Financial highlights and state of Affairs of the Company

We reported a healthy performance in difficult times. Having crossed C3,000 crore mark comprehensively in FY22, we scaled past the C4,000 crore milestone in FY23. We achieved volume and revenue growth of 11% and 18% y-o-y, respectively showcasing the organisation's resilience and brand's strength.

Spiraling gas prices, impacted business profitability of all tile majors and Kajaria. Our focus on value-addition helped cushion the drop in profitability. Your Company reported a Net Profit of C345 crore in FY23. We sustained our deleveraged position which strengthens our ability to undertake capital projects over the coming years to capitalise on growth opportunities.

The State of Affair of the Company is detailed in the 'Management Discussion and Analysis' section which forms part of this report.

Outlook

The positivity in the external environment coupled with reduced inflation suggest a promising current year.

The healthy uptick in the real estate sector across India coupled with the Government's impetus to creating world-class infrastructure is expected to fuel demand over the medium term.

Further, Government agencies have decided to offer large land parcels for real estate development which adds to the optimism of the tile sector.

After a lag of a few years, residential housing is growing rapidly as cities widen their municipal limits and Tier 2 and 3 towns emerge as new residential hubs. Additionally, demand for Grade-A office space is growing at a healthy pace as global conglomerates are looking to set shop in India. Further, realty creation has gained steam in other segments such as warehouses, data, centers retail segment and hospitality.

From an organisational standpoint, our recently commissioned capacities coupled with our reduced reliance on natural gas (owing to the use of bio mass) should help in sustaining profitable business growth.

Dividend

Your Directors have recommended to the shareholders a final dividend of C3/- (i.e. 300%) per equity share of C1/- each fully paid-up for the financial year ended March 31, 2023, if approved at the ensuing Annual General Meeting ('AGM').

During the year 2022-23, the Company has also paid Interim Dividend of C6/- (i.e. 600%) per equity share of C1 each fully paid-up

aggregating to C95.54 crores thereby making the total Dividend (Interim Dividend & Final Dividend) of C9/- per equity share of C1/- each fully paid-up (previous year C11/- per equity shares of C1/- each fully paid-up) aggregating to C 143.31 crores.

Consolidated Financial Statements

The Company adopted Indian Accounting Standard (Ind-AS) from 1st April, 2016 and accordingly, the Consolidated Financial Statements have been prepared in accordance with the Accounting Standard notified under Section 133 of the Companies Act, 2013 ('the Act') and the relevant rules issued thereunder read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ('the Listing Regulations') and the other accounting principles generally accepted in India. The Consolidated Financial Statements form part of the Annual Report.

There are no material changes and commitments affecting the financial position of the Company and also no change in the nature of business of the Company.

Holding, Subsidiaries, Associate, Joint Venture Companies and their performance

During the year under review, Kajaria International DMCC and South Asian Ceramic Tiles Private Limited have become a wholly-owned subsidiary and a subsidiary of the Company, respectively.

Vennar Ceramics Limited ceased to be a subsidiary of the Company pursuant to the Company's Board approval to dispose offthe entire stake of the Company in Vennar Ceramics Limited, in a phased manner.

On 3rd November 2022, the Company entered into a Joint Venture Agreement with various individuals affiliated with Ramesh Corp, Nepal to establish a manufacturing facility in Nepal for Ceramic Floor/Wall Tiles and glazed vitrified tiles in equal ratio. Accordingly, a Joint Venture Company ('JVC') named Kajaria Ramesh Tiles Limited has been incorporated in Nepal, which is yet to commence its commercial production.

A report on performance and financial position (Form AOC-1) of each of the subsidiaries / joint venture as per the Act is provided as Annexure-1.

Share Capital

As on 31st March, 2023, the Authorised Share Capital of the Company is C 154,10,00,000 (Rupees One Hundred Fifty Four Crores Ten Lacs only) divided into 77,00,00,000 (Seventy Seven Crores) Equity Shares of C1/- each (Rupee One Only) aggregating to C77,00,00,000 (Rupees Seventy Seven Crores Only) and 77,10,000 (Seventy Seven Lacs Ten Thousand) Redeemable Preference

Shares of C100/- each (Rupees One Hundred Only) aggregating to C 77,10,00,000 (Rupees Seventy Seven Crores Ten Lacs Only).

During the financial year 2022-23, the Company's paid up share capital has been increased by issue of 28,500 equity shares of C1/-each pursuant to the Kajaria Employee Stock Option Scheme 2015. Accordingly, as on 31st March, 2023, the paid-up and subscribed share capital of the Company is 15,92,32,550 equity shares of C1 each.

After the closure of the financial year 2022-23, the Company's paid up share capital has further been increased by issue of 25,750 equity shares of C1/- each pursuant to the Kajaria Employee Stock Option Scheme 2015. Thus, presently, the paid up share capital of the Company is 15,92,58,300 equity shares of C1 each.

The Company has not issued shares with differential voting rights or sweat equity shares during the financial year 2022-23. As on 31st March, 2023, none of the Directors of the Company hold any instruments convertible into equity shares of the Company.

Employee Stock Option Scheme

Kajaria Employee Stock Option Scheme 2015 ('ESOP Scheme 2015') was approved by the shareholders of the Company on 7th September, 2015 for issue and allotment of options exercisable into not more than 10,62,000* equity shares of C1 each (Originally the ESOP Scheme 2015 was for 5,31,000 equity shares of C2 each) to eligible employees of the Company and its subsidiaries. The ESOP Scheme 2015 is administered by the Nomination and Remuneration Committee of the Board of Directors ('the Board') of the Company. On 20th October 2015, the Nomination and Remuneration Committee of the Company had granted 4,58,000* equity shares of C1 each ('Stock option') to the employees of the Company and its subsidiaries.

During the year 2021-22, the stock options under the ESOP Scheme 2015 have further been increased from 10,62,000 options to

15.87.000 options equivalent to 15,87,000 equity shares of C1/- each by addition of 5,25,000 options through the shareholders' approval obtained on 24th March, 2022. Further, the Company has granted 8,37,600 options equivalent to 8,37,600 equity shares of C1/- each to the eligible employees of the Company and its subsidiaries @ C980 per option in two tranches and the same will be vested within 5 years of the grant date. Details regarding the ESOP Scheme 2015 are given at Note No. 43 to the financial statements.

Total 1,49,700 equity shares of C1 each (12,000 equity shares during the year 2022-23, 11,700 equity shares during the year 2020-21,

29.000 equity shares during the year 2019-20, 44,000 equity shares during the year 2018-19, 13,000 equity shares during the year 2017-18 and 40,000 equity shares during the year 2016-17) had

been forfeited/lapsed due to resignation/death of ESOP Option holders.

During the year under review, there are no material changes in the ESOP Scheme 2015 and the same is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ('ESOP Regulations'). The disclosures under Regulations 14 of ESOP Regulations is uploaded on the Company's website viz.: https://www.kajariaceramics.com/pdf/Disdosure_pursuant_to_ Reg_14_of_SEBI_SBEB_SE_Reg_2021_for_FY_2022_23.pdf

* During the year 2016-17, equity shares of the Company had been sub-divided from C2 per share to C1 per share.

Transfer to Reserves

During the year under review, there is no transfer of fund to the Company's General Reserve Account.

Directors' Responsibility Statement

In terms of the provisions of the Companies Act, 2013, the Directors confirm that:

i) In the preparation of the annual accounts for the year ended on 31st March, 2023, the applicable accounting standards have been followed and no material departures have been made from the same;

ii) Appropriate accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2023 and of the profit of the Company for the period ended 31st March, 2023;

iii) Proper and sufficient care has been taken 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;

iv) The annual accounts have been prepared on a going concern basis;

v) The Company is following up the proper Internal financial controls and such internal financial controls are adequate and are operating effectively; and

vi) The Company has devised proper systems to ensure the Compliance with the provisions of all the applicable laws and that such systems are adequate and operating effectively.

Corporate Governance

The Company has complied with the Corporate Governance requirements as stipulated under the Listing Regulations. A separate section on corporate governance, along with a certificate from M/s Chandrasekaran Associates, Company Secretaries confirming the compliance, is annexed and forms part of the Annual Report.

Management Discussion and Analysis Report

Management Discussion and Analysis on matters related to the business performance as stipulated in the Listing Regulations, is given as a separate section in the Annual Report.

Related Party Transactions

For all related party transactions, prior approvals of the Audit Committee and the Board of Directors, as may be required under the applicable laws, were obtained. Further, the omnibus approvals of Audit Committee and the Board of Directors, as may be required under the applicable laws, are usually obtained on yearly basis, which are of a foreseen and repetitive nature and such approval is in the interest of the Company. The transactions entered into, pursuant to the omnibus approvals so granted, were placed before the Audit Committee by way of a statement giving details of all related party transactions for its review. All related party transactions are disclosed in Note No. 40 to the financial statements. The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Act in the prescribed Form AOC-2 is annexed as Annexure- 2.

During the year under review, the Related Party Transaction Policy of the Company has been revised in order to ensure compliance of the provisions of the Listing Regulations and circulars, issued by the SEBI, from time to time. The Related Party Transaction Policy is uploaded on the Company's website i.e. https:// www.kajariaceramics.com/pdf/RelatedPartyTransactionPolicy.pdf

Corporate Social Responsibility Initiatives

In terms of provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 ['the CSR Rules'], the Company has formulated a Corporate Social Responsibility Policy ('CSR Policy') indicating the activities to be undertaken by the Company. The constitution of the Corporate Social Responsibility Committee ('CSR Committee') is disclosed in the Annual Report on CSR Activities as an Annexure - 3 of this report.

The Corporate Social Responsibility ('CSR') Policy may be accessed on the Company's website i.e. https://www.kajariaceramics.com/ pdf/CSR_Policy.pdf

Your Company strives to make a difference in the lives of people with a special focus on neighbouring and local areas of the Company's manufacturing locations. Your Company has implemented various CSR programmes/projects which made positive impacts mainly in the areas of health, sanitation, social relief and education, etc. During the year under review, the CSR programmes/activities initiated by the Company includes taking steps for Swachh Bharat, preventive health care, constructing sanitation facilities in the schools, etc. near the manufacturing facilities, contributing to the education, social welfare and social economic development of under privileged children, etc. These CSR initiatives are implemented directly and/or through trusts/ societies/NGOs. These projects/activities are also in accordance with Schedule VII of the Act.

The Annual Report on CSR activities as prescribed under the CSR Rules is set out as Annexure-3, forming part of this Report.

The Company has incurred CSR expenditures of C743.34 Lacs during the year 2022-23. However, C88.10 Lacs are yet to be incurred to the CSR activity(ies)/project(s) as that were not fully completed during the financial year 2022-23, being ongoing activity(ies)/project(s). The said CSR activity(ies)/project(s) would be completed during the financial year 2023-24 and onwards and the unspent amounts of C88.10 Lacs towards the said CSR activity(ies)/project(s) has been carried over to the financial year 2023-24 and onwards, in accordance with the provisions of the Act read with CSR Rules.

The Company has also completed the ongoing CSR project/activity of C54 Lacs pertaining to the financial year 2021-22.

Risk Management

Your Company understands the importance of various risks faced by it and has adopted a Risk Management Policy which establishes various levels of accountability within the Company. The Company has also constituted a Risk Management Committee which ensures that the Company has appropriate and effective risk management systems which carries out risk identification, assessment and ensures that risk mitigation plans are in place. The Risk Management Committee identifies, from time to time, various risks to which the Company is subject to and has accordingly, aligned the concerned departments to take the necessary mitigating steps. Risk management has been inter-linked with the annual planning exercise where each function and business carries out fresh risk identification, assessment and draws up treatment plans.

A Risk Management Policy in terms of provisions of Section 134(3)(n) of the Act read with the Listing Regulations is in

place and is uploaded on the Company's website i.e. https:// www.kajariaceramics.com/pdf/Risk_Management_Policy.pdf

Internal Control Systems and their adequacy

The Company believes in a strong internal control framework, which is necessary for business efficiency, management effectiveness and safeguarding assets. The Company has a well-defined internal control system in place, which is designed to provide reasonable assurance related to operation and financial control. The Management of the Company is responsible for ensuring that Internal Financial Control has been laid down in the Company and that controls are adequate and operating adequately.

Internal Audit of the Company's operations are carried out by the Internal Auditors and periodically covers different areas of business. The audit scope, methodology to be used, reporting framework are defined well in advance, subject to consideration of the Audit Committee of the Company. The Internal Auditors evaluates the efficacy and adequacy of internal control system, its compliance with operating systems and policies of the Company and accounting procedures at all the locations of the Company. Based on the report of the Internal Auditors, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are placed before the Audit Committee of the Company. The Internal Audit also continuously evaluates the various processes being followed by the Company and suggests value addition, to strengthen such processes and make them more effective.

Internal Controls with respect to financial statements

The Company has an adequate system of internal financial control in place with reference to financial statements. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, 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 reliable financial information.

Directors and Key Managerial Personnel

Mr. Raj Kumar Bhargava and Mr. Debi Prasad Bagchi completed their tenure as the Independent Director(s) of the Company and accordingly, they ceased to be the Independent Director(s) of the Company from the conclusion of the 36th Annual General Meeting held on 23rd September, 2022.

During the year 2022-23, the shareholders of the Company has accorded their approval(s) at the 36th Annual General Meeting ('AGM') of the Company held on 23rd September, 2022 for appointment(s) of Dr. Lalit Kumar Panwar and Mr. Sudhir Bhargava

as the Independent Director(s) for a period of five consecutive years effective from the conclusion of the 36th AGM of the Company.

Mr. Dev Datt Rishi, who is liable to retire by rotation, has offered himself for re-appointment as the Director at the ensuing AGM of the Company. The Board recommends for his re-appointment in the ensuing Annual General Meeting of the Company.

All Independent Directors of the Company have given declarations that they meet the criteria of independence as prescribed under Section 149(6) of the Act read with Regulations 16(1)(b) & 25(8) of the Listing Regulations and in the opinion of the Board of the Company, all Independent Directors of the Company have integrity, expertise, experience and proficiency as prescribed under the Companies (Appointment and Disqualification of Directors) Rules, 2014 read with the Companies (Accounts) Rules, 2014 (including amendment thereof).

All Directors of the Company have also given declarations that they are not debarred from holding the office of Director by virtue of any SEBI order or any other such statutory authority as required under the Circular dated 20th June, 2018 issued by BSE Limited and National Stock Exchange of India Limited.

Further, except as stated above there is no other change in the composition of Key Managerial Personnel of the Company.

Performance Evaluation

The Board of the Company, on recommendation of the Nomination and Remuneration Committee and in line with the Nomination and Remuneration Policy of the Company, has carried out an annual performance evaluation of the Board as a whole, its Committees and all Directors including the Chairman.

The manner in which the annual performance evaluation has been carried out has been explained in the Corporate Governance Report.

Nomination and Remuneration Policy

On the recommendation of the Nomination and Remuneration Committee, the Board has framed a policy for selection and appointment of Directors, Senior Management including Key Managerial Personnel and other Senior Management and their remuneration. The Nomination and Remuneration Policy includes the criteria for determining qualification, positive attributes, independence, etc. is placed on the Company's website, i.e. https:// www.kajariaceramics.com/pdf/Nomination_Remuneration_ Policy.pdf

Disclosures under the Companies Act, 2013 and rules made thereunder:

Annual Return

The Annual Return in Form MGT-7 is available at https:// www.kajariaceramics.com/pdf/Annual_Return_Form_2022-23. pdf

Compliance of the Secretarial Standards

During the year under review, the Company has complied with the applicable provisions of the Secretarial Standard on meetings of the Board of Directors ('SS-1') and the Secretarial Standard on General Meetings ('SS-2') issued by the Institute of Company Secretaries of India.

Particulars of Loans, Investments and Guarantees

Particulars of Loans, Investments and Guarantees, covered under the provisions of Section 186 of the Act are given in the Notes Nos. 6, 7, and 40 to the Financial Statements.

Conservation of energy, technology absorption and foreign exchange earnings & outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under the Act are provided in Annexure - 6 to this report.

Meetings of Board

The Board of the Company met six (6) times during the financial year 2022-23 on 17th May, 2022, 21st July, 2022, 3rd October, 2022, 2nd November, 2022, 28th January, 2023 and 25th March, 2023. Details of the meetings of the Board of Directors held during the financial year 2022-23 and attendance thereof are disclosed in the Corporate Governance Report.

Audit Committee

The Composition of Audit Committee is disclosed in the Corporate Governance Report. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has established a Vigil Mechanism for the Directors and Employees of the Company by adopting the Whistle Blower Policy to report about the genuine concerns, unethical behaviour, fraud or violation of Company's Code of Conduct and leakage/ suspected leakage of Unpublished Price Sensitive Information with respect to the Company. The Whistle Blower Policy may be accessed on the website of the Company i.e. https:// www.kajariaceramics.com/pdf/whistel_blowing_policy.pdf

Maintenance of Cost Records

The Company is not required to maintain cost records as per sub-section (1) of Section 148 of the Act.

Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal), Act, 2013

The Company has in place a Policy on Prevention of Sexual Harassment at the Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. This Policy may be accessed on the Company's website i.e. https://www.kajariaceramics.com/ pdf/prevention_of_sexual_harassment_at_workplace.pdf

Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, Contractual, Temporary and Trainees) are covered under this Policy. The Company has not received any sexual harassment complaints during the year 2022-23 nor any complaint is pending at the end of the year 2022-23.

Particulars of Employees

The information required pursuant to Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is attached as Annexure- 7 to this Report.

Deposits

The Company did not invite/accept any deposit within the meaning of Section 73 of the Act and the rules made thereunder.

Proceeding under Insolvency and Bankruptcy Code, 2016

No application or any proceeding has been filed against the Company under the Insolvency and Bankruptcy Code, 2016, during the financial year 2022-23.

Details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof

The Company has not made any one-time settlement, therefore, the same is not applicable.

Significant and material orders passed by the regulators or courts or tribunals

There is no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

Your Directors would also like to record their appreciation for the support and cooperation your Company has been receiving from its suppliers, dealers, business partners and others associated with the Company.

Your Directors place on record their sincere appreciation to the employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain as industry leader.

And to you, our shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

For and on behalf of the Board Ashok Kajaria

Chairman & Managing Director DIN:00273877

Place: New Delhi Date: 26^th July, 2023