To

The Members

KWALITY PHARMACEUTICALS LIMITED.

Your Directors have pleasure in presenting the 42^nd Annual Report of KWALITY PHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended 31^st March 2025.

1) FINANCIAL HIGHLIGHTS

The Company's financial performance for the year under review has been encouraging and is summarized below

2) PERFORMANCE REVIEW

Your Company has prepared the Financial Statements for the financial year ended March 31, 2025, in terms of Sections 129, 133 and other applicable provisions, if any, of the Companies Act, 2013 (as amended) (the "Act") and Schedule III thereto read with the Rules framed thereunder.

During the year under review, on standalone basis, revenue of the company was Rs. 37211.71 Lakhs as compared to Rs. 30900.21 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 3988.97 Lakhs as compared to Rs. 2398.39 Lakhs in the previous year.

On consolidated basis, revenue of the company was Rs. 37211.71 Lakhs as compared to Rs. 30900.21 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 3980.27 Lakhs as compared to Rs. 2361.59 Lakhs in the previous year.

3) CHANGES IN NATURE OF BUSINESS

The Company is engaged in the business of manufacturing & trading in Pharmaceuticals & allied products and there was no change in the nature of the business of the Company during the year under review.

4) DIVIDEND

In order to conserve the resources, the Board of Directors does not recommend any dividend for the financial year 2024-25.

5) RESERVES

During the financial year under review, there are no transfers to any specific reserves.

6) ANNUAL RETURN

The Annual Return of the Company as on March 31, 2025 is available on the Company's website and can be accessed at https://www.kwalitypharma.com/annual returns.php

7) ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The details pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8, sub-rule (3) of Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo is given in Annexure 'A.'

8) PARTICULARS OF EMPLOYEES REMUNERATION

The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as 'Annexure B'. There is no employee drawing a salary exceeding the limit prescribed under Section 197(12) read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

9) ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Audited Financial Statements for the financial year ended March 31, 2025 have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable.

10) DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board received a declaration from all the directors under section 164 and other applicable provisions, if any, of the Companies Act, 2013 that none of the directors of the company is disqualified under the provisions of the Companies Act, 2013 ('Act') or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

(a) Based on the recommendation of the Nomination and Remuneration Committee, Mr. Vinod Kumar Sharma (DIN:08502519) was appointed as an Additional Director (under Independent Director category) of the Company by the Board at its meeting held on July 26, 2025, under the provisions of section 161(1) and other applicable provisions, if any, of the Companies Act, 2013 and is entitled to hold office upto the date of 42^nd Annual General Meeting of the Company.

Mr. Vinod Kumar Sharma has passed online proficiency test pursuant to the provisions of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014. The Company has also received requisite disclosures/ declarations from Mr. Vinod Kumar Sharma under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and its amendments thereunder. Mr. Vinod Kumar Sharma is not disqualified from being appointed as Director in terms of Section 164 of the Companies Act, 2013. In opinion of the Board, he fulfills the conditions specified in the Companies Act, 2013 & Listing Regulations and is independent of the management. The Board recommends the Special Resolution for his appointment as Independent director of the company for approval by the Members at the ensuing AGM.

The aforesaid appointment with brief profile and other related information of Mr. Vinod Kumar Sharma forms part of the Notice convening the ensuing AGM.

(b) Mr. Kiran Kumar Verma (DIN: 07415375) ceased to be Director of the Company and also from Chairperson of Nomination & Remuneration Committee and Member of Audit Committee of the Company with effect from 26^th July, 2025 due to other professional commitments .

The Board of Directors places on record its sincere appreciation for the valuable guidance and contributions made by Mr. Kiran Kumar Verma during his association with the Company.

(c) The first term of Mr. Kartik Kapur (DIN: 08966816), Non-Executive Independent Director of the

Company is due to expire on 15^th January, 2026. Accordingly, on the recommendation of the Nomination & Remuneration Committee, the Board of Directors made the re-appointment of Mr. Kartik Kapur for a second term of five consecutive years commencing from 16^th January, 2026 upto 15^th January, 2031 in the board meeting held on 16^th August, 2025 subject to the approval of shareholders in forthcoming Annual General Meeting of the Company. The Board of Directors recommends his re-appointment as

Independent Director of the Company for a further period of five consecutive years with effect from 16^th January, 2026.

(d) The current term of Executive Directors i.e. Mr. Ramesh Arora (DIN: 00462656) Managing Director, Mr. Ajay Kumar Arora (DIN: 00462664) Whole Time Director, Mrs. Geeta Arora (DIN: 03155615) Whole Time Director and Mrs. Anju Arora (DIN: 03155641) Whole Time Director is due to expire on 15^th January, 2026. Accordingly, on the recommendation of the Nomination & Remuneration Committee, the Board at its meeting held on 16^th August, 2025 has, subject to the approval of the shareholders in the ensuing Annual General Meeting, approved their re-appointment for further period of 5 years. i.e. with effect from 16^th January, 2026 to 15^th January, 2031.

The Board recommends the above re-appointments for the consideration of Members of the Company at the ensuing Annual General Meeting.

(e) During the f.y. 2024-25, the continuation of appointment of Mr. Ramesh Arora (DIN: 00462656), as Managing Director of the company beyond the age of 70 years was approved by the shareholders through a Special Resolution passed at the Annual General Meeting held on September 24, 2024. Accordingly, Mr. Ramesh Arora continues to serve as the Managing Director of the Company.

ii. ) RETIREMENT BY ROTATION

In accordance with the provisions of section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ajay Kumar Arora and Mrs. Geeta Arora, directors retire by rotation at the ensuing Annual General Meeting and offer themselves for reappointment.

iii. ) Key Managerial Personnel: The following are the Key Managerial Personnel of the Company for the year:

11) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2024-25, 11 meetings of the Board of Directors of the company were held and the details of which are given in the Corporate Governance Report which is enclosed with director's report as "Annexure E". The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

12) COMMITTEES OF THE BOARD

The Board has constituted various committees to support the Board in discharging its responsibilities. The following four committees are constituted by the Board:

AUDIT COMMITTEE

The Audit Committee comprises of Sh. Pankaj Takkar as Chairman and Sh. Vinod Kumar Sharma and Sh. Aditya Arora as members. Sh. Kiran Kumar Verma ceased to be member of the Audit Committee w.e.f. 26-07-2025 due to his resignation from the board and Sh. Vinod Kumar Sharma (newly appointed additional independent director w.e.f. 26-07-2025) was appointed as a member of committee w.e.f. 2607-2025. The details of term of reference of the Audit Committee members, dates of meetings held and attendance of the Directors are given separately in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of Sh. Vinod Kumar Sharma (newly appointed additional independent director w.e.f. 26-07-2025) as Chairman and Sh. Pankaj Takkar and Sh. Ravi Shanker Singh as members. Sh. Kiran Kumar Verma ceased to be Chairman of the Nomination and Remuneration Committee w.e.f. 26-07-2025 due to his resignation from the board and Sh. Vinod Kumar Sharma was appointed as a Chairman w.e.f. 26-07-2025. The details of term of reference of the Committee members, dates of meetings held and attendance of the Directors are given in the Corporate Governance Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises of Sh. Ravi Shanker Singh as Chairman and Smt. Geeta Arora and Smt. Anju Arora as members. The details of term of reference of the Committee members, dates of meetings held and attendance of the Directors are given separately in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee is duly constituted in terms of the requirement of Companies Act, 2013. During the financial year 2024-25, two meetings of CSR committee were held on 23-05-2024 and 31-03-2025. The composition of Committee and attendance of members is as follows:

13) MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors met on 31^st March 2025 inter alia, to

a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;

b) review the performance of the Managing Director of the Company, taking into account the views of Executive Directors and Non-Executive Directors;

c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

14) DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has one subsidiary company Kwality Pharmaceuticals Africa, Limitada' at Maputo Province, Mozambique which is mainly engaged in the Pharmaceuticals business. The Board reviewed the affairs of the Company's subsidiary during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which forms part of this Annual Report. Further a statement containing Salient features of the Financial Statements of its subsidiary in Form AOC-1 as given in the annual report forms part of the Financial Statements. During the year, no company became or ceased to be Subsidiary, Joint Venture or Associate Company.

15) MECHANISM FOR EVALUATING BOARD MEMBERS:

Pursuant to the section 134 (p) of Companies Act, 2013 read with Rule 8 (4) of Companies Accounts Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, as well as the Board Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, frequency of committee meetings, their functioning etc.

The evaluation of the Directors were based on their attendance and participation, acting in good faith and in the interests of the company as a whole, exercising duties with due diligence and reasonable care, complying with legislations and regulations in letter and spirit and such other factors.

In addition, the managing director was also evaluated on the key aspects of his role. In a separate meeting of independent Directors, performance of non independent directors, performance of the board as a whole and performance of the managing director was evaluated, taking into account the views of executive directors and non-executive directors.

16) FAMILIARISATION PROGRAMME FOR BOARD MEMBERS

The Familiarization Program seeks to update the Independent Directors on various matters covering Company's strategy, business model, operations, organization structure, finance, risk management etc. It also seeks to update the Independent Directors with their roles, rights, responsibilities, duties under the

Companies Act, 2013 and other statutes. The policy and details of familiarization program imparted to the Independent Directors of the Company is available at

https://www.kwalitvpharma.com/assets/Disclosure%20under%20Regulation%2046/Familiarization%20 Programmes%20imparted%20to%20Independent%20Directors.pdf

17) STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

The Company had received declarations from all the Independent Directors of the Company confirming that they meet criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and under Regulation 16 (1)(b) of Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company and in the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act and the Listing Regulations and are Independent of the management.

18) POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of the Directors, the senior management and their remuneration. The remuneration policy is stated in the Corporate Governance Report.

19) WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about the unethical behavior, fraud, improper practice or violation of the Company's Code of Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It gives a platform to the whistle blower to report any unethical or improper practice (not necessarily violation of law) and to define processes for receiving and investigating complaints. The mechanism provides adequate safeguards against victimization of employees and directors who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy is available on the website of the Company at https://www.kwalitypharma.com/assets/CORPORATE%20POLICIES /Whistle-Blower-Policy.pdf

20) VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established and Chairman of the Audit Committee is responsible for issue pertaining to same.

21) RISK MANAGEMENT

The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Efficient risk management is the key to achieving short term goals and sustained value creation over the long term. A well-defined risk management mechanism covering

the risk mapping and trend analysis, risk exposures, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and nonbusiness risks.

22) STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, the Company in its 41^st Annual General Meeting held on 24^th day of September, 2024 had appointed M/s VIJAY MEHRA & CO., Chartered Accountants, Amritsar (FRN: 001051N) as the Statutory Auditors of the Company for a period of Five consecutive years from the conclusion of the 41^st Annual General Meeting, till the conclusion of the 46^th Annual General Meeting of the Company. The Companies Amendment Act, 2017 has dispensed the ratification of auditors appointment at every Annual General Meeting. Accordingly the Ordinary Business Agenda item relating to the ratification of the statutory Auditors appointment is not placed in the AGM notice.

M/s VIJAY MEHRA & CO., Chartered Accountants, have submitted their Report on the Financial Statements of the Company for the F.Y 2024-25, which forms part of the Annual Report. The Statutory Auditors' Report on the Financial Statements of the Company for FY 2024-25 does not contain any qualifications, reservations, adverse remarks or disclaimer.

The Statutory Auditors of the Company have not reported any fraud as specified under section 143(12) of the Act, in the year under review.

24) COST AUDITOR

Pursuant to Section 148(3) of the Companies Act, 2013, M/s Verma Khushwinder & Co., Cost Accountants, Jalandhar, were appointed as the Cost Auditors of the Company for the financial year 202425 by the Board of Directors and their remuneration was ratified by members at the 41^st Annual General Meeting of the Company.

Further, the Board of Directors has appointed M/s Verma Khushwinder & Co. as the Cost Auditors of the Company for the financial year 2025-26 and has also fixed their remuneration. The Board has recommended the remuneration approved in its meeting, for ratification by the shareholders in the ensuing AGM of the Company.

The Company has maintained the Cost Records as specified by the Central Government under Section 148(1) of the Act.

25) SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Rishi Mittal & Associates, , Practicing Company Secretaries, Amritsar to undertake the Secretarial Audit of the Company for the Financial Year 2024-25.

The Secretarial Audit Report for Financial Year 2024-25 forms part of the Annual report as "Annexure C" to the Board's report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark except the following :-

i.) As per Regulation 24A(2) of SEBI (LODR) Regulations, 2015, every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within sixty days from end of each financial year but the company had made delay of 1 day in submission of XBRL format of report for year ended 31-03-2024 with BSE for which penalty of Rs.2360 was imposed by BSE on company;

Explanation: The Company had filed the PDF report within the due date on 30th May, 2024 but due to some technical problem in login, XBRL could not be uploaded on same day at BSE portal So, there was delay of 1 day in submission of XBRL with BSE for which penalty of Rs. 2360 was imposed on company which was duly paid by the company to BSE.

ii) Pursuant to the provisions of Regulation 30 read with sub-para 20, Para A, Part A of Schedule III of the SEBI (LODR) Regulations, 2015, the company has not intimated to stock exchange (BSE) regarding various demand orders passed under the Central Goods and Services Tax Act, 2017, imposing penalties on company;

Explanation: The management acknowledges the observation and is in the process of submitting the required disclosures to BSE.

iii) The company has not intimated to stock exchange (BSE) the details regarding 'Pendency of any litigation(s) or dispute(s) or the outcome thereof which may have an impact on the listed entity' i.e. updates on ongoing tax litigations or disputes pursuant to the provisions of Regulation 30 read with subpara 8, Para B, Part A of Schedule III of the SEBI (LODR) Regulations, 2015.

Explanation: The management acknowledges the observation and is in the process of submitting the required disclosures to BSE.

Further, pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing Regulations and based on the recommendation of Audit Committee, the Board of Directors have recommended appointment of M/s Rishi Mittal & Associates, Peer-reviewed Practicing Company Secretaries firm (Peer Review Number 2486/2022), to undertake the Secretarial Audit of the Company for a period of five years from the conclusion of this 42^nd AGM till the 47^th AGM of the company. The proposed Secretarial Auditors have confirmed that they are not disqualified from being appointed as Secretarial Auditors of the Company. Necessary Resolution for approval of Shareholders has been set out at Item No. 10 in the Notice convening 42^nd AGM and the Board recommends the said Resolution.

26) DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In view of the profits and turnover of the Company, your Company was required to undertake CSR projects during the year 2024-25 under the provisions of section 135 of the Companies Act, 2013 and the rules

made thereunder. As part of its initiatives under Corporate Social Responsibility (CSR)", the Company has undertaken various activities, which are in accordance with CSR Policy of the Company and Schedule VII of the Companies Act, 2013.The Board has approved a CSR policy on the recommendations of the CSR Committee. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014 is set out at Annexure-D forming part of this Board Report.

27) REPORT ON CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of the Corporate Governance aligned with the best practices. In compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on corporate governance along with a certificate from practicing company secretary on its compliance forms an integral part of this Board's Report.

A report on Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations is provided in a separate section and is annexed to this Report and marked as "Annexure E".

28) MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of the operations and performance of the Company is set out in the Management Discussion and Analysis Report pursuant to Regulation 34 Part-B of Schedule V of the (Listing Obligations and Disclosure Requirements)Regulations, 2015 which forms part of the Annual Report for the year under review as "Annexure F".

29) PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

30) PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All Related Party Transactions that were entered into during the financial year were on an arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 ('the Act') and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no related party transactions made by the Company with the Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

The Board of Directors of the Company has approved the criteria for giving the omnibus approval by the Audit Committee within the overall framework of the Policy on Related Party Transactions. Omnibus approval was obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm's length basis.

The transactions with the related parties have been disclosed in the financial statements. During the year the company has not entered into any contracts / arrangements / transactions with related parties which could be considered material in accordance with policy of the Company on material related party transactions or under section 188 (1) of the Act. Thus disclosure in Form AOC-2 is not required.

31) COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

Your Directors state that they have devised proper systems to ensure compliance with the Secretarial Standards and that such system are adequate and operating effectively. During the year under review, the Company has complied with the provisions of all the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under section 118 of the Companies Act, 2013.

32) MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company to which the Financial Statements relate and the date of this Report.

33) DEPOSITS

Your Company has not accepted any deposits from the public during the year under review, within the meaning of Section 73 of the Companies Act, 2013 ('the Act) read with the Companies (Acceptance of Deposits) Rules, 2014, and no amount of principle or interest on deposits from the public is outstanding as on the date of Balance Sheet.

34) SHARE CAPITAL

During the year under review, there was no change in the paid-up equity share capital of the Company which is as on 31^st March, 2025 was Rs. 1037.62 Lakhs.

35) PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES

The company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees as per Rule 16(4) of Companies (share capital and debentures) Rules, 2014.

36) ISSUE OF SWEAT EQUITY SHARES

The Company has not issued any sweat equity share during the financial year in accordance with the provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

37) ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any equity shares with differential voting rights during the financial year as per Rule 4(4) of Companies (Share capital and debentures) Rules, 2014.

38) ISSUE OF EMPLOYEE STOCK OPTION

The company has not issued any employee stock option during the financial year as per Rule 12 of Companies (share capital and debentures) Rules, 2014.

39) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has comprehensive and adequate internal financial controls system for all major processes including financial statements to ensure reliability of reporting. The system also helps management to have timely data/feedback on various operational parameters for effective review. It also ensures proper safeguarding of assets across the Company and its economical use. The internal financial controls system of the Company is commensurate with the size, scale and complexity of its operations. The systems and controls are periodically reviewed and modified based on the requirement.

The Company has an internal audit function which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process. The scope of Internal Audit is well defined and documented and the audit committee reviews the observations of the Internal Audit critically. The composition and working of the audit committee forms part of the Corporate Governance Report.

Internal audits are undertaken on a quarterly basis by Internal Auditors covering all units and business operations to independently validate the existing controls. Reports of the Internal Auditors are regularly reviewed by the management and corrective action is initiated to strengthen the controls and enhance the effectiveness of the existing systems. There were no observations or remarks reported by the said auditors of the Company during the year under review.

40) COMPANY SECRETARY AND COMPLIANCE OFFICER

Ms. Gurpreet Kaur (M.No. 52091) is Company Secretary, KMP and Compliance Officer of the Company.

PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. An Internal Complaints Committee has been set up to redress the complaints received regarding sexual harassment. Your Company did not receive any complaints during the period under review.

42) PROHIBITION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with requirements of SEBI (Prohibition of Insider Trading) Regulations, 2015. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed and disclosures to be made while dealing with shares of the

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Company, as well as the consequences of violation. The Policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company Securities. The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading is available on the Company's website at https://www.kwalitypharma.com/assets/CORPORATE%20POLICIES /Code%20of%20Practice%20and%2 0Procedure%20for%20fair%20disclosure%20of%20UPSI.pdf

43) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

FUND (IEPF)

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

45) DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors' confirm that:

i. in the preparation of the annual accounts for the financial year ended March 31, 2025, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year ended 31^st March, 2025 and of the profit of the Company for that period;

iii The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. The Directors had prepared the annual accounts on a 'going concern' basis;

v. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

46) POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

Based on the recommendation of Nomination & Remuneration Committee, the Board of Directors approved and adopted a Policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and other employees of the Company as required under Section 178(3) of the Act. The Remuneration Policy on the appointment and remuneration of Directors and Key Managerial Personnel provides a framework based on which our human resources management aligns their recruitment plans for the strategic growth of the Company. The policy may be accessed under the 'Investor Relations' section on the website of the Company at the web link

https://www.kwalitvpharma.com/assets/CORPORATE%20PQLICIES /Nomination%20 %20Remuneratio n%20Policy.pdf

47) POSTAL BALLOT

During the year under review, no postal ballot resolutions were passed.

48) CASH FLOW STATEMENT

In due compliance of the listing agreement and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

49) HUMAN RESOURCES

The Company continues to recognize its employees as one of its most valuable assets. During the year under review, the Company maintained cordial and harmonious relations with all employees across all levels and locations. Various initiatives were undertaken to enhance employee engagement, skill development, and performance management, aligning individual goals with the Company's strategic objectives. The focus remained on building a culture of accountability, innovation, and continuous learning.

50) OTHER DISCLOSURES

The Company does not have any Employees Stock Option Scheme in force and hence particulars are not furnished, as the same are not applicable. No proceedings against the Company is initiated or pending under the Insolvency and Bankruptcy Code, 2016. The 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 - Not Applicable. During the year under review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee and / or Board under section 143(12) of the Act.

51) EXPLANATION REGARDING PENDING TAX LITIGATIONS

During the financial year 2024-25, the Company received certain orders and show cause notices from the Goods and Services Tax (GST) Department pertaining to earlier financial years. These matters relate to alleged erroneous refunds, wrongful availment of Input Tax Credit (ITC), and related penalties.

Based on legal advice and our internal assessment, we believe these demands are not legally sustainable. The Company has taken appropriate legal action in each case and is actively contesting the matters before the respective appellate authorities and courts. A summary of the ongoing proceedings is given below:

(a) Show Cause Notice Alleging Wrongful Availment of ITC (FY 2017-18 to 2022-23)

A Show Cause Notice bearing No. AE/51/2024-25 was received under Sections 74 and 122 of the CGST Act, 2017, alleging wrongful ITC availment of ^15,13,03,420/-, with an equivalent proposed penalty, totaling ^30,26,06,840/-.

The Company has filed a Civil Writ Petition before the Hon'ble Punjab and Haryana High Court (CWP- 34165-2024). The Court has stayed the adjudication proceedings, and the matter is currently under litigation.

(b) Erroneous Refund of IGST (FY 2017-18 to 2022-23)

An order bearing No. 14/GST/ADC/JAL/2024-2025 was received under Section 74(9) of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017, raising a demand of ^3,15,02,758/- and an equivalent penalty of ^3,15,02,758/-. Interest has also been levied, though not quantified.

The Company has filed an appeal against the order before the appropriate appellate authority. The total disputed amount of ^6,30,05,516/- is currently under litigation.

(c) Orders in Form DRC-07 for ITC Disputes

The Company received orders dated 30/12/2024 from the GST Department under Section 74 of the CGST Act, 2017, for the following:

o FY 2017-18: Penalty of ^2,80,695/- (no tax).

o FY 2019-20: Tax and penalty of ^6,74,856/- each.

o FY 2020-21: Tax of ^12,62,160/- and penalty of ^12,70,485/-.

The Company has filed appeals before the concerned GST appellate authority, and the matters are currently pending.

We reaffirm that, based on legal advice and a thorough internal review, the Company believes these matters are defensible. The management is pursuing them diligently and is confident of receiving favourable outcomes. The Company remains committed to full legal compliance and protection of stakeholder interests.

52) INDUSTRIAL RELATIONS

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

53) ENVIRONMENT, HEALTH AND SAFETY

The Company remains committed to conducting its operations in an environmentally sustainable and socially responsible manner. During the year under review, all applicable environmental and safety regulations were complied with. Regular safety audits, training sessions, and medical check-ups were conducted to ensure workplace safety and employee well-being. Waste disposal, emissions, and effluent treatment were managed as per statutory norms, and energy conservation measures were implemented across operations.

54) APPRECIATION

Your Company has been able to perform better with the continuous improvement in all functions and areas which coupled with an efficient utilization of the Company's resources led to sustainable and profitable growth of the Organization. Your Directors express their deep sense of appreciation and extend their sincere thanks to every employee and associates for their dedicated and sustained contribution and they look forward the continuance of the same in future.

55) ACKNOWLEDGMENTS:

Your Directors would like to express their gratitude for the valuable assistance and cooperation received from shareholders, lenders, government authorities, customers and vendors. Your Directors also wish to place on record their appreciation for the committed services of all the employees of the Company.