Your Directors are pleased to present their Forty First Report together with the audited Stand-alone and Consolidated financial statements of the Company for the year ended 31^st March 2022.

Financial Results

This discussion on the financial condition and results of operations of your Company for the year ended 31^st March 2022, which are summarised below, should be read in conjunction with its audited stand-alone and the consolidated financial statements containing financials and notes thereto of Sagar Cements Limited and its subsidiaries, namely Sagar Cements (M) Private Limited and Jajpur Cements Private Limited.

Performance

Despite increase in the input cost, particularly power and fuel, your Company could achieve a reasonable performance, resulting in an operational profit of ' 275.77 crores. To avoid repetition in the Directors’ Report, further details about other aspects of the performance of the Company during the year 2021-22 have been furnished in the Management Discussion and Analysis Report as annexure to this report.

Dividend

Dividend is recommended by your Board taking into consideration the factors like overall profitability, cash flow, capital requirements and other business consideration as well as the applicable regulatory requirements read with the dividend distribution policy adopted by your Company, which is available on your Company’s website. In this background, your Board of Directors is pleased to recommend a dividend at ' 0.70 per equity share (35%) on the 13,07,07,548 equity shares of ' 2/- each of your Company. This would result in a total outflow of ' 914.95 lakhs.

The Dividend Distribution Policy of the Company is available on the Company’s website and can be accessed at: https://sagarcements. in/wp-content/uploads/2020/08/Scl Dividend-Distribution-Policy.pdf

Transfer to Reserves

No transfer to any reserve is proposed and accordingly, the entire balance available in the Statement of Profit and Loss is retained in it.

Pursuant to the approval accorded by the shareholders, at their Extra-ordinary General Meeting held on 23^rd April 2022, the Securities Allotment Committee of the Board at their meeting held on 7^th May, 2022 has since allotted 1,32,07,548 equity shares of ' 2/- each at a premium of ' 263/- per share on a preferential basis aggregating to ' 350 crores to M/s. PI Opportunities Fund-I, Scheme II, an Alternative Investment Fund registered with SEBI under SEBI (Alternative Investment Fund) Regulations, 2012. This amount is proposed to be utilised by your Company for expanding its operations through organic and inorganic means, apart from meeting its incremental working capital requirements and for other general corporate purposes. With this allotment, the paid-up share capital of your Company is ' 26,14,15,096/- divided into 13,07,07,548 equity shares of ' 2/- each.

Utilisation of Funds Raised through Issue of Non Convertible Debentures

During the financial year 2021-22, your Company issued and allotted on a private placement basis 25,000 Secured Redeemable Non-Convertible Debentures (NCDs) of face value of ' 1,00,000/-(Rupees One Lakh only) each, aggregating to ' 250,00,00,000/-(Rupees Two Hundred and Fifty Crores only). The funds raised through NCDs have been utilised to meet general business requirements, addressing working capital needs as well as expansion of business activities.

Subsidiaries, Joint Ventures and Associate Companies

In the year 2015 your Company acquired the entire equity stake in BMM Cements Limited, which has since been re-named as Sagar Cements (R) Limited. This wholly-owned subsidiary has a cement plant of 1.25 Million MTs per annum capacity along with a coal based captive power plant of 25 MW capacity in Gudipadu Village in Ananthapur District, A.P. With a view to achieving more synergy in the operations of your group as a whole, this subsidiary has since been merged with the holding company, Sagar Cements Limited.

As you may be aware, your Company had acquired majority stake in Satguru Cement Private Limited, which has since been renamed as Sagar Cements (M) Private Limited (SCMPL), to set-up a green field integrated cement plant of 1 MTPA capacity with a waste heat recovery plant in the State of Madhya Pradesh. This plant as well as the another wholly-owned subsidiary, Jajpur Cements Private Limited earlier acquired to set-up a 1.5 MTPA capacity grinding station at Jajpur in Odisha, have since commenced their commercial operations during the year 2021-22.

Salient features of the financials of the above mentioned two subsidiaries have been given in Form AOC-1 as Annexure-1 to this report.

Your Company does not have any Joint Ventures or Associate Companies.

The Board of Directors in their meeting held on 28^th January, 2022, subject to necessary approvals, accorded their consent for the merger/amalgamation of M/s.Jajpur Cements Private Limited, a wholly-owned subsidiary company with the Company.

Grinding Unit in Bayyavaram

This grinding unit of your Company, located at Bayyavaram in Vizag District, with a capacity of 1.5 MTPA utilises the surplus clinker available at your plant in Mattampally, for grinding into slag cement to cater to the markets in South Odisha and North Coastal districts of Andhra Pradesh where, with the identification of Vishakhapatnam

and Kakinada in Andhra Pradesh and Bhubaneswar in Odisha, which are being developed as ‘smart cities’ under the Prime Minister’s ‘Smart Cities Mission’.

Future Outlook

The cement produced from your Company’s plants is presently catering to the markets in Telangana, Andhra Pradesh, Karnataka, Maharashtra, Chhattisgarh, Odisha, Jharkhand, Madhya Pradesh, Tamil Nadu and Gujarat.

The cement demand during the financial year 2022 was around 350 million tonnes. The expected demand growth during the financial year 2023 is around 7 to 8%. This growth is expected to be driven by the Government’s infrastructure and continued growth in rural housing and steady revival in urban demand.

While the financial year 2023 is likely to witness one of the highest capacity additions, most of it are grinding units, set-up to optimise costs more than adding supplies. Capacity utilisations is therefore expected to remain at around 65%.

However, we believe that the Central Government initiatives on the infrastructure, including proposal to allocate funds in the form of interest free loans to fund the PM Gati Shakti Scheme and other infrastructure projects and issue green bonds for projects would all help to drive cement demand.

Cement demand from the housing segment continues to have support from Central and State Governments under the affordable housing PMAY Scheme. This will be in addition to the regular demand from construction of new houses (due to population growth and increasing urbanisation and nuclearisation) and replacement / renovation of existing houses. Demand from urban housing, which was hit hard by the pandemic during the last couple of years, witnessed a mild recovery during FY22.

However, with the on-going Russia-Ukraine conflict, impacting input costs and constrained supply position as weather and environmental concerns in key producing countries such as South Africa, Indonesia and China, pose a serious challenge for the sector. Power and fuel costs, which were earlier expected to peak during second half of FY22, will now witness a sharp increase in FY23, as coal and pet coke prices hit new high in March 2022.

Thus, taking an overall view of the above, your Board is cautiously optimistic about the future outlook for your Company.

Risk Management System

While your Company is subject to normal external business risks that are associated with similar companies operating within the cement industry, your Company attaches utmost importance to the assessment of internal risks and the management thereof in all its dealings. Like any other dynamic business organisations, your Company is constantly on the lookout for identifying new opportunities to enhance its enterprise value. Keeping in view the need to minimise the risks associated with such efforts, every proposal of significant nature is screened and evaluated for the risks involved in it and then approved at different levels in the organisation before implementation.

With a view to overcoming the risk of dependence exclusively upon any particular marketing segment or region, your Company is trying to reach out to a wider section of its ultimate consumers and, as mentioned earlier, is looking for growth opportunities in other States, where infrastructure spending is set to get a boost.

Your Company has adequate system to manage the financial risks of its operations. The system is implemented through imposition of checks and balances on extending credit to the customers, audits like internal audit, statutory, cost and secretarial audit, all of which are periodically carried out through external firms, proper appraisal of major capital expenditure, adherence to the budget norms covering all areas of its operations and by adequate insurance coverage for the Company’s facilities.

To focus on the risk management being followed by your Company, a committee has been formed exclusively for the purpose, in which, two members are independent directors.

Further details on this are available in the Management Discussion and Analysis Report.

Internal Control System and its Adequacy

Your Board of Directors are satisfied with the adequacy of the internal control system currently in force in all major areas of operations of the Company, which is supported by an ERP and compliance management systems. The audit committee assists the board of directors in monitoring the integrity of the financial statements, reservations, if any, expressed by the Company’s auditors including, the financial, cost, internal and secretarial auditors and based on their inputs, your board is of the opinion that the Company’s internal controls are adequate and effective.

Human Resource Development and Industrial Relations

Your Company continues to enjoy cordial relationship with all its personnel at its Plants, Offices and on the field.

Your Company is organising training programmes wherever required for the employees concerned to improve their skill. They are also encouraged to participate in the seminars organised by the external agencies related to the areas of their operations.

Your Company continues to focus on attracting and retaining competent personnel and providing a holistic environment where they get opportunities to grow and realise their full potential. Your Company is committed to providing all its employees with a healthy and safe work environment.

Sexual Harassment

Regarding the Sexual Harassment of Women at the work place (Prevention, Prohibition & Redressal) Act, 2013, your Company has an Internal Complaints Committee. No complaints were received or disposed off during the year under the above Act and no complaints were pending either at the beginning or at the end of the year.

Your Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC). ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the policy. ICC has its presence at corporate office as well as at site locations.

Awards and Recognitions

Your Company has already achieved ISO Certification ISO 9001:2015 for Quality Management System Standard, ISO 14001:2015 for Environmental Management System Standard, ISO 45001:2018 for Occupational Health and Safety Management System Standard and ISO 50001:2018 for Energy Management.

Your Company was awarded with “Best Management Award” in appreciation of providing local employment and providing

skill development training for local newly qualified graduates at Mattampally unit by Ministry of Labour, Government of Telangana.

Your Company’s Gudipadu Unit was awarded with “State level and Zonal level overall 2^nd price for Mines Safety-2022” in appreciation of the Safety and other working parameters in Mines by Mines Safety Association, Karnataka under the aegis of Directorate General of Mines Safety, Government of India.

As the shareholders are aware your Company’s Laboratory at its Plant in Mattampally is the recipient of the Accreditation by the National Accreditation Board for Testing and Calibration Laboratories (NABL), which is the sole accreditation body for testing and calibration laboratories under the aegis of Department of Science and Technology, Government of India.

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, your board of directors, to the best of their knowledge and ability, confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. 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 of the Company for that period;

iii. t he directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the directors have prepared the annual accounts on a going concern basis;

v. the directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Directors and Key Managerial Personnel

On recommendation of the Audit Committee and Nomination and Remuneration Committee, the Board of Directors in their meeting held on 1^st July, 2021, re-appointed Dr.S.Anand Reddy as Managing Director and Shri S.Sreekanth Reddy as Joint Managing Director respectively for a further period of 3 years with effect from 31^st October, 2021 and subsequently approval of shareholders was taken in the 40^th AGM held on 28^th July, 2021.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Dr. S. Anand Reddy and Shri John-Eric Bertrand will be retiring by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Necessary resolutions seeking the approval of the members for the re-appointments have been incorporated in the notice of the annual general meeting of the Company.

In accordance with Clause 3.1 (a) of the Shareholders Agreement dated 25^th March 2022 entered into between M/s.PI Opportunities Fund-I, Scheme II (Investor), the Company and the promoters read with Article 84 and 97 of the Articles of Association of the Company and in accordance with the Communication received from the said

Investor, Shri Madhavan Ganesan (DIN: 01674529) was appointed as an additional director on 11^th May 2022 under Section 161 of the Companies Act, 2013 to act as Nominee Director of M/s.PI Opportunities Fund-I, Scheme II and that the said Shri Madhavan Ganesan will not be liable to retire by rotation. A suitable resolution has been included in the Notice of the Annual General Meeting seeking approval of the shareholders for the said appointment.

Excepting Mrs. S. Rachana, who is a director in Panchavati Polyfibres Limited and R V Consulting Services Private Limited, whose transactions with the Company have been reported under the related parties disclosure in the notes to the accounts, none of the other non-executive directors has had any pecuniary relationship or transactions with the Company, other than the receipt of sitting fee for the meetings of the Board and Committees thereof attended by them.

Independent Directors Declaration

The Company has received necessary declarations from all the Independent Directors of the Company in accordance with Section 149 (7) of the Companies Act 2013, that they meet the criteria of independence as laid out in Section 149(6) of the said Act and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”). There has been no change in the circumstances affecting their status as an Independent Director during the year.

The Independent Directors have also confirmed that they have complied with Schedule IV of the Companies Act, 2013 and the Company’s Code of Conduct.

The Board of Directors is of the opinion that all the Independent Directors possess requisite qualifications, experience and expertise in industry knowledge and corporate governance and they hold highest standards of integrity.

Number of Meetings of the Board

During the year 2021-22, eight meetings of the board were held and the details of these meetings of the Board as well as its Committees have been given in the corporate governance report, which forms part of the Integrated Report.

Credit Rating

Details of Credit Ratings obtained by the Company have been given in the corporate governance report, which forms part of the Integrated Report.

Policy on Directors’ Appointment and Remuneration and Other Details

The Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178 (3) of the Companies Act, 2013 have been disclosed in the corporate governance report.

Under Section 178 (3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the board has adopted a policy for nomination, remuneration and other related matters for directors and senior management personnel. A gist of the policy is available in the Corporate Governance Report.

Board Evaluation

The Board of directors have carried out an evaluation of its own performance and of its committees as well as its individual directors, on the basis of criteria such as composition of the board / committee structure, effectiveness, its process, information flow, functioning etc.

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants (FR No. 008072S), who were re-appointed as Statutory Auditors of the Company by the Shareholders at their 39^th Annual General Meeting held on 9^th September 2020 for a second consecutive term of 5 years will be holding their said office from the conclusion of the said Annual General Meeting till the conclusion of the 44^th Annual General Meeting to be held in the year 2025, at such remuneration as may be mutually agreed between the Board of Directors of the Company and the said Auditors.

Auditors’ Report and Secretarial Auditors’ Report

Auditors’ Report

The auditors’ report does not contain any qualifications, reservations or adverse remarks and it is an unmodified one.

Secretarial Auditors’ Report

In accordance with Section 204 (1) of the Companies Act, 2013, the report furnished by the Secretarial Auditors, who carried out the secretarial audit of the Company under the said Section is given in the Annexure-2, which forms part of this report. There are no adverse remarks in the said report. Your Company has complied with the Secretarial Standards applicable for holding Board and General Meetings.

Secretarial Standards

Your Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time and that such systems are found to be adequate and operating effectively.

Maintenance of Cost Records

Cost records are required to be maintained by the Company under Section 148 (1) of the Companies Act, 2013. Accordingly, such accounts and records made and maintained.

Cost Auditors

M/s.Narasimha Murthy & Co., Cost Auditors (FR No.000042) have been appointed as Cost Auditors of the Company for the year ending 31^st March 2023. A resolution seeking shareholders’ approval for ratification of the remuneration payable to the said Cost Auditors has been included in the notice of the AGM. The reports submitted by the Cost Auditors are duly filed with the appropriate authorities under Section 148 of the Companies Act, 2013.

Details in respect of frauds reported by Auditors under Section 143 (12) other than those which are reportable to the Central Government.

No frauds were reported by the Auditors under Sub-Section 12 of Section 143 of the Companies Act, 2013 read with the Rules made there under.

Particulars of Loans, Guarantees and Investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements at appropriate places.

Transactions with Related Parties

Information on transactions with related parties pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with rule 8 (2) of the Companies (Accounts) Rules, 2014 are given in Annexure-3 in Form AOC-2 as part of this report.

c. The percentage increase in the median remuneration of employees in the financial year: 0.72

d. The number of permanent employees on the rolls of Company: 751

e. Percentage increase or decrease in the market quotations of the shares of the Company, compared to its price at which the Company came out with its last public offer:

f. The average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year is around 9%. The managerial remuneration is as per the approval accorded by the Nomination and Remuneration Committee of the Board and Shareholders.

g. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that remuneration is as per its remuneration policy.

Whistle Blower Policy

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees of the Company to enable them to report their genuine concerns, if any. The provisions of this policy are in line with the provisions of the Section 177 (9) of the Act and the SEBI Listing Regulations and the said policy is available on the Company’s website www.sagarcements.in.

Deposits from Public

The Company does not accept any deposits from public during the year.

Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo:

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 have been provided in the Annexure-6, which forms part of this Report.

Insurance

All the properties of the Company have been adequately insured.

Pollution Control

Your Company is committed to keep the pollution at its plant within the acceptable norms and as part of this commitment, it has, inter-alia, adequate number of bag filters in the plant.

Sub Committees of the Board

The Board has Audit Committee, Nomination and Remuneration Committee, Investment Committee, Corporate Social Responsibility Committee, Stakeholders’ Relationship Committee, Securities

Allotment Committee and Risk Management Committee. The composition and other details of these committees, have been given in the Report on the Corporate Governance, which forms part of the Integrated Report.

Compliance Certificate

A certificate as stipulated under Schedule V (E) of the SEBI Listing Regulations from a Practicing Company Secretary regarding compliance with the conditions of Corporate Governance is attached to this Report along with our report on Corporate Governance.

Material Changes and Commitments since the end of the Financial Year

The shareholders at their Extra-ordinary General Meeting held on 23^rd April 2022 approved a proposal to issue and allot 1,32,07,548 equity shares of ' 2/- each at an issue price of ' 265/- per share through preferential allotment. The Securities Allotment Committee in its meeting held on 7^th May, 2022 allotted the said 1,32,07,548 equity shares to M/s.PI Opportunities Fund-I Scheme II. The process of getting them listed on the Stock Exchanges are currently in progress. Other than this, there were no other material changes or commitments between the end of the financial year and the date of this report.

Significant and material orders passed by the Regulators

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

Cautionary Statement

Statements in this report and its annexures describing company’s projections, expectations and hopes are forward looking. Though, these are based on reasonable assumption, their actual results may differ.

Acknowledgement

Your Directors wish to place on record their appreciation of the valuable co-operation extended to the Company by its bankers and various authorities of the State and Central Government. They thank the Distributors, Dealers, Consignment Agents, suppliers and other business associates of your Company for their continued support. Your Board also takes this opportunity to place on record its appreciation of the contributions made by the employees of company at all levels and last but not least, of the continued confidence reposed by you in the Management.

For and on behalf of the Board of Directors

Dr. S. Anand Reddy S. Sreekanth Reddy

Hyderabad Managing Director Joint Managing Director

11^th May 2022 DIN: 00123870 DIN: 00123889