<dhhead>DIRECTORS REPORT</dhhead>

To

The Shareholders

Your Directors have pleasure in presenting this SEVENTY SIXTH ANNUAL REPORT along with the Audited Statement of Accounts for the year ending 31st March, 2023.

Financial Results:

(Rupees in lakhs)

PERFORMANCE:

Your Directors are glad to report that for the year 2022-23, your Company made a Profit of Rs.233.30 Crores (before tax) against a Profit of Rs.213.34 Crores made last year, which reflects another year of consistent performance. The Net Profit (After Tax) was Rs.174.05 Crores against Rs. 161.70 Crores made last year.

DIVIDENDS:

Your Directors are glad to recommend a Dividend of Rs. 2/- per Equity Share i.e., 100% (Face Value of Rs.2/-) for the year 2022-23. With this Dividend, if approved, your Company would have the distinction of rewarding its Shareholders continuously for the past 6 decades. The outflow towards Dividend payment would be Rs. 27.11 Crores.

The url link of Dividend Distribution Policy is https://theandhrasugars.com/wp-content/uploads/didvidend-distribution-policy.pdf

CAPITAL & RESERVES: Authorised and Paid-Up Capital:

As on 31.3.2023, the Authorised Capital of the Company is Rs.30.00 Crores and the Paid-up Capital is Rs. 27.11 Crores.

Reserves:

With the transfer of Rs. 100 Crores during the year under report, the total Reserves as on 31.3.2023 stands at Rs. 993.30 Crores against Rs. 893.30 Crores on 31.3.2022.

SUGAR UNITS:

The Sugar Unit-II crushed in aggregate 3,37,491.66 M.T. of cane during the 2022-23 season against 2,78,328.660 M.T. crushed last year. The crushing operations and cane price paid to cane suppliers for the 2022-23 Season are:

*Includes Transport Subsidy.

Operations of Sugar Unit-I and Sugar Unit-III were suspended for the Crushing Season 2022-23.

To encourage farmers to plant cane, your Company opted to pay a cane price higher than the Fair Remunerative Price fixed by the Government.

POWER GENERATION:

During the year under report the Co-generation Unit at Taduvai generated 12895832 Units of Power.

PERFORMANCE OF CHEMICAL DIVISION:

During the year under report the performance of Caustic Soda Division at Saggonda was good. Turnover of Rs.858.51 Crores was achieved, Profit after depreciation achieved this year was Rs. 233.70 Crores against Rs.185.27 Crores in the last year.

Sulphuric Acid division at Kovvur and Saggonda performed impressively by posting a Profit of Rs.20.75 Crores as against Rs.36.69 Crores in the last year.

POWER UNITS:

The Net Power generated at Ramagiri Wind Mills during this year is 1145335 Units KWH.

The Net Power generation at the Tamil Nadu Wind Mills during the year under report is 25356937 Units. This Power is being fed into the Tamil Nadu State Electricity Board grid.

The Power generated by 33 MW Coal Based Captive Power Plant put up by the Company at Saggonda during this year is 119983000 KWH. The entire Power is being used at our Chemical Plants at Saggonda.

The Power generated by 2.5 MW Solar Captive Power Plant put up by the Company at Kovvur during this year is 3293669 KWH. The entire Power is being used at our Chemical Plants at Kovvur.

PROJECTS: A. Caustic Soda:

Demand for Caustic Soda is on the rise. Our Major customers in the Private and Public Sectors have been consistently lifting their commitments. As a part of the ongoing market programme efforts are directed towards widening the customer base. Keeping this in mind, your Company has expanded from the existing 500 Tonnes per day to 600 Tonnes per day Membrane Cell Caustic Soda facility at Chemical Complex, Saggonda and the consent for operation for the expanded capacity is obtained. This Expansion is based on the latest generation of Environment friendly and Energy-efficient Membrane Cell Technology supplied by M/s. Thyssenkrupp Industrial Solutions India Ltd., a renowned International organization having expertise and experience in establishing Chemical Plants. The Plant is based on the latest 6th Generation Membrane Technology. This process has a lower production cost, simple operations, is Energy Efficient & Environmental friendly.

B. Sulphuric Acid:

Sulphuric Acid is widely used in Pharmaceutical, Fertilizer and Water Treatment Industries causing an increase in demand for this product.

Your Company is setting up a 500 TPD Sulphuric Acid Plant at Chemical Complex, Saggonda with an estimated cost of Rs.100.00 Crores being met by internal generation. The Plant is expected to commence operations in the last quarter of the Financial Year 2023-24.

C. Sodium Hypochlorite:

Your Company is setting up a Project at J.N. Pharmacity, Parawada, Visakhapatnam non-SEZ area to manufacture 100 TPD Sodium Hypochlorite. Required statutory approval was obtained for setting up the Plant. The estimated project cost was about Rs.18.00 Crores. The required raw materials viz., Sodium Hydroxide and Chlorine gas can be supplied from our Chemicals Division, Saggonda.

Sodium Hypochlorite has applications in Bulk Drugs / Pharmaceuticals, Fine Chemicals, Water treatment and Sea Food Industries.

Most of the Civil construction works are completed. All the bought-out components required for this project have already been procured. Fabrication of all the process equipment and main storage tanks are completed. Fabrication and erection of pipe racks / bridges are also completed. Equipment erection was done partly.

We have planned to utilize the site (42.28 acres) completely in a phased manner and we have also obtained CFE from APPCB for setting up a Chlor-alkali project.

Meanwhile, APIIC had issued cancellation orders of the allotted site of 42.28 acres, stating that your Company has not fulfilled the terms and conditions of the original tri-party agreement entered between APIIC, RPCIL and ASL and the project was not implemented. Your Company has filed a writ petition in the Hon'ble High Court of Andhra Pradesh against APIIC to suspend the site cancellation orders given by APIIC. The High Court has ordered Status Quo and the matter is reserved for Judgement.

Under the present circumstances, your Company is not continuing with the Sodium Hypochlorite project construction and commissioning activities.

D. Salicylic Acid Project:

As the demand for Salicylic Acid is continuously growing in the areas of Cosmetic Skin Care, Hair Care and Health Care, it is proposed to set up a new 2640 TPA Salicylic Acid Plant with the latest Technology and Zero discharge waste water system at Tanuku. The expected outline is around Rs.36.50 Crores. Major works are in progress and the plant is expected to be commissioned at the end of the 3rd quarter of 2023-24.

DEMATERIALISATION OF EQUITY SHARES:

As of 31st March, 2023 Equity Shares representing 56.19 % of the Share Capital have been dematerialised.

AUDITORS:

The Audit Committee and the Board at their meeting held on May 28, 2022 approved the appointment of M/s. Brahmayya & Co., Chartered Accountants as Statutory Auditors for a term of five (5) years i.e. from conclusion of the 75th Annual General Meeting till the conclusion of 80th Annual General Meeting.

Their remuneration for the Financial Year 2023-24 of Rs. 19,00,000/- is being sought for your approval at the ensuing Annual General Meeting.

OBSERVATIONS MADE BY STATUTORY AUDITORS:

In respect of the observation made by statutory auditors on excess provision of Managerial Remuneration, the same will be placed for the approval of the Share holders in the ensuing Annual General Meeting.

COST AUDITORS:

For the year 2022-2023 M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad were the Cost Auditors of the Company which are subject to Cost Audit. For the year ended 2023-24, your Board of Directors have approved the appointment of M/s. Narasimha Murthy & Co., Hyderabad as Cost Auditors for the 8 No. of Products and recommend to Shareholders to ratify the remuneration of Rs. 7,50,000/- as fixed by the Board on the recommendation of Audit Committee.

CORPORATE GOVERNANCE:

As per the amended provisions of the SEBI Listing Regulations, a Report on Corporate Governance along with Management Discussion and Analysis forming part of the Directors' Report is annexed.

COMPLIANCE CERTIFICATE OF THE AUDITORS:

The Statutory Auditors have certified that the Company has complied with the conditions of Corporate Governance as stipulated in the Listing Agreement with the Stock Exchanges and the same is annexed to the Report of Directors.

AUDIT COMMITTEE:

Audit Committee comprises of Three Non-Whole time, Independent Directors and One Whole-time Director Dr. P. Kotaiah, Sri V.S. Raju, Sri P.A. Chowdary and Sri P. Achuta Ramayya respectively. Dr. P. Kotaiah is the Chairman of this Committee.

DIRECTORS AND KMP:

Directors Sri Mullapudi Narendranath and Sri P. Achuta Ramayya retire by rotation at the ensuing 76th Annual General Meeting and being eligible, offer themselves for re-appointment.

Statements of declaration as per Section 149(6) of the Companies Act, 2013 have been given by the Independent Directors.

Sri P. Narendranath Chowdary, Chairman & Managing Director and Sri P.V.S. Viswanadha Kumar, Vice President (Finance) & Addl. Secretary have been designated as Key Managerial Personnel.

COMPLIANCE UNDER COMPANIES ACT, 2013

Pursuant to Sec.134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, your company has complied with the compliance requirement and the details of which are enumerated hereunder.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements of Section 134(1) (c) of the Companies Act, 2013 and based on the explanation and compliance certificate given by the executives of the Company, and subject to disclosures in the Annual Accounts and on the basis of discussions with the Statutory Auditors of the Company from time to time, we state as under: a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departure. b) that the directors selected such accounting policies and applied them consistently and made judgments and estimates that those 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 of the Company for that period. c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d) that the Directors have prepared the annual accounts on a going concern basis. e) that the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. f) that the Directors devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

BOARD MEETINGS:

The Board of Directors met 4 times during the financial year 2022-2023 on 28.05.2022, 10.08.2022, 12.11.2022 and 11.02.2023.

INDEPENDENT DIRECTORS MEETING:

A Meeting of the Independent Directors was held on 18th March, 2023. The Independent Directors have evaluated the performance of the Non-independent Directors, the Board as a whole and Chairman of the Board. The Board was briefed by Lead Independent Director on the deliberations made at the Independent Directors Meeting.

FAMILARISATION PROGRAMME:

Your Company through a Policy has in place a familiarisation programme to all the Directors with a view to update them on the Company's Policies and Procedures. Independent Directors make a periodical visit to plants to keep themselves abreast of the plant operations. Respective Plant Heads interact with the Independent Directors and explain to them about the various processes and operations.

FORMAL ANNUAL EVALUATION OF THE BOARD

The Board evaluated its own performance and that of its Committees and Directors in terms of: Measured and appropriate contribution by the Directors to the discussions on the Agenda Items, ??Each Director exercising the responsibilities in a bonafide manner. Understanding of the Company's business, strategic plans and other key issues. ??Special Skills and expertise of each Director contributing to the Board's overall effectiveness. ??Respecting the confidentiality of the Company's business information and Board's deliberations. ??Satisfactory attendance and active participation of each Director at the meetings of the Board and Committee.

The Board members were of the opinion that the Board as a whole and the Directors have performed effectively as per the terms of the above parameters. The respective Committees performed as per its terms of reference.

VIGIL MECHANISM:

As a part of Vigil Mechanism, a Whistle Blower Policy has been established and approved by the Board. This Policy envisages reporting of wrong doing or un-ethical activities observed by Employees at any level directly to the Chairman of the Audit Committee or to the Chairman & Managing Director. The matter whenever reported is investigated and if the wrong doer is found guilty, disciplinary action will be initiated depending upon the materiality of the un-ethical doings. During the year under report there have been no instances which required reporting. An exclusive E-mail ID ?histleblower@theandhrasugars.com· was created for this purpose.

NOMINATION AND REMUNERATION COMMITTEE:

As required by the Provisions of the Companies Act, 2013 and Listing Agreement, a Nomination and Remuneration Committee comprising of Independent Directors Sri V.S. Raju (Chairman), Sri P.A. Chowdary and Dr. Manjulata was constituted by the Board.

This Nomination and Remuneration Committee has formulated Nomination and Remuneration Policy which has been approved by the Board. This Nomination & Remuneration Policy has laid down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration based on the Company's size and financial position and trends and practices on remuneration prevailing in the industry. Appointment of Managing Director / Whole-time Director / KMP and Functional Heads are placed before Nomination and Remuneration Committee for its consideration and recommendation to the Board.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

As required by the Provisions of the Companies Act, 2013, a Corporate Social Responsibility (CSR) Committee has been constituted by the Board of the Company with Sri P. Narendranath Chowdary, Managing Director Chairman of the Committee, Sri Mullapudi Thimmaraja, Joint Managing Director and Sri V.S. Raju, Independent Director are Members of the Committee. This Committee has formulated a CSR Policy which has been approved by the Board. This Policy envisages CSR Activities to be taken up, the amount of expenditure to be incurred and monitoring of CSR Activities from time to time.

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This Policy aims to achieve the CSR objectives by undertaking one or more of the activities to be in alignment with Schedule VII of the Companies Act, 2013 either on its own or through any Trust / Society or any other recognized implementing Agency.

As per the provisions of Section 135(5) of the Companies Act, 2013, the company should spend in every Financial Year at least 2% of the average net profits of the company made during the three immediately preceding Financial Years. In pursuance of its Corporate Social Responsibility Policy, the company gives preference to the local area and areas around it, where it operates or any other permissible location for spending the amount earmarked for Corporate Social Responsibility activities.

Accordingly, for achieving its CSR objectives through the implementation of meaningful and sustainable CSR programmes, your Company allocates at least 2% of its average Net Profits calculated as per Section 198 of the Companies Act, 2013, as its Annual CSR Budget in each Financial Year.

From the Annual CSR Budget allocation, a provision is made towards the expenditure to be incurred on identified areas, for undertaking CSR activities on a year-to-year basis.

Allocation of the Annual Budget for CSR activities in any given year would be as per the provisions of the Companies Act, 2013 and rules made thereunder as amended from time to time. Any unspent/unutilised CSR allocation of a particular year will be carried forward to the next year, i.e., the CSR budget will be non-lapsable in nature.

As required by Rule 8 of the Companies (CSR Policy) Rules, 2013, a Report on CSR Activities and the amount of expenditure incurred are annexed to this Report.

RISK MANAGEMENT COMMITTEE:

As required by the Provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 the Board constituted of Risk Management Committee with the following members:

1. Sri Mullapudi Narendranath - Member (Executive Director)

2. Sri P. Achuta Ramayya - Member (Executive Director)

3. Sri P. Venkateswara Rao - Chairman (Non-Executive and Independent Director)

4. Sri P.S.R.V.K. Ranga Rao - Member (Executive Director)

The Committee met in the twice in the year on 28.05.2022 and 11.11.2022.

RISK MANAGEMENT POLICY

This Risk Management Committee has formulated a Risk Management Policy which has been approved by the Board, which envisages the following Identification of areas of Risk Assessing the impact of Risks Steps were taken to mitigate the Risk The Major Segments of operations of the Company are Sugar and Chlor Alkali.

The major aspects of concern for the Sugar Sector are:

1) Lack of Harvesting Labour

2) Power to operate the irrigation requirements

3) Proper Cane Varieties that give good Cane and Sugar yield that are suitable for mechanical harvesting.

To get around the 1st aspect, the Company has developed a mechanised sugar Cane Harvester suited to our Grower Farm sizes. The 2nd aspect is being taken care of by setting up a Solar Powered Pumping System at our R & D Farm so that our Growers could ultimately be provided the right guidance in this aspect. The 3rd aspect is being met by the Cane Breeding Programme undertaken by the Company.

The Chlor Alkali segment is power intensive where Power constitutes a major input cost. Restricted power supply and increased power costs have become a cause of concern. To mitigate this impact, a Solar Power Plant has been commissioned at Kovvur. At Saggonda a 33 MW Coal Based Captive Power Plant has been commissioned. This would improve the power availability to the Chemical Plants at Saggonda. Increasing imports and volatilities in the market prices constitute a major risk factor for this segment.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The Company has duly complied with the provisions of Section 186 of the Companies Act, 2013 with regard to Loans, Guarantees or Investments, the details of which, as applicable are provided in the Notes to Balance Sheet.

CREDIT RATING:

ICRA has rated the Credit Limits of the Company and re-affirmed rating as stated below:

The rating assigned above shows the safety regarding timely servicing of financial obligations and low credit risk.

INDUSTRIAL RELATIONS:

The relations with employees continue to be cordial and harmonious during the year under report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY:

The Company has in place a Prevention of Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (Act.) An Internal Compliance Committee (ICC) has been set up to redress the complaints received regarding sexual harassment. All employees are covered under this Policy. As on the date of this report, there were no complaints received by the ICC.

SAFETY, HEALTH AND ENVIRONMENT:

Safety, Occupational Health and Environment Protection continue to be accorded high priority.

ANNUAL RETURN:

As required by Section 92 of the Companies Act, 2013 and relevant rules, an Extract of Annual Return in MGT-7 is placed on the Company's website. You can find the same on www.theandhrasugars.com.

RELATED PARTY TRANSACTIONS:

There is no transaction with Related Party which requires disclosure under Section 134(3) (h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014.

SECRETARIAL AUDIT REPORT:

As required by Provisions of Companies Act, 2013, Secretarial Audit Report as provided by Nekkanti S R V V Satyanarayana & Co., Hyderabad, Company Secretaries in practice is annexured to this Report.

PARTICULARS OF EMPLOYEES:

Information in accordance with the provisions of the Companies Act, 2013, read with the relevant Rules made thereunder, regarding employees is annexed as Annexure "A" forming part of this Report.

RATIO OF REMUNERATION OF EACH DIRECTOR:

Details of ratio of Remuneration of each Director to the median employee's remuneration is enclosed.

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

Information pursuant to Section 134 of the Companies Act, 2013 read with relevant rules is given in Annexure "B" forming part of this Report.

FIXED DEPOSITS:

As required by the Companies Act, 2013 the details of Fixed Deposits as on 31.3.2023 is given hereunder.

TRANSFERS TO I.E.P.F:

During the year 21,422 no. of shares of 33 Shareholders have been transferred to I.E.P.F Authority. Unclaimed dividend amounting to Rs 8,29,017/- of 1,276 Shareholders for the year 2014-15 has been transferred to I.E.P.F Account.

CONSOLIDATED ACCOUNTS:

In accordance with the Accounting standards, consolidated financial statements of the Company and its Subsidiaries form part of the Report and Accounts. These consolidated statements have been prepared on the basis of Audited Results received from the Subsidiary Companies as approved by their respective Boards. The Accounts of the Subsidiary Companies for the year 2022-23 have not been attached to the Company's Accounts. However, Shareholders desirous of obtaining the Annual Accounts of the Subsidiaries may obtain them upon request. The Annual Report and the Accounts of the Subsidiary Companies will be kept for inspection at the Company's Registered Office as well as at the offices of our Subsidiary Companies.

SUBSIDIARIES AND ASSOCIATE: JOCIL LIMITED:

For the Financial Year ending 31.3.2023 your subsidiary Company, JOCIL Ltd., posted a profit of Rs.1274.28 lakhs (before taxation) against Rs. 957.85 lakhs (before taxation) last year. The Board of Directors of this Company has recommended a Dividend of Rs. 2.50/- per Share to Shareholders for the Financial Year 2022-23.

THE ANDHRA FARM CHEMICALS CORPORATION LIMITED:

The Company incurred a Loss of Rs.1,67,350/- as against the Loss of Rs.5,617/- during last year.

HINDUSTAN ALLIED CHEMICALS LIMITED:

Directors are on the look out for the suitable projects to be taken up. This Company during the year has earned a profit of Rs.52.76 lakhs (Before Tax) against a profit of Rs.57.08 Lakhs (Before Tax) last year.

THE ANDHRA PETROCHEMICALS LIMITED:

The Company achieved sales of Rs. 68298.16 lakhs against Rs. 96538.01 lakhs last year and earned profit (before Tax) of Rs. 2927.41 lakhs against Rs. 30107.98 lakhs last year. The Board of Directors of this Company has recommended a Dividend of Rs.1.50/- per Share to Shareholders for the Financial Year 2022-2023.

INTERNAL CONTROL SYSTEM:

Your Company conducts a periodical review of the financial and operating controls of the various Units. The Internal Control System of your Company is commensurate with its size and nature of business. The Board has also laid down a policy on Internal Financial Control as required by the provisions of the Companies Act, 2013. The same has been posted on Company's Website www.theandhrasugars.com

LISTING ON STOCK EXCHANGE:

Company's Equity Shares are listed on National Stock Exchange and Annual Listing Fee for the Financial Year 2022-23 has been paid.

ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the co-operation extended by the State & Central Government authorities, Banks, Farmers and all the concerned associated with the Company in its Business process. They also express their appreciation to the employees at all levels for the successful working of the Company.