Discussion and Analysis, which forms part of the Annual Report.

RISK MANAGEMENT GOVERNANCE

The Board has an overall responsibility for governance of Company''s risk management.

The Board approves the Company''s risk policies and oversees management in the designing, implementation and monitoring of risk management systems. It also has the authority to approve any deviation in risk management policies or any breach of risk limits.

The Company has ensured the development and implementation of a risk management policy for identification of elements of various risks within and outside the organization, if any, which in the opinion of the Board may threaten the existence of the Company and for the effective mitigation of risk.

The Risk Management Committee constituted by the Board assists the Board in monitoring and reviewing the risk management for business operations, implementation of the risk management framework of the Company and such other functions as Board may deem fit.

During the year under review, the Company has appointed M/s. Deloitte Touche Tohmatsu India LLP (Deloitte), Internal Auditors of the Company, for Enterprise Risk Management (ERM) on the terms and conditions as per the Engagement Letter executed with them.

The Risk Management Framework covers all the Key Categories for Risk Classification i.e. Strategic and Reputational Risks, Financial and Fraud Risks, Governance and Compliance Risks, Extended Enterprise Risks, Cyber Risks and Information Security & Operational Risks, etc.

The key activities which would be covered by Deloitte during ERM is to develop ERM Framework and Policy, Risk Identification, Assessment and Prioritization, Risk Response Planning and Training & Capability Development.

The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report, which forms part of the Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a robust vigil mechanism in place in the form of Code of Conduct (COC) which enables its stakeholders to report concerns about unethical or inappropriate behaviour, actual or suspected fraud, leak of unpublished price sensitive information, unfair or unethical actions or any other violation of the COC.

The Company has adopted a ''Whistle-Blower Policy'' / ''Vigil Mechanism'' for Directors and Employees of the Company. The vigil mechanism of the Company provides for adequate safeguards against victimization of directors, employees and third parties who avail the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The provisions of this policy are in line with the

provisions of Section 177 (9) of the Act and the SEBI Listing Regulations.

The Company did not receive any complaints from the employees regarding violation of Code of Conduct or other matters whatsoever.

The functioning process of this mechanism has been more elaborately mentioned in the Corporate Governance Report forming a part of the Annual Report. The Whistle Blower Policy can be accessed on the Company''s website at https://www.paragmilkfoods. com/policy.php?id=42

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has constituted a Corporate Social Responsibility Committee and details of the composition are given separately in the Corporate Governance Report, which forms part of the Annual Report. The Company has undertaken the CSR activities in accordance with the CSR Policy of the Company adopted in accordance with Schedule VII of the Act. The Company''s CSR Policy can be accessed on the Company''s website at https:// www.paragmilkfoods.com/policy.php?id=53.

The brief outline of the CSR Philosophy, CSR policy, salient features of and the initiatives undertaken by the Company on CSR activities during the year under review are set out in this report in the format prescribed under Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 under ''Annexure III'' to this Report.

RELATED PARTY TRANSACTIONS

During the year under review i.e. 2023-24, all Transactions that were entered into with the related parties were in ordinary course of business and at arms'' length basis with prior Audit Committee approval. Therefore, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act w.r.t. contracts or arrangements with related parties under Section 188(1) in Form AOC-2 is not applicable to the Company for the FY 2023- 24 and hence, the same is not provided. The details of the transactions with related parties during FY 2023-24 are provided in the accompanying financial statements. There were no materially significant related party transactions entered into by the Company with the promoters, key management personnel or other designated persons that may have potential conflict with the interests of the Company at large.

The Audit Committee grants omnibus approval for the transactions that are in the ordinary course of business and are repetitive in nature. For other transactions, the Company obtains specific approval of the Audit Committee before entering into any such transactions. All related party transactions are placed before the Audit Committee on a quarterly basis. The same are also placed before the Board for seeking their approval.

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy

on Related Party Transactions and the same can be accessed on the Company''s website at https://www. paragmilkfoods.com/policy.php?id=40.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS BY THE COMPANY

The loans given, investments made and guarantees given & securities provided during the year under review are in compliance with the provisions of Section 186 of the Companies Act, 2013 and the Rules made thereunder and the details of the same are provided in the Notes to the Standalone Financial Statements, which forms part of the Annual Report.

BUY BACK

The Company has not bought back any of its securities during the Financial Year ended March 31, 2024.

DEPOSITS FROM PUBLIC

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, during the year under review.

No amount on account of principal or interest on deposits from the public was outstanding as on March 31, 2024.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

In accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and the rules made there under, the Company has adopted a Policy (Prevention of Sexual Harassment Policy a.k.a POSH Policy).

To build awareness in this area, the Company has been carrying out online Induction/ refresher programmes on a periodical basis. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. As per the requirement of the POSH Act and Rules made thereunder, the Company has constituted Internal Committees to redress complaints received regarding sexual harassment. Following is a summary of sexual harassment complaints received and disposed off during the year under review:

• No. of complaints received : NIL

• No. of complaints disposed off : NIL

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

In terms of Regulation 34 of SEBI Listing Regulations, a separate section on Management Discussion and Analysis, Business Responsibility & Sustainability Report and Corporate Governance Report together with a certificate from a Practicing Company Secretary

confirming compliance with the Regulations relating to Corporate Governance of Listing Regulations are set out and forms part of the Annual Report.

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

The Company is continuously making efforts to reduce and optimize the energy consumption at its manufacturing facilities/ offices all over India. Particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are provided in the prescribed format and are annexed as ''Annexure IV'' and forms an integral part of this Report.

ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Act, the Annual Return of the Company prepared as per Section 92(3) of the Act for the financial year ended March 31, 2024, is available on the Company''s website and can be accessed under ''Annual General Meeting'' 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

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 V'' and forms an integral part of this Report.

In terms of the provisions of 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, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said rules are provided in this Annual Report. In terms of Section 136 of the Act, this report is being sent to the Members and others entitled thereto, excluding the aforesaid annexure. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary at [email protected].

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as prescribed under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing details prescribed under rule 5(3) of the said rules, which form part of the Directors'' Report, will be made available to any Member on request, as per provisions of section 136(1) of the Act.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review and in terms of 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

At the 28^th AGM held on September 29, 2020, the Members had approved appointment of M/s. Sharp & Tannan, Chartered Accountants, Mumbai (Firm Registration No. 109982W), as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of the 28^th AGM till the conclusion of the 33^rd AGM.

As required under Regulation 33(1)(d) of Listing Regulations, M/s. Sharp & Tannan, have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Statutory Auditors have further confirmed that they are not disqualified from continuing as Auditors of the Company.

The Auditor''s Report for the financial year ended March 31, 2024 on the financial statements of the Company forms part of the 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 Companies Act, 2013 and the rules made thereunder, on the recommendation of the Audit Committee, the Board of Directors at its Meeting held on August 5, 2023 had appointed M/s. Deloitte Touche Tohmatsu India LLP, as Internal Auditors of the Company for the FY 2023-24 and FY 2024-25.

At the beginning of each Financial Year, an audit plan is rolled out after approval of the Audit Committee. The audit plan is aimed at evaluation of the efficacy and adequacy of internal control systems in the Company and compliance thereof with the same as well as robustness of internal processes, policies

and accounting procedures and compliance with laws and regulations. Based on the reports of Internal Auditors, the functional heads undertake corrective action in their respective areas.

• Cost Auditors

In accordance with provisions of Section 148 of the Act, the Company is required to maintain the accounts and cost records. It is hereby confirmed that the Company has maintained the cost records pursuant to provisions of the said section and accordingly such accounts & records are prepared & maintained by the Company.

Further, as per the requirements of Section 148 of the Act read with Rule 14 of the Companies (Cost Records and Audit) Rules, 2014, the cost records are required to be audited by a qualified Cost Accountant. During FY 2023-24, the Company filed the Cost Audit Report for the FY 2022-23 issued by M/s. Harshad Deshpande & Associates, Cost Accountants, (Firm Registration Number: 00378) with the Ministry of Corporate Affairs on September 1, 2023 which did not contain any qualification, reservation, adverse remark or disclaimer. No frauds were reported by the Cost Auditors to the Company in the said Report under sub-section (12) of Section 143 of the Act. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

The Board of Directors, upon the recommendation of the Audit Committee, has re-appointed M/s. Harshad Deshpande & Associates, Cost Accountants, (Firm Registration Number: 00378) to conduct audit of the cost records of the Company for the FY 2024-25. Accordingly, the Board of Directors recommends to the Members the resolution seeking their approval for ratifying the remuneration payable to the Cost Auditors for FY 2024-25, details of this resolution are provided in the Notice of the ensuing Annual General Meeting.

• Secretarial Auditors

The Secretarial Audit Report for FY 2023-24 in Form MR-3 is annexed as ''Annexure VI'' and forms an integral part of this Report. The said Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks and no frauds were reported by the Secretarial Auditors to the Company under sub-section (12) of Section 143 of the Act therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

Pursuant to the provisions of Section 204 of the Act and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. N. L. Bhatia & Associates, Practicing Company Secretaries (UIN: P1996MH055800), as the Secretarial Auditor of the Company to conduct audit of the secretarial records of the Company for the FY ending March 31, 2025.

COMPARISON OF SHAREHOLDING DATA AS AT THE END OF FY 2023-24 AND PREVIOUS FY 2022-23

The Category wise shareholding of the Company for the FY 2023-24 (From April 1, 2023 to March 31, 2024) is given below for reference of shareholders:

		As on March 31, 2024		As on March 31, 2023		%
CATEGORY CODE	CATEGORY OF SHAREHOLDER	TOTAL NO OF SHARES	% OF TOTAL SHARES	TOTAL NO OF SHARES	% OF TOTAL SHARES	CHANGE DURING YEAR
		HELD		HELD
(I)	(II)	(III)	(IV)	(V)	(VI)	(VII)
(A)	PROMOTER AND PROMOTER GROUP
(1)	INDIAN
(a)	Individual / HUF	50861435	42.61	48861435	41.63	0.98
(b)	Central Government / State Government(s)	0	0.00	0	0.00	0
(c)	Bodies Corporate	0	0.00	0	0.00	0
(d)	Financial Institutions / Banks	0	0.00	0	0.00	0
(e)	Others	0	0.00	0	0.00	0
Sub-Total A(1):		50861435	42.61	48861435	41.63	0.98
(2)	FOREIGN
(a)	Individuals (NRIs / Foreign Individuals)	0	0.00	0	0.00	0
(b)	Bodies Corporate	0	0.00	0	0.00	0
(c)	Institutions	0	0.00	0	0.00	0
(d)	Qualified Foreign Investor	0	0.00	0	0.00	0
(e)	Others	0	0.00	0	0.00	0
Sub-Total A(2):		0	0.00	0	0.00	0
Total A=A(1) A(2)		50861435	42.61	48861435	41.63	0.98
(B)	PUBLIC SHAREHOLDING
(1)	INSTITUTIONS
(a)	Mutual Funds / UTI / AIFs	10048760	8.42	4504503	3.84	4.58
(b)	Financial Institutions /Banks	0	0.00	0	0.00	0
(c)	Central Government / State Government(s)	0	0.00	0	0.00	0
(d)	Venture Capital Funds	0	0.00	0	0.00	0
(e)	NBFC Registered with RBI	262782	0.22	185250	0.16	0.06
(f)	Foreign Institutional Investors	10682111	8.95	12007842	10.23	(1.28)
(g)	Foreign Venture Capital Investors	0	0.00	0	0.00	0
(h)	Qualified Foreign Investor	0	0.00	0	0.00	0
(i) Others		0	0.00	0	0.00	0
Sub-Total B(1):		20993653	17.59	16697595	14.23	3.36
(2)	NON-INSTITUTIONS
(a)	Bodies Corporate	10520533	8.81	12968039	11.05	(2.24)
(b)	Foreign Corporate Bodies	4199018	3.52	6756756	5.76	(2.24)
(c)	Directors and their relatives (excluding independent directors and nominee directors)	310700	0.26	310700	0.26	0
(d)	Key Managerial Personnel	10	0	10	0	0
(e)	Individuals
	(i) Individuals holding nominal share capital	22534392	18.88	17924279	15.27	3.61
	upto f2 lakh
	(ii) Individuals holding nominal share capital	7032766	5.89	8964934	7.64	(1.75)
	in excess of f2 lakh

CATEGORY CATEGORY OF SHAREHOLDER CODE	As on March 31, 2024		As on March 31, 2023 %
	TOTAL NO OF SHARES HELD	% OF TOTAL SHARES	TOTAL % OF CHANGE NO OF TOTAL DURING SHARES shares year
(I) (II)	(III)	(IV)	(V) (VI) (VII)
(f) Others
Clearing Members	1129	0.00	2051683 1.75 (1.75)
Non-Resident Indians	1014266	0.85	1037740 0.88 (0.03)
Non-Resident Indians Non-Repatriation	403455	0.34	263591 0.22 0.12
Trusts	1000	0.00	1000 0 0
HUF	1327469	1.11	1362064 1.16 (0.05)
(g) Qualified Foreign Investor	0	0	0 0.00 0
Sub-Total B(2):	47344738	39.66	51640796 43.99 (4.33)
Total B=B(1) B(2):	68338391	57.25	68338391 58.22 (0.97)
(c) NON PROMOTER NON PUBLIC
Employee Benefit Trust	176015	0.14	176015 0.15 (0.01)
Sub-Total C:	176015	0.14	176015 0.15 (0.01)
Total (A B C)	119375841	100.00	117375841 100.00 0
GRAND TOTAL (A B C):	119375841	100.00	117375841 100.00 0

CHANGE IN THE SHAREHOLDING OF TOP TEN EQUITY SHAREHOLDERS OF THE COMPANY AS ON MARCH 31, 2024:

Shareholders		As on March 31, 2024		As on March 31, 2023		%
		Total Shares	% of Holding	Total Shares	% of Holding	Change
1 Devendra Prakash Shah		20206400	16.93	20206400	17.22	(0.29)
2	Netra Pritam Shah	13867027	11.61	13867027	11.81	(0.20)
3	Pritam Prakash Shah	9159888	7.67	9159888	7.80	(0.13)
4	Sixth Sense India Opportunities III	8167245	6.84	2702702	2.30	4.54
5	AG Dynamic Funds Limited	5433150	4.55	7392250	6.30	(1.75)
6	International Finance Corporation	4199018	3.52	6756756	5.76	(2.24)
7	Peanence Commercial Private Limited	3460981	2.90	0	0	2.90
8	Poojan Devendra Shah	3295000	2.76	3295000	2.80	(0.04)
9	VLS Finance Ltd	2634826	2.21	2010000	1.71	0.50
10	Priti Devendra Shah	2222820	1.86	2222820	1.89	(0.03)

ACKNOWLEDGEMENTS

The Directors wish to place on record their deep sense of appreciation for the committed services by the Company''s employees. The Directors acknowledge with gratitude, the encouragement and support extended by its valued shareholders. The Directors also place on record their appreciation for the support and co-operation which the Company has been receiving from its suppliers, distributors, retailers, business partners and others associated as its trading partners.

The Directors also take this opportunity to thank all the Farmers, Consumers, Employees, Shareholders, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

For Parag Milk Foods Limited

Sd/-

Devendra Shah

Place: Mumbai Chairman

Date: May 18, 2024 DIN: 01127319