Aartech Solonics Director Discussions


To,

The Members,

Aartech Solonics Limited

Your directors are pleased in presenting their 41st Annual Report on the business performance and operations along with the Audited Financial Statements with the consolidated financial statements of the company and the Auditors Report for the financial year ended March 31, 2023.

1. FINANCIAL SUMMARY OR HIGHLIGHTS / PERFORMANCE OF THE COMPANY:

The summary of the Standalone and Consolidated performance are set out below: -

(In Lakhs)

Standalone Consolidated
PARTICULARS Year ended 31st March 2023 Year ended 31st March 2022 Year ended 31st March 2023 Year ended 31st March 2022
Revenue from Operations 2,164.67 1,635.96 2,168.80 1,633.64
Other Income 213.39 181.98 187.19 145.17
Total Revenue 2,378.07 1,818.00 2,356.00 1,778.81
Less: Expenses (2,138.07) (1,645.99) (2,120.90) (1,436.40)
Profit before Finance Cost, Depreciation/ Amortisation Expenses & Tax 239.99 172.01 235.10 342.41
Exceptional Items - - - -
Profit before Depreciation/ Amortisation Expenses & Tax 239.99 172.01 235.10 342.41
Less: Depreciation/ Amortisation Expenses
Profit/ (Loss) before tax 239.99 172.01 235.10 342.41
Current T ax 46.26 28.70 47.10 59.25
Deferred Tax 0.61 1.52 2.17 3.41
Net Profit/ (Loss) after tax 193.12 141.79 185.83 279.75

2. BRIEF DESCRIPTION OF THE COMPANYS OPERATIONS DURING THE YEAR / STATE OF COMPANYS AFFAIR

STANDALONE

At Standalone level, the Revenue from operations amounted to Rs 2,164.67 Lakhs as against Rs 1,635.96 Lakhs in the previous year. The Profit before Tax amounted to Rs 239.99 Lakhs as against Rs 172.01 Lakhs in the previous year. The Net Profit for the year amounted to Rs 193.12 Lakhs as against Net Profit of Rs 141.79 Lakhs reported in the previous year.

CONSOLIDATED

The Consolidated Revenue from Operations amounted to Rs 2,168.80 Lakhs as against Rs 1,633.64 Lakhs in the previous year. The Consolidated Profit before Tax amounted to Rs235.10 Lakhs as against Consolidated Profit before Tax amounted to Rs342.41 Lakhs in the previous year. The Consolidated Net Profit after Tax amounted to Rs185.83 Lakhs as against Consolidated Net Profit after Tax amounted to Rs279.75 Lakhs in previous year.

3. CHANGE IN NATURE OF BUSINESS

There was no change in business of the Company during the year under review.

4. DIVIDEND

Based on the Companys performance and considering the accumulated profit of the previous years, your directors have recommended a dividend of Rs 0.50/- (Fifty Paise) i.e. 5% per equity share of Face Value Rs10.00 (Rupees Ten only) each (previous year Rs 0.50/- per equity share i.e. 5% on the equity share of Rs10/- each) for the financial year 2022-23 subject to the TDS as may be applicable. The dividend payment is subject to the approval of members at the ensuing Annual General Meeting and will be paid to those members whose names appear in the Companys Register of Members and are beneficial owners as per the details to be furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited. (CDSL) as on the date of book closure date and shall be paid within the period of 30 days from the date of declaration at the Annual General Meeting.

Pursuant to the Finance Act, 2020, dividend income is taxable in the hands of the members w.e.f. April 1, 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the members at prescribed rates as per the Income-tax Act, 1961.

The Register of Members and Share Transfer Books of the Company shall remain closed from Saturday, September 23, 2023 to Saturday, September 30, 2023 (both days inclusive) for the purpose of ascertainment for eligibility for participation in payment of dividend for the financial year ended March 31, 2023.

5. SHARE CAPITAL

During the period under review, there has been no change in the Authorized Share Capital of the Company which stand at Rs15,00,00,000/- (Rupees Fifteen Crores Only) divided into 15000000 (One Crore Fifty Lakh) equity shares of Rs10/- (Rupees Ten only) each.

The paid-up equity share capital as at March 31, 2023 is Rs. 10,59,01,250/- (Rupees Ten Crore Fifty-Nine Lakh One Thousand Two Hundred Fifty only) divided into 10590125 (One Crore Five Lakh Ninety Thousand One Hundred and Twenty Five) equity shares of Rs10/- (Rupees Ten only) each.

6. RESERVES

Your directors proposed to transfer Rs193.12 Lakhs to the general reserve out of the profits available with the Company for appropriations.

7. DEPOSITS

During the year under review, the Company has not accepted or renewed any deposits falling within the purview of provisions of Section 73 of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014.

8. CORPORATE GOVERNANCE

The Corporate Governance Report pursuant to the SEBI (LODR) Regulations, 2015 is not applicable for the year under review.

9. ANNUAL RETURN

The copy of annual return is prepared in form MGT-7 as per the provisions of the companies Act, 2013 and will be placed on the Company website at www.aartechsolonics.com.

10. SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

The Company has two subsidiary companies namely AIC-Aartech Solonics Private Limited and Faradigm Ultracapacitors Private Limited.

11. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of section 203 of the Companies Act, 2013 and the rules made their under, following are the Board of Directors and Key Managerial Personnel of the Company as on March 31, 2023:

S. Name of No. Directors/ KMPs Current Designation Original date of appointment Nature of changes Date of Cessation DIN/PAN
1 Mr. Amit Anil Raje Chairman & Managing Director 01.04.2007 - - 00282385
2 Mrs. Arati Nath Woman Director & CEO 12.05.2020 - - 08741034
3 Mr. Anil Anant Raje Non-executive director 24.08.1982 - 01658167
4 Mr. Prashant Dattatray Lowlekar Independent Director 27.02.2018 08041377
5 Mr. Kshitij Negi Independent Director 08.02.2021 - 09046425
6 Ms. Supriya Sunil Chitre Independent Director 23.03.2023 Appointed as Independent Director 09237218
7 Mr. Pradeep Vasant Narkhede Chief Financial Officer 12.05.2020 ADIPN4506H
8 Mr. K R T anuj Reddy Company Secretary & Compliance Officer 08.06.2018 APIPT5347Q

(a) Directors seeking appointment/ re-appointment

In terms of the provisions of the Companies Act, 2013, Mr. Anil Anant Raje (01658167), Non-executive Director of the Company will retire by rotation and being eligible, offer himself for re-appointment at the ensuing Annual General Meeting.

The Board recommends his re-appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.

In case of appointment/re-appointment of Directors, the details of respective Directors as stipulated under Regulation 36(3) of the Listing Regulations are included in the Notice of Annual General Meeting.

(b) Woman Director

Mrs. Arati Nath (DIN: 08741034) was appointed as Woman Director & CEO and Ms. Supriya Sunil Chitre (DIN: 09237218) was appointed as a Woman Independent Director on the Board as required under the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015.

(c) Independent Directors and their Declaration

The Company is having 3 (Three) Independent Directors which are in accordance with the requirement of the SEBI (LODR) Regulations, 2015 as well as under the Companies Act, 2013.The terms and conditions of appointment of the Independent Directors are placed on the website of the Company.

All the Independent Directors have confirmed that they meet the criteria as mentioned under Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015 read with Section 149(6) of the Companies Act, 2013. As per the SEBI (LODR) Regulations 25 (8) states that every Independent Director, at the first meeting of the Board in which he participates as a Director and thereafter at the first meeting of the Board in every financial year, or whenever there is any change in the circumstances which may affect his status as an independent director, submit a declaration that he meets the criteria of independence as provided in clause of sub-regulation (1) of regulation 16 and that he is not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence and the board of directors of the company shall take on record the declaration and confirmation submitted by the independent director under sub-regulation (8) after undertaking due assessment of the veracity of the same.

In the opinion of the Board, the Independent Directors possess the requisite expertise and experience (including the proficiency of the independent director as ascertained from the online proficiency self- assessment test conducted by the Indian Institute of Corporate Affairs notified under sub-section (1) of section 150 of the Companies Act, 2013 and are the persons of high integrity and repute. They fulfill the conditions specified in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and the Rules made thereunder and are independent of the management.

The Independent Directors have registered their names in the data bank maintained with the Indian Institute of Corporate Affairs. As per the proviso to Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors of the Company have passed or are exempted from undertaking the online proficiency self-assessment test. These confirmations have been placed before the Board. None of the Independent Directors hold office as an Independent Director in more than seven listed companies as stipulated under Regulation 17A of the Listing Regulations. The maximum tenure of Independent Directors is determined in accordance with the Act and rules made thereunder, in this regard, from time to time.

(d) Programme for familiarization of Directors

The Company conducts familiarization programme for all the directors at the time of their appointment and also at regular intervals to enlighten the directors regarding their roles, rights and responsibilities in the Company and the nature of the industry in which the Company operates, the business model of the Company etc. The details regarding the familiarization programme conducted during the year are put up on the website of the company.

12. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY UNDER SECTION 186

The Company has not granted any loan, guarantee, or made any investments during the year ended 31st March 2023 under Section 186 of the Companies Act, 2013 and rule made there under. Pursuant to Section 186 (4) read with rule 11 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), disclosure on particulars relating to Loans, advances and investments are provided as part of the financial statements.

13. CONSTITUTION OF THE BOARD OF DIRECTORS AND THEIR MEETINGS

a) Constitution of the Board

The composition of the Board is in conformity with Regulation 17 of the SEBI (LODR) Regulations, 2015 and Section 149 of the Companies Act, 2013. The Companys policy is to maintain optimum combination of Executive and Non-Executive Directors. As on March 31, 2023, the Company has 6 (Six) Directors. Out of the 6 (Six) Directors, 2 (Two) are Executive Directors; 1 (One) Non-executive Director and 3 (Three) are Non-Executive, Independent Directors.

Mr. Amit Anil Raje, Chairman & Managing Director and Mr. Anil Anant Raje, Non-executive Director of the Company, are the Promoters of the Company and Mrs. Arati Nath, Director & CEO comes into the category of Promoter Group of the Company. The Members of the Board are highly qualified and having varied experience in their respective field and they assist the Board to discharge their functions from time to time.

b) Meetings of the Board

The Company prepares the schedule of the Board Meeting in advance to assist the Directors in scheduling their programme. The agenda of the meeting is circulated to the members of the Board well in advance along with necessary papers, reports, recommendations and supporting documents so that each Board member can actively participate on agenda items during the meeting.

The Board met 7 (seven) times during the Financial Year 2022-23. The maximum interval between any two meetings did not exceed 120 days. The details of Board meetings held during the financial year 2022-23 are as follows:

S. No. Date of Board Meeting Board Strength No. of Directors Present
1. 12.05.2022 5 5
2. 29.06.2022 5 5
3. 16.08.2022 5 4
4. 13.10.2022 5 4
5. 12.11.2022 5 4
6. 11.01.2023 5 3
7. 23.03.2023 5 5

Attendance of Directors at the Board Meetings and at the last Annual General Meeting (AGM)

Name of the Directors Number of board meetings during the year 2022-23 Whether attended last AGM
Held Attended
Mr. Amit Anil Raje 7 7 Yes
Mrs. Arati Nath 7 7 Yes
Mr. Anil Anant Raje 7 6 Yes
Mr. Prashant Dattatray Lowlekar 7 6 Yes
Mr. Kshitij Negi 7 4 Yes
Ms. Supriya Sunil Chitre 0 0 NA

c) Information available for the members of the Board

The Board has complete access to any information within the Company. The Company has provided inter alia following information.

- Financial results of the Company, its Subsidiaries;

- Minutes of meetings of the Board, Committees, resolutions passed by circulations and minutes of the meetings of the Board of Subsidiary Companies;

- Periodic compliance/reports which includes non-compliance, if any;

- Disclosures received from Directors;

- Related party transactions;

- Regular business updates;

- Action Taken Report on decisions of previous Board Meetings;

- Various Policies of the Board;

- Code of Conduct for the members of the Board;

- Discussion with the Auditors and the audit committee members.

18. COMMITTEES OF THE BOARD

The Board of Directors has constituted various mandatory and non-mandatory committees to deal with specific areas and activities. The Committees are formed with approval of the Board and function under their respective Charters.

These Committees play an important role in the overall management of day-to-day affairs and governance of the Company. The Board Committees meet at regular intervals and take necessary steps to perform its duties entrusted by the Board. The Minutes of the Committee Meetings are placed before the Board for noting. The Board currently has the following Committees:

a) Audit Committee

The Audit Committee was constituted by our Board in accordance with Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (LODR) Regulations, 2015. Its purpose is to assist the Board in fulfilling its oversight responsibilities of monitoring financial reporting processes, reviewing the Companys established systems and processes for internal financial controls, governance and reviewing the Companys statutory and internal audit activities.

As on March 31, 2023, the Audit Committee is headed by Mr. Prashant Dattatray Lowlekar and has Mr. Kshitij Negi and Mr. Amit Anil Raje as its members. All the members of the Committee have relevant experience in financial matters.

The Board assures that the members of the Committee are financially literate. In addition to the Audit Committee members, Statutory Auditors, the Chief Financial Officer, Head - Internal Auditors, are also invited to the Audit Committee Meetings, on need basis. The Company Secretary of the Company is the Secretary of the Committee.

The Audit Committee member meets at least four times a year with maximum interval of four months between two meetings and reports to the Board if required. During the year 2022-23, seven meeting of the Audit Committee were held i.e., 12.05.2022, 29.06.2022, 16.08.2022, 13.10.2022, 12.11.2022, 11.01.2023 and 23.03.2023.

The Composition of the Audit Committee and the details of the meetings attended by its members held during the financial year 2022-23 are stated below:

Sr. No. Name of the Director(s) Category Position held No. of Meeting
Held Attended
1. Mr. Prashant Dattatray Lowlekar Non-Executive & Independent Director Chairperson 7 6
2. Mr. Kshitij Negi Non-Executive & Independent Director Member 7 5
3. Mr. Amit Anil Raje Executive Director Member 7 7

The terms of reference of Audit Committee Inter-alia, includes the following:

- Overseeing of the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient, and credible.

- Recommending to the Board, the appointment, remuneration and terms of appointment of the Statutory Auditor of the Company.

- Approving payments to Statutory Auditors for any other services rendered by them.

- Reviewing, with the management, the Annual Financial Statements and Auditors Report thereon before submission to the Board for approval, with particular reference to:

• Matters required to be included in the Directors Responsibility Statement to be included in the Boards Report in terms of Section 134 (3)(c) of the Companies Act, 2013;

• Changes, if any, in accounting policies and practices and reasons for the same;

• Major accounting entries involving estimates based on the exercise of judgment by management;

• Significant adjustments made in the financial statements arising out of audit findings;

• Compliance with listing and other legal requirements relating to financial statements;

• Disclosure of any related party transactions;

• Modified opinion(s) in the draft Audit Report.

- Reviewing, with the management, the quarterly, half-yearly and Annual Financial Statements before submission to the Board for approval;

- Reviewing, with the management, the statement of uses / application of funds raised through an issue (preferential issue, rights issue etc.), the statement of funds utilized for purposes other than those stated in the offer document/ prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter. This also includes monitoring the use or application of the funds raised through the proposed initial public offering by our Company;

- Reviewing and monitoring the auditors independence and performance, and effectiveness of audit process;

- Approving of any subsequent modification of transactions of the Company with related parties;

- Scrutinizing inter-corporate loans and investments;

- Valuing undertakings or assets of the Company, wherever it is necessary;

- Evaluating internal financial controls and risk management systems;

- Reviewing, with the management, the performance of statutory and internal auditors, and adequacy of the internal control systems;

- Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

- Discussing with internal auditors any significant findings and follow up thereon;

- Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

- Discussing with statutory auditors, internal auditors, secretarial auditors, and cost auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

- To investigate the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

- To review the functioning of the whistle blower mechanism;

- Establishing a vigil mechanism policy for directors and employees to report their genuine concerns and grievances;

- Approval of appointment of the CFO (i.e., any person heading the finance function or discharging that function) after assessing the qualifications, experience, and background, etc. of the candidate;

- Review and monitor the process for compliance with laws, regulations and the code of conduct as per SEBI Insider Trading Regulations, 2015, and all other applicable Laws, rules and regulations, if any;

- Review all the provisions as per the Companies Act, 2013 and Securities and Exchange Board of India (LODR) Regulations, 2015 as amended from time to time; and

- Carrying out any other function as mentioned in the terms of reference of the Audit Committee.

The Audit Committee also mandatorily review the following information:

i. Management discussion and analysis of financial condition and result of operations;

ii. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;

iii. Management letters/ letters of internal control weaknesses issued by the Statutory Auditor;

iv. Internal audit reports relating to internal control weaknesses;

v. Statement of deviations:

- Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of the Securities and Exchange Board of India (LODR) Regulations, 2015; and

- Annual statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice in terms of the Securities and Exchange Board of India (LODR) Regulations, 2015.

The Board considered and approved the same and instructed to forward the matter to the audit committee for its noting and record.

The powers of the Audit Committee include the following:

a. To investigate any activity within its terms of reference;

b. To seek information from any employee;

c. To obtain outside legal or other professional advice; and

d. To secure attendance of outsiders with relevant expertise, if it considers necessary.

Details of establishment of vigil mechanism for directors and employees

The Company has formulated the Vigil Mechanism and Whistle Blower Policy. The policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity, and ethical behavior. All permanent employees of the Company are covered under the Vigil Mechanism Policy.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail the mechanism and allows direct access to the Chairperson of the Audit Committee in exceptional cases. Further, during the financial year 2022-23, no whistle blower complaint has been received against any Promoter, Directors and employees of the Company. The Policy is available on the website of the Company.

b) Stakeholders Relationship Committee

Stakeholders Relationship Committee has been constituted by the Board in accordance with Section 178 of the Companies Act, 2013. The Committee specifically looks into the redressal of shareholders and investors complaints such as transfer of shares, non-receipt of Balance Sheet, non-receipt of declared dividends, payment of unclaimed dividends etc.

In addition, the Committee also investigated matters that can facilitate better investor services and relations. The Board was kept apprised of all the major developments on investors issues through various reports and statements furnished to the Board from time to time throughout the year. As on March 31, 2023, the Companys Stakeholders Relationship Committee was headed by Mr. Kshitij Negi and other members of the Committee are -Mr. Anil Anant Raje and Mr. Amit Anil Raje.

In order to act in compliance with Regulation 13(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Stakeholders Relationship Committee reports to the Board as and when need arise, with respect to the status of redressal of complaints received from the shareholders of the Company. During the year 2022-23, five meeting of the committee were held on 12.05.2022, 16.08.2022, 13.10.2022, 11.01.2023 and 23.03.2023. The requisite quorum was present in the meeting.

The Composition of the Stakeholders Relationship Committee and the details of the meetings attended by its members held during the financial year 2022-23 is stated below:

Sr. No. Name of the Director(s) Category Position held No. of Meeting
Held Attended
1. Mr. Kshitij Negi Non-Executive & Independent Director Chairperson 5 4
2. Mr. Anil Anant Raje Non-Executive Director Member 5 4
3. Mr. Amit Anil Raje Executive Director Member 5 5

The terms of reference of the Stakeholders Relationship Committee of the Company includes the following:

i. Consider and resolve grievances of the security holders of the Company, including complaints related to the transfer of shares, non-receipt of Annual Report and non-receipt of declared dividends; and

ii. Carrying out any other function as prescribed under the SEBI (LODR) Regulations, 2015.

c) Nomination and Remuneration Committee

The Nomination and Remuneration Committee has been constituted by the Board in accordance with section 178 of Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This policy is applicable to all Directors, Key Managerial Personnel (KMP), Senior Management team and other employees of Aartech Solonics Limited ("Company"). During the year 2022-23, seven meeting of the committee were held on 12.05.2022, 29.06.2022, 16.08.2022, 13.10.2022, 12.11.2022, 11.01.2023 and 23.03.2023. The requisite quorum was present in the meeting.

The Composition of the Nomination and Remuneration Committee and the details of the meetings attended by its members held during the financial year 2022-23 is stated below:

Sr. No. Name of the Director(s) Category Position held No. of Meeting
Held Attended
1. Mr. Kshitij Negi Non-Executive & Independent Director Chairperson 7 5
2. Mr. Prashant Dattatray Lowlekar Non-Executive & Independent Director Member 7 6
3. Mr. Anil Anant Raje Non-Executive Director Member 7 7

The Nomination and Remuneration policy was adopted by the Board on the recommendation of

Nomination & Remuneration Committee. The Policy is available on the website of the Company.

Brief description of terms of reference:

- Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to, the remuneration of the Directors, Key Managerial Personnel, and other employees;

- Formulation of criteria for evaluation of performance of independent Directors and the Board;

- Devising a policy on Board diversity;

- Identifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with the criteria laid down and recommend to the Board their appointment and removal and evaluation of Directors performance;

- Determining whether to extend or continue the term of appointment of the Independent Director, on the basis of report of performance evaluation of independent directors;

- Carrying out any other function as prescribed under the SEBI Listing Regulations;

- recommend to the board, all remuneration, in whatever form, payable to senior management; and

- Performing such other activities as may be delegated by the Board of Directors and/or are statutorily prescribed under any law to be attended by the Nomination and Remuneration Committee.

19. MECHANISM FOR EVALUATION OF BOARD, COMMITTEES, CHAIRPERSON AND INDIVIDUAL DIRECTORS

The Nomination and Remuneration Committee and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, Committees, Individual Directors, CEO & MD and the Chairman has to be made. Pursuant to the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015, a structured questionnaire was prepared after taking into consideration the various aspects of the Boards functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, Individual Directors, CEO & MD and the Chairman.

As per Section 134(3) read with Rule 8(4) of the Companies (Accounts) Rules, 2014, the evaluation is done by the Independent Directors of the Board for the performance of the executive directors with specific focus on the performance and effective functioning of the Board and Individual Directors, areas of improvement for the Directors and for the aforesaid purpose, Independent Directors of the Company have conducted their separate meeting on December 05, 2022. The Board of Directors expressed their satisfaction with the evaluation process.

Criteria for evaluation of Board as a whole

i. Board Composition & Quality;

ii. Board Meetings;

iii. Committees;

iv. Core Governance & Compliance; and

v. Risk Management.

Criteria for evaluation of Committees

i. Structure of committees;

ii. Appropriateness of delegation of responsibilities by the Board to its committees;

iii. Composition of the committees;

iv. The meetings are conducted in a manner that ensures open communication and meaningful participation;

v. The amount of information received is appropriate for discussion and decision-making purposes;

vi. The reporting by each of the Committees to the Board is sufficient;

vii. Committees takes effective and proactive measures to perform its functions; and

viii. The frequency of the Committee meetings is adequate.

Criteria for evaluation of Chairperson

i. Leadership; and

ii. Managing Relationships.

Criteria for evaluation of the Executive Directors

i. Strategy Formulation & Execution;

ii. Board Meetings;

iii. Interpersonal Skills;

iv. Leadership;

v. Diligence; and

vi. Knowledge & Expertise.

Criteria for evaluation of the Independent Directors

i. Knowledge & Expertise;

ii. Participation in Board Meetings;

iii. Interpersonal Skills;

iv. Professional Conduct & Independence;

v. Diligence;

vi. Roles & Responsibilities; and Disclosure & Reporting.

20. VIGIL MECHANISM (WHISTLE BLOWER POLICY)

In terms of the Section 177(9) of Companies Act, 2013 and rules framed there under, your Company has established a Whistle Blower Policy and Vigil Mechanism for directors and employees it provides a channel to the employees to report to the appropriate authorities concerns about unethical behavior, actual or suspected, fraud or violation of the Companys code of conduct policy and provides safeguards against victimization of employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. Protected disclosures can be made by whistle blower through an e-mail, or dedicated telephone line or a letter to the concerned authorities.

21. GOVERNANCE CODES

a) Code of Business Conduct & Ethics

The Company has adopted Code of Conduct for Board of Directors and Senior Management ("the Code") which is applicable to the Board of Directors and all Employees of the Company. The Board of Directors and the members of Senior Management Team of the Company are required to affirm Compliance of this Code. The Company has received the annual affirmation declaration from the Board of Directors and Senior Management. The Code requires Directors and Employees to act honestly, fairly, ethically and with integrity, conduct themselves in professional, courteous and respectful manner. The Code is displayed on the Companys website.

b) Conflict of Interests

Each Director informs the Company on an annual basis about the Board and the Committee positions they occupies in other Companies including Chairmanships and notify changes during the year. The Members of the Board while discharging their duties, avoid conflict of interest in the decision-making process. The Members of Board restrict themselves from any discussions and voting in transactions in which they have concern or interest.

c) Insider Trading Code

The Company has adopted a Code of conduct for prevention of Insider Trading ("the Code") in accordance with the SEBI (Prohibition of Insider Trading) Regulations, 2015, amended time to time (the PIT Regulations). This Code is displayed on the Companys website.

The code shall be applicable to the insiders of the Company which includes all insiders, designated persons and their immediate relatives, connected persons, fiduciaries and intermediaries and shall come into effect from the date of listing of equity shares of the Company on a Stock Exchange in India subsequent to an initial public offering of the equity shares of the Company. The Chief Financial Officer of the Company is the Compliance Officer for monitoring adherence to the said PIT Regulations.

The Company has also formulated The Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI) in compliance with the PIT Regulations. This Code is displayed on the Companys website.

22. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Sec. 134 (5) of the Companies Act, 2013, the Directors confirm that:

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

ii. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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. 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.

iv. that the directors had prepared the annual accounts for the Financial Year ended March 31, 2023 on a going concern basis;

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

vi. that 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.

23. PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES REFERRED TO SECTION 188(1)

All transactions entered with Related Parties for the year under review were entered on arms length basis and in the ordinary course of business and that the provisions of Section 188(1) of the Companies Act, 2013 and the Rules made there under were not attracted. The particulars of contracts or arrangements with related parties referred to in Section 188(1) is prepared in Form AOC-2 pursuant to Section 134(3)(h) of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is annexed to the Boards Report as Annexure-A.

All Related Party Transactions are placed before the Audit Committee and the Board for approval. The Company has a process in place to periodically review and monitor Related Party Transactions. Omnibus approval was obtained on a yearly basis for transactions which are of repetitive nature. All the related party transactions were in the ordinary course of business and at arms length.

24. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has an effective internal control and risk mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism.

25. RISK MANAGEMENT

For your Company, Risk Management is an integral and important component of Corporate Governance. Your Company believes that a robust Risk Management ensure adequate controls and monitoring mechanisms for a smooth and efficient running of the business. A risk-aware organization is better equipped to maximize the shareholder value. Your Company has a well-defined risk management framework in place. The risk management framework works at various levels across the Company. These levels form the strategic defense cover of the Companys risk management. The Company has a robust organizational structure for managing and reporting on risks. The Company follows well established and detailed risk assessment and minimization procedures, which are periodically reviewed by the Board. The Companys Business Risk Management Framework helps in identifying risks and opportunities that may have a bearing on the organizations objectives, assessing the terms of likelihood and magnitude of impact and determining response strategy.

26. CONSERVATION OF ENERGY, TECHNICAL ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

The Conservation of Energy, Technology Absorption, Foreign Exchange Earning and Outgo pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Account) Rules, 2014:

A. Conservation of Energy

While continuing to believe in philosophy of Energy saved is Energy produced, adequate measures commensurate with the business operations have been taken to reduce and conserve the energy consumption by utilizing energy efficient equipment whenever required.

B. Technology Absorption

The Company is doing its business by ensuring optimum utilization of its available resources. Your company has not taken any research & development activity so far.

C. Foreign Exchange Earnings and Outgo

Foreign Exchange Earnings: Rs30.93 Lakhs.

Outgo: Rs2.67 Lakhs.

27. POLICIES:

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandated the formulation of certain policies for all listed companies. In compliance with the same, the Company has formulated the policies.

POLICY ON NOMINATION AND REMUNERATION POLICY

The policy of the Company on directors appointment and remuneration, including criteria for determining qualification, positive attributes, independence of a director and other matters provided under sub - section (3) of Section 178 of the Companies Act, 2013 was framed on the recommendation of Nomination and Remuneration Committee and approved by the Board.

The key objective of this policy is selection, appointment of and remuneration to Key Managerial Personnel, Directors and Senior Management Personnel.

RELATED PARTY TRANSACTIONS AND POLICY

The Company has developed a related party transactions framework through standard operating procedures for the purpose of identification and monitoring of transactions with the related parties.

None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company.

CODE OF CONDUCT

In Compliance with Regulation 26(3) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013, The Company has laid down the Code of Conduct for all Board members and senior management of the Company.

All the Board members and senior management of the Company have affirmed compliance with their Code of Conduct for the financial year ended March 31, 2023. The Managing Director has also confirmed and certified the same. The certification is annexed at the end of this report.

VIGIL MECHANISM AND WHISTLE BLOWER POLICY

The Company has implemented a vigil mechanism policy (Whistle blower policy), whereby the employees can raise their concerns on any violation of legal or regulatory requirements, suspicious fraud, misfeasance, misrepresentation of any financial statements and reports. The policy safeguards the whistle blower and also provides a direct access to the Chairman of Audit Committee. During this year no complaints were received under this mechanism nor has any personnel been denied access to the Audit Committee.

28. CORPORATE SOCIAL RESPONSIBILITY

The provisions of Section 135 of the Companies Act, 2013 are not applicable to the Company.

29. SIGNIFICANT AND MATERIAL OREDERS PASSED BY REGULATORS OR COURTS

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

30. AFFIRMATION ON COMPLIANCE OF SECRETARIAL STANDARDS

The Company hereby affirms that during the year under review the Company has complied with all the applicable mandatory secretarial standards (including any modifications or amendments thereto) issued by the Institute of Company Secretaries of India.

31. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to Section 134(5)(e) of the Companies Act, 2013 read with Rule 8(5)(viii) of the Companies (Accounts) Rules, 2014, the Board is 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 weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Companys operations. This process includes the design, implementation and maintenance of adequate Internal Financial Control that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, safeguarding of its assets, the prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information, as required under the Act.

During the period under review, the Company has appointed independent audit firm as Internal Auditors to observe the Internal Control system.

The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Vigil Mechanism Policy, Policy to determine Material Subsidiaries and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control system and suggests improvements to strengthen the same. The Company has robust management information system, which is an integral part of the control mechanism.

32. AUDIT REPORT AND AUDITORS Statutory Auditors & their Reports

M/s S. Ramanand Aiyar & Co., Chartered Accountants, Indore (ICAI Firm Registration No. 000990N) were appointed as Statutory Auditor of the Company for a term of three years (3) in the Annual General Meeting of the Company held on September 24, 2020.

M/s S. Ramanand Aiyar & Co., Chartered Accountants, Indore have audited the books of accounts of the Company for the financial year ended March 31, 2023 and have issued the Auditors Report there on. There are no qualifications or reservations or adverse remarks or disclaimers in the said report. Further, no fraud has been reported by the Auditors to the Audit Committee or the Board during the period under review.

The Auditors Report, read together with the notes on financial statements are self-explanatory and hence do not call for any further comments under section 134 of the Act.

The term of M/s S. Ramanand Aiyar & Co., Indore will culminate at the conclusion of the ensuing Annual General Meeting of the Company. Due to the expiration of terms as mentioned above for Statutory provisions of the Companies Act, 2013 and other applicable provisions, if any, and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), the Audit Committee and Board has recommended the appointment of M/s BANCRS & CO. LLP, Chartered Accountants, Bhopal (ICAI Firm Registration No. C400331), as the Statutory Auditors of the Company, to hold an office for a term of Five (5) years from the conclusion of this Annual General Meeting till the conclusion of 46th Annual General Meeting of the Company to be held in the year 2028, at a remuneration of Rs2.50 Lakhs (Rupees Two Lakh Fifty Thousand Only) which includes Audit Fee, Consolidation of Accounts, Limited Review Report plus applicable taxes and reimbursement of out-of-pocket expenses at actuals.

Further M/s BANCRS & CO. LLP, Chartered Accountants, Bhopal (ICAI Firm Registration No. C400331), have confirmed the compliance of the statutory requirements under the Companies Act, 2013 and of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Further pursuant to regulation 36(5) of SEBI (LODR) Regulations, 2015, the details and credentials of the statutory auditor are as under :

M/s BANCRS & CO. LLP is a firm of Chartered Accountants established in the year 2022. The firm is engaged in providing services in Audit, Accounting, Taxation and Advisory services. The firm is an empanelled Auditors having 5 Partners and 15 plus staff.

The firm has been awarded the Peer Review Certificate issued by the Institute of Chartered Accountants of India pursuant to the Statement on Peer Review. The firm has large team of professionals including Chartered Accountants, CWAs, DISA, CS, amongst others.

M/s BANCRS & CO. LLP, Chartered Accountants, Bhopal (ICAI Firm Registration No. C400331), has fulfilled and complied all the conditions as specified in the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and has submitted their eligibility certificate to the Company and also meets the criteria as specified in section 141 of the Companies Act, 2013 and resolution seeking members approval for appointment of Statutory Auditor forms part of the Notice convening the Annual General Meeting.

Secretarial Auditors

Secretarial Audit Report for the Financial Year 2022-23 issued by M/s APVN & Associates, Practicing Company Secretaries, Bhopal in Form MR-3 which is annexed to the Boards Report as Annexure-C which is self-explanatory and do not call for any further explanation of the Board.

Internal Auditors

As per the provisions of Section 138 of the Companies Act,2013, the Board of Directors had appointed M/s Prem Chand Jain & Co., Chartered Accountants, Bhopal (ICAI Firm Registration No. 000066C), as an Internal Auditor to conduct internal audit of the Company for the Financial Year 2022-23.

33. DISCLOSURE WITH RESPECT TO MAINTENANCE OF COST RECORDS

Your Company doesnt fall within the scope of Section 148(1) of the Companies Act, 2013 and hence does not require to maintain cost records as specified by the Central Government.

34. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENT RELATED AND THE DATE OF REPORT

During the year under review and as on the date of report, there is no material change and commitments made which affect the financial position of the Company.

35. PARTICULARS OF EMPLOYEES

Disclosures under section 197(12) of the Companies Act, 2013 read with Rule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 respectively, is annexed to the Boards report as Annexure-D

36. MANAGEMENT DISCUSSION AND ANALYSIS

In terms of the provisions of Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Management Discussion and Analysis Report on the financial condition and result of operations of the Company for the year under review is presented in a separate section forming part of the Annual Report.

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

Your Company is committed to provide a work environment that ensures everyone is treated with dignity and respect. The Company is also committed to promote equality at work and an environment that is conducive to the professional growth for all employees and encourages equal opportunity. Your Company does not tolerate any form of sexual harassment and is committed to take all necessary steps to ensure that its employees are not subjected to any form of harassment including sexual harassment. The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition, and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the Financial Year ended March 31, 2023, the Company has not received any Complaints pertaining to Sexual Harassment.

38. GENERAL DISCLOSURES

During the year under review, the Company has not entered into any transactions which covered under the following provisions and no disclosure or reporting is required :

a) Details relating to deposits covered under Chapter V of the Act and rules made there under.

b) As per rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014, the Company has not issued equity shares with differential rights as to dividend, voting or otherwise.

c) As per rule 8(13) of the Companies (Share Capital and Debentures) Rules, 2014, the Company has not issued shares (including sweat equity shares) to employees of the Company under any scheme.

d) As per rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014, the Company has not issued equity shares under the scheme of employee stock option.

e) As per rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014, there are no voting rights exercised directly or indirectly by the employees in respect of shares held by them. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

f) Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

g) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the Companys going concern status and operations in future.

h) No fraud has been reported by the Auditors to the Audit Committee or the Board.

i) There is no amount of unpaid/unclaimed dividend and shares which are required to be transferred in IEPF (Investor Education and Protection Fund) as per the provisions of the Companies Act, 2013.

j) There is no Corporate Insolvency Resolution Process initiated by and against the Company under the Insolvency and Bankruptcy Code, 2016 (IBC).

k) There is no one time settlement of loans taken from banks and financial Institution.

39. REPORTING OF FRAUDS

During the year under review, neither the Statutory Auditors nor the Secretarial Auditor has reported to the Audit Committee under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in boards report.

40. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its members are among its most important stakeholders. Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating, and building for growth, enhancing the productive asset and resource base, and nurturing overall corporate reputation.

41. CAUTIONARY STATEMENT

Statements in this Boards Report and Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include raw material availability and its prices, cyclical demand and pricing in the Companys principle markets, changes in Government regulations, tax regimes, economic developments in the Country and other ancillary factors.

42. APPRECIATIONS AND ACKNOWLEDGMENTS

Your Companys organizational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilization of the Companys resources for sustainable and profitable growth. Your directors acknowledge with gratitude and wishes to place on record its appreciation for the dedication and commitment of your Companys employees at all levels which has continued to be our major strength. Your directors also thank the shareholders, investors, customers, visitors to our websites, business partners, bankers and other stakeholders for their confidence in the Company and its management and look forward for their continuous support.

For and on behalf of the Board
Aartech Solonics Limited
Sd/- Sd/-
Amit Anil Raje Arati Nath
Place: Bhopal Managing Director Director
Dated: 06/09/2023 (DIN:00282385) (DIN:08741034)