Directors' Report

To,

The Members,

Parag Milk Foods Limited

Your Board of Directors ("Board") takes pleasure in
presenting the 31^st Annual Report along with the 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, 2023. The consolidated performance of the
Company and its subsidiary has been referred to
wherever required.

In Compliance with the applicable provision of the
Companies Act, 2013 ("Act") and the Securities and
Exchange Board of India ("SEBI") (Listing Obligations
& Disclosure Requirements) Regulations, 2015 ("Listing
Regulations"), this report covers the financial results
and other developments during the financial year

from April 1, 2022 to March 31, 2023, with respect
to the Company and its Subsidary Company. The
consolidated entity has been referred to as "Parag
Group" or "Group" in this report.

FINANCIAL SUMMARY - HIGHLIGHTS

The Standalone and Consolidated Financial Statements
of the Company for the Financial Year ended March 31,
2023, have been prepared in accordance with the Indian
Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 and Companies (Indian
Accounting Standards) Rules, 2015 and other relevant
provisions of the Act. The summarized Financial Results
of the Company (Standalone & Consolidated) for the
Financial Year ended March 31, 2023 are presented below:

FINANCIAL PERFORMANCE AND STATE OF
COMPANY'S AFFAIRS

Standalone

At Standalone level, the total Revenue from operations
for FY 2022-23 increased by 41% to ^28,532.00 Million
against ^20,256.07 Million in the Previous Year
2021-22. The Standalone Profit Before Tax for FY 2022-23
increased to f671.87 Million against f(5,177.32) Million in
the Previous Year 2021-22. The Standalone Profit after
Tax for FY 2022-23 increased to f684.91 Million against
f(5291.55) Million reported in the Previous Year 2021-22.
The Operations and Financial Results of the Company
are elaborated in the Management Discussion and
Analysis Report.

Consolidated

Consolidated Revenue from Operations for FY 2022-23
stood at ^28,926.20 Million reporting a growth of 39.60%
as compared to ^20,717.54 Million in FY 2021-22 driven
by improvement in core categories which reported
43.50% growth. The Consolidated Profit Before Tax for
FY 2022-23 increased to f510.62 Million from f(5220.54)
Million in the Previous Year 2021-22. The Consolidated
Profit After Tax for FY 2022-23 stood at f532.54 Million
as compared to f(5324.95) Million in the Previous Year
2021-22.

PERFORMANCE ANALYSIS, OUTLOOK & OUR
BUSINESS

The Company had started on a positive note and had
delivered record revenue for the 1^st Quarter ended June
30, 2022. Consolidated income from operations stood
at ^6,909.34 Million registering a growth of 57.6% Y-o-Y
and 22.9% Q-o-Q driven by robust volume and value
growth across categories. Gross Profit, EBIDTA and
Profit After Tax were lower compared on a quarter on
quarter basis. The share of value-added Products for
Q1 FY 2022-23 was 61.8% of total revenue, while that of
liquid milk was 12.8% and the same for Skimmed Milk
Powder was 25.4%.

For Q2 FY 2022-23; the overall festive buoyancy being
felt across all product categories, resulting in healthy
demand growth. Decent volume growth in core
product categories of ghee, cheese and paneer was
reported. Consolidated total income from operations
of ^6,648.40 Million registering a growth of 24.9% Y-o-Y
driven by robust volume and value growth across
categories. The share of value-added Products for
Q2 FY 2022-23 was 74.5% of total revenue, while that
of liquid milk was 12% and the same for Skimmed Milk
Powder was 13.5% respectively.

The Company associated with national shows like
Kaun Banega Crorepati ("KBC") and Super Singer for
Gowardhan Ghee and Go Cheese respectively. E-
commerce business grew by 76% Y-o-Y in Q2 FY 2022¬
23. Company also commenced the Lactose Value
Added Plant and was working on cold-room facilities
across India.

For Q3 FY 2022-23; the Company registered an all time
quarterly high revenue at ^7358.90 Million recording a
robust growth of 36.6% Y-o-Y at consolidated level. The
growth was broad-based with all distribution channels
of General Trade, Modern Trade, Ecommerce and
HORECA contributing to the growth. Gross Profit stood
at f1556.1 Million as compared to f1507.5 Million in Q3 FY
2021-22. The share of new age business was 3.8%, while
for liquid milk being 8.1% and value-added products
at 74.8% of total revenue, while that for Skimmed Milk
Powder was 12.5% respectively.

Core categories of Ghee and Cheese had seen
continuous traction throughout the year and posted a
growth of457% Y-o-Y and 14.1% Q-o-Q for Q3 FY2022-23.

Overall, the year posted a very strong momentum
on demand across business verticals and FY 2022¬
23 posted highest revenue of ^28,926.20 Million; led
by volume, value, and product mix. The outstanding
performance was driven by extensive distribution
reach and outlet coverage, coupled with impact led
marketing and branding campaigns and premium
pricing in flagship products. The share of new age
business was 3.3% while liquid milk took 9.4% and
value-added Products at 69.3% of total revenue.
Skimmed Milk Powder was 18% Y-o-Y.

During the year under review, core categories of Ghee
and Cheese have seen continuous traction throughout
the year and have posted a growth of 43.5% Y-o-Y, led
by volume growth of 21.5% YoY.

The protein portfolio consisting of the Premium Brand
Avvatar, continued its momentum and recorded
robust 123% growth Y-o-Y, led by 69% volume growth
Y-o-Y.

The overall business growth was broad-based with all
distribution channels contributing to performance.

E-commerce business has grown by ~2.2x on a Y-o-Y
basis.

For FY 2022-23, the General Trade, Modern Retail
and HORECA verticals posted a growth of 37% Y-o-Y,
42% Y-o-Y and 35% Y-o-Y respectively. The overall
retail presence expanded by 30% Y-o-Y to reach
4.6 lacs retail touchpoints.

BRAND BUILDING INITIATIVES & MARKETING
HIGHLIGHTS

GOWARDHAN: The Company has strengthened its
brand equity reach by adopting unique content led
impact marketing and branding activities. Some
of the recent activities include association with the
national show "Kaun Banega Crorepati (KBC)" - a
campaign promising 100 Cr Eyeballs which enabled
the Company to widen its reach in tier 2 and tier 3
cities through strong brand messaging 'Garv Se
Gowardhan'. Gowardhan had India's best Brand
Integration.

GO CHEESE: Our Company also associated with
"SUPER SINGER" for promotion of GO Cheese. There
were Outdoor campaigns with 1000 Sites on display;
focusing on Pune, Ahmedabad, Udaipur Jaipur,
Kolkata, Nagpur, Lucknow, Indore, Surat, Chandigarh,
Jalandhar, Amritsar and Bhopal.

Retaining its core theme "Make it amazing" the brand
Go Cheese has participated in one of the most popular
show "Anupama", enabling the Company to gain
strong consumer connect.

AVVATAR: Pa rag Milk Foods is the only Indian
Company to manufacture Whey Protein in India.

The Company undertook brand activation drive for its
premium protein brand "Avvatar" in IHFF (International
Health, Sports & Fitness) festival associating with the
health and fitness icon - The Great Khali. The event
had a massive footfall of 1 Lakh visitors garnering
strong brand equity.

PRIDE OF COWS: Company associated & curated
experiences with one of India's leading concerts
(Singer-Arijit Singh) and Christmas activations
(Hamleys).

The Company is providing consistent media support
to all of its brands with investments of 80% of media
spends in AIR and Building brands over new age
influencers content strategy.

Our impact led marketing campaigns coupled with an
aggressive distribution drive continue to strengthen
our brand equity.

EXPANSION OF SUBSIDIARY

The Company is expanding its wholly owned subsidiary
("WOS") "Bhagyalakshmi Dairy Farm Private Limited"

("Wholly Owned Subsidiary" / "Bhagyalaxmi"), which
supplies exclusively to our brand "Pride of Cows" and
is expected to reach over 15,000 cows by FY 2026-27.

REVIEW OF OPERATIONS

Strong network and steady relationship with 5 lakh
farmers and more than 300 Bulk Milk Coolers ("BMC")
across India has helped our Company to stand strong
in the fluctuating situations throughout the year
including turmoil in the dairy industry due to exponential
rise in export of butter, skimmed milk powder, lumpy
cow disease and heavy monsoons. During the year our
Plant procurement purchase increased by 20% from 14
lac liters a day to 18 lac liters a day. The Company is
built on the backbone of a robust network comprising
of 29 Depots, 300 Super Stockists, 3000 Distributors
and 4.6 Lakh Retail touch points.

The Company is optimizing its productivity to drive
growth whereby:

• More than 70% of GT Business has been covered in
sales force automation

• Leveraging vendors, re-negotiations, reverse
auctions, office consolidation

• Depot & Cold Storage restructuring

• Beat planning in opportunity markets The aim of
the Company is to reach 5 Lakh retail touch points
by FY 2024-25 and 13-15 Lakh Touch Points by FY
2026-27. The expansion would be driven by:

- Increasing distribution dominance in < 1 lakh
towns

- Building Depots and infrastructure across India

- Aggressive outlet expansion

There was no change in the nature of business of the
Company.

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.

There are 5 Major Strategic Priorities of the Company
as under:

1. Strengthening and accelerating core categories

2. Brand Building & Innovation

3. Evolving a route to market

4. Strengthening New Age business

5. Optimizing Productivity to drive growth

EXPORT MARKET

Parag Milk Foods Limited continues to enjoy a strong
presence and brand recall of Go and Gowardhan
brands across several geographies through its exports
to UAE, Singapore, Mauritius, Oman, Kuwait, Saudi
Arabia, Congo, Hong Kong, Philippines, Sri Lanka,
Bangladesh, Maldives, USA, Thailand, Nepal, Bhutan etc.

Our export sales has contributed 1.09% to the overall
revenues. Our products received good recognition in
key markets of Middle East, South East Asia, Africa and
Indian subcontinents.

PHILANTHROPIC ACTIVITIES

The Company has been efficacious in philanthropic
activities for the community as a whole whereby even
during the onset of the Second Wave of COVID-19
pandemic, the Company has continued to work on the
following areas viz:

• Food & Water facilities - Providing three nutritious
meals to Covid Patients and Hospital staff on
daily basis

• Healthcare - Provided health kit to Corona Warriors
on a consistent basis

• Education

• Animal Welfare

• Sanitation

In conjunction with State Government of Maharashtra,
Company developed the JUMBO COVID hospital
to provide necessary medical support for the local
residents of Manchar.

DIVIDEND DISTRIBUTION POLICY

The Company has formulated Dividend Distribution
Policy in accordance with Regulation 43A of the SEBI
(Listing Obligations and Disclosure Requirements)
Regulations, 2015 and any amendments thereto for
bringing transparency in the matter of declaration of
dividend and for protecting the interest of investors.

Your 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

TRANSFER TO RESERVE

During the Financial Year 2022-23, there was no
amount proposed to be transferred to the Reserves.

DIVIDEND

The Board of Directors at its meeting held on April
29, 2023, decided not to recommend dividend for
the financial year ended March 31, 2023 in order to
conserve the resources of the Company and for long
term requirement of funds.

The dividend payout has always been in accordance
with the Company's Dividend Distribution Policy which
has been adopted in accordance with Regulation 43A
of Listing Regulations as available on the website of
the Company at www.paragmilkfoods.com and which
also forms part of this Annual Report.

SHARE CAPITAL

During FY 2022-23, the Company's paid-up Equity
Share Capital increased from f953.76 Million to ^1,173.76
Million consequent to the allotment of 1,10,00,000
(One Crore Ten Lakh) Equity Shares of f10/- (Rupees
Ten only) each fully paid-up on preferential basis to
AG Dynamic Funds Limited (Investor) and 10,00,000/-
(Ten Lakh) Equity Shares of f10/- (Rupees Ten only) each
fully paid-up on preferential basis to Pivotal Business
Managers LLP (Investor). Also, 20,00,000 Warrants of
face value f10/- (Rupees Ten only) each were allotted to
Ms. Akshali Shah belonging to Promoter group entitling
her for the subscription of equivalent number of equity
shares of f10/- (Rupees Ten Only) each.

Further, during the year, the Company converted
1,00,00,000 Convertible Share Warrants into 1,00,00,000
equity shares of face value of f10/- (Rupees Ten only)
each allotted to Promoter and Promoter group viz
Mr. Devendra Prakash Shah and Mrs. Netra Pritam Shah.

As on March 31, 2023, Ms. Akshali Shah - Member of
Promoter Group & Executive Director holds 20,00,000
Warrants convertible into 20,00,000 equity shares of
face value of f10/- each.

MATERIAL CHANGES AFFECTING THE COMPANY

Some material changes and commitments affecting
the financial position of the Company occurred
between April 1, 2023 till the date of signing this report.

Mr. Pritam Shah, Managing Director of the Company
was provided with added responsibility of the office
of Interim Chief Financial Officer (CFO) w.e.f. April 29,
2023 and consequent to that Mr. Surendra Malaviya
was released from the office of Interim CFO w.e.f.
April 28, 2023. Currently, Mr. Pritam Shah bears dual
responsibility as the Managing Director and Interim
CFO of the Company.

The Company has over the years, advanced funds
to M/s. Bhagyalaxmi Dairy Farms Pvt. Ltd. ('Wholly
Owned Subsidiary' / 'Bhagyalaxmi') towards supply of
materials to the Company. Out of the said advances,
an amount of f300 Million was converted into short¬
term loan as on March 31, 2023 with a provision of
interest @8.75% per annum, in order to utilize the said
funds by the Wholly Owned Subsidiary for its working
capital needs, expansion and general corporate
purposes. The Company further, invested f419.6 Million
including conversion of the said amount of short¬
term loan of f300 Million towards infusion in the equity
shares of Face Value of f10/- per share of Bhagyalaxmi
at later stage.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has one Wholly Owned Subsidiary as
on March 31, 2023. There were no material changes
in the nature of the business of the subsidiary. During
FY 2022-23, no new subsidiary was incorporated /
acquired. The Company does not have any associate
company, nor has it entered into a joint venture with
any other company.

Bhagyalaxmi Dairy Farms Private Limited:

Pursuant to the provisions of Section 129(3) of the Act a
statement containing the salient features of financial
statements of the Company's Subsidary in Form No.
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'. The said Policy is uploaded on the website
of the Company at www.paragmilkfoods.com.

Performance highlights of the subsidiary is given
below:

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the provisions of Section 129 of the Companies
Act, 2013 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 Companies
Act, 2013 and shall be laid before the forthcoming
31^st Annual General Meeting ("AGM") of the Company.

The Audited Financial Statements of the Company
and subsidiary are available 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 Annual General Meeting.
As per Section 136 of the Companies Act, 2013, any
shareholder interested in obtaining a copy of separate
Financial Statements of the subsidiary shall make
specific request in writing to the Company Secretary.

CREDIT RATING

The Company was given revised ratings twice during
the FY 2022-23 by the Credit Rating Agency, ICRA
Limited ("ICRA") in July and December 2022. Ratings
were further revised by ICRA in May 2023.

In July 2022, ICRA revised and downgraded its rating
assigned to the Company for the long-term Rating to
[ICRA] BBB (Negative) from [ICRA] A (Stable)and for
short-term Rating to [ICRA]A2 from [ICRA]A2 . In case
of rating for Non-Convertible Debentures the rating
was Long-term Rating of [ICRA] BBB (Negative) from
[ICRA] A (Stable) due to the announcement of the Q4
FY 2021-22 results.

In December 2022, the ratings assigned to Company
were revised and downgraded for the long¬
term Rating to [ICRA] BBB (Negative) from [ICRA]
BBB (Negative) and for short-term Rating to [ICRA]A3
from [ICRA] A2. In case of rating for Non-Convertible
Debentures the rating was Long-term Rating of [ICRA]
BBB (Negative) from [ICRA] BBB (Negative) due to the
announcement of the Q2 FY 2022-23 results.The overall
ratings were downgraded due to expectation that the
financial profile/ performance of Company was likely
to weaken owing to ongoing pressure on profitability
margins and higher borrowing levels, leading to
moderation in the Company's debt protection metrics.

Further, in May 2023, ICRA Limited had downgraded
the credit rating for the credit facilities availed by
the Company, for the Long-term Rating to [ICRA]
BBB-(Negative) from [ICRA] BBB (Negative) and for
Short-term Rating to [ICRA]A3 from [ICRA]A3 . In
case of Non-Convertible Debentures, the rating was
Long-term Rating of [ICRA]BBB-(Negative) from [ICRA]
BBB (Negative) due to Q4 & FY 2022-23 Results.

BOARD OF DIRECTORS AND KEY MANAGERIAL
PERSONNEL

Appointment / Re-appointment of Directors:

On recommendation of Nomination and Remuneration
Committee, the Board of Directors of the Company,

approved the appointment of Ms. Akshali Shah (DIN:
06575079) as Executive Director at its meeting held on
June 30, 2022 w.e.f. the date of shareholders' approval.
Further, the Board at its meeting held on November
14, 2022 approved the appointment of Mr. Dnyanesh
Darshane (DIN: 08515431) as an Independent Director
of the Company w.e.f. the date of shareholders'
approval. The Shareholders vide Postal Ballot process
on December 25, 2022, approved appointments of Mr.
Dnyanesh Darshane (DIN: 08515431) as Independent
Director and Ms. Akshali Shah (DIN: 06575079) as
Executive Director on the Board of the Company.

Mr. Devendra Shah - Chairman & Whole-time Director
and Mr. Pritam Shah, Managing Director were re¬
appointed for a further period of 3 (three) years from
April 1, 2023 to March 31, 2026. These re-appointments
were approved by shareholders at the 30^th AGM held
on September 30, 2022 and the term of office of Mr.
Devendra Shah - Chairman & Whole-time Director
shall be liable to retire by rotation.

During the year, two Directors ceased to be associated
with the Company viz, Mr. B. M. Vyas (Non-Executive
Director) resigned from the Board w.e.f. June 29,
2022 due to old age health reasons. Also, Mr. Ramesh
Chandak (Independent Director) resigned from the
Board w.e.f. August 12, 2022 on account of personal
commitment and other professional commitments
which may lead to conflict of interest. It is further
confirmed that there were no other material reason for
the resignation other than those mentioned above.

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 & Qualification of Directors) Rules, 2014.

Further, the Board affirms the highest levels of integrity,
expertise and experience of the Independent Directors
appointed during the year.

KEY MANAGERIAL PERSONNEL (KMP)

Pursuant to the provisions of Section 2(51) and Section
203 of the Act read with Rules framed thereunder,
the following are the Key Managerial Personnel of the
Company as on March 31, 2023:

During the year, Mr. Surendra Malaviya was appointed
as Interim Chief Financial Officer from June 30,
2022 subsequently upon the appointment of Mr.
Krishnamurthy Suryanarayan as the Whole time Chief
Financial Officer on October 18, 2022, Mr. Malaviya
ceased to hold the office of Interim Chief Financial
Officer. On November 13, 2022, Mr. Suryanarayan
resigned from the post of Whole time CFO and
Mr. Malaviya was re-appointed as the Interim Chief
Financial Officer on November 13, 2022.

Ms. Rachana Sanganeria resigned from the post
of Company Secretary & Compliance Officer w.e.f.
September 30, 2022 and Mr. Virendra Varma was
appointed as Company Secretary & Compliance
Officer w.e.f. October 18, 2022.

Mr. Pritam Shah was provided with added responsibility
of the office of Interim Chief Financial Officer and
consequently his designation changed to Managing
Director & Interim Chief Financial Officer w.e.f. April
29, 2023. Mr. Surendra Malaviya was released from
the office of the Interim Chief Financial Officer
w.e.f. April 28, 2023.

MEETINGS OF THE BOARD OF DIRECTORS AND ITS
COMMITTEES

The Board of Directors of the Company met seven
(7) times during the financial year. The details of
composition of the Board and its Committees, their
meetings held during the year under review and the
attendance of the Directors/ Committee Members at
the respective meetings are provided in the Corporate
Governance Report section of this Annual Report.

During the year under review, the Board accepted all
the recommendations made by the Audit Committee.
The Board evaluates the recommendations made by
Audit Committee and seeks further information as
they may require. There were no instances where the
Board has not accepted any recommendation of Audit
Committee.

Committees of the Board

The Board of Directors has the following Committees
as on March 31, 2023:

1. Audit Committee

2. Nomination and Remuneration Committee ("NRC");

3. Stakeholders' Relationship Committee ("SRC");

4. Corporate Social Responsibility Committee ("CSR");

5. Risk Management Committee ("RMC"); and

6. Finance Committee

The details of the Committees along with their
composition, number of meetings held and attendance
at the meetings are provided in the Corporate
Governance Report.

BOARD EVALUATION

The Company believes in value for its shareholders
through ethical processes & integrity. The purpose of
Board feedback is to identify opportunities for enhancing
the effectiveness of the Board as a whole. The Evaluation
Policy and Criteria is duly approved by NRC. This 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.

Evaluation plays a very important role in ensuring
that the Company's progress is monitored and timely
inputs are given to enhance its performance and set
the right direction for profitable growth fully complying
with relevant regulatory requirements.

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 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 & mitigation, stakeholder relationship,
personal attributes etc.

In terms of the requirements of the Act, a separate
meeting of the Independent Directors was also
held during the year. The Independent Directors at
their meeting held on March 28, 2023 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.

The evaluation exercise highlighted the key areas
requiring improvisation in order to strengthen the
performance and the effectiveness of the Board and
Committee Meetings held by the Company.

Familiarisation Programme for Independent Directors

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 a rigorous execution
of the induction process to ensure a smooth transfer
and seamless integration of the new Board Members.

Pursuant to Regulation 25(7) and 46 of the SEBI
Listing Regulations, the details of the familiarisation
programme imparted to the Directors are explained
in the Report on Corporate Governance 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 of Directors 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 & 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

Pursuant to the requirements under Section 134(3)
(c) of the Companies Act, 2013, with respect to the
Director's 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, 2023, the applicable accounting standards
have been followed along with proper explanation
relating to material departures, if any;

b) that 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 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, 2023;

c) that the Directors had 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 had prepared the annual
financial statements for the Financial Year ended
March 31, 2023 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

At the AGM held on September 30, 2022, the
Shareholders approved the 'Parag Milk Foods Limited
- Employee Stock Option Plan 2022' ("ESOP 2022"/
"Plan") authorizing the Board and the NRC to create,
issue and grant in one or more tranches subject to
maximum 5,00,000 (Five Lakh) stock options to such
persons working exclusively with the Company and
its subsidiary.

The said 5,00,000 (Five Lakh) stock options shall be
exercisable into not more than 5,00,000 (Five Lakh)
equity shares ("Shares") of face value of f10/-
(Rupees Ten) each fully paid-up, out of which 3,23,985
(Three Lacs Twenty-Three Thousand Nine Hundred
Eighty-Five) Shares to be sourced from primary issue
by the Trust from the Company and 1,76,015 (One Lac
Seventy-Six Thousand Fifteen) Shares through the
existing irrevocable employee welfare trust of the
Company namely 'Parag Milk Foods Employees Stock
Option Trust' ("Trust").

Details required to be provided under Section 62 of the
Act and Rule 12(9) of Companies (Share Capital and
Debenture Rules, 2014) and Regulation 14 of SEBI (Share
Based Employee Benefits) Regulations, 2021 read
with SEBI Circular dated June 16, 2015 are provided in
Annexure II. The certificate issued by the Secretarial
Auditors for the compliance under Regulation 13 of SEBI
(Share Based Employee Benefits) Regulations, 2021
shall be placed before the Members at the 31^st AGM.

Further, the Company at its 31^st AGM shall place the
amendments which were approved by the Board at its
meetings held on April 29, 2023 and August 5, 2023 for
shareholders' approval.

The details of the same are provided in the explanatory
statement annexed with the notice of the 31^st AGM. A
brief of the proposed amendments/ approvals to be
placed are as follows:

• to limit the maximum number of Options to be
granted per employee and in aggregate in any
year shall not exceed 1,00,000 stock options

• to transfer the unused 10,00,000 stock options
under ESOP 2019 to ESOP 2022 i.e. 10,00,000 Options
convertible into 10,00,000 Equity Shares having
face value of f10/- each and to revise the total
ESOP pool from existing 5,00,000 stock options to
25,00,000 stock options under the ESOP 2022

• grant of options to employees of the Company or
its Subsidiary.

INTERNAL FINANCIAL CONTROL SYSTEMS AND
THEIR ADEQUACY

The Company has an Internal Control System, in line
with the size, scale and complexity of its operations.
Audit Committee, comprises of professionally
qualified Directors, who interact with the statutory
auditors, internal auditors and management in
dealing with matters.

Internal Financial Controls are 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 has been detailed out in the Corporate
Governance Report.

The Board reviews the internal processes, systems
and the internal financial controls and accordingly,
the Directors' Responsibility Statement contains a
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
commensurate with the nature and size of its business
operations and operating effectively and no material
weaknesses exist during the financial year 2022-23.

The details in respect of internal financial control and
their adequacy are included in the Management
Discussion and Analysis, which forms part of the
Annual Report.

RISK MANAGEMENT GOVERNANCE

The Board has an overall responsibility for governance
of the 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 Company has ensured the development and
implementation of a risk management policy for
identification of elements of various risks within and
outside the organisation, if any, which in the opinion of
the Board may threaten the existence of the Company
and for the effective mitigation of risk.

The RMC 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, inter alia, includes
identification of internal and external risks, including
financial, operational, sectoral, information, cyber
security, strategic or any other risk as may be
determined by the Risk Management Committee and
the measures for risk mitigation.

The detailed terms of reference and the composition of
RMC are set out in the Corporate Governance Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a robust vigil mechanism in place
in the form of Code of Conduct ("COC") which enables
its stakeholders to report concerns about unethical or
inappropriate behaviour, actual or suspected fraud,
leak of unpublished price sensitive information, unfair
or unethical actions or any other violation of the COC.

The Company has adopted a 'Whistle-Blower Policy' /
'Vigil Mechanism' for Directors and Employees. The vigil
mechanism of the Company provides for adequate
safeguards against victimization of directors, employees
and third parties who avail of the mechanism and also
provides for direct access to the Chairman of the Audit
Committee in exceptional cases. The provisions of this
policy are in line with the provisions of the Section 177 (9)
of the Act and the SEBI Listing Regulations.

The Company did not receive any complaints from the
employees regarding violation of Code of Conduct or
other matters whatsoever.

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

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has constituted a Corporate Social
Responsibility Committee and details of the
composition are given separately as part of the
Corporate Governance 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
www.paragmilkfoods.com under 'Investors' tab.

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 and are annexed as
Annexure III and forms an integral part of this Report.

RELATED PARTY TRANSACTIONS

During the year under review i.e. 2022-23, 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 the FY 2022¬
23 and hence, the same is not provided. 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.
Further, the Company has not entered into any
transaction of a material nature with the Promoters,
subsidiary of the Company, Directors, Key Managerial
Personnel or their relatives etc. that may have potential
conflict with the interests of the Company.

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 i.e.
www.paragmilkfoods.com 'Policies' tab under Investors
Section.

PARTICULARS OF LOANS GRANTED, GUARANTEE
PROVIDED AND INVESTMENTS MADE PURSUANT
TO THE PROVISIONS OF SECTION 186 OF THE
COMPANIES ACT, 2013

The loans given, investments made and guarantees
given & securities provided during the year under
review, are in compliance with the provisions of
Section 186 of the Companies Act, 2013 and the Rules
thereunder and the details are provided in the Notes
to the Standalone Financial Statements, forming part
of this Report.

BUY BACK

The Company has not bought back any of its securities
during the Financial Year ended March 31, 2023.

DEPOSITS

There were no outstanding deposits within the
meaning of Sections 73 and 74 of the Act read with the
Companies (Acceptance of Deposits) Rules, 2014, as
amended, at the end of the financial year 2022-23 or
the previous financial year.

Your Company did not accept any deposits during
financial year 2022-23.

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 there under, your Company has
adopted a Policy (Prevention of Sexual Harassment
Policy a.k.a "POSH Policy").

To build awareness in this area, 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 Committees to redress complaints received

regarding sexual harassment. All employees are
covered under this Policy and the Policy is gender
neutral. Following is a summary of sexual harassment
complaints received and disposed off during the year:

No. of complaints received : NIL

No. of complaints disposed off : NIL

During the FY 2022-23, the Company has not received
any complaint on sexual harassment.

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

In terms of Regulation 34 of SEBI Listing Regulations,
a separate section on Management Discussion and
Analysis, Business Responsibility & 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 form part of this Annual Report.

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

Company continues its 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 Companies Act, 2013 read
with Rule 8(3) of the Companies (Accounts) Rules, 2014
are provided in the prescribed format and is enclosed
as Annexure IV.

ANNUAL RETURN

A copy of the annual return as provided under section
92(3) of the Act, in the prescribed form, which will
be filed with the Registrar of Companies ("ROC")/
Ministry of Corporate Affairs ("MCA"), is hosted on
the Company's website and it can be accessed
under 'Annual and Compliance Report' Tab at
https://www.paragmilkfoods.com/investors.php.

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, as amended is disclosed in
"Annexure V" to 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 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 or email to 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 / MATERIAL ORDERS PASSED BY THE
REGULATORS

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 &
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 33^rd AGM.

As required under Regulation 33(1) (d) of Listing
Regulations, M/s. Sharp & 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 confirmed they are not disqualified from
continuing as auditors of the Company.

The Auditor's Report for the financial year ended
March 31, 2023 on the financial statements of the
Company forms part of the 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 of Directors have
appointed M/s. Grant Thornton India, Chartered
Accountants, as Internal Auditors of the Company
for the Financial Year 2022-23. Further, The Board
at its meeting held on August 5, 2023 approved the
appointment of 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

As per the requirements of the Section 148 of the
Act read with Rule 14 of the Companies (Cost
Records and Audit) Rules, 2014 as amended from
time to time, the cost records are required to be
audited by a qualified Cost Accountant.

Further, it is hereby confirmed that the Company
has maintained the cost records under Section
148 of Companies Act, 2013 and accordingly such
accounts & records are prepared & maintained by
the Company.

The Board of Directors, upon the recommendation
of the Audit Committee, has re-appointed
M/s. Harshad Deshpande & Associates, Cost
Accountants, Pune (Firm Registration Number:
00378) to conduct audit of the cost records of
the Company for the FY 2023-24. Accordingly, the
Board of Directors recommends to the Members
and the resolution seeking approval of the
members for ratifying the remuneration payable
to the Cost Auditors for FY 2023-24 is provided in
the Notice of the ensuing Annual General Meeting.

During FY 2022-23, the Company has filed the Cost
Audit Report for the FY 2021-22 with the Ministry
of Corporate Affairs on August 17, 2022. The Cost
Auditor's Report does not contain any qualification,
reservation, adverse remark or disclaimer and no
frauds were reported by the Cost 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.

• SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act
and Rule 9 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules,
2014, the Company has appointed M/s. N. L. Bhatia
& Associates, Practicing Company Secretaries
(UIN: P1996MH055800), as the Secretarial Auditor
of the Company to conduct audit of the secretarial
records of the Company for the financial year
ending March 31, 2024. The Company has received
consent from Mr. Bhaskar Upadhyay to act as such.

The Secretarial Audit Report for FY 2022-23 in Form
MR-3 is annexed as “Annexure VI" to 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.
However, the Secretarial Auditors had specified in
their audit report that there was a delay in filing
the Financial Results for FY 2021-22 whereby
Company had paid fine of f0.155 Million to each
Stock Exchange. The response of the Directors was
that the Company had made an application for
waiver of penalty with the Stock Exchange and the
response was still awaited.

COMPARISON OF SHAREHOLDING DATA AS AT THE END OF FY 2022-23 AND PREVIOUS FY 2021-22

The comparison of Category wise shareholding of the Company at the end of FY 2022-23 and FY 2021-22 is given
below for reference of shareholders:

CHANGE IN THE SHAREHOLDING OF TOP TEN EQUITY SHAREHOLDERS OF THE COMPANY AS ON
MARCH 31. 2023:

ACKNOWLEDGEMENTS

Your Directors wish to place on record their deep sense of appreciation for the committed services by your Company's
employees. Your Directors acknowledge with gratitude, the encouragement and support extended by our valued
shareholder

Your directors place on record their appreciation for the support and co-operation the Company has been receiving
from its suppliers, distributors, retailers, business partners and others associated with it as its trading partner The
Company looks upon them as partners in its progress and has shared with them the rewards of growth.

The Board of Directors also take this opportunity to thank all farmers, consumers, employees, Shareholders, Clients,
Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

For Parag Milk Foods Limited

Sd/-

Devendra Shah

Place: Mumbai Chairman

Date: August 5, 2023 (DIN: 01127319)