AFFLUENCE

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Signed this …………. day of ………. 2017

Signature of Shareholder

Signature of Proxy holder(s)

Note: This form in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the company, not less than One hour before the commencement of the meeting.

Statement provided pursuant to the provisions of Secretarial Standard 2 on General Meetings issued by the Institute of Company Secretaries of India

BRIEF PROFILE OF DIRECTOR WHO HAS SOUGHT FOR RE-APPOINTMENT

Item No.: 2

Mr. D. Sesha Reddy, is a graduate from Osmania University in the field of Arts, is one of the co-founder of the Company, who is presently acting in the capacity of Non-Executive Director and Chairman of the Company. Further, he has vast experience in the Construction industry particularly Infrastructure projects for 25 years, which has helped in contributing significantly to companys activities relating to setting up processing plants / chilling centres / bulk coolers. Currently he lends his years of experience in defining the vision and strategy of the Company.

Taking into consideration his qualification and rich experience it is proposed to appoint Mr. Sesha Reddy to spearhead companys strategies including monitoring effective implementation of Capex plans.

Route Map

Directors Report

Dear Members,

Your Directors take the pleasure in presenting the 22nd Directors report on the business and operations of the Company for the financial year ended 31 March 2017.

FINANCIAL HIGHLIGHTS

(Amount (Rs) in Crores)

STATE OF AFFIARS / COMPANYS PERFORMANCE

On Consolidated basis, the revenue from operations for FY 2017 at Rs 1,441.52 Crores was higher by 20% over the last year (Rs 1,201.34 Crores in FY 2016) with a corresponding Profit after tax of Rs43.85 Crores, 22% higher than that of the previous year (Rs 35.92 Crores).

On Standalone basis, the revenue from operations for FY 2017 at Rs 1,411.46 Crores was higher by 19.41% over the last year (Rs 1,182.01 Crores in FY 2016) with a corresponding Profit after tax of Rs 44.39 Crores, 25% higher than that of the previous year (Rs 35.57 Crores).

TRANSFER TO RESERVES

The Company has not proposed to transfer any amount to the general reserve out of the amount available for appropriation.

DIVIDEND

The Company has plans to expand its business in new locations across the globe and it may dip its retained earnings to fund the growth. Hence, your Directors have not recommended any dividend for the financial year 2016-17 to facilitate increased earnings.

CHANGE IN NATURE OF BUSINESS, IF ANY

There are no such changes occurred in nature of business during the financial year under review

MATERIAL CHANGES AND COMMITEMENTS, IF ANY, AFFECTING FINANCIAL STATEMENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS TILL THE DATE OF REPORT

There were no material changes and commitments affecting financial position of the company between 31 March 2017 and the date of Boards Report, except the following:

The investor of the Company i.e., Black River Capital Partners Food Fund Holdings (Singapore) Pte Ltd, has transferred its entire 23.66% equity stake in the Company to TPG Dodla Dairy Holdings Pte. Ltd (the Investor); and Dodla Sunil Reddy and Dodla Deepa Reddy, promoters of the Company transferred part of their equity stake in the Company, which stake represents a total of 3.34% of the share capital of the Company, to the Investor.

Accordingly, the Composition of the Board and its committees and the shareholding pattern of the Company changed which is referred elsewhere of this report.

On24 May 2017, a Step-down subsidiary of the Company has been incorporated under the name and style: DODLA DAIRY KENYA LIMITED in Kenya, South Africa

PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT

The particulars of loan, guarantee and investment have been disclosed in the financial statements

Particulars of conservation of energy, Technology ABSORPTION, FOREIGN eXCHANGE eARNINGS AND outgo

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is appended to this Report as Annexure I.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES

Details of the Subsidiaries, JVs and / or associate Companies is provided in Form AOC-1, appended to this report as Annexure II

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The particulars of Contracts or Arrangements made with related parties pursuant to Section 188 during the year is provided in Form AOC-2, appended to this Report as Annexure III

EXTRACT OF THE ANNUAL RETURN

As required pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in Form MGT 9 is appendedto this report as Annexure IV.

DETAILS RELATING TO DEPOSITS, COVERING THE FOLLOWING

During the year under review, your Company has neither invited nor accepted any deposits from the Public / Members.

(a) Accepted during the year : Nil

(b) Remained unpaid or unclaimed as at the end of the year: Nil

(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved:

i. at the beginning of the year : Nil

ii. Maximum during the year : Nil

iii. at the end of the year : Nil

DETAILS OF DEPOSITS WHICH ARE NOT IN COMPLIANCE WITH THE REQUIREMENTS OF CHAPTER V OF THE ACT

NIL

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS, TRIBUNALS IMPACTING GOING CONCERN STATUS OR OPERATIONS IN FUTURE

The Company has not received any significant/ material orders from the statutory regulatory bodies/ courts/ tribunals which effect the operations/ status of the Company.

BOARD OF DIRECTORS

The board acts on an informed basis and in the best interests of the company with good faith, care and diligence, for the benefit of shareholders, while having regard to all relevant stakeholders. At the company, the board is accountable to shareholders and relevant stakeholders and is responsible for protecting and generating sustainable value over the long term. In fulfilling their role effectively, board of directors of the company:

guide, review and approve corporate strategy and financial planning, including major capital expenditures, acquisitions and divestments;

monitor the effectiveness of the company's governance practices, environmental practices, and social practices, and adhere to applicable laws;

oversee the management of potential conflicts of interest, such as those which may arise around related party transactions;

oversee the integrity of the company's accounting and reporting systems, its compliance with internationally accepted standards, the effectiveness of its systems of internal control, and the independence of the external audit process;

oversee the implementation of effective risk management and proactively review the risk management approach and policies annually or with any significant business change;

The board meets regularly to discharge its duties and directors allocate adequate time to board meeting preparation and attendance. Board members are aware of the business, its operations and senior management well enough to contribute effectively to board discussions and decisions.

CHANGE IN THE DIRECTORS OR KEY MANAGERIAL PERSONNEL

None of the directors of the company is disqualified under the provisions of the Act.

Appointments

No Directors were appointed on the Board of the Company during the year under review however Akshay Tanna (DIN: 02967021) and Vishwarupe Narain (DIN: 03394320) were appointed as directors on the Board on 21 July 2017.

Resignations

None of the Directors or KMPs resigned from the Company during the year under review however Deepak Malik (DIN: 00662141) and James David Sayre (06392836) resigned from the Board with effect from 20 July 2017.

Composition of the Board:

Dodla Sesha Reddy : Chairman

Dodla Sunil Reddy : Managing Director

*James David Sayre : Director

*Deepak Mallik : Director

Kishore Mirchandani : Independent Director

Ponnavolu Divya : Independent Director

#Akshay Tanna : Director

#Vishwarupe Narain : Director

* Ceased as a Director with effect from 20 July 2017

# appointed as Additional Director and regularized as director with effect from 21 July 2017

Term of Board membership

As per the provisions of the Companies Act, 2013 (Act) one third of the board members retire every year. The executive directors are appointed by the shareholders for a period of five years at a time, but, they are eligible for re-appointment in accordance with the provisions of the Act. The board on the recommendations of the nomination and remuneration committee considers the appointment/ re-appointment of executive and non-executive directors. Independent directors are appointed for a term of up to 5 years.

Board Effectiveness

An effective board is a key feature of the governance journey to building a successful company. The duty of the board is to represent and protect the interests of all the stakeholders. In particular, it:

provides direction for management; lays down strategy and vision; makes well informed and quality decisions based on a clear line of sight into the business; creates the right framework for helping directors meet their statutory duties under the relevant statutory and regulatory regimes

Training of board members

Non-executive directors who are inducted on the board are given an orientation about the company, its operations, services, details of subsidiaries and joint ventures, board procedures and processes and major risks and risk management strategies. The company ensures that directors are inducted through a familiarization process comprising, inter alia, their roles and responsibilities.

Meetings of Board of Directors

The Board has met Six (6) times during the financial year i.e., on 2 May 2016, 27 May 2016, 9 August 2016, 10 August 2016, 6 December 2016, 23 February 2017. The intervening gap between any two meetings was within the period prescribed under the Companies Act, 2013

Board processes, procedures and practices

The company believes that the effectiveness of the board is reinforced by its structures and the processes and procedures it follows. It has in place robust practices and processes that contribute to the effective and efficient performance of the board. Board systems and procedures broadly comprise convening the meetings, contents of the agenda, conducting the meetings, decision making at the meetings, adequacy of minutes and working of board committees.

Decisions relating to the policy and operations of the company are arrived at meetings of the board held periodically. Meetings of the board enable discussions on matters placed before them and facilitate decision making based on collective judgment of the board. The company follows the best practices in convening and conducting meetings of the board and its committees. These include:

Meeting location

The meetings of the board of directors are usually held at the registered office in Hyderabad

Frequency of meetings

A minimum of four board meetings is held each year with the time gap between any two successive meetings not exceeding four months. Meetings of the committees are also planned and scheduled to be held along with the board meetings.

Board agenda

It strikes a fine balance between the reviews of the past performance and forward-looking issues. The agenda is structured such that routine and administrative matters do not consume too much board time. The agenda is made available to the directors along with supporting documents sufficiently in advance of the meetings.

Briefing papers

Board materials, including the notes on agenda are summarized and formatted in such a way that the directors can readily grasp and focus on the more significant issues in the preparation for the board meetings. Relevant and complete information is presented in an orderly manner. The board papers associated with a particular agenda item are set out as an executive summary with further details annexed thereto. The briefing papers are crisp and succinct and facilitate decision making.

Decision making process

The board follows a culture of openness and debate by facilitating effective contribution of all directors and ensuring constructive relations among the directors. Constructive discussions are facilitated leading to effective decision making. The chairman ensures that adequate time is available for discussion of all agenda items, in particular, strategic issues.

Directors participation

All the directors participate, discuss and deliberate the proposals and matters put up to it. On some occasions, where a director is not physically present, the company arranges for Video Conference facility to enable participation. On matters where a director is concerned or interested, he/she does not participate.

Board Minutes

The minutes of the meetings of the board and committees are drafted such that they strike the right balance between being a bare record of decisions and a full account of the discussions. They mention the brief background of the proposal and summarize the deliberations and decisions. The minutes are drafted in unambiguous terms and comprise a fair and correct summary of the proceedings conducted thereat.

Availability of information to the board

The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties. Under the advice and direction of the chairman, the company secretary's responsibility includes ensuring good information flows within the board as well as between senior management and non-executive directors.

The following information, inter alia, is provided to the directors of the company:

Annual operating plans and budgets and any updates. Capital budgets and any updates. Quarterly results for the company Minutes of meetings of audit committee and other committees of the board General notices of interest received from directors. Show cause, demand, prosecution notices and penalty notices which are materially important. Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems Any material default in financial obligations to and by the company Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which, may have passed strictures on the conduct of the company Non-compliance of any regulatory, statutory duty Legal compliance reports and details of payment of statutory dues

Secretarial Standards

The Institute of Company Secretaries of India (ICSI), a statutory body that is in the forefront of promoting corporate governance, has issued secretarial standards on various important facets of corporate functioning and management. The secretarial standards on board and general meetings are mandatory from 1 July 2015, the company has adopted and complied with the standards.

Role of the Chairman

The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role. The role includes:

Making certain that an effective decision-making process is in place in the board, and that the board's committees are properly structured with appropriate terms of reference Encouraging the active engagement of all board members in board and committee meetings, drawing fully on their skills, experience, knowledge and, where appropriate, independence; Building effective relationships founded on mutual respect and open communication - both inside and outside the boardroom - between the non-executive directors and executive team, in particular with regard to the identification and oversight of significant risks

Role of Managing Director

The managing Director lives and upholds the highest standards of integrity and probity inside and outside the boardroom, through setting clear expectations in terms of culture and values, as well as in terms of the style and tone of board discussions. The MD encourages directors to express their views frankly and challenge constructively in order to improve the standard of discussion in the boardroom. The MD appreciates that constructive challenge from non-executive directors is an essential aspect of good governance and encourage the non-executive colleagues to probe proposals, especially when issues of judgement are concerned. The role includes:

Setting a board agenda which is primarily focused on business, strategy, accountability, competitive performance and value creation; ensuring that issues relevant to this objective are reserved for board consideration, including determining the nature and extent of the significant risks the board is willing to embrace in the implementation of its strategy; developing, in particular, a productive working relationship with the CEO, providing support and advice while respecting executive responsibility; consulting the senior independent director on board matters consistent with regulations; ensuring effective processes are established relating to succession planning and the composition of the board, having regard to the benefits of diversity;

Role of CEO

The CEO is vested with operational responsibility for delivering the company's strategy. The CEO's relationship with the chair and MD is the key dynamic that underpins the effectiveness of the board. The CEO, with the support of the executive team, has primary responsibility for communicating to the people working within the business the expectations of the board in relation to the company's culture, values and behaviours.

He has the most intimate knowledge of the company and its capabilities. This is evidenced when making proposals and exercising judgement, particularly on matters of strategy.

Decision making at the board

Effective and good decision-making at the board is facilitated by:

ensuring that directors are afforded adequate time to prepare for meetings; allowing time for debate and challenge, especially for complex, contentious or business-critical issues; achieving timely closure on decisions taken; and providing clarity for executives on the actions required.

Role of company secretary in overall governance process

The company secretary has a key role to play in facilitating the effective functioning of the board through the timely presentation of board information which - by being accurate, clear and comprehensive - assists high-quality decision making.

Under the direction of the chairman and MD, the company secretary's responsibilities include ensuring good information flows within the board and its committees, between senior management and non-executive directors, as well as facilitating induction and assisting with professional development. All directors have access to the advice and services of the company secretary who is responsible to the Board for ensuring that Board procedures are complied with. In addition, the Company Secretary discharges the functions prescribed under the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Besides, the company secretary acts as secretary of the Board and its committees thereof.

STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTOR AS PER SECTION 149 (6)

The Company has received necessary declarations from each of the Independent Directors of the Company under Section 149(7) of the Companies Act, 2013 that they meet the criteria of Independence laid down in Section 149(6).

Meetings of Independent Directors

The independent directors met once in the financial year under review i.e., on 31 March 2017 to review the performance of non-independent directors and the Board as a whole, review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors and to assess the quality, quantity and timeliness of flow of information between the company management and the Board and suggested for various implementations for adopting enhanced transparency and hostile good governance practices in the Company.

COMMITTEES OF THE BOARD

Currently, the Board has 3 (Three) Committees: the Audit Committee, the Nomination and Remuneration Committee and the CSR Committee. The composition of the committees and compliances, as per the applicable provisions of the Act and Rules, are as follows:

a. Audit Committee

Composition of the committee:

Kishore Mirchandani Chairman

Dodla Sunil Reddy Member

Ponnavolu Divya Member

Meetings:

The Committee had met Four (4) times i.e., on 26 May 2016, 27 May 2016, 9 August 2016, 6 December 2016 and 23 February 2017 during the financial year under review.

Highlights of duties, responsibilities & activities

· All recommendations made by the audit committee during the year were accepted by the Board.

· The Company has adopted the Vigil mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the Company's Code of Conduct and Ethics.

· The Company has developed and implemented a risk management framework that includes identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company. The purpose is to assist the Board in fulfilling its corporate governance with regard to the identification, evaluation and mitigation of operational, strategic and environmental risks efficiently and effectively

b. Nomination and Remuneration committee

Composition of the committee:

*James Sayre Chairman

#Vishwarupe Narain Chairman

Dodla Sesha Reddy Member

Kishore Mirchandani Member

Ponnavolu Divya Member

* Ceased as Chairman and Member with effect from 20 July 2017

# appointed as Chairman and Member with effect from 21 July 2017

Meetings:

The Committee had met One (1) time i.e., on 9 August 2016, during the financial year under review.

Highlights of duties, responsibilities & activities:

· The committee oversees and administers executive compensation, operating under a written charter.

· To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations.

· To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

c. Corporate Social Responsibility (CSR) Committee

Composition of the committee:

Dodla Sesha Reddy Chairman

*Deepak Malik Member

#Akshay Tanna Member

Kishore Mirchandani Member

Ponnavolu Divya Member

* Ceased as Member with effect from 20 July 2017

# appointed as Member with effect from 21 July 2017

Meetings:

The Committee had met One (1) time i.e., on 9 August 2016, during the financial year under review.

Highlights of duties, responsibilities & activities:

· The Committee annually review the CSR Policy and associated frameworks, processes and practices of the Company and make appropriate recommendations to the Board if any.

· The Committee ensures that the Company is taking the appropriate measures to undertake and implement CSR projects successfully and monitor the CSR Policy from time to time.

· The Committee identify the areas of CSR activities and recommend the amount of expenditure to be incurred on such activities.

· The Committee coordinate with outside agency for implementing programs and executing initiatives as per CSR policy and review the performance of agency periodically.

· The Committee delegates authority to subcommittees formed as CSR Sub-Committee.

· The Committee reports to the Board about the progress of various initiatives and make appropriate disclosures on a periodic basis.

COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration committee and Independent Directors with specific focus on the performance and effective functioning of the Board and individual Directors.

Mechanism for evaluation of board

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration committee and Independent Directors with specific focus on the performance and effective functioning of the Board and individual Directors.

Criteria for evaluation of Board of Directors as a whole

The frequency of meetings; The length of meetings; The administration of meeting; The number of committees and their notes; The flow of information to board members and between board members The quality and quantity of information; and The disclosure of information to the stakeholders

Criteria for evaluation of the Individual Directors

Ability to contribute and monitor corporate governance practices; Ability to contribute by introducing best practices to address top management issues; Participation in long term strategic planning; Commitment to the fulfilment of director obligations and fiduciary responsibilities; Guiding strategy; Monitoring management performance and development; Statutory compliance & Corporate governance; Attendance and contribution at Board/Committee meetings; Time spent by each of the member; and Core competencies

Nomination and Remuneration Policy

The objectives of the Policy

To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

To determine remuneration based on the Companys size and financial position and trends and practices on remuneration prevailing in peer Companies.

To carry out evaluation of the performance of Directors,

To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations.

To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

A detail policy is available on the website of the Company.

RISK MANAGEMENT POLICY

The Company has adopted the following measures concerning the development and implementation of a Risk Management Policy after identifying the following elements of risks which in the opinion of the Board may threaten the very existence of the Company itself.

a. To ensure there is an embedded, robust process in place throughout the Company to identify, assess, mitigate and report business risks with clear lines of ownership.

b. To drive and co-ordinate risk management process covering all areas of risk (including operational, strategic, financial, commercial, regulatory, reputational etc.), through an appropriate business risk management organization.

c. To ensure that the business risk strategy and management processes comply with applicable regulatory requirements and corporate governance principles.

d. To monitor external developments in the business environment which may have an adverse impact on Companys risk profile, and make recommendations, as appropriate.

e. To periodically monitor and review Companys key business risks and risk mitigation plans, and advise the Board of business risks which could materially impact Companys delivery of its business plans, strategy, and reputation, if left untreated.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company is well equipped with adequate internal financial controls. The Company has a continuous monitoring mechanism which enables the organisation to maintain with the same standard of the control systems and helps them in managing any default on timely basis because of strong reporting mechanisms followed by the company. The internal financial controls with reference to the Financial Statements, including monthly management reviews apart from statutory audit, internal audit and Standard Operating Procedures for all processes are adequate to the size and operations of the Company.

VIGIL MECHANISM

A Vigil Mechanism for Directors and Employees to report genuine concerns has been established by the Board along with the Whistle Blower Policy. The Company has also provided adequate safeguards against victimization of employees and Directors who expressed their concerns

CORPORATE SOCIAL RESPONSIBILTY POLICY

The brief outline of the corporate social responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year is appended to this Report as Annexure V in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

A detail policy is available on the website of the Company

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the Financial Year 2016-17, the Company has received no complaints of sexual harassment at workplace.

DIRECTORS RESPONSIBILITY STATEMENT

In pursuance of Section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) 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 as at 31st March 2017 and of the profit and loss of the company for that period;

(c) 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) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

AUDITORS AND AUDITORS REPORT

Statutory Auditors

M/s. A. Ramachandra Rao & Co., Joint Statutory Auditors of the company has completed the tenor of their appointment pursuant to section 139(1) and will retire at the ensuing Annual General Meeting and hence not eligible for re-appointment.

It is informed that M/s. B S R & Associates LLP., the Statutory Auditors of the company, retire at the ensuing Annual General Meeting and, being eligible; offer themselves for reappointment for the financial year 2017-18 for auditing the books of Accounts subject to ratification of their appointment at every AGM. Accordingly, requisite resolution forms part of the notice convening the AGM.

Secretarial Auditors

Mrs M. Sridevi, Practicing Company Secretary was appointed to conduct the secretarial audit of the Company for the financial year 2016-17, as required under Section 204 of the Companies Act, 2013 and Rules made thereunder. The secretarial audit report for Financial Year 2016-17 is appended to this Report as Annexure VI.

DISCLOSURE ABOUT COST AUDIT

During the financial year under review, your Company has not crossed the threshold limits prescribed for appointment of Cost Auditor as per provisions of Section 148 of the Companies Act, 2013 and rules made thereunder.

EXPLANATION OR COMMENTS BY BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE

I. By the Statutory Auditor in his report :

i. Delay in statutory payments

* Amount in brackets in parenthesis represents amounts paid under protest.

ii. On observation:

The Company has provided requisite disclosures in the financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. The Management has obtained an opinion from an independent legal counsel and is of the view that the cash collected in specified bank notes in the normal course of the business is covered under the ambit of exemption provided under clause (d) of the notification S.O.3408(E) dated 8 November 2016 issued by the Ministry of Finance, allowing the use of specified bank notes for purchase at milk booths operating under authorisation of the Central or State Governments until 15 December 2016 (originally 11 November 2016, amended by notifications issued from time to time). However, we are unable to obtain sufficient and appropriate audit evidence to report on whether the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management Refer note 2.41 to the standalone financial statements.

Explanation / Comments by the Board on

i. Delay in statutory payments

a. The sales tax department had not called for the assessment for the year 2012-13. The tax was paid however the methodology of payment for same is under dispute. The demand for the same shall be nullified accordingly.

b. The company had filed rectification form u/s 154 of Income Tax Act, 1961 before deputy commissioner of Income Tax. The Company is waiting for further response from the department.

c. The Company has received demand u/s 143(3) of Income Tax Act, 1961 for Rs 3 Crore against which the company had filed appeal against said order before CIT V, Hyderabad. The Company has remitted the said amount in the month of November 2015. The Company has submitted returns with Hble CIT and the Company is waiting for the final order to which a favourable order is expected.

d. In Financial year 2015-16 the Company has imported packing machine from China and while importing it was wrongly grouped under Dairy machinery hence the CVD paid was Nil, against which the customs department has issued show cause notice u/s 124 read with Sec. 128 of customs Act, 1962 for payment of CVD @ 12.5% against which the Company has filed a written submission before Additional commissioner of customs (Import I), Mumbai for payment of 6% CVD. We are expecting a favourable order.

e. The Company has received demand u/s 143(3) read with section 147 of Income Tax Act, 1961 for Rs 0.28 Crores against which the company had filed appeal against said order before CIT V, Hyderabad. The Company has remitted the said amount in the month of January 2017. The Company has submitted returns with Hble CIT and the Company is waiting for the final order to which a favourable order is expected.

f. The Company has received demand u/s 143(3) read with section 147 of Income Tax Act, 1961 for ? 0.64 Crores against which the company had filed appeal against said order before CIT V, Hyderabad. The Company has remitted the said amount in the month of January 2017. The Company has submitted returns with Hble CIT and the Company is waiting for the final order to which a favourable order is expected

g. The Company has received demand u/s 143(3) read with section 92CA(3) of Income Tax Act, 1961 for Rs 2.54 Crores against which the company had filed appeal against said order before CIT V, Hyderabad. The Company has remitted the said amount in the month of January 2017. The Company has submitted returns with Hble CIT and the Company is waiting for the final order to which a favourable order is expected

h. The Company has received demand u/s 143(3) of Income Tax Act, 1961 for Rs 0.92 Crores against which the company had filed appeal against said order before CIT V, Hyderabad. The Company has remitted the said amount in the month of January 2017. The Company has submitted returns with Hble CIT and the Company is waiting for the final order to which a favourable order is expected

i. The Company has received a show-cause notice for payment of VAT on flavoured milk for FY 2012-13 & 2013-14 to the extent of Rs 40 Lakhs in September 2016 for which the Company has responded. Based on the submissions by the Company, we are expecting a favourable order based on the submissions

ii. On observation

The Company has a record of denominations of the currencies deposited by the Company however the data pertaining to direct deposits by the customers is unavailable with the Company for which the Company has requested the bankers to provide the breakup of Specified bank notes and legal tender notes which were deposited in the bank during the demonetization period by the customers of the Company.

II. By Company Secretary in Practice in Secretarial Audit report :

a. During the financial year 2016-17 the actual CSR amount spent was Rs 2,24,110/- as against an amount of Rs 86,10,008/- (2% of Average net profit of preceding three financial year)which is required to be spent.

b. The Company has received notices from RBI with reference to its subsidiary namely Dodla Milk Processing Plc, Ethiopia, for non-compliances with regard to non-filings of Annual Performance Reports (APR) and ‘report on disinvestment with reference to Disinvestment which was under automatic route when the shares certificates were not received vide its letters dated 20th April, 2016 and 2nd January, 2017 respectively through AD Bank and further contravention notice was issued by the RBI for the above stated non-compliance vide letter dated 20th April, 2017 for which the company filed the compounding application to RBI vide letter dated 10th May, 2017, for regularisation of the stated noncompliance.

Explanation or comments by the Board

a. The Company has identified the sector i.e., Rural development projects (Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly, and the differently abled and livelihood enhancement projects) where the funds can be spent. The Company in 4th quarter has ordered for infrastructure facility to be provided in the school to the extent of Rs 24 lakhs, however the invoice for the said infrastructure facility provided by the Company to the school were raised in 1st quarter of FY 2017-18. The CSR activities are scalable which coupled with new initiatives that are considered in future, moving forward the Company will endeavour to spend on CSR activities in accordance with the prescribed limits

b. The violation of non-filing the APR and Non-reporting of share certificates with RBI is neither wilful nor with malafide intention and it was merely due to inadvertence. The Company had filed Compounding application with the RBI on 10 May 2017 for compounding of same. The company is yet to receive the Order.

INDUSTRY BASED DISCLOSURES AS MANDATED BY THE RESPECTIVE LAWS GOVERNING THE COMPANY

RBI Guidelines:

The Company being not accepting deposits, will not fall under the category of NBFC to comply with all the requirements prescribed by the Reserve Bank of India, from time to time as applicable to it.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their sincere gratitude to the Government of India, Government of Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra and Gujarat, Registrar of Companies - Andhra Pradesh and Telangana, lenders including bankers whose assistance and support, your Company has been privileged to receive.

Your directors thank the shareholders for the confidence reposed in the Company and for their continued support and co-operation. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, cooperation and support.

For and on behalf of the Board

Place : Hyderabad D. Sesha Reddy

Date : 16 August 2017 Chairman

Note: Except as otherwise stated, all the numbers in the Directors Report are on standalone basis

ANNEXURE INDEX

ANNEXURE- I

Conservation of Energy, Technology Absorption, Foreign Exchange Earning and outgo etc.,

Information on conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are provided hereunder:

(A) Conservation of Energy:

(i) the steps taken or impact on conservation of energy : NA

(ii) the steps taken by the company for utilising alternate sources of energy : NA

(iii) the capital investment on energy conservation equipments : NA

(B) Technology absorption:

(i) the efforts made towards technology absorption : NA

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution : NA

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) : NA

a) the details of technology imported;

b) the year of import;

c) whether the technology been fully absorbed;

d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;

(iv) the expenditure incurred on Research and Development : NA

Expenditure on R & D

(C)Foreign exchange earnings and Outgo:

In accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013, read with the Rule 5 of the Companies (Accounts) Rules, 2014, the information relating to foreign exchange earnings and outgo is:

Foreign Exchange Earnings and Outgo

ANNEXURE - II

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

Statement containing salient features of the financial statement of subsidiaries/associate companies/joint ventures

Part A: Subsidiaries

Notes: The following information shall be furnished at the end of the statement:

1. Names of subsidiaries which are yet to commence operations

2. Names of subsidiaries which have been liquidated or sold during the year.

Part B: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

Names of associates or joint ventures which are yet to commence operations. NIL

Names of associates or joint ventures which have been liquidated or sold during the year: Dodla Milk Processing Plc Ethiopia:

During the year 2014-15, the Board of directors of the Company has decided to wind up Dodla Milk Processing Plc since it does not intend to pursue the business opportunities in Ethiopia and it stands dissolved on 24 November 2015. Shares of Dodla Milk Processing Plc were not allotted to the Company.

Subsequently, the Company had initiated process of settling the dues and repatriating the funds to India and has received ? 13,534,264, which was deposited in nostro account with Authorised dealer. The Company is required to obtain approval from Reserve Bank of India (‘RBI) to utilise these funds.

Accordingly, the Company had made necessary application with RBI, who in turn has issued a letter to the Company intimating the contravention made by the Company and advised the Company to file an application for compounding of the contraventions. The Company has filed the requisite applications to the RBI for compounding of the contraventions. Further, Management of the Company expects the offence to be compounded. The Company has provided for balance amount of ? 2,299,566 lying in share application money and not repatriated, which has been incurred on winding up activities of this subsidiary.

ANNEXURE - III

FORM NO. AOC.2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in section 188(1) of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Details of contracts or arrangements or transactions not at arm's length basis: NIL

Details of material contracts or arrangement or transactions at arm's length basis:

The following material contracts or arrangements or transactions entered in to during the year ended 31 March 2017, which were at arms length basis as mentioned below:

Note: All the above transactions were approved by the Members of Audit Committee and by the Board of Directors of the Company In the Previous financial year, it was erroneously mentioned in this form that the above transactions were not at arms length basis however it is clarified that all the above transactions entered in in FY 2016 were also on arms length basis.

(DODLA SESHA REDDY) (DODLA SUNIL REDDY)

Chairman Managing Director

DIN: 00520448 DIN: 00794889