DIRECTORS' REPORT & MANAGEMENT DISCUSSION AND ANALYSIS

Your Directors are pleased to present the 86th Annual Report on the business and operations along with the Audited Financial Statements of the Company for the financial year ended March 31, 2023.

ECONOMIC ENVIRONMENT

Global economic activity slowed in 2022 following a strong recovery in 2021 due to the pickup in trade and commerce backed by higher vaccination rates, robust consumer spending and an increase in investment which was further supported by the government's favorable monetary and fiscal policies. According to the April 2023 report by the International Monetary Fund (IMF), the global gross domestic product (GDP) for 2022 was projected to have been affected by the conflict in Ukraine and the deceleration in China, resulting in a growth rate of 3.4%. (Source: IMF World Economic Outlook April 2023). In 2022, the US economy experienced a GDP growth of 2.1%, which represented a slowdown compared to the robust growth of 5.7% saw in 2021. Similarly, the European economy recorded a GDP growth of 3.5% in 2022, reflecting a slight deceleration from the 5.3% growth observed in 2021. In Asia, China recorded GDP growth of 3.0% in 2022, compared to 8.1% in 2021. (Source: IMF World Economic Outlook April 2023). Europe also experienced sluggish growth, as several economies in Central and Eastern Europe, along with energy-intensive industries, faced output declines due to the significant impact of soaring energy prices. During the latter part of 2022, US saw an uptick in its economic activities as its labor market remained resilient, mitigating the effects of increased interest rates on private investment.

Inflation at a global level is projected to slowly ease throughout 2023 and 2024. However, it is anticipated to remain above central bank targets until the latter half of 2024 in most countries. This is primarily attributed to significant increases in service prices and cost pressures arising from tight labor markets. The uncertainty surrounding the geopolitical conflict poses a significant risk that will influence monetary policy adjustments. It is crucial for countries to address and mitigate inflationary pressures, while fiscal support should be directed towards the vulnerable segments of the population. At domestic levels, implementation of structural reforms is essential to revive productivity and stimulate economic activities. Globally, countries must enhance international cooperation to alleviate supply constraints, thereby controlling the prices of commodities and managing energy shortage, as well as preventing low-income countries from falling into debt.

The Indian economy registered a robust recovery resulting in GDP growth of 6.8% in 2022 and was one of the fastest-growing economies in the world. However, the growth trajectory was impacted due to the dual challenges of two pandemic waves and geopolitical tensions in Eastern Europe. These factors significantly dampened expectations for economic growth and inflation in 2023. Retail inflation surpassed the tolerance range set by the RBI for ten consecutive months; however, it gradually declined and fell below the upper limit of the target range by November 2022. According to the IMF's growth projections, the Indian economy is anticipated to sustain its strong performance, having achieved an impressive growth rate of 6.8% in 2022. The projections indicate a GDP growth rate of 5.9% in 2023, followed by a further increase to 6.3% in 2024. In spite of persistent global economic volatility, India is poised to maintain its position as one of the fastest-growing economies, supported by robust consumer demand and the government's increased emphasis on infrastructure development.

TOBACCO INDUSTRY

India is the world's second largest tobacco producer with annual production of 800 million kg and third major exporter of tobacco after China and Brazil. (Source: https://www.tiionline.org/facts-sheets/tobacco-production/). Indian tobacco accounts for 10% of the area and 9% of the total production in the world. (Source: https://ctri.icar.gov.in/ for tobaccoEconomy.php). Tobacco farming is drought tolerant and is a short duration crop. Tobacco, as one of the major commercial crops in India, contributes substantially to the socio-economic landscape by generating significant benefits in terms of employment, revenue generation, and foreign exchange earnings. India has an edge over other leading tobacco producers due to its low production costs, average farm and export prices. In India the tobacco is grown in 13 states and given its production is highly labour intensive, the tobacco industry provides employment directly and indirectly to more than 45.7 million people working in processing, manufacturing and exports of tobacco and products. (Source: https://www.tiionline.org/facts-sheets/livelihood/) The government earns more than Rs. 8,000 crores through tobacco and tobacco products export. Tobacco products make a substantial contribution to the tax revenue of the government. The government collects approximately R55,000 crores per year in tax revenue from tobacco products, with legal cigarettes accounting for more than 75% of the total tobacco tax revenue. In India, the consumption of legal cigarettes represents a mere 8% of the overall tobacco consumption, which stands in stark contrast to the global scenario where legal cigarettes account for 90% of tobacco consumption. The remaining 92% of tobacco consumption in India is comprised of multiple traditional products including chewing tobacco, bidi, Khaini, etc.

The implementation of higher taxes on cigarettes, mounting health awareness programs and stringent regulations on tobacco products in India, including the mandatory 85% pictorial warnings on packaging, play an important role in sale and consumption of cigarettes. Despite a 50% increase in tobacco consumption in India, the proportion of legal cigarettes has dwindled from 21% in 1981-82 to 8% in 2020-21. This decline indicates a continuing rise in the illicit cigarette trade. However, the government continues to curb the trade of illicit cigarettes through regular raids and seizures. It is our belief that any steps taken by the government in the directions of moderating the cigarette taxation will help in maximising tax collection and reducing shift towards cheaper illicit cigarettes.

CONSUMER AND RETAIL INDUSTRY

The Indian FMCG sector holds a prominent position in the Indian economy, ranking as the fourth largest sector with a market size of US$ 56.8 billion as of December 2022. This growth is propelled by factors such as the growing affluent population, increasing urbanization, rising incomes, and the flourishing e-commerce industry. The sector continues to encounter challenges including a fragmented market, relatively low per capita consumption, evolving consumer preferences and regulatory complexities. However, despite these obstacles, the sector remains highly appealing due to India's growing population and somewhat flourishing economy. FMCG companies are addressing these challenges through strategies such as innovation, expanding their market reach, collaborating with e-commerce platforms, and forming partnerships with the government. By embracing these approaches and effectively navigating the evolving landscape, businesses in the Indian FMCG sector can position themselves for enduring success in the long term.

The Indian government has implemented several impactful initiatives to support and foster the growth of the FMCG sector. Notably, the Production Linked Incentive (PLI) Scheme has been introduced as a key incentive plan, designed to stimulate industry expansion and facilitate significant scaling up effort. Furthermore, the government has prioritized infrastructure development, offered tax incentives such as reduced corporate tax rates and import duty waivers, and actively encouraged exports to facilitate a conducive business environment for FMCG companies and propel the growth in the industry. Additionally, the government has approved foreign direct investment (FDI) measures, allowing 100% FDI in the cash and carry segment, single-brand retail and 51% FDI in multi-brand retail. These comprehensive incentives and FDI provisions will significantly contribute to establishing a resilient supply chain and mitigating potential disruptions for the FMCG sector.

The Union Budget of 2022-23 has emphasized the development of physical and digital infrastructure, facilitating the growth of the organized sector. The increasing dependence of consumers on internet and online sales platforms has presented favourable opportunities for FMCG companies to broaden their customer base. Enhanced infrastructure, competitive pricing, and the cost-effectiveness of digital platforms have significantly facilitated the reach and convenience in connecting with a wider audience. This paradigm shift has allowed companies in the FMCG sector to efficiently expand their market presence and enhance their customer reach, thus contributing positively to their overall growth and performance. The transition from unorganized to organized markets in the FMCG sector is not only driving competition and offering consumers a wider range of products at affordable prices, but also contributing to job creation and overall economic growth in India.

SEGMENTWISE PERFORMANCE IN 2022-23 Cigarettes

The domestic Cigarettes industry showcased further signs of recovery in FY23 with the economy bouncing back on account of restoration of normalcy in market operating conditions. However, global geopolitical tensions, hyper-inflation across raw materials as well as extended disruptions to supply chain were some fresh challenges that had to be solved for during the course of the year.

Despite the challenging situation faced by it, your Company was able to maintain its growth momentum in the Regular Size Filter Tipped (RSFT) segment and register decent growth in other segments that it operates in, backed by introduction of some new brands/variants in order to strengthen its presence in new geographies. Our main brands Four Square, Red & White, Cavanders, Stellar and Focus continue to perform strongly, especially in our core markets owing to concentrated efforts in increasing relevance to the evolving consumer needs and improving capabilities for faster product development and innovations.

Your Company is committed to driving enhanced shareholder value by pursuing various plans like portfolio expansion to address new growth opportunities, adding pricing power to flagship brands, investing into innovative product development and quick adoption of digital technologies across all modes of operation and improving distribution footprint across various states through expanded infrastructure.

Chewing Products

During the year under review, the Company has sold/assigned (a) Trademarks along with all the rights, titles and interests therein and (b) certain non-current assets including the rights in the Leasehold Land; used in relation to its Chewing business. This sale/assignment was in line with Company's decision to exit from its Chewing business which was incurring losses.

Confectionary Products

Your Company's confectionary business has made significant stride during the year with the gross sales growing by over 50% from last year. Growth has largely come from Naturalz Imili Candy on the back of expanded distribution network and availability across markets. We have recently test launched a new variant Funda Gumshums Mint Chewing Gum.

Exports

The following table shows the status of exports for different products during the year under report:

In line with other business goals, your Company achieved targets across all categories. Covid had a severe impact on the business last year, but your Company bounced back with significant growth in overall terms.

Unmanufactured tobacco exports have been growing year on year and this year your Company has done exceptionally well by achieving the highest ever export revenue of Rs. 780 Crores. Your Company has now broad- based its customer reach and started exporting in various new geographies. We are continuously focussing on improving our raw tobacco procurement processes, faster processing and packing thereof and improving processing yields.

Retail

24Seven is India's organized retail chain in the 'round the clock's convenience store format with more than 145 stores/kiosks spread across Delhi NCR, Punjab and Telangana. Gross sales during the FY23 increased by 19% to Rs. 482 crores from Rs. 405 crores in the previous year. Operating performance was also better than FY22 due to sustained cost saving initiatives and improvement in product mix and therefore, margins. Efforts are being made to enhance the proportion of food and beverages and private label items in order to garner rise in gross margins.

HUMAN RESOURCE DEVELOPMENT

With people centricity at the Core of its philosophy, your Company has been consistently developing competencies and capabilities of its employees, building managerial styles that propagate employee involvement, fostering a culture of appreciation and engagement, building performance orientation, and encouraging work-life balance. This people focus has helped your Company achieve excellent business results and in building a foundation for positive future economic outcomes. Your company has registered significantly high scores on its human resource strategy, people practices, policies and systems, and continues to be recognized as a Great Place to Work, a feat achieved fifth time in a row. This recognition instills a sense of renewed pride in the workforce as well as the stakeholders associated with your Company. The Company's leadership too plays a pivotal role in ensuring continuous personal connect that goes a long way in building trust with the workforce and inspiring and motivating employees to deliver their best in achievement of short and long term company objectives.

INFORMATION TECHNOLOGY (IT)

Your Company has made significant strides in leveraging technology to enable and support the business growth. It has a matured AI driven Digital Supply Chain Platform which is delivering efficiencies across our supply chain, is helping bring more predictability in our operations and has enabled the Company to further enhance its business performance through improvements in service delivery, collaboration and productivity. Also, we have modernized our overall IT infrastructure to fulfil the future needs of the organization and to minimize the emerging risks.

Your Company has embarked upon Green IT strategies such as multi-cloud migration and maximizing virtualization. It has migrated its core systems to cloud thereby further improving our scalability, adaptability and resiliency necessary to ensure all time availability of critical systems.

With the increase of IT footprint and remote working, the cyber threats have also increased. To minimize the risk and keep the IT landscape further secure, your Company has implemented many leading security solutions such as Microsegmentation, Email Security Layer and Zero Trust Exchange to provide seamless and secure access to our enterprise applications from anywhere. Recently we have been certified for ISO-27001in IT processes.

STRATEGIC INSIGHTS AND ANALYTICS (SIA)

The Strategic Insights function is a one of a kind in-house skill set of the organization to utilise the power of algorithms supported by computing process to ameliorate precision in Sales, Marketing, Human Resource Management and other functions. This has matured over the last several years and is now a way of working and decision-making for all our key functions. The Data Lake has feed from all our key systems and we have near real-time updates, thereby facilitating high quality decision-making. Our dashboards and algorithms constantly evolve with time and as per the demands of our ever-changing business environment.

With all the above, your Company has embarked on a structured digital transformation program for the organization, aligned to strategic business goals and enabled by cutting edge data science technology.

TREASURY OPERATIONS

Your Company continues to enjoy the highest rating of 'CRISIL A1+' for Short Term Debt Programme, 'CRISIL AA+/ Stable' for Long Term Loan, 'CRISIL AA+/Stable' for fund-based credit facilities and long term non-fund based Facilities & 'CRISIL A1+' for short term non-fund-based facilities. With these ratings in place, your Company can raise funds at most competitive terms. Following the principles of liquidity, safety and tax efficient returns, the Company has been deploying its long term surplus funds primarily in debt-oriented schemes of reputed mutual funds. Also, the Company continued to park its temporary surpluses in liquid/short-term schemes of various mutual funds.

FINANCIAL RESULTS

During the year, the gross sales value registered a growth of 32.41% by reaching the level of Rs. 4257.65 crores from Rs. 3215.33 crores last year. Similarly, the profit after tax is Rs. 608.38 crores as compared to Rs. 431.97 crores last year.

DIVIDEND

Your Directors are pleased to recommend the dividend of 2200 % i.e. Rs. 44 per equity share of face value of Rs.2/- each. The proposed dividend will absorb Rs. 22877.32 lakhs.

DEPOSITS

Your Company has not accepted any deposits, covered under Chapter V of the Companies Act, 2013 and hence, no details pursuant to Rules 8(v) and 8(vi) of the Companies (Accounts) Rules, 2014 are required to be reported.

ANNUAL RETURN

As required under Sections 134(3)(a) and 92(3) of the Act, the Annual Return has been uploaded from time to time on the Company's website and can be accessed at https://www.godfrevphillips.co/companv/investor-relation/financials/ annual-return/.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

As on 31^st March 2023, your Company had five operating subsidiaries and two associate companies. The basic details of these companies form part of the Annual Return given as mentioned above.

Form AOC-1 containing the salient features of financial statements of the Company's subsidiaries and associates is attached as 'Annexure - 1'. Note 46 of the consolidated financial statements shows the share of each subsidiary and associate company in the consolidated net assets and profits of the Company. The audited financial statements of these entities will be available for inspection during business hours at the Registered Office of the Company.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Indian Accounting Standard (IndAS-110)-Consolidated Financial Statements, Group Accounts form part of this Annual Report. The Group Accounts have been prepared based on financial statements received from the subsidiary and associate companies, as approved by their respective Boards.

INTERNAL CONTROL SYSTEMS

Your Company has a robust system of internal controls commensurate with the size of the Company and the nature of its business, which ensures that transactions are recorded, authorised and reported correctly apart from safeguarding its assets against loss from wastage, unauthorised use and disposition.

The internal control systems are supplemented by well documented policies, guidelines and procedures which are in line with the internal financial control framework requirements. There is an extensive programme of internal audit by a firm of chartered accountants followed by periodic management reviews.

The Audit Committee actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company's CSR initiatives are largely focused on tobacco farmers in Vinukonda in Andhra Pradesh who are essential to our business. Many of these farmers are small or marginalised. The CSR program is integrated into the larger business with the objective of ensuring sustainable tobacco farming. In short-term goals to ensure farming efficiencies and impact earnings, Good Agriculture Practices has been initiated for the farmers wherein we provide technical advice, establish processes, and minimize hazards to ensure better yield and quality of crop. In long-term goals, we look at minimising climate change risk with environment management with focus on water.

The Company has built over 32 check dams, undertaken over 26 de-siltation of ponds, developed tanks for water conservation in past 6 years along with farm ponds and borewell recharge pits to lower impact on ground water. The Company has also created 3 bio-diversity parks over 23 acres where more than 9000 trees and over 30 flora species have been planted. Also, it has installed community RO water plants across 40 plus villages for access to safe potable water as Vinukonda area is dangerously high on fluoride and TDS. Health Camps are held in over 40-50 villages every year with specialists on board and free medicine distribution. Also, eliminating child labour is an essential element to our commitment to Sustainable Tobacco Production and our initiatives have led to zero child labour incidences in the past 4 years. The Company invests heavily in creating intensive community awareness year on year on the dangers of child labour and benefits to continuing education. Since the last two years, the Company has been investing in higher education of community children for the entire society's holistic development.

The Company has constituted a CSR Committee of the Board in accordance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The brief outline of the CSR policy, overview of the activities undertaken with amounts spent/unspent thereon during the year, reason for unspent CSR thereof and composition of the Committee has been disclosed in 'Annexure - 2'.

DIRECTORS

Mr. Sharad Aggarwal (DIN: 07438861) retires by rotation at the ensuing Annual General Meeting, in accordance with the provisions of Section 152 of the Companies Act, 2013 and being eligible, has offered himself for re-appointment.

Based on the recommendation of the Nomination and Remuneration Committee ('NRC') the Board of Directors in its meeting held on 27th May, 2023 approved the appointment of Mr. Ajay Vohra (DIN: 00012136) with effect from 1^st July,

2023 as an Additional Director to serve as a Non-Executive Independent Director of the Company which appointment is subject to the approval of the Shareholders at the ensuing Annual General Meeting of the Company. Accordingly, a resolution proposing appointment of Mr. Ajay Vohra as a Non-Executive Independent Director of the Company for a period of 5 consecutive years will form part of the Notice of the ensuing Annual General Meeting.

As per provisions of the Companies Act, 2013, Independent Directors are required to be appointed for a term of five consecutive years and are not be liable to retire by rotation. Accordingly, a resolution proposing re-appointment of Mrs. Nirmala Bagri (DIN: 01081867) as Independent Director of the Company for another term of five years w.e.f 1^st April, 2024 forms part of the Notice of the ensuing Annual General Meeting.

The Independent Directors of your Company have confirmed that:

(a) They meet the criteria of Independence as prescribed under Section 149 of the Companies Act, 2013 and Regulation 16 of the SEBI (LODR) Regulations, 2015; and

(b) They are not aware of any circumstance or situation which could impair or impact their ability to discharge duties with an objective independent judgement and without any external influence.

Further, in the opinion of the Board, the Independent Directors fulfill the conditions prescribed under the Listing Regulations and are independent of the management of the Company.

PERFORMANCE EVALUATION OF THE BOARD, ETC.

Details pertaining to the way evaluation of the Board, its committees and individual Directors has been carried out, form part of Corporate Governance Report.

KEY MANAGERIAL PERSONNEL

Dr. Bina Modi, Chairperson and Managing Director, Mr. Samir Kumaar Modi, Executive Director, Mr. Sharad Aggarwal, Whole-time Director, Mr. Sunil Agrawal, Chief Financial Officer and Mr. Sanjay Kumar Gupta, Company Secretary of the Company are deemed to be Key Managerial Personnel of the Company as per the provisions of Companies Act, 2013 and the rules made thereunder.

BOARD MEETINGS

Details of the meetings of the Board held during the year, form part of the Corporate Governance Report.

AUDIT COMMITTEE

The composition, functions and details of the meetings of the Audit Committee held during the year, form part of the Corporate Governance Report.

RISK MANAGEMENT

Your Company considers that risk is an integral part of its business and therefore, it takes proper steps to manage all risks in a proactive and efficient manner. The Company management periodically assesses risks in the internal and external environment and incorporates suitable risk treatment processes in its strategy and business and operating plans. The details of practices being followed by the Company in this regard, form part of the Corporate Governance Report.

There are no risks which, in the opinion of the Board, threaten the very existence of your Company. However, some of the challenges faced by it have been dealt with under Management Discussion and Analysis which forms part of this Report.

Details regarding constitution of Risk Management Committee, its role and responsibilities, form part of the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 (the 'Act'), the Directors, to the best of their knowledge, confirm that:

(i) In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

(ii) Appropriate accounting policies have been applied consistently and judgements and estimates that are reasonable and prudent have been made 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 the period;

(iii) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Annual Accounts have been prepared on a going concern basis;

(v) The internal financial controls to be followed by the Company have been laid down and such internal financial controls are adequate and are operating effectively; and

(vi) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

The above statements were noted by the Audit Committee at its meeting held on 27^th May, 2023.

RELATED PARTY TRANSACTIONS

Form AOC-2 containing particulars of contracts or arrangements entered into by the Company with related parties referred in Section 188(1) of the Companies Act, 2013 is attached as 'Annexure - 3'.

Details of related party transactions and related disclosures are given in the notes to the financial statements.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of loans, guarantees and investments covered by the provisions of Section 186 of the Companies Act, 2013 (if any) are given in the notes to the financial statements.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

Details of Whistle Blower Policy/Vigil Mechanism form part of the Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY

The appointment and remuneration of the Directors is governed by the recommendation of the Nomination and Remuneration Committee and then decided by the Board subject to approval of the Shareholders.

The remuneration payable to the Directors is decided keeping into consideration long term goals of the Company apart from the individual performance expected from them in pursuit of the overall objectives of the Company.

The remuneration of the Executive Director(s) including Managing Director(s) and Whole-time Director(s), is governed by the recommendation of the Nomination and Remuneration Committee as per the criteria recommended by it and then approved by the Board subject to approval of the Shareholders.

The Non-executive Director(s) may be paid remuneration by way of commission either by way of monthly payments or specified percentage of net profits of the Company or partly by one way and partly by the other, as may be recommended by the Nomination and Remuneration Committee and then decided by the Board subject to approval of the Shareholders.

In accordance with the provisions of the Articles of Association of the Company and the Companies Act, 2013, a sitting fee (presently fixed at Rs. 1,00,000 per meeting) is paid to the Non-executive Directors of the Company who are not drawing any remuneration described hereinabove, for attending any meeting of the Board or of any Committee thereof.

The remuneration payable to the Directors shall be governed by the ceiling limits specified under section 197 of the Companies Act, 2013.

The remuneration policy for other senior management employees including key managerial personnel aims at attracting, retaining and motivating high calibre talent and ensures equity, fairness and consistency in rewarding the employees. The remuneration to management grade employees involves a blend of fixed and variable component with performance forming the core. The components of total remuneration vary for different employee grades and are governed by industry practices, qualifications and experience of the employees, responsibilities handled by them, their potentials, etc. Remuneration of senior management employees is also being looked at by the Nomination and Remuneration Committee.

The Nomination and Remuneration Policy is available on the Company's web-site at https://www.godfreyphillips. co/company/investor-relation/corporate-governance/policies

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

As mandated by the Listing Regulations, the Business Responsibility and Sustainability Report has been included as part of the Annual Report.

UNCLAIMED SHARES

Status of the unclaimed shares as on 31^st March, 2023 has been mentioned in the Report on Corporate Governance.

CORPORATE GOVERNANCE

The Company is committed to maximise the value for its stakeholders by adopting the principles of good Corporate Governance in line with the provisions of law and particularly those stipulated in the Listing Regulations. Its objective and that of its management and employees is to manufacture and market the Company's products in a way so as to create value that can be sustained over the long term for consumers, shareholders, employees, business partners and the national economy in general.

Certificate from the auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in the Listing Regulations, is enclosed.

Certificate from Dr. Bina Modi, Chairperson and Managing Director as the Chief Executive Officer (CEO) and Mr. Sunil Agrawal, Executive Vice President-Finance as the Chief Financial Officer (CFO) in relation to the financial statements for the year along with declaration by the CEO regarding compliance with the code of business conduct of the Company by the directors and the members of the senior management team of the Company during the year, were submitted to and taken note of by the Board.

STATUTORY AUDITORS

In compliance with the provisions of Section 139 and other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s)/re-enactment(s)/ amendment(s) thereof, for the time being in force), S.R.Batliboi & Co. LLP, Chartered Accountants, (FRN 301003E/ E300005) were re-appointed as the Statutory Auditors for another term of five (5) consecutive years until the date of conclusion of the 90th Annual General Meeting, by the Shareholders in the 85th Annual General Meeting of the Company held on 26th August 2022.

Auditors' Report on the financial statements of the Company forms part of the Annual Report and does not contain any qualification, reservation, adverse remark or disclaimer.

COST AUDIT

The provisions of Cost Audit are not applicable on the Company.

SECRETARIAL AUDIT

Chandrasekaran Associates, Practicing Company Secretaries, have been appointed as the Secretarial Auditor of the Company.

The Secretarial Audit Report for the year under review is attached as 'Annexure - 4' and does not contain any qualification, reservation, adverse remark or disclaimer.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETING

Pursuant to Clause 9 of Revised Secretarial Standard -1 (SS -1), your Company has complied with applicable Secretarial Standards issued by Institute of Company Secretaries of India, during the financial year under review.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material order was passed by the Regulators/Courts that could impact the going concern status of the Company and its future operations.

There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016. There was no instance of onetime settlement with any Bank or Financial Institution.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as 'Annexure - 5'.

Pursuant to the provisions of Section 136(1) of the Act and as advised, the statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be available for inspection at the Registered Office of the Company during working hours and Members interested in obtaining a copy of the same may write to the Company Secretary and the same will be furnished on request. Hence, the Annual Report is being sent to the Members excluding the aforesaid information.

CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars prescribed under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are attached as 'Annexure - 6'.

DIVIDEND DISTRIBUTION POLICY

As mandated by the Listing Regulations, the Board has formulated a dividend distribution policy and the same is attached as 'Annexure - 7' and is also available on the Company's website at: https://www.godfreyphillips.co/ company/investor-relation/corporate-governance/policies/.

KEY FINANCIAL RATIOS

Key Financial Ratios for the financial year 2022-23 with comparatives for the year 2021-22, are disclosed in 'Annexure - 8'.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on prevention, prohibition and redressal of sexual harassment of women at workplace in line with the requirements of the above Act.

Under the said policy, an Internal Complaints Committee (ICC) has been set up to redress complaints received relating to sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy.

During the year under review, no complaint was filed with the Company.

THE FUTURE

Availability of best in the class manufacturing facilities with right blend of technology, vast distribution network, adequate financial resources, stable tax regime and motivated manpower will facilitate your Company to continue to drive growth across its various businesses and product categories both in domestic and international markets. Your Company has valiantly weathered the ill-effects of the COVID-19 pandemic which adversely impacted the business operating environment and had led to slowdown in the economic activity in past three years Your Directors are confident that the Company will continue to create value for its shareholders and other stakeholders.

ACKNOWLEDGEMENT

Your Directors wish to place on record their sincere appreciation to the Government authorities, Company's bankers, customers, vendors, investors and all other stakeholders for their continued support during the year. Your Directors are also pleased to record their appreciation for the dedicated services of employees at all levels of operations in the Company.

Respectfully submitted on behalf of the Board