The Directors have a great pleasure in presenting the 32nd Annual Report together with the Audited Standalone & Consolidated Financial Statements of your Company for the Financial Year ended March 31, 2024.

Financial Results

The Company's financial performance for the year ended March 31, 2024 is summarized below:

Performance of the Company Standalone

Your Company, during the year under review earned revenue of Rt37,343.45 Million, against ^ 32,086.75 Million over the previous year. The profit before Finance Cost, depreciation & amortization and tax was of ^.2,107.85 Million as against ^.1,463.56 Million in the previous year.

The Profit After Tax for the current year is R1910.38 Million    against    ^ 658.89    Million    in the

previous year.

Consolidated

Your Company,    during the year    under    review

earned revenue    of ^.    37,939.04    Million,    against

^ 32,406.54 million over the previous year. The profit before Finance Cost, depreciation & amortization, share of loss of an associate and joint venture and tax was of ^ 2,215.09 Million as against ^ 1,503.15 Million in the previous year.

The Profit After Tax from continuing operations for the current year is ^.1,065.49 Million against ^ 579.76 Million in the previous year.

Transfer to General Reserves

Your Directors do not propose to transfer any amount to general reserves for the financial year ended March 31, 2024.

Dividend

Your Directors have pleasure in recommending a dividend of 50 % i.e. ^.2.50/- per equity share of face value of ^ 5/- each for the financial year ended March 31, 2024 at their meeting held on May 29, 2024 amounting to ^. 231.99 Millions. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.

The Register of Members and Share Transfer Books will remain closed from Wednesday, August 14, 2024 to Wednesday, August 21, 2024 (both days inclusive) for the purpose of payment of dividend for the financial year

ended March 31, 2024. The Annual General Meeting is scheduled to be held on Wednesday, August 21, 2024. Dividend Distribution Policy

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), the Company has formulated and adopted a Dividend Distribution Policy with the objective of providing clarity to its stakeholders on the profit distribution strategies of the Company. During the year, the said Policy has been reviewed by the Board of Directors of the Company. The policy hosted on the website of the Company at https://www. heritagefoods.in/policy.

Share Capital

The Authorised Share Capital of the Company as on March 31, 2024 was ^500,000,000/- divided into 9,60,00,000 equity shares of ^5/- each and 20,00,000 preference shares of ^10/- each. The issued, subscribed and fully paid-up Equity Share Capital as on March 31, 2024 stood at ^46,39,80,000/- divided into 9,27,96,000 equity shares face value of ^5/- each. During the year under review, the Company has not issued any shares with differential voting rights, not granted any stock options and not issued any sweat equity share to its employee(s)/ director(s). As on March 31, 2024, none of the Directors of the Company holds any instruments convertible into equity shares of the Company. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise as on March 31, 2024.

Unclaimed Rights Equity Shares Suspense Account

During the year 2022-23 the Company has issued and made allotment of 4,63,98,000 equity shares of face value of ' 5 each (Issue Shares) for cash at a price of ' 5 per Equity Share (Right Issue Price), aggregating up to ' 23,19,90,000/- to the Eligible Equity Shareholders of the Company on rights basis (Rights Equity Shares) in the ratio of 1 (one) Rights Equity Share for every 1 (one) fully paid-up Equity Share (' 5/- face value) held by the Eligible Equity Shareholders on the record date.

The Company has opened demat account in the name of HERITAGE FOODS LIMITED for Rights Shares Unclaimed Suspense Account maintained with Stock Holding Corporation Of India Limited, Reg. Office: 301, Centre Point, Dr. Babasaheb Ambedkar Road, Parel, Mumbai -400012, Maharashtra, India vide DPID IN301330 and client ID 41280635.

Out of the total number of eligible shareholders, 334 shareholders who applied in the rights issue did not get the credit of shares due to their incorrect details provided in the rights issue application and all those shares were transferred to Heritage Foods Limited - Rights Shares unclaimed suspense account.

In accordance with the requirement of Clause F of Schedule V of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Company reports

the following details as of March 31, 2024 in respect of equity shares lying in the suspense account:

*Between April 01, 2024 and the date of this report 21 more shareholders holding 2,645 equity shares have approached the Company and those shares were transferred from the Unclaimed Suspense account. Hence as on the date of this report 21 shareholders holding 1,212 equity shares are lying in the Unclaimed rights equity share Suspense account.

The voting rights on the shares outstanding in the suspense account as on March 31, 2024 shall remain froze till the rightful owners of such shares claim the shares.

Reclassification of Promoters group:

During the year under review, The Board of Directors at their Meeting held on May 25, 2023, approved the re-classification for the below mentioned persons from “Promoter Group” category to “Public” category and the same was approved by the shareholders' on the 31st Annual General Meeting (Shareholders Meeting) held on August 22, 2023.

•    Mrs. Durga Ramakrishna N P

•    Mrs. Neelima N P

•    Mrs. Kathya N P

•    Mr. N P Ramakrishna

•    Mr. Sivasankara Prasad Alapati

Your Company had made an application for such reclassification to the Stock Exchanges where the Company's shares are Listed i.e., BSE Limited and National Stock Exchange of India Limited on August 28, 2023 and received the approval from BSE Limited, vide ref. no LIST/ COMP/BS/2395/2023-2024 dated December 12, 2023 and National Stock Exchange of India Limited, vide ref. no. NSE/LIST/329 dated December 12, 2023.

The below mentioned is the Promoter & Promoters Group shareholding pre and post reclassification with effect from December 12, 2023 pursuant to the above approval.

Deposits

Your Company has not accepted any deposits including deemed deposits covered under Chapter V of the Companies Act, 2013, i.e. within the meaning of Section 2(31) of the Companies Act, 2013 read with Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 and as such there are no such overdue deposits outstanding as on 31st March, 2024 Buy Back of shares

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

Particulars of Loans, Guarantees and Investments

Loans: During the year under review your Company has not given any loans to any persons or body corporates as envisaged under Section 186 of the Companies Act, 2013. Guarantees: The Company has given corporate guarantee as at March 31, 2024 of ^ 220 Million for the credit facilities availed by its joint venture Company namely Heritage Novandie Foods Private Limited (CIN: U74999TG2017PTC120860) (the outstanding as on March 31, 2024 was ^ 63.55 Million) from ICICI Bank Limited for long term loan and working capital facilities.

The guarantee facility extended to Heritage Nutrivet Limited was discontinued wef. March 29, 2024. Investments: During the year under review your Company has invested ^ 97.50 million in the equity shares of its Joint Venture namely Heritage Novandie Foods Private Limited.

Particulars of Contract or Arrangements made with Related Parties

The particulars of contracts or arrangements with related parties as per Section 188 of the Companies Act, 2013 and rules made thereof as amended from time to time and as per the Related Party Transaction (RPT) policy the Company during the financial year ended March 31, 2024 in prescribed Form AOC-2 is annexed to this Board's Report (Annexure-1). Further there are no materially significant related party transactions during the year under review with Promoters, Directors, Key Managerial Personnel's and their relatives, which may have potential conflict with interest of the company at large. The related party transactions were placed before the audit committee and also to the Board at their respective meetings for approval. All related party transactions entered during the year were in the ordinary course of business and at arm's length basis. Details of the related party transactions during the year are part of the financial statements forming part of this Annual Report.

Material changes and commitments affecting financial position between the end of the financial year and date of report

There are no material changes and commitments affecting financial position of the company, which occurred after the end of the financial year i.e., March 31, 2024.

Directors’ Responsibility Statement as required under Section 134 (3)(c) & (5) of the Companies Act, 2013.

The financial statements are prepared in accordance with the provision of Section 129 read with Schedule III of the Companies Act, 2013 and the rules made thereof, Ind-AS and Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except the sale proceeds received under REC Mechanism of the Renewable Energy. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (‘the Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). There are no material departures from prescribed accounting standards in the adoption of these standards.

In terms of the Section 134 (3)(c) & (5) of the Companies Act, 2013 the Board of Directors of the Company states that:

•    In the preparation of the annual accounts (Standalone & Consolidated) for the financial year 2023-24, the applicable accounting standards have been followed along with proper explanation relating to material departures.

•    They have 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 2023-24 and of the profit and loss of the Company for that period.

•    They 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 if any,

•    The annual accounts of the company have been prepared on a going concern basis.

•    They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

•    They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Variation in market capitalization

Variations in Net worth:

The Standalone Net worth of the Company for the Financial Year ended March 31, 2024 is ' 8,034.98 million as compared to ' 7,366.98 million for the previous Financial year ended March 31, 2023 and the consolidated Net worth of the Company for the Financial Year ended March 31, 2024 is ' 8,081.59 million as compared to ' 7,258.67 million for the previous Financial year ended March 31, 2023.

Management Discussion and Analysis

In terms of the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 as amended from time to time, the Management's Discussion and Analysis is provided in a separate section and forms an integral part of this Report.

Corporate Governance

Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization's brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders' expectations. It is imperative that your company's affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of the stakeholders.

In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter “Listing Regulations”) as amended from time to time, a Report on Corporate Governance along with Compliance Certificate issued by Statutory Auditors of the Company forms integral part of this Annual Report.

Compliance Management

The Company has built and adopted a compliance management tool as a part of the SAP. The application provides a facility to update statutory compliances from time to time by attaching the evidence of compliance. The tool also provides system-driven alerts to the respective personnel of the Company for complying with the applicable laws and regulations as per the due dates for compliance. The President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Company Secretary of the Company will present a certificate certifying the compliance of all the applicable laws, rules and regulations to the Board of Directors of the Company in the Board Meetings held for reviewing of the quarterly financial statements.

Business Review

Your Company has not changed nature of its business during the period under review. Your Company continues to report results under two divisions i.e. Dairy division and Renewable energy division, in operation across 12 States in India.

Dairy Business Overview

The Indian dairy industry currently represents one of the largest in the world and contributes to the economic growth of the country by providing livelihood and nutritional protection to the masses. It is a crucial component of the rapid and self-sustained development of the rural economy, as the Indian dairy industry provides a lucrative source of income to small farmers, marginal cattle farmers, and landless labourers. As per the research report by IMARC Group, the dairy industry in India size reached INR 16,792.1 Billion in 2023. The market is projected to reach INR 49,953.5 billion by 2032, exhibiting a growth rate (CAGR) of 13% during 2024-2032, propelled by technological innovation, enhanced retail and e-commerce platforms, and improved cold chain infrastructure, meeting rising consumer demand with a diversified and quality-focused product range.

The Indian dairy sector offers an opportunity for investors to tap into the rising discretionary consumption in the country. Private dairy companies are well-positioned for substantial growth, supported by key demand drivers and the ongoing shift towards a more organized industry. As consumer preferences evolve towards value-added dairy products, private players should gain. In the medium term, the anticipated decrease in inflationary pressures should drive earnings growth.

Long-term structural growth: India ranks as the top

producer and consumer of dairy products globally, contributing to over 25% of the total global dairy production. In the food landscape of India, dairy products are indispensable and are consumed in various forms, including direct consumption, in restaurants and as packaged foods. Indian households allocate nearly 45% of their food budget to dairy and packaged foods and this trend has been steadily increasing. The growing population, changing lifestyle patterns, increasing disposable incomes, and rising health awareness are the primary factors driving the growth of dairy consumption in India. Even though India is the largest consumer of dairy products, its per capita consumption is still low when compared to developed countries, indicating enormous potential for further growth. Thus, we believe Indian dairy industry presents an attractive opportunity for investors looking to capitalize on the country's growing discretionary consumption trend.

Structural industry shifts favouring private players: The

Indian dairy industry is currently witnessing significant structural changes, driven by key demand drivers, which should particularly benefit private players. One major trend is the formalization of the market, as the organized sector gains prominence over the unorganized sector, driven by consumerism, urbanization, and the preference for branded products. Another important trend is the increasing demand for value-added dairy products due to shifting dietary habits and evolving consumer lifestyles. This transformation presents opportunities for private

companies offering a diverse range of products and adapting quickly to changing consumer preferences. Lastly, industry consolidation is projected to strengthen the growth of private dairy player, placing them as competitive alternatives to larger cooperatives.

Industry coming out of a tough stretch: The Indian dairy industry has faced numerous challenges over the past three years. Initially, the sector encountered disruptions in demand due to the pandemic, which led to crashing of raw milk prices, making it unviable for the farmer producer. This resulted in shortages in milk supply in the years following the pandemic, that caused a significant rise in procurement prices of raw milk. This had a negative impact on the profitability of dairy players. However, the industry has come out of this crisis in the last few quarters, as the raw milk prices stabilised encouraging the dairy farmers to invest again in increasing their herd sizes. And dairy players, both private and cooperative have invested in improving breeds, farm and feed practices, which together have helped improve the yield and farm level production. It is expected that this period of stability will continue for some time to come.

Consequently, your Company anticipate that the combination of reduced inflationary pressures and strong demand will drive earnings growth in the dairy sector.

The attractiveness of Dairy industry

The Indian dairy industry is a promising avenue to capitalize on this growth trend. Following are the essential structural trends that underpin the optimistic stance on the dairy industry.

•    Growing demographic dividend. India's population is projected to steadily increase in the coming years. This shift in population dynamics is significant, as India's working-age population is on the rise for the next two decades. India's expanding demographic dividend offers immense market potential and ensures long-term growth prospects.

•    Rising income levels. India has seen a significant increase in per capita income, rising by over 80% in the last ten years to reach US$2.6K in 2023. The International Monetary Fund (IMF) predicts this number will reach around US$4K by 2028, a growth of over 50%. This rise in income levels is expected to result in the addition of around 140 million middle-income households and 21 million high-income households by 2030. Furthermore, the share of middle-income households is set to rise from 54% in 2018 to 78% in 2030. This growth in income levels will lead to higher disposable incomes and drive a rising consumer preference for premium and nutritious food products like milk and milk products.

•    Discretionary spends. India's promising income growth and favourable demographics should drive consumer spending in the future. The World

Economic Forum predicts that consumer spending in India will skyrocket from $1.5 trillion to nearly $6 trillion by 2030. The latest National Family Health Survey 2022 conducted in India highlights that households in the country allocate a significant portion of their budget towards the food segment. The survey also emphasizes a steady rise in discretionary spending within the Food segment over the past two decades, with a consistent growth in dairy products and packaged food products witnessing accelerated growth.

•    Urbanization. Urbanization is a key trend unfolding in India, driven by improved access to higher education, unremunerative agriculture, and infrastructure development. Although the urban population in India has been increasing steadily, just over one-third of the population currently resides in urban areas. As per Census Bureau, it is estimated that nearly 40% of India's population will reside in urban areas by 2030. This growing trend is particularly driving the demand for packaged milk products, including milk, curd, buttermilk, ghee, butter, ice cream, paneer etc.

•    Changing dietary patterns. The food consumption pattern of Indian households is undergoing a notable transformation due to increasing health awareness, especially in the aftermath of the pandemic. There is now a greater inclination towards consuming high-value and nutritious food items like milk, milk products, fruits, and vegetables, while staple cereals are becoming less prominent. The preference is now leaning towards high-value and nutritious food choices such as milk, milk products, fruits, and vegetables, with staple cereals taking a backseat. The preference for dairy products as an essential source of nutrients like proteins, vitamins, and minerals is continuously growing. This preference extends beyond conventional dairy items to include value-added products like flavoured yogurts, fortified

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Industry setup and structural shifts

Since 1997, India has consistently held the top position as the world's largest milk producer, contributing to more than a quarter of the global dairy output.. In the FY23, the country produced around 231 million tonnes of milk, clocking a growth rate of 6% CAGR over the past decade. A report by NITI Aayog predicts that milk production will reach approximately 300 million tonnes by 2030. Indian dairy industry primarily caters to the domestic market, with production and consumption centred within the country. It serves as a crucial pillar of the rural economy, contributing to employment and income generation for the rural population.

The dairy market in India was estimated to be worth Rs13 trillion in 2023 (as per IMARC). Over the past 15 years, the market has shown a steady growth rate of approximately 15% CAGR, and it is anticipated to achieve a market size of about Rs31 trillion by 2027 as per IMARC. The liquid milk segment accounts for approximately 61% of the overall dairy market in the country, with traditional value-added products making up 34% and emerging value-added products comprising the remaining 5%. It is projected that the liquid milk market is expected to experience a 9% CAGR over the next five years. Meanwhile, traditional value-added products such as paneer, ghee, ice-cream/ FD, khoa, curd, etc., are forecasted to grow at a 14% CAGR, and emerging value-added products like cheese, flavoured milk, lassi, buttermilk, whey, and organic milk are anticipated to grow at a rate exceeding 19% per annum.

The fragmented and unorganized Indian dairy industry is poised to change

The majority of markets in the Indian dairy industry are dominated by regional players. This is mainly due to the high consumption of liquid milk and the demand for dairy products with short shelf-life. Moreover, the limited profitability and feasibility of transporting liquid milk over long distances have also played a role. Furthermore, the establishment of trust with farmers and the development of a reliable procurement network have been significant

factors contributing to the dominance of regional players. Consequently, numerous companies have opted to concentrate on their local regions initially and then expand into other markets once they have established a solid foundation.

The Department of Animal Husbandry & Dairying (DAHD) predicted that the organized sector's share will grow to 54% by 2026. The rise in consumerism, urbanization, and the preference for branded packaged products is driving a noticeable shift towards the organized sector. Moreover, the increasing demand for packaged products is attributed to their superior hygiene, convenient storage, consistent quality, and widespread availability. Additionally, the influx of capital investments from cooperatives and private players will enable them to establish a strong presence and capture market share from the unorganized sector.

Co-ops dominant, private players gaining ground.

India's dairy sector has historically been dominated by state co-operatives However, since the implementation of industrial licensing reforms in 1991, private players have experienced impressive growth by investing in procurement, storage, and distribution networks. These private companies have made significant investments in the dairy industry, surpassing the combined capacity of both cooperative dairies and government-owned dairies over the past two decades. To stay competitive with cooperatives, private players offer attractive pricing, prompt payments, and work closely with farmers to boost cattle productivity. Their ability to swiftly adjust to industry trends, consistent investment in technology and infrastructure, and introduction of innovative products based on consumer preferences will likely ensure their outperformance over cooperatives in the future.

Consolidation is the way forward

The Indian dairy industry is characterized by a high level of fragmentation, with numerous regional players dominating most markets due to the limited shelf life of dairy products. Only a handful of companies have succeeded in creating a nationwide brand and procurement network. Building a robust milk procurement network and establishing a brand in a new region is a gradual process and takes time organically. Consequently, many regional players have opted for inorganic growth strategies to expand beyond their traditional markets. It is anticipated that this trend will continue to gain momentum in the future, as dairy companies looking to expand nationally seek to acquire smaller regional players to leverage their procurement and distribution networks.

As consumption increases and consumer awareness increases and consumers start demanding for better quality products suiting their specific nutritional needs, this will change rapidly, leading to consolidation in the industry. We are witnessing this across markets, where marginal small players are disappearing to the benefit of high-quality players like your company.

Beyond milk to value-added products

The evolving dietary patterns and changing consumer lifestyles have resulted in a rise in demand for value-added dairy products like curd, ghee, cheese, paneer, etc., surpassing the demand for liquid milk. Consumers are now more inclined towards purchasing these products rather than making them at home, which is driving the growth of value-added dairy products. Indian dairy companies are also adapting to this trend by introducing innovative products across different price ranges to cater to the diverse tastes and preferences of consumers. With improved packaging, longer shelf-life, and higher product quality, the penetration of value-added dairy products is expected to increase, supporting long-term growth. This trend is likely to continue in the future, with value-added dairy products expected to outpace the growth of the liquid milk category.

The company’s operations and evolution in recent years:

Your Company was founded with a vision of ‘Delighting every home with fresh and healthy products and empowering the farmer.' Your company has made significant progress on both these pillars in this financial year. Your Company is pioneer in adopting the critical success factors as stated above .

Your Company has grown into a formidable dairy company in India and has second largest private milk procurement network in South India. Over the past three decades, the company grown its daily milk procurement volumes at 15% CAGR to 1.6 million liters in 2024. Today, HERITAGE has established a robust network of 300,000 plus dairy farmers across 9 states in India and boasts one of the most extensive regional footprints among publicly dairy companies in India, and its products are available in 12 states.

The primary focus of the company lies in the B2C dairy business, where it operates under the brand name ‘Heritage'. Over time, the company has diversified its range of milk and value-added products (VAP), which include curd, ice cream, frozen dessert, paneer, buttermilk, flavoured milk, lassi, milk shakes, and sweets, among others.

Your company today collects milk from nearly 300,000 farmers, spread across more than 10,500 villages in 9 states. In this financial year, we have opened 1457 new village level milk procurement centres, which brought in nearly 3 lakh plus litres of additional raw milk daily by the end of quarter 4. For the last 3 decades, the company has strengthened its farmer- partner relations on 3 basic principles.

(i) Prompt and timely payment: Your company holds the principle of paying farmers for the milk collected promptly twice or thrice in a month (depending on the region). This means faster, but more importantly

guaranteed cashflow for our farmers. This year as well, as for the last 30+ years, your company has not missed even a single pay day notwithstanding the bank holidays and other challenges.

(ii)    Transparency and accurate measurement: The

company has a very transparent mechanism to ensure that the measurement of solids in the milk collected is absolutely accurate and is openly communicated to the farmers, so that our farm partners know how much they have earned on any given day. Once a farmer starts supplying milk to Heritage, they realize the gains they make because of this, which creates stickiness.

(iii)    Fair pricing: The company remunerates the farmer for the milk supplied based on measurement of solids (fat and SNF) delivered. The prices are set in a very fair manner and is competitive compared to any other option the farmer has in the village. This helps us attract farmers in every village we enter.

While these principles help your company go a long way in empowering its farmers, the company also undertakes several other activities which go a long way in enhancing farmer income and empowering them financially. Some of these initiatives are

•    Dissemination of animal care and farm management information through informative videos on VET+ mobile application, which has over 100,000 downloads and monthly active users.

•    Conducting veterinary camps throughout the year, through 17 veterinary doctors and many vet assistants

•    Supply of high quality cattle feed and fodder seeds

•    Training offarmers for better feed and fodder practices

•    Facilitating loans for the purchase of cattle through commercial banks/ NBFCs

•    Facilitating Group personal accident coverage for farmers and insurance for the cattle

Your company has farmer network about 3,00,000 dairy farmers across 9 major milk producing States namely, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Rajasthan, Punjab, Uttar Pradesh and Odisha. The company added several chilling plants through the year, to increase its procurement network and today operates 201 chilling centres/ bulk coolers and procured an average of 1.54 Million litres of milk per day in FY23-24, which is a growth of 23% over previous year. With this, the chilling capacity of the company has grown to 2.4 million litres per day. Your company also operates 18 processing plants with installed milk processing capacity of 2.7 million litres per day.

During the year, the contribution of revenues from milk dropped below 60% as the company's revenues from VAP increased to 29.6%. The contribution of ghee and butter which is classified as fat products stood at 8.2%. Curd is the biggest Value added product in our portfolio contributing to about 70% of VAP revenues. Through the year, your company launched over a dozen new products, across many product clusters and added several new customers. We expanded our presence in the emerging channels like Quick commerce, with the addition of several new customers, alongside deepening our presence in the general trade segments through 250+ Heritage Happiness Points, which are franchisee operated stores-cum-neighbourhood distribution centres.

Renewable Energy Division:

Your Company strongly recognizes the responsibility towards protecting the environment. As a forward-looking enterprise, it is strongly committed for extending the Green' footprint.

Your Company is taking a lot of initiatives for conservation of energy. Renewable energy was the major focus area in the last ten years. Now your Company has 11.70 MW of solar and wind power for captive consumption. Your Company is continuously investing in latest technologies and efficiencies to conserve energy.

Renewable Energy Division ofyour Company had achieved the turnover of 90.29 Million during the year under review.

Listing & Custodian Fees

The Company's equity shares are listed on the following Stock Exchanges:

(i)    BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001, Maharashtra, India; and

(ii)    National Stock Exchange of India Limited, Exchange Plaza, Floor 5, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra, India.

The Company has paid the Annual Listing Fees to the said Stock Exchanges for the Financial Year 2023-24. The annual custodian fees have also been paid to the depositories before the due date.

Names of Companies, which have become or ceased to be Company’s Subsidiaries, Joint Ventures or Associate Companies during the year

During the year under review, no Company has become or ceased to be Company's Subsidiary, Joint Venture or Associate Company.

Subsidiary / Associate Companies

Your Company as on March 31, 2024 is having following subsidiary / associate / joint venture Companies:

Heritage Nutrivet Limited (CIN: U15400TG2008PLC062054)

A wholly owned Subsidiary Company operating with Animal Nutrition covering over 0.30 million farmers spread across six states viz., Andhra Pradesh, Telangana, Tamil Nadu, Karnataka, Odisha and Maharastra. Product quality is pivotal in our endeavour towards “HEALTHY MILCH ANIMAL - HAPPY FARMER”

It is also proficient in providing cost-effective solutions for the farmers facing ground reality. The products of the Heritage Nutrivet Limited are innovatively engineered to serve varieties of needs of the animals. They segregate the animal feed into: Dairy Power+, Dairy Milk Rich, Dairy Supreme, Milk Joy +, Buffalo Feed, Dairy Bypass, Bypass +, Milk Gold etc.

Skil Raigam Power (India) Limited (CIN:U40102TG2009PLC063671)

An associate Company as per the provisions of Section 2(6) of the Companies Act, 2013, which has been declared as Dormant Company as per Section 455(2) of Companies Act, 2013 vide SRN: T42936765 dated September 22, 2021, the Company planned to set up hydro power plant at Raigam, in Arunachal Pradesh. Your Company is having 43.33% of shareholding in this Company.

Heritage Novandie Foods Private Limited (CIN: U74999TG2017PTC120860)

A 50:50 Joint Venture Company between Heritage Foods Limited (HFL), Hyderabad, India and Novandie, France with an object to manufacture and market various Yoghurts and other dairy products in India. The Company had started the commercial production on February 16, 2021 and launched Yoghurt brand ‘Mamie Yova' in India. The Company is hoping to woo Indian consumers with its fruit-based yogurt and aims to have a strong presence across 8-10 key cities in the next two years. Due to COVID out-break the Company couldn't make the market penetration in large scale, however during the coming financial year the company is expected to make more penetration in the market, to maximise revenue and to minimise operation losses.

The salient features of financial statements of Subsidiary, Associate and Joint Venture companies of the company are given in Form AOC-1 which is forming part of the standalone financial statement. The gist of financial performance of the Subsidiary/Associate/Joint Venture companies is as follows.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its Subsidiary, Associate and Joint Venture are available on the website of your Company www.heritagefoods.in.

Quality

Your Company continues the journey of delivering value to its consumers/customers through significant investments in quality assurance programs.

Your Company adheres to international quality standard certifications such as ISO 22000:2018 (Food Safety Management System), ISO 9001:2015 (Quality Management System), ISO 45001:2018 (Occupational Health & Safety), ISO 14001:2015 (Environmental Management System), ISO 50001:2018 (Energy Management System) and HALAL Certification by JUHF. Your Company has also acquired AgMark, BIS, EIA and FSSC 22000 v 5.1 Certificates.

The Quality department of your company plays a crucial role in implementing and driving change management initiatives that aim to improve quality and increase productivity across the organization. By continuously updating its practices and embracing new technologies, the department helps to streamline processes, reduce waste, and enhance overall performance. Through its efforts, the Quality department is instrumental in driving the company's success and achieving its goals.

Branding

“Heritage” as a brand reflects your company's identity, core values and belief system. Your company is actively working on diversifying the products portfolio in line with the current consumer trends and mission of bringing health, nutrition & happiness to every home. During the year under review the brand came up with the biggest integrated marketing campaign for curd under the theme-“Heritage curd makes your Day”, with 360 degree touch points covering TV, Digital and Out of Home. In the coming years, your company shall further develop

more integrated marketing campaigns based on strong Consumer insights that will help to connect and build brand preference.

Awards & Recognitions

During the financial year 2023-24 your Company has received the following awards and recognitions.

•    Prestigious National Energy Conservation Awards (NECA - 2023) in Dairy Sector for the year 2023

Your company has won the 2nd prize in Dairy Sector for the year 2023 on December 14, 2023 at all India level for the effective energy conservation process/ methods for its Dairy Plant, situated at: Bayyavaram (V), Kasimakota (M), Visakhapatnam District, Andhra Pradesh-531031

•    Prestigious SKOCH Award under the following two categories in the 97th SKOCH Summit held at India Habitat Center, New Delhi on 29th March 2024

F Platinum Award in the Digital Transformation for “Heritage Vet+” Project

F    CIO of the Year for the Agri Sector

•    Own the best packaging & best video campaign at IAMAI Awards for the Buffalo Milk.

•    The Company has been awarded "Best Corporate-cash management services" by HDFC Bank in Dairy sector for quick transformation from cash collections to 100% digital mode.

Human Resources and Industrial Relations

Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Your company ensures that it provides a harmonious and cordial working environment to all its employees. To ensure good human resources management, your Company focused on all aspects of the employee lifecycle. This provides a holistic experience for the employee as well. During their tenure at the Company, employees are motivated through various skill-

development programs, engagement and volunteering programs. Your company has put in continued efforts in building capabilities of Human Resources with adoption of specific and targeted interventions. Your Company has a structured induction process at all locations and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas are in place for all employees.

Your Company is committed to nurture, enhance and retain talent through superior Learning & Organizational Development.

The total strength of your Company employees as on March 31, 2024 was 3,225.

Investor Relationship

Investor relations is a critical function within a company that focuses on building and maintaining relationships with its investors and stakeholders. It serves as the bridge between the company's management team, its shareholders, analysts, and the broader investment community. The primary goal of investor relations is to effectively communicate the company's financial performance, strategic direction, and key developments to the investment community.

Investor relations professionals play a vital role in managing the flow of information between the company and its investors. They are responsible for disseminating accurate and timely information, such as financial reports, earnings releases, and regulatory filings, to ensure transparency and compliance. These professionals also organize and participate in investor conferences, roadshows, and earnings calls, where they provide updates on the company's performance and address questions and concerns from investors.

Another crucial aspect of investor relations is building and maintaining relationships with shareholders and analysts. Investor relations teams proactively engage with institutional investors, retail shareholders, and sell-side/ buy-side analysts, providing them with insights into the company's operations, industry trends, and financial outlook. These interactions help foster trust, credibility, and long-term relationships, which are essential for attracting and retaining investors.

In addition to communication and relationship - building, investor relations professionals also monitor and analyze market trends, investor sentiment, and competitor activities. They assess the impact of market developments on the company's valuation and help management understand and respond to changes in the investment landscape. By staying abreast of market dynamics, investor relations teams can effectively advise the company's leadership on investor concerns, expectations, and potential risks.

Overall, investor relations is a critical function that helps companies establish and maintain productive

Introduction of various initiatives using Data Science such as grading of MCCs & Representatives and Forecasting of SMP Price - have helped the Organisation in taking data driven decisions. BI Dashboards have been deployed covering all major functions such as; Sales, Procurement, Finance, Production, Purchase & Stores and Human Resource.

Heritage CLapp (Customer Live Application) & DMS (Distributor Management System) have given an edge in terms of streamlining the primary and secondary sales process from Distributor, Agent level up to the counter sales level in an authentic manner.

Vet+ app continued to widen its user base and the range of services helping the Farmers with hassle free veterinary services and eventually enhancing their income.

All the IT related initiatives combined have helped the organisation in being consumer centric and farmer friendly while making Heritage as the best place to work with for its employees.

As part of Digital Transformation for business operations your Company has migrated its IT infrastructure to AWS cloud using Well Architecture Review Framework which enhances scalability, reliability, and security w.e.f. November 1, 2023. as per below table. This transition reduces operational costs, improves system performance and provides access to advanced services like machine learning and big data analytics, driving greater business agility and innovation.

By leveraging the power of analytics and insights generated your Company is able to unlock business opportunities in Sales, Milk procurement and Planning areas.

Your Company also streamlined Its customer payment process by moving to 100% digital payments and also automated key activities in Procure to Pay, Order to Cash and Quality management processes.

Cyber Security

The Company has established requisite technologies, processes and practices designed to protect networks, computers, programs and data from external attack, damage or unauthorized access. The Company is conducting training programs for its employees at regular intervals to educate the employees on safe usage of the Company's networks, digital devices and data to prevent any data breaches involving unauthorized access or damage to the Company's data. The Information Technology Department of the Company is in a constant process of taking feedback from the employees and updating the cyber security protocols.

The Risk Management Committee and the Board of Directors are reviewing the cyber security risks and mitigation measures from time to time.

Board Diversity

Board diversity offers several advantages. Here are some of the key benefits of having diverse boards:

Enhanced decision-making: Board diversity brings together individuals from different backgrounds, experiences, and perspectives. This diversity of thought and expertise can lead to more robust and well-rounded decision-making processes. By considering a wider range of viewpoints, boards can avoid groupthink and make more informed and innovative choices.

Improved corporate governance: Diverse boards can contribute to better corporate governance practices. When a board comprises individuals with diverse skills, knowledge, and experiences, it ensures a more comprehensive oversight of the company's activities. This can help in addressing conflicts of interest, promoting transparency, and ensuring accountability.

Increased creativity and innovation: Diversity stimulates creativity and innovation within organizations. By incorporating diverse perspectives, boards can foster a culture of openness, collaboration, and inclusivity. Different viewpoints can challenge existing norms, encourage fresh ideas, and lead to more innovative solutions and strategies.

Enhanced problem-solving: Diverse boards tend to be more effective in addressing complex problems. The varied backgrounds and experiences of board members enable them to approach challenges from multiple angles. This diversity of perspectives can result in more effective problem-solving and better outcomes for the organization.

Better understanding of customers and markets:

India is a diverse country with a wide range of cultures, languages, and consumer preferences. Having diverse boards can provide valuable insights into the diverse needs and preferences of customers in different regions and segments of the market. This understanding can help companies tailor their products, services, and marketing strategies to effectively target and serve diverse customer groups.

Improved reputation and stakeholder trust: Companies with diverse boards often enjoy a positive reputation for being inclusive and socially responsible. Such companies are perceived as more attuned to societal values and needs. Board diversity can enhance the company's brand image, attract diverse talent, and build trust with stakeholders, including investors, customers, and employees.

Mitigation of biases: Diverse boards can help mitigate unconscious biases and promote fairness and equity. By ensuring representation from different genders, ethnicities, age groups, and backgrounds, boards can counterbalance any inherent biases and ensure a more equitable and inclusive decision-making process.

In summary, board diversity offers numerous advantages, including improved decision-making, enhanced corporate governance, increased creativity and innovation, better problem solving, understanding of diverse markets, improved reputation, and the mitigation of biases. These benefits contribute to the long-term success and sustainability of organizations in the Indian business landscape. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Policy is available in the Company website, ie www.heritagefoods.in>Investor>policy.

Meetings of the Board

The Board met five (5) times during the financial year 2023-24, the details of which are given in the Corporate Governance Report forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Policy on Director’s Appointment and Remuneration

The current policy is to have an appropriate mix of Executive and Non-executive & Independent and Women Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2024, the Board consists of 7 members, 2 of them are Executive/Wholetime directors, 1 is Non-Executive Director, 1 is Non-Executive Independent Woman Director and 3 are Non-Executive Independent Directors. The Board periodically evaluates the need for change in its composition and size.

The policy of your Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Section 178(3) of the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 was adopted by the Board. It is affirmed that the remuneration paid to the Director(s) is as per the terms

laid out in the nomination and remuneration policy of the Company.

Directors and Officers insurance (‘D&O insurance’)

Your company has taken Directors and Officers insurance policy (‘D&O insurance') for all its Directors and members of the Senior Management as per Regulation 25(10) of SEBI (LODR), Regulations, 2015.

Declaration from Directors

Your Company has received necessary declaration from all Directors stating that they are not debarred or disqualified from being appointed or continuing as Directors of companies as per the Securities and Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs or any such other Statutory Authority.

Declaration by Independent Directors

Your Company has received necessary declaration from each independent director stating that they met the criteria prescribed for independence under Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the Board has confirmed its veracity and taken the same on record.

Board Evaluation

As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time the Nomination and Remuneration Committee laid down criteria for performance evaluation of individual director(s), the board and its committee(s). Accordingly, an annual evaluation was carried out for the Board's performance, its Committees and individual director(s).

The Board performance evaluation is carried out through a structured questionnaire which provides a clear and valuable feedback for Board effectiveness and highlighting areas for further development.

The following are some of the broad issues that are considered in performance evaluation questionnaire

•    Evaluating the board member's understanding of the organization's mission, vision, and strategic goals, as well as their ability to provide strategic guidance and direction.

•    Ability to act on a fully informed basis, in good faith, with due diligence and in the best interest of the company and the stakeholders.

•    Optimum combination of knowledge, skill, experience and diversity on the Board as well as its Committees.

•    Relationships and effective communication among the Board members.

•    Effectiveness of individual non-executive and executive directors and Committees of Board.

•    Quality of the discussions, general information provided on the company and its performance, papers and presentations to the Board.

•    Risk management as well as processes for identifying and reviewing risks.

•    Well- defined mandate and    terms of

reference of Committee.

•    Attendance at Board as well as Committee Meetings

•    Procurement of Information, preparation for Board Meetings and value of contribution at meetings

•    Relationships with fellow Board members, the company secretary and senior management and mutual trust and respect they stimulated within the Board.

•    Keeping update with the latest developments in the areas of governance and financial reporting

•    Willingness to devote time and effort to understand the company and its business

•    Providing necessary guidance using their knowledge and experience in development of corporate strategy, major plans of action, risk policy, and setting performance objectives.

•    Independence exercised in taking decisions, listening to views of others and maintaining their views with resolute attitude

•    Ability in assisting the Company in implementing the best corporate governance practices.

•    Capability in exercising independent judgement to tasks where there is potential conflict of interest

•    Commitment in fulfilling the director's obligations fiduciary responsibilities.

•    Providing an overall assessment of the board member's contribution to the effectiveness of the board in fulfilling its governance responsibilities and advancing the organization's mission and objectives.

The Board of Directors received all evaluations from each DirectorincludingBoard asawhole and itscommitteebased on the above criteria, discussed various points and all points are satisfactory, no further action is required. There were no actions pending from the previous year observations. The detailed format of Board evaluation is available in the website of the Company i.e. https://www.heritagefoods.in/ uploads/investors/pdf/15870145475Roard & Director Evaluation Framework.pdf

Familiarisation programmes imparted to Independent Directors

Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of your Company, the Executive Directors/Senior Managerial

Personnel make presentations to the inductees about the Company's strategy, operations, product and service offerings, markets, organization structure, quality and risk management etc.

Meeting of Independent Directors

A separate meeting of the Independent Directors was held on May 25, 2023, inter-alia, to discuss evaluation of the performance of Non- Independent Directors, the Board as a whole, evaluation of the performance of the Chairperson, taking into account the views of the Executive and Non-Executive Directors and the evaluation of the quality, content and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

The Independent Directors expressed satisfaction with the overall performance of the Directors and the Board as a whole.

Registration of Independent Directors in Independent Directors Databank:

All the Independent Directors of your Company have been registered and are members of Independent Directors Databank maintained by the Indian Institute of Corporate Affairs (IICA).

Online Proficiency Self-Assessment Test

All Independent Directors of the Company have passed the Online Proficiency Self-Assessment Test conducted by Indian Institute of Corporate Affair (IICA).

Confirmation and Opinion of the Board on Independent Directors.

All the Independent Directors of the Company have given their respective declaration / disclosures under Section 149(7) of the Companies Act, 2013 (“the Act”) and Regulation 25(8) of the Listing Regulations and have confirmed that they fulfill the independence criteria as specified under section 149(6) of the Act and Regulation 16 of the Listing Regulations and have also confirmed that they are not aware of any circumstance or situation, which exist 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. Further, the Board after taking these declarations/disclosures on record and acknowledging the veracity of the same, concluded that the Independent Directors are persons of integrity and possess the relevant expertise and experience to qualify as Independent Directors of the Company and are Independent of the Management.

Code of Conduct

Board of Directors have adopted and oversee the administration of the Company's Code of Business Conduct and Ethics (the ‘Code of Conduct'), which applies to all Directors, Officers and Employees of Heritage Foods Limited and its subsidiaries. The Code of Conduct reflects the Company's commitment to do business with integrity and in full compliance with the law and provides a general

roadmap for all the Directors, Officers and Employees to follow as they perform their day-to-day responsibilities with the highest ethical standards.

The Code of Conduct also ensures that all members of company perform their duties in compliance with applicable laws and in a manner that is respectful of each other and the company's relationships with its customers, suppliers and shareholders, as well as the communities and regulatory bodies where the Company does business.

Appointment/Re-Appointment

During the year under review, Mr. Angara Venkata Girijakumar (DIN: 02921377) (herein after called as A. V. Girijakumar) has been appointed as a Non-Executive Independent Director of the Company w.e.f. June 01, 2023, for a period of 5 consecutive years, the said appointment was approved by shareholders at the 31st Annual General Meeting of the Company held on August 22, 2023.

Mr. A. V. Girijakumar (DIN: 02921377) has been appointed as a Chairperson of the Company, in accordance with applicable provisions of the Companies Act, 2013, SEBI LODR, Secretarial Standard-1 & 2 and Articles of Association of the Company, with effect from October 18, 2023 till decided otherwise by the Board subject to a maximum period up to 31st May 2028 (being the end of his first term of 5 years).

The approval of members through special resolution was taken on March 14, 2024, for the re-appointment of Mrs. Aparna Surabhi (DIN: 01641633) as Non-Executive Independent Woman Director of the Company for

second and final term with effect from April 1, 2024, to January 29, 2029.

The approval of members through special resolution was taken on March 14, 2024, for the re-appointment of Mrs. N. Bhuvaneswari (DIN: 00003741) as Whole-time Director designated as Vice-Chairperson and Managing Director (VC&MD) of the Company for a further period of 5 years commencing from April 1, 2024, to March 31, 2029.

The approval of members through special resolution was taken on March 14, 2024, for the re-appointment of Mrs. N. Brahmani (DIN: 02338940) as Whole-time Director designated as Executive Director of the Company for a further period of 5 years commencing from April 1, 2024 to March 31, 2029.

Retirements and Resignations

During the year under review, Mr. N Sri Vishnu Raju (DIN:00025063) ceased to be the Non-Executive Independent Director of the Company upon his completion of second and final term of five years wef. the closing business hour on October 21, 2023.

In terms of the provisions of Section 152 of the Companies Act, 2013 and rules made thereunder, Dr. V. Nagaraja Naidu (DIN:00003730) Non-Executive Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and does not offer himself for reappointment. He shall ceased to be director wef. August 21, 2024 and the Board proposes that the vacancy caused by his retirement be not filled-up now.

Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following Committees constituted by the Board function according to their respective roles and defined scope:

a) Audit Committee

b    Nomination and Remuneration Committee

c)    Corporate Social Responsibility Committee

d)    Stakeholders' Relationship Committee

e)    Risk Management Committee

f)    Management Committee

g)    Rights Issue Committee (Dissolved with effect from October 18, 2023)

During the Year under review, upon cession of Mr. N Sri Vishnu Raju (DIN:00025063) Non-Executive Independent Director and upon induction of Mr. A. V. Girijakumar as Non-Executive Independent Director the Board members reconstituted the Committees of the Board.

Insurance

All properties and insurable interests of the Company have been fully insured. Your Company also insured all its employees and contract labour working across the Company. The Company has also insured its farmers enrolled with Company.

Remuneration of Directors, Key Managerial Personnel and Senior Management

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with

the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 of the Listing Regulations.

The information required under Section 197 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of the Company is set out in the Annexure-2 [A&B] to this report.

Auditors’ & Auditor’s Report Statutory Auditor:

As per Section 139 of the Companies Act, 2013 (‘the Act'), read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at their 30th Annual General Meeting held in the year 2022, approved the appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants (FRN 001076N/N500013), as the Statutory Auditors of the Company for a term of 5 years i.e. from the conclusion of 30th Annual General Meeting till the conclusion of ensuing 35th Annual General Meeting of the Company.

The Audit reports dated May 29, 2024 (Standalone UDIN: 24207660BKERHW5646) (Consolidated UDIN: 24207660BKERHY1625) issued by M/s. Walker Chandiok & Co. LLP, Chartered Accountants, Statutory Auditors on the Company's standalone and consolidated financial statements for the financial year ended 2023-24 is part of the Annual Report.

There has been no qualification, reservation or adverse remark in their Report.

Cost Auditor / Records

As your Company is dealing with Skimmed Milk Powder and Renewable energy for captive consumption, which require to maintain the cost records. Your Company has maintained all the required records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and the appointment of Cost Auditor is not applicable for your Company.

Secretarial Auditors and Secretarial Standards

The Secretarial Audit was carried out by Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Hyderabad - 500094, Telangana for the financial year 2023-24. The report issued by the secretarial auditor dated May 07, 2024 (UDIN: F003738F000324245) is annexed in Annexure-3 and forms integral part of the Board's Report. There has been no qualification, reservation or adverse remark in their Report.

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board of Directors appointed Mr. A Ravi Shankar, (M No: FCS- 5335, CP No: 4318), Partner of M/s. Ravi & Subramanyam Company Secretaries Hyderabad , Telangana as the Secretarial Auditors of the Company for the financial year 2024-25.

In terms of Regulation 24(A) of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 as amended from time to time, the Company has obtained the Secretarial Compliance certificate from Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No: 1796, M.No.3738), Hyderabad -500094, Telangana is annexed in Annexure-3(i) and forms part of the Annual Report and the same was also

intimated to the Stock Exchanges where the shares of the Company are listed.

Pursuant to Regulation 34(3) and Schedule V Para C clause (10) (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Company has obtained a certifi cate from Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Hyderabad - 500094, Telangana is annexed in Annexure-3(ii) and forms part of the Annual Report and the same was also intimated to the Stock Exchanges where the shares of the Company are listed.

Your Company has obtained a secretarial Audit Report of its wholly owned subsidiary company namely Heritage Nutrivet Limited (CIN:U15400TG2008PLC062054) from Mrs. Khusboo Laxmi Bhagat, Partner of M/s. KLB & Associates, Practicing Company Secretary (CP No:14703, M.No.9376), Hyderabad- 500016, Telangana is annexed in Annexure- 3(iii) and forms part of the Annual Report.

Your Company is in compliance with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India, New Delhi for the financial year ended March 31, 2024.

Internal Auditors

The Company has appointed external firms of Chartered Accountants across India as internal auditors to conduct internal audit and to review internal controls and operating systems and procedures as per the scope of the audit. The Internal Audit Reports of the company are reviewed by the Audit Committee on monthly basis. The Internal Auditors send the quarterly audit observations to the Company and the same were presented quarterly by the lead internal auditor of the Company to the Audit Committee. The Audit Committee along with Statutory Auditors and the management of the Company meets all Internal Auditors of the Company once in a year and review the internal controls and its adequacy. The Board of Directors on recommendation of the Audit Committee appoints/re-appoints the Internal Auditors every year in compliance with Section 138 of the Act read with the Companies (Accounts) Rules, 2014. List of Internal Auditors is provided in the corporate information section in the Annual Report.

Internal Audit & Control Systems

Internal audit and control systems play a crucial role in ensuring the efficient and effective operation of organizations across various sectors. Internal audit refers to the independent and objective examination of an organization's activities, processes, and controls to assess their adequacy, reliability, and compliance with relevant laws, regulations, and internal policies. The primary objective of internal audit is to provide assurance to management and stakeholders that risks are identified, managed, and mitigated appropriately.

Internal audit encompasses a wide range of activities, including evaluating the effectiveness of internal controls, identifying areas of improvement, assessing operational efficiency, detecting fraud and irregularities, and ensuring compliance with legal and regulatory requirements. By conducting regular audits, internal auditors help organizations identify potential weaknesses in their systems and processes, allowing management to take proactive measures to address them.

Control systems, on the other hand, refer to the policies, procedures, and practices put in place by management to safeguard assets, ensure accurate financial reporting, and promote operational efficiency. These control systems aim to mitigate risks and provide reasonable assurance that the organization's objectives are achieved.

The internal audit function is responsible for evaluating the design and effectiveness of these control systems. Internal auditors assess whether the controls are properly designed to mitigate risks and whether they are operating effectively in practice. They conduct tests and reviews to identify control gaps, weaknesses, or deviations from established policies and procedures. Based on their findings, they provide recommendations to management for enhancing controls and improving processes, thus helping the organization operate in a more efficient and risk-aware manner.

Effective internal audit and control systems contribute to better governance, risk management, and internal controls within an organization. They provide management and stakeholders with confidence that risks are managed appropriately, financial information is reliable, and operations are conducted with integrity. By continuously monitoring and evaluating controls, internal audit helps organizations stay ahead of emerging risks, adapt to changing business environments, and enhance overall performance and accountability.

Your Company has an Audit Committee consisting of Four Non-Executive Independent Directors and one Non-Executive Director. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control system and suggests improvements if any for strengthening them. Your Company has a robust Management Information System which is an integral part of the control mechanism.

Significant Material Orders Passed by the Regulators

There were no significant material orders passed by any Regulators/Courts that would impact the going concern status of the Company and its future operations.

Your Company has complied with all the Acts, Rules, Regulations and Guidelines issued/prescribed by the

Securities Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs and other statutory authorities.

Annual Return

The Annual Return as on March 31, 2024 as required under Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, will be hosted on the Company's website (https:// www.heritagefoods.in/annualreturn)

Internal Financial Controls (IFC) and its adequacy

Your Company has adequate Internal Financial Controls as per Section 134(5)(e) of Companies Act, 2013, that commensurate with the size of the business and nature of its operations, designed to provide reasonable assurance with regard to the accuracy and completeness of the accounting records and timely preparation and provision of reliable financial statements.

The Board has inter alia reviewed the adequacy and effectiveness of the Company's internal financial controls relating to its financial statements.

Your Company has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of financial information.

During the year, such controls were tested and no reportable material weakness in the design or operation was observed by the consultant namely, M/s. Kapasi Bangad & Co., appointed by the Board of Directors of the Company, Hyderabad appointed by the Board of Directors of the company.

During the year no fraud by the Company or with the Company by its officers or employees has been noticed / reported.

Declaration as per Section 134(3)(ca) of the Companies Act, 2013

During the year, the auditors have not reported any instances of frauds committed by or against the Company by its Directors/Officers/ Employees to the Audit Committee or Board under section 143(12) of the Companies Act, 2013 and rules made thereof. Therefore no detail is required to be disclosed under Section 134 (3) (ca) of the Act.

CEO & CFO Certification

The Vice Chairperson & Managing Director, Chief Executive Officer and Chief Financial Officer of the Company have given annual certification on financial reporting and internal controls to the Board in terms of Regulation 17(8) of the SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015. Vice Chairperson & Managing Director, Chief Executive Officer and Chief Financial Officer also give

quarterly certification on financial results while placing the financial results before the Board in terms of Regulation 33(2) (a) of the SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015. The annual certificates given by the Vice-Chairperson & Managing Director, Chief Executive Officer and Chief Financial Officer forms part of this Annual Report.

Corporate Social Responsibility (CSR)

Your Company has made Corporate Social Responsibility (CSR) an integral part of its ethos and culture. Your company has constituted a Corporate Social Responsibility Committee (“CSR Committee”) in accordance with Section 135 of the Companies Act, 2013. A robust system of reporting and monitoring has been put in place to ensure effective implementation of planned CSR initiatives.

The CSR activities / projects as per the provisions of the Companies Act, 2013 and rules made thereof, is undertaken directly by the Company or through a registered trust or a registered society. During the Financial Year 2023-24 the CSR Committee of the Board evaluated various options to implement the CSR activities and decided to contribute the mandated CSR amount to the following implementing Agency:

NTR Memorial Trust

NTR Memorial Trust is operating since 1997 towards the promoting and preventive of health care of the needy groups, meeting the educational needs of underprivileged students, advancing the concept of entrepreneurship and self-employment and offering support and relief during disasters and lot more other initiatives for the upliftment of the backward and needy population in the society.

The total CSR obligation of the Company for spending in FY 2023-24 was ' 31.42 million on ongoing/multiyear projects. The details of the CSR initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-4 forming part of the Board's Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company's CSR Policy. The Policy is available at the Company's website at www.heritagefoods.in.

Business Responsibility and Sustainability Report (BRSR)

Pursuant to regulation 34(2)(f) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, top 1000 listed entities based on their market capitalisation as on 31st March every year, are required to submit their Business Responsibility and Sustainability Report (BRSR) as a part of their Annual Report. The Annual Report shall contain a Business Responsibility and Sustainability Report (BRSR) describing the initiatives taken by the Company from an environmental, social and governance perspective. BRSR has been designed as a tool to help companies understand the principles and core elements of responsible business practices and start implementing which reflect their adoption in the manner the company undertakes its business. Based on the market capitalization of BSE as on March 31, 2024 your Company was at sl no. 789 under top 1000 listed Company. In compliance with the regulation, the BRSR is provided in a separate section and forms an integral part of this Report.

Energy Conservation, Technology Absorption & Foreign Exchange Earnings & Outgo

The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act 2013, read with the Companies (Accounts) Rules, 2014 are provided in the Annexure-5 to the Board Report.

Transfer of Un-Claimed Dividends and Shares

Pursuant to Section 124(5) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time the unclaimed/ unpaid dividend amount of ^ 16,84,803 /- (Sixteen Lakhs Eighty Four Thousand Eight Hundred Three Only) for the year 2015-16 was transferred to the Investor Education and Protection Fund during the financial year 2023-24.

In compliance with the provisions of Section 124 of the Companies Act, 2013, the Company has transferred 5,198 (Five Thousand One Hundred Ninety Eight) no of equity shares belongs to 14 members of the company to Investor Education and Protection fund Authority (IEPF) on October 13, 2023 of those members who have not claimed the dividends for a continuous period of 7 years.

Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C (2) of the Companies Act, 1956] read with the Investor Education and Protection Fund (awareness and protection of Investors) Rules, 2001 as amended from time to time the unclaimed/unpaid dividend and the shares thereof pertaining for the financial year 2016-17 shall be transferred to the Investor Education and Protection Fund during the financial year 2024-25.

The information in respect of unclaimed/unpaid dividend & shares thereto and the last date for claiming the dividend are given below:

The voting rights on the shares outstanding shall remain frozen till the rightful owner of such shares claim the shares. The company sends reminders to the members concerned to claim the unclaimed and unpaid dividends & shares thereto before they are transferred to the IEPF Authority as per the applicable provisions.

The members whose shares got transferred to IEPF Authority shall claim the dividends and shares from IEPF Authority by submitting an online application in the prescribed e-Form No. IEPF-5 available on the website www.iepf.gov.in and the procedure prescribed thereon. Mr. Umakanta Barik is the Nodal Officer who was appointed by the Company under the provisions of IEPF. Risk Management

Your Company have constituted a Risk Management Committee pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, Information Technology, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Risk Management Procedure shall be reviewed by the Risk Management Committee and Board of Directors on a half- yearly basis at the time of review of Financial Results of the Company.

The policy is available in the Company website: www.heritagefoods.in>Investor> policies

Policy on Sexual Harassment

The Company is committed to providing a safe and conducive work environment to all its employees and associates. Your Company has constituted an Internal

Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has a policy and framework for employees to report sexual harassment cases at workplace. The Company's process ensures complete anonymity and confidentiality of information. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization.

The below table provides details of complaints received/ disposed during the financial year 2023-24:

No. of complaints at the beginning of financial year: Nil

No. of complaints filed during the financial year : Nil

No. of complaints disposed during the financial year : Nil

No. of complaints pending at the end of financial year : Nil

As per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company follows calendar year for annual filling with statutory authority

Vigil Mechanism policy

The Board of Directors of the Company had adopted the Whistle Blower Policy in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A mechanism has been established for employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the Audit Committee in exceptional cases. The Audit Committee reviews periodically the functioning of whistle blower mechanism. No complaints have been received during the Financial Year ended March 31, 2024. No personnel have been denied access to the Audit Committee during the Financial Year 2023-24.

The details of said vigil mechanism are given in Corporate Governance Report, which forms part of this Annual Report. A copy of the Whistle Blower Policy is available in the company's website i.e. www.heritagefoods.In.

Indian Accounting Standards (Ind AS)

The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2017 pursuant to Ministry

of Corporate Affairs' notification of the Companies (Indian Accounting Standards) Rules, 2015. The standalone and consolidated financial statements of the Company, forming part of the Annual Report, have been prepared and presented in accordance with all the material aspects of the Indian Accounting Standards (‘Ind AS') as notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Aff airs (‘MCA')) and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 as amended and relevant amendment rules issued thereafter and guidelines issued by the Securities Exchange Board of India (“SEBI”). There was no revision of Financial Statements (Standalone & Consolidated) and Board Reports during the year under review.

Your Company is using SAP S/4HANA accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled at the database level for the accounting software to log any direct data changes. There is no instance of tampering was noted in respect of the software where audit trail has been enabled. Prevention of Insider Trading Code

As per SEBI (Prohibition of Insider Trading) Regulation, 2015 as amended from time to time, the Company has adopted a Code of Conduct to Regulate, Monitoring & Reporting of Trading by Insiders. The Company has appointed Mr. Umakanta Barik, Company Secretary of the Company as Compliance Officer, who is responsible for setting forth procedures and implementation of the code of conduct for trading in Company's securities. During the year under review, there has been due compliance with the said code.

Your Company is maintaining Structured Digital Database (‘SDD'), the database of unpublished price sensitive information (UPSI), shared internally or externally, with the intent of keeping track as to who all were in the know of an UPSI before it became public.

Reconciliation of Share Capital Audit

As required by the SEBI Listing Regulations, quarterly audit of the Company's share capital is being carried out by an independent Practicing Company Secretary with a view to reconcile the total share capital admitted with NSDL and CDSL and held in physical form, with the issued and listed capital. The Practicing Company Secretary's Certificate in regard to the same is submitted to BSE and the NSE and is also placed before the Board of Directors. Acknowledgement and Appreciation

We, the Board of Directors, feel compelled to express our sincere acknowledgement and heartfelt appreciation to the farmers, customers, consumers, investors, bankers, vendors/employees and all stakeholders who have played an invaluable role in our collective success.

First and foremost, we extend our deepest gratitude to the farmers who toil tirelessly to take-care of the milch animals and bring forth the bounties of nature. Their unwavering commitment and dedication ensure a steady supply of high-quality milk that form the foundation of our products. Without your hard work and expertise, we would not be able to deliver exceptional goods to our customers.

To our esteemed customers and consumers, we extend our utmost appreciation. Their loyalty and trust in our brand inspire us to continuously improve and exceed your expectations. Their invaluable feedback and support have guided us in refining our products and services, ultimately enhancing the overall consumer experience. We are honoured to be a part of their lives and strive to consistently deliver excellence.

We would also like to express our gratitude to our investors for your unwavering confidence in our vision and mission. Your financial backing and strategic guidance have propelled our growth and enabled us to pursue innovation and expansion. Your belief in our potential has been instrumental in transforming our ideas into reality, and we remain committed to delivering sustainable returns on your investment.

To our esteemed bankers, we extend our sincere appreciation for your trust and collaboration. Their unwavering support in providing financial solutions and expertise has been instrumental in our operational efficiency and growth. Your partnership has enabled us to navigate challenges and seize opportunities, and we are grateful for the synergy we have cultivated together.

Last but not least, we would like to extend our heartfelt thanks to all our stakeholders. Their collective efforts, dedication, and belief in our organization have been the cornerstone of our achievements. We cherish the relationships we have built, and we are committed to fostering open communication, transparency, and collaboration as we move forward.

In conclusion, we wholeheartedly acknowledge and appreciate the farmers, customers, consumers, vendors investors, bankers, employees and all stakeholders who have contributed to our journey thus far. Your unwavering support and trust have been integral to our success, and we look forward to continuing this partnership as we strive for new heights together.