Dear Members,

The Board of Directors of your Company ('Board') is pleased to share with the valued stakeholders the Integrated Annual Report for financial year 2024-2025 ('Integrated Annual Report'/ Annual Report') comprising of Audited Standalone and Consolidated Financial Statements of Parag Milk Foods Limited ('Parag' or 'Company' or 'Your Company') for the financial year ('FY') ended March 31, 2025. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

OVERVIEW OF FINANCIAL PERFORMANCE

In Compliance with the applicable provision of the Companies Act, 2013 ('Act') and the Securities and Exchange Board of India ('SEBI') (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'), this Board's Report is prepared based on the financial statements of the Company for the year under review, with respect to the Company and its subsidiary companies. The consolidated entity has been referred to as 'Parag Group' or 'Group' in this report.

Key highlights of Standalone and Consolidated Financial Results of the Company for the financial year ended March 31, 2025, are summarized as under:

(Rs. in Crore)

Note: Due to rounding off, numbers presented in the above table may not add up precisely to the totals provided in Financial Statements.

FINANCIAL PERFORMANCE AND STATE OF COMPANY'S AFFAIRS

Standalone

At Standalone level, the total Revenue from operations for FY 2024-25 increased by 8.98% to H3,36740 Crore against H3,089.83 Crore in the Previous Year 2023-24. The Standalone Profit Before Tax for FY 2024-25 increased to H134.84 Crore against H82.86 Crore in the Previous Year 2023-24. The Standalone Profit after Tax for FY 2024- 25 increased to H123.54 Crore against H91.95 Crore reported in the Previous Year 2023-24. The Operations and Financial Results of the Company are further elaborated in the Management Discussion and Analysis Report, which forms part of the Integrated Annual Report.

Consolidated

Consolidated Revenue from Operations for FY 2024-25 stood at H3,432.21 Crore reporting a growth of 9.35% as compared to H3,138.70 Crore in FY 2023-24, driven by improvement in core categories of mainly Ghee, Cheese and Paneer which have witnessed a volume growth of 17% for FY 2024-25. The Consolidated Profit Before Tax for FY 2024-25 increased to H132.59 Crore from H85.86 Crore in the Previous Year 2023-24.

The Consolidated Profit After Tax for FY 2024-25 stood at H118.79 Crore as compared to H90.59 Crore in the Previous Year 2023-24.

PERFORMANCE ANALYSIS, BUSINESS OUTLOOK AND HIGHLIGHTS

Parag demonstrated a robust performance in FY 2024-25, with a 10% year-on-year volume growth, driven by strong momentum in its core dairy categories-Ghee, Cheese and Paneer which collectively recorded 17% growth during the year.

Despite ongoing fluctuations in milk procurement prices, the Company effectively optimized its cost structure and improved Gross Profit Margins by 130 basis points, reaching 25.8%, supported by premium product mix, operational efficiency and strategic pricing.

According to the IMARC Report 2024:

• Gowardhan Ghee maintained its leadership in the branded cow ghee segment with a 22% market share.

• Go Cheese continued as the second-largest cheese brand in India, with a 35% share, reflecting consumer trust and category strength.

New-Age Business Growth:

• Avvatar (Parag's performance nutrition brand) recorded significant growth, strengthening its leadership in India's sports and active nutrition category through innovation and clean-label offerings.

• Pride of Cows expanded its product range and deepened its reach through quick commerce platforms and premium retail, accelerating the Company's premiumization strategy.

Company-wide growth was further supported by ongoing investments in distribution and channel expansion, reinforcing presence across general trade, modern retail and digital commerce.

INNOVATION AND PRODUCT EXPANSION

The year was marked by strategic innovation across all brands, aligned with evolving consumer demand for nutritious, indulgent and functional foods. Key launches included:

• Gowardhan: Crunchy Chikki (Sesame and Peanut) made with pure cow ghee - offering a wholesome, nostalgic snack.

• Go: Fruit Yogurt - a vibrant, on-the-go product that blends taste and nutrition for urban consumers.

• Pride of Cows: Low-Fat High-Protein Paneer, Greek Yogurt and Bocconcini - all designed for health-conscious, premium consumers.

• Avvatar: High-protein bars (Chocolate and Coffee Wafer)- a clean-label snacking innovation aimed at fitness- focused individuals.

BRAND BUILDING AND MARKETING INITIATIVES

Parag elevated its brand strategy through a holistic, multichannel approach to storytelling, product visibility and consumer engagement. The goal is to position the Company not just as a dairy provider but as a partner in health, taste and lifestyle.

1. Multi-Platform Campaigns and Media Integrations

To drive top-of-mind recall, the Company executed strategic

brand integrations on national and regional platforms:

• Go Cheese partnered with Bigg Boss under the campaign "Har Tasty Cheese, Mein Go Cheese", reaching a wide consumer base.

• Presence across Kaun Banega Crorepati, MTV Roadies and Maharashtrachi Hasya Jatra enhanced emotional connection with Hindi and regional viewers.

• Branded content initiatives included Chef Ajay Chopra for Go Cheese, a Curly Tales special with Kamiya Jani for Pride of Cows and YouTube chef collaborations for Avvatar-positioning the brands as lifestyle companions.

2. Influencer and Creator Collaborations

• Avvatar Performance Whey was launched with over 100+ fitness and lifestyle influencers, spotlighting India's 80% protein deficiency and building credibility as a homegrown, science-backed alternative to global brands.

• Pride of Cows received organic amplification from premium lifestyle bloggers and chefs, boosting brand perception among affluent urban consumers.

• Gowardhan Ghee's purity was emphasized through influencer conversations amidst rising concerns over food adulteration, reinforcing trust and transparency.

3. Launch Communication and Product Campaigns

Each new product launch was accompanied by

tailored campaigns:

• Go Fruit Yogurt: "Taste Meets Nutrition-positioning the product as a nutritious indulgence for busy urban families.

• Gowardhan Chikki: Presented as a healthy festive treat, rooted in tradition yet modern in convenience.

• Pride of Cows: Focused on clean-label, high-protein, single-origin dairy options for discerning consumers.

• Avvatar Protein Bars: Launched with a digital-first campaign under "Snack Strong", merging convenience, performance and flavor.

4. On-Ground and Trade Activation

To support retail conversion and in-store traction:

• Go Cheese conducted sampling and bundling in modern trade, timed around festive seasons and cricket events.

• Pride of Cows ran tasting sessions in premium housing societies and cafes, reinforcing its boutique, high- quality identity.

• Recipe contests and chef events were organized for Avvatar and Go Cheese, engaging culinary communities and fitness enthusiasts alike.

5. Sharpened Brand Positioning

Each brand further refined its voice and identity:

• Gowardhan leaned into its "Garv se Gowardhan" positioning, reflecting purity, trust and tradition- especially relevant during the festive period.

• Go Cheese emphasized innovation, variety and fun targeting families and young adults.

• Pride of Cows reinforced its single-origin, with elevated packaging and messaging.

• Avvatar strengthened its leadership as India's own performance nutrition brand, rooted in clean ingredients, functional benefits and transparent labeling.

Together, these initiatives solidified Parag's positioning as a future-ready dairy and nutrition powerhouse, committed to meeting modern lifestyle needs while staying true to its roots in purity, health and trust.

EXPANSION / INCORPORPATION OF SUBSIDIARY

The Company is expanding its wholly owned subsidiary ('WOS'), Bhagyalakshmi Dairy Farms Private Limited ('Bhagyalaxmi'), which supplies exclusively to our brand "Pride of Cows" and is expected to reach about 15,000 cows in coming five years.

The Company has incorporated a wholly owned foreign subsidiary in Dubai, UAE, named Parag Milk Foods Middle East FZE to expand its reach and build seamless supply chain operations worldwide to cater the international market.

REVIEW OF OPERATIONS

The details of review of operations are elaborated in the Management Discussion and Analysis, which forms part of the Integrated Annual Report.

BRAND BUILDING: STRATEGY

The Company's foremost strategic priority is to be one of the best performing, most trusted and respected dairy FMCG Companies across stakeholders and become a global nutrition provider that emphasizes health and nutrition to consumers through quality and innovation.

EXPORT MARKET

The Company continues to enjoy its presence and brand recall of Go and Gowardhan brands across several geographies through its exports to UAE, Singapore, Mauritius, Oman, Kuwait, Bahrain, Hong Kong, Philippines, Sri Lanka, Bangladesh, Maldives, Indonesia, Malaysia, USA, Nepal, Bhutan etc. It had also started expanding its reach in UK, Germany and other European countries through Sweet export. Our export sales has contributed 2.68% to the overall revenues.

PHILANTHROPIC ACTIVITIES

The company has actively contributed to philanthropic efforts benefiting the broader community, with continued focus in the following areas:

• Promotion of education

• Animal health and social welfare

• Rural Development

DIVIDEND AND RESERVES Policy on Dividend Distribution

The Company has adopted Dividend Distribution Policy in terms of the requirements of Regulation 43A of the Listing Regulations and any amendments thereto for bringing transparency in the matter of declaration of dividend and for protecting the interest of investors.

The Company intends to maintain similar or better levels of dividend payout in future. However, the actual dividend payout in each year will be based on the profits and investment opportunities of the Company.

The policy is available on the website of the Company at https:// www.paragmilkfoods.com/policy. php?id=52

Dividend

The Board at its Meeting held on May 2, 2025, recommended a final dividend of H1 per equity share i.e. 10% of face value of H10 each for the financial year ended March 31, 2025, subject to approval of the shareholders at the ensuing 33 rd Annual General Meeting ('AGM').

If approved, the dividend would result in a cash outflow of H11.94 Crore payable to all Beneficial Owners in respect of shares held in dematerialized form as per the data as may be made available by the Depositories as on the Cut-off / Record Date. The total dividend payout works out to 9.66% of the Company's standalone net profit. In view of the amendment in the Income Tax Act, 1961 through the Finance Act, 2020, imposition of Dividend Distribution Tax (DDT) has been abolished. The dividend, if declared, at the ensuing AGM will be taxable in the hands of the Members of the Company and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income Tax Act, 1961.

The Dividend declared/recommended is in accordance with the Company's Dividend Distribution Policy, which has been disclosed on the Company's website, www.paragmilkfoods.com, as required under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.

Unclaimed dividends

Details of outstanding and unclaimed dividends previously declared and paid by the Company are elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report.

Transfer to Reserve

During FY 2024-25, there was no amount proposed to be transferred to the Reserves.

SHARE CAPITAL

During FY 2024-25, the Authorised Share Capital of the Company is H200 Crore divided into 20 Crore Equity Shares of Face Value of H10 each.

Further, Paid-up Equity Share Capital is H119.38 Crore.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE COMPANY

Strong investor confidence was reflected in the recent H161 Crore capital raise (April 2025) via convertible share warrants. The round included participation from the prominent investors, Mr. Utpal Sheth and senior company leadership. Funds will be used to optimize debt, strengthen working capital and support strategic growth.

Except for the above-mentioned issuance, there have been no such material changes or commitments that have affected the financial position of the Company between the close of FY 2024-25 and the date of signing of this report.

There has been no change in the nature of the business of your Company.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has two Wholly Owned Subsidiaries namely Bhagyalaxmi Dairy Farms Private Limited and Parag Foods Middle East FZE as on March 31, 2025. There were no material changes in the nature of the business of the subsidiaries. During FY 2024-25, Parag Foods Middle East FZE was incorporated as wholly owned foreign subsidiary of the Company. The Company does not have any associate company, nor has it entered into a joint venture with any other company.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing salient features of financial statements of the Company's Subsidiaries in Form AOC-1, is enclosed as Annexure I to this report.

Pursuant to Listing Regulations, the Company has formulated a policy for determining its 'material subsidiaries' and the same can be accessed on the Company's website at https://www. paragmilkfoods.com/policy.php?id=13.

Performance highlights of the Bhagyalaxmi Dairy Farms Private Limited for FY 2024-25 is given below:

(Rs. in Crore)

Note: Performance highlights pertaining to Parag Foods Middle East FZE has not been included, as the entity is yet to commence its operations.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the provisions of Section 129 of the Act and the Companies (Accounts) Rules, 2014, the Consolidated Financial Statements of the Company and its subsidiary have been prepared in the same form and manner as mandated by Schedule III to the Act and shall be laid before the forthcoming 33 rd AGM of the Company.

The Audited / Unaudited Financial Results of the Company as submitted with Stock Exchanges and Financial Statements of subsidiary are available under the 'Financial Performance' tab under Investors section on the website of the Company at www. paragmilkfoods.com. Further a copy of the Audited Financial Statements of the subsidiary shall be made available for inspection at the registered office of the Company during business hours on any working day upto the date of AGM. According to Section 136 of the Companies Act, 2013, any shareholder interested in obtaining a copy of separate Financial Statements of the subsidiary shall make a specific request in writing to the Company Secretary at investors@parag.com.

CREDIT RATING

During FY 2024-25, ICRA Limited, on April 8, 2024, reaffirmed the credit rating previously assigned to the Company on May 8, 2023, as disclosed in the previous annual report of the Company for FY 2023-24.

In addition to the above credit rating, the Company obtained a credit rating from India Ratings and Research Pvt. Ltd. The same can be accessed on the Company's website at https://www.paragmilkfoods.com/parag_uploads/images/ pdfs/4hduZP4PdT0XI4O20oIa.pdf.

Subsequent to FY 2024-25, following the issuance of convertible warrants on preferential basis by the Company, ICRA Limited issued a revised credit rating report on the debt instruments of the Company and simultaneously it withdrew the ratings on Company's bank facilities at the request of the Company and based on NOCs received from the lenders and in accordance with the ICRA's policy on withdrawal. The same can be accessed on Company's website at https://www.paragmilkfoods.com/parag_ uploads/images/pdfs/BfsDgyiNrtdDSadFSRQF.pdf.

BOARD OF DIRECTORS

During the year under review, the composition of the Board consists of 8 Directors comprising of 4 Independent Directors, 1 Non-Executive Director and 3 Executive Directors, details thereof are elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report.

In terms of the requirement of the Listing Regulations, the Board has identified core skills, expertise and competencies of the Directors in the context of the Company's businesses for effective functioning. The list of key skills, expertise and core competencies of the Board are elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report.

In the opinion of the Board, all the directors, possess the requisite qualifications, experience and expertise and hold high standards of integrity.

Appointment / Re-appointment of Directors:

At the 32 nd AGM held during FY 2024-25, Mr. Nikhil Vora whose term was liable to retire by rotation, was re-appointed pursuant to provisions of the Act. Other than this, no appointment / reappointment of Directors were made during FY 2024-25.

In terms of the provisions of the Companies Act, 2013, Ms. Akshali Shah, Executive Director of the Company, retires by rotation at the ensuing AGM and being eligible, offers herself for re-appointment. A resolution seeking the re-appointment of Ms. Shah, forms part of the Notice convening the ensuing AGM. The profile along with other details of Ms. Shah is provided in the annexure to the Notice of the AGM.

Changes in the Board subsequent to financial year ended March 31, 2025:

Appointments:

The Board at its meeting held on May 2, 2025 had appointed Ms. Namrata Garud as an Additional Non-Executive Independent Director with effect from May 2, 2025.

Cessations:

Mr. Narendra Ambwani, Ms. Radhika Dudhat would cease to be the Independent Directors of the Company with effect from May 26, 2025 and Mr. Nitin Dhavalikar would cease to be the Independent Directors of the Company with effect from July 27, 2025 due to completion of their term of appointment of 10 (Ten) consecutive years.

The Board places on record its sincere appreciation to the outgoing directors viz. Mr. Narendra Ambwani, Ms. Radhika Dudhat and Mr. Nitin Dhavalikar for their leadership, guidance and invaluable contributions made over the years.

Declarations by Independent Directors:

All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. In the opinion of the Board, the Independent Directors fulfill the conditions of independence specified in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and Company's Code of Conduct for Directors and Senior Management Personnel. The Independent Directors of the Company have confirmed that they have registered their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Director of the Company and the Board is satisfied with the integrity, expertise and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 2(51) and Section 203 of the Act read with Rules framed thereunder, the followings are the Key Managerial Personnel of the Company as on March 31, 2025:

MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of the Company met 4 (four) times during FY 2024-25. The details of composition of the Board and its Committees, their Meetings held during FY 2024-25 and the attendance of the Directors / Committee Members at the respective Meetings are elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report.

The Board evaluates the recommendations made by the Audit Committee and seeks further information as they may require. During the year under review, the Board accepted all the recommendations made by the Audit Committee.

Committees of the Board

The Board has the following Committees as on March 31, 2025:

(1) Audit Committee

(2) Nomination and Remuneration Committee ('NRC')

(3) Stakeholders' Relationship Committee

(4) Corporate Social Responsibility ('CSR') Committee

(5) Risk Management Committee ('RMC')

(6) Finance Committee

(7) Management Committee

The details of the Committees along with their composition, number of Meetings held and attendance at the Meetings are elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report.

AUDIT COMMITTEE

The details pertaining to the composition of the Audit Committee are included in the Corporate Governance Report, which forms part of the Integrated Annual Report.

BOARD EVALUATION

Pursuant to the provisions of the Act and Regulation 17(10) of Listing Regulations and as prescribed in the stated policy of the Board, the Board has carried out an annual performance evaluation of

(i) the Directors (Independent and non-Independent);

(ii) Board itself (as a whole); (iii) Committees and (iv) fulfillment of Independence criteria. The Board performance was evaluated based on inputs received from the Board Members after considering criteria such as Board composition and structure, effectiveness of Board / Committee processes and information provided to the Board etc. The evaluation process at the Company is conducted through structured questionnaires which covers various aspects of the Board's functioning prepared after circulating the draft forms, covering various aspects such as structure of the Board, qualifications, experience and competency of Directors, diversity in Board, effectiveness of the Board processes, among others.

The performance of the Executive Chairman was evaluated after seeking the inputs from all the Directors other than the Chairman on the basis of the criteria such as Chairman competency, value addition, leadership qualities, ease of communication, risk handling and mitigation, stakeholder relationship, personal attributes etc.

In terms of the requirements of the Act, a separate Meeting of the Independent Directors was held during the year. The Independent Directors at their Meeting held on March 18, 2025 reviewed the performance of the Chairman, Non-Independent Directors of the Company and overall performance of the Board and Committees as mandated by Schedule IV of the Act and Listing Regulations.

Following the above evaluation carried out at the Independent Directors' meeting, the Board and NRC at its meetings held on May 2, 2025 discussed the performance of the Board, its Committees, and Individual Directors. Performance evaluation of Independent Directors was done by the entire Board, excluding the Individual Director being evaluated.

The Company also acted on feedback received from the previous year's evaluation process. For more details on the Board Evaluation Process, please refer the 'Performance Evaluation' section in the Corporate Governance Report, which forms part of the Integrated Annual Report.

Familiarisation Programme for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The Company already has an elaborate familiarization programme in place for effective induction of Independent Directors. The Board acknowledged this and reiterated the importance of rigorous execution of the induction process to ensure a smooth transfer and seamless integration of the new Board Member.

The Board is regularly briefed on relevant legal and regulatory matters, emerging geo-political and macro-economic scenarios, governance developments or changes, best practice developments and other risk factors, etc.

Pursuant to Regulation 25(7) and 46 of the SEBI Listing Regulations, the details of the familiarisation programme imparted to the Directors are elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report and are also available on the Company's website i.e. www.paragmilkfoods. com under 'Investors' tab.

Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel

The Board has formulated a Nomination and Remuneration Policy in terms of the provisions of sub-section (3) of Section 178 of the Act and Regulation 19 of the Listing Regulations dealing with appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Personnel.

The policy covers criteria for determining qualifications, positive attributes, independence and remuneration of its Directors, Key Managerial Personnel and Senior Management Personnel.

The Nomination and Remuneration Policy is available on the website of the Company and the web-link of the same is https:// www.paragmilkfoods.com/policy.php?id=38

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the Management and the relevant Board Committees including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and operating effectively during FY 2024-25.

Pursuant to the requirements under Section 134(3)(c) of the Act with respect to the Directors' Responsibility Statements, your Directors make the following statements:

a) that in the preparation of the annual financial statements for the Financial Year ended March 31, 2025, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit and loss of the Company for the Financial Year ended March 31, 2025;

c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that the directors have prepared the annual financial statements for the Financial Year ended March 31, 2025 on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS

There has been no change in the Employee Stock Option Scheme (ESOP scheme) during the current financial year.

Information as required under Regulation 14 read with Part F of Schedule I of the SEBI (Share Based Employee Benefits and

Sweat Equity) ('SBEB') Regulations, 2021, has been uploaded on the Company's website and can be accessed under 'Annual Reports' tab at https://www.paragmilkfoods.com/investors.php.

A certificate received from M/s. N. L. Bhatia and Associates, Secretarial Auditors of the Company, confirms that the ESOP Scheme of the Company is in compliance with the SBEB Regulations and that the Company has complied with the provisions of the Act.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations and such internal financial controls concerning the Financial Statements are adequate. The Audit Committee comprises of professionally qualified Directors, who interact with the statutory auditors, internal auditors and management in dealing with matters.

Internal Financial Control is an integrated part of the risk management process which in turn is a part of Corporate Governance addressing financial reporting risks. The Internal Financial Controls have been documented and embedded in the business processes. Your Company's approach on Corporate Governance is elaborated in the Corporate Governance Report, which forms part of the Integrated Annual Report.

The Board reviews the internal processes, systems and the internal financial controls and accordingly, the Directors' Responsibility Statement contains confirmation as regards to adequacy of the internal financial controls.

Assurances on the effectiveness of Internal Financial Controls are obtained through management reviews, self-assessment, continuous monitoring by departmental heads as well as testing of the internal financial control systems by the internal auditors during the course of their audits.

The Audit Committee and the Board are of the opinion that the Company has sound Internal Financial Control and it is operating effectively and no material weaknesses exist during FY 2024-25. The details with respect of internal financial control and their adequacy are elaborated in the Management Discussion and Analysis, which forms part of the Integrated Annual Report.

RISK MANAGEMENT GOVERNANCE

The Board has an overall responsibility for governance of Company's risk management.

The Board approves the Company's risk policies and oversees management in the designing, implementation and monitoring of risk management systems. It also has the authority to approve any deviation in risk management policies or any breach of risk limits.

The Risk Management Committee constituted by the Board assists the Board in monitoring and reviewing the risk management for business operations, implementation of the risk management framework of the Company and such other functions as Board may deem fit.

The Risk Management Framework covers all the Key Categories for Risk Classification i.e. Strategic and Reputational Risks, Financial and Fraud Risks, Governance and Compliance Risks, Extended Enterprise Risks, Cyber Risk and Information Security and Operational Risks, etc.

During the year under review, Deloitte, the Internal Auditors of the Company, addressed the top key risks relevant to the Company and has also supported in the implementation of its Risk Management Policy of the Company. The risk identified are being systematically addressed through mitigating actions on an ongoing basis.

The detailed terms of reference and the composition of RMC are set out in the Corporate Governance Report, which forms part of the Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company promotes ethical behaviour in all its business activities and is in line with the best governance practices. The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for employees, Directors and stakeholders in confirmation with the provisions of Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, to report concerns about unethical behaviour.

The Company did not receive any complaints from the employees regarding violation of Code of Conduct or other matters during the year under review.

The functioning process of this mechanism has been more elaborately mentioned in the Corporate Governance Report forming a part of the Integrated Annual Report. The Whistle Blower Policy can be accessed on the Company's website at https://www.paragmilkfoods.com/policy.php?id=42

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility Committee and details of the composition are given separately in the Corporate Governance Report, which forms part of the Integrated Annual Report. The Company has undertaken the CSR activities in accordance with the CSR Policy of the Company adopted in accordance with Schedule VII of the Act. The Company's CSR Policy can be accessed on the Company's website at https://www.paragmilkfoods.com/policy.php?id=53.

The brief outline of the CSR Philosophy, CSR policy, salient features of and the initiatives undertaken by the Company on CSR activities during the year under review are set out in this report in the format prescribed under Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 under Annexure II to this Report.

RELATED PARTY TRANSACTIONS

During the year under review, all transactions that were entered into with the related parties were in ordinary course of business and at arms' length basis with prior Audit Committee approval. Therefore, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act w.r.t. contracts or arrangements with related parties under Section 188(1) in Form AOC-2 is not applicable to the Company for FY 2024- 25 and hence, the same is not provided. The details of the transactions with related parties during FY 2024-25 are provided in the accompanying financial statements. There were no materially significant related party transactions entered into by the Company with the promoters, key management personnel or other designated persons that may have potential conflict with the interests of the Company at large.

The Audit Committee grants omnibus approval for the transactions that are in the ordinary course of business and repetitive in nature. For other transactions, the Company obtains specific approval of the Audit Committee before entering into any such transactions. All related party transactions are placed before the Audit Committee on a quarterly basis. The same are also placed before the Board for seeking their approval.

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same can be accessed on the Company's website at https://www.paragmilkfoods.com/policy. php?id=40.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS BY THE COMPANY

The loans given, investments made, guarantees given and securities provided during the year under review are in compliance with the provisions of Section 186 of the Act and the Rules thereunder and the details are provided in the Note No 6 and 7 to the Standalone Financial Statements, which forms part of the Integrated Annual Report.

BUY BACK

The Company has not bought back any of its securities during the Financial Year ended March 31, 2025.

DEPOSITS FROM PUBLIC

The Company has not accepted any deposits from the public within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014, as amended, during the year under review.

No amount on account of principal or interest on deposits from the public was outstanding as on March 31, 2025.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

In accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ('POSH Act') and the rules made thereunder, the Company has adopted a Policy (Prevention of Sexual Harassment Policy a.k.a POSH Policy).

To build awareness on the subject, the Company has been carrying out online Induction/ refresher programmes on a periodical basis. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. As per the requirement of the POSH Act and Rules made thereunder, the Company has constituted Internal Complaint Committee(s) to redress complaints received regarding sexual harassment. All employees are covered under this Policy. Following is a summary of sexual harassment complaints received and disposed off during the year under review:

MANAGEMENT DISCUSSION AND ANALYSIS, CORPORATE GOVERNANCE REPORT AND BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34 of SEBI Listing Regulations, a separate section on Management Discussion and Analysis, Business Responsibility and Sustainability Report and Corporate Governance Report together with a certificate from a Practicing Company Secretary confirming compliance with the Regulations relating to Corporate Governance of Listing Regulations are set out and forms part of the Integrated Annual Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTFLOW

The Company is continuously making efforts to reduce and optimize the energy consumption at its manufacturing facilities/ offices all over India. Particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are provided in the prescribed format and are annexed as Annexure III and forms an integral part of this Report.

ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Act, the Annual Return of the Company prepared as per Section 92(3) of the Act for the financial year ended March 31,2025, is available on the Company's website and can be accessed under 'Annual Reports' tab at https://www. paragmilkfoods.com/investors.php.

In terms of Rules 11 and 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return shall be filed with the Registrar of Companies, within prescribed timelines.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The ratio of remuneration of each Director to the median employees' remuneration as per Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure IV and forms an integral part of this Report.

In terms of the provisions of Section 197(12) of the Act, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said rules are provided in this Integrated Annual Report. In terms of Section 136 of the Act, this report is being sent to the Members and others entitled thereto, excluding the aforesaid annexure. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary at investors@parag.com.

Details of top ten employees in terms of the remuneration and employees in receipt of remuneration as prescribed under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing details prescribed under rule 5(3) of the said rules, which form part of the Directors' Report, will be made available to any member on request, as per provisions of section 136(1) of the Act.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, there were no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review and in terms of Section 118(10) of the Act, the Company has complied with Secretarial Standards on Meetings of the Board of Directors (SS-1) and on General Meetings (SS-2) as amended and issued from time to time by the Institute of Company Secretaries of India.

AUDITORS

Statutory Auditors

At the 28 th AGM held on September 29, 2020, the Members approved appointment of M/s. Sharp and Tannan, Chartered Accountants, Mumbai (Firm Registration No.109982W), as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of the 28 th AGM till the conclusion of the ensuing 33 rd AGM.

The Board, based on the recommendation of Audit Committee, has proposed re-appointment of M/s. Sharp and Tannan, Statutory Auditor for another period of 5 years as their current tenure is valid upto the ensuing AGM. Accordingly, a resolution seeking members' approval for the re-appointment of M/s. Sharp and Tannan as the Statutory Auditor of the Company forms part of the Notice of the ensuing AGM.

As required under Regulation 33(1)(d) of Listing Regulations, M/s. Sharp and Tannan, have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Statutory Auditors have further confirmed that they are not disqualified from continuing as auditors of the Company.

The Auditor's Report for the financial year ended March 31, 2025 on the financial statements of the Company forms part of the Integrated Annual Report. The said report was issued by the Statutory Auditor with an unmodified opinion and does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any fraud under Section 143(12) of the Act and therefore no details are required to be disclosed under Section 134(3)(ca) of the Act.

Internal Auditors

Pursuant to provisions of Section 138 of the Companies Act, 2013 and the rules made thereunder, on the recommendation of the Audit Committee, the Board at its Meeting held on August 5, 2023 appointed M/s. Deloitte Touche Tohmatsu India LLP, as Internal Auditors of the Company for FY 2023-24 and FY 2024-25.

At the beginning of each Financial Year, an audit plan is rolled out after approval of the Audit Committee. The audit plan is aimed at evaluation of the efficacy and adequacy of internal control systems in the Company and compliance thereof with the same as well as robustness of internal processes, policies and accounting procedures and compliance with laws and regulations. Based on the reports of internal auditor, the functional heads undertake corrective action in their respective areas.

Cost Auditors

In accordance with Section 148 of the Act, the Company is required to maintain the accounts and cost records. It is hereby confirmed that the Company has maintained the cost records pursuant to provisions of the said section and accordingly such accounts and records are prepared and maintained by the Company.

Further, as per the requirements of Section 148 of the Act read with Rule 14 of the Companies (Cost Records and Audit) Rules, 2014, the cost records are required to be audited by a qualified Cost Accountant. During FY 2024-25, the Company filed the Cost Audit Report for FY 2023-24 issued by M/s. Harshad Deshpande and Associates, Cost Accountants, Pune (Firm Registration Number: 00378) with the Ministry of Corporate Affairs on August 21, 2024 which did not contain any qualification, reservation, adverse remark or disclaimer. No frauds were reported by the Cost Auditors to the Company in the said Report under sub-section (12) of Section 143 of the Act. Therefore, no detail is required to be disclosed under Section 134(3)(ca) of the Act.

The Board, upon the recommendation of the Audit Committee, has re-appointed M/s. Harshad Deshpande and Associates, Cost Accountants, Pune (Firm Registration Number: 00378) to conduct audit of the cost records of the Company for FY 2025-26. Accordingly, the Board of Directors recommends to the Members the resolution seeking their approval for ratifying the remuneration payable to the Cost Auditors for FY 2025-26, is provided in the Notice of the ensuing AGM.

Secretarial Auditor

The Secretarial Audit Report for FY 2024-25 in Form MR-3 is annexed as Annexure V and forms an integral part of this Report. The said Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks and no frauds were reported by the Secretarial Auditors to the Company under sub-section (12) of Section 143 of the Act therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

In compliance with Regulation 24A of the SEBI Listing Regulations and Section 204 of the Act, the Board at its meeting held on May 2, 2025, has approved the appointment of M/s. N. L. Bhatia and Associates, Practicing Company Secretaries (UIN:

P1996MH055800) as Secretarial Auditors of the Company for a term of five consecutive years commencing from FY 2025-26 till FY 2029-30, subject to approval of the Members' at the ensuing AGM. Accordingly a resolution seeking Members' approval for the re-appointment of M/s. N. L. Bhatia and Associates as the Secretarial Auditor of the Company forms part of the Notice of the ensuing AGM.

OTHER DISCLOSURES

• No application has been made under the Insolvency and Bankruptcy Code, 2016. Hence, the requirement to disclose

the details of the application made or any proceeding pending under the said Code during the year along with their status as at the end of the financial year is not applicable.

• The requirement to disclose the details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

No shares with differential voting rights and sweat equity shares have been issued during the year under review.

COMPARISON OF SHAREHOLDING DATA AS AT THE END OF FY 2024-25 AND PREVIOUS FY 2023-24

CHANGE IN THE SHAREHOLDING OF TOP TEN EQUITY SHAREHOLDERS OF THE COMPANY AS ON MARCH 31, 2025:

ACKNOWLEDGEMENTS

The Directors wish to place on record their deep sense of appreciation for the committed services by the Company's employees. The Directors acknowledge with gratitude, the encouragement and support extended by its valued shareholders. The Directors also place on record their appreciation for the support and co-operation which the Company has been receiving from its suppliers, distributors, retailers, business partners and others associated as its trading partners.

The Directors also take this opportunity to thank all the Farmers, Consumers, Employees, Shareholders, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.