Advanced Enzyme Director Discussions


for the financial year ended March 31, 2023 Dear Members,

Your Board of Directors ("Board") is pleased to present the 34th Annual Report of Advanced Enzyme Technologies Limited ("Company") along with the Audited financial statements for the financial year ended March 31, 2023.

FINANCIAL HIGHLIGHTS

The financial performance of your Company for the financial year ended March 31, 2023 is summarized below:

(Rs. in million)

Standalone

Consolidated

Particulars Year ended March 31, 2023 Year ended March 31, 2022 Year ended March 31, 2023 Year ended March 31, 2022
Revenue from operations 3,115 2,728 5,406 5,294
EBITDA 749 727 1,564 2,014
Less:
Finance Cost 1 1 24 18
Depreciation and Amortisation 103 96 350 349
Add:
Other income 98 91 255 64
Profit before exceptional items and tax 743 721 1,445 1,711
Exceptional items - - 41 -
Profit Before Tax 743 721 1,404 1,711
Less: Provision for Taxation
Current tax 183 180 428 504
Deferred tax 5 (5) (63) (31)
MAT credit entitlement - - - -
Tax adjustment for earlier years - - - -
Tax expenses 188 176 365 473
Profit for the year 555 545 1,039 1,238
Surplus Brought Forward from Previous Year 3,827 3,349 9,173 7,977
Amount Available for Appropriations 4,175 3,827 10,023 9,174
Earnings Per Share (Amount in Rs.)
Basic 4.97 4.88 9.45 10.70
Diluted 4.97 4.87 9.45 10.68

RESULTS FROM OPERATIONS Revenue - Consolidated

Your Companys revenue from operations on consolidated basis increased to Rs. 5,406 million in the financial year 202223 ("FY23") from Rs. 5,294 million in the financial year 2021-22 ("FY22"), a growth rate of 2%. The total revenue comprises of international sales amounting to Rs. 2,850 million (FY22 - Rs. 2,951 million), fall of 4% and domestic sales amounting to Rs. 2,557 million (including Export Incentives of Rs. 3 million) (FY22 - Rs. 2,342 million (including Export Incentives of Rs. 5 million)), an increase of 9%.

Your Companys domestic sales constitute about 47% of revenue from operations during FY23 as compared to 44% of revenue from operations during FY22. International sales were 53% of revenue from operations as compared to 56% of revenue from operations during FY22.

Revenue - Standalone

Your Companys revenue from operations on standalone basis increased to Rs. 3,115 million in FY23 from Rs. 2,728 million in FY22, at an increase of 14%. The total revenue comprises international sales of Rs. 975 million (FY22 - Rs. 782 million), an increase of 25% and Domestic sales at Rs. 2,140 million (including Export Incentives of Rs. 2 million) (FY22 - Rs. 1,946 million (including Export Incentives of Rs. 4 million)), an increase of 10%.

The domestic sales constitute 69% of revenue from operations during FY23 as compared to 71% of revenue from operations during FY22. International sales were 31% of revenue from operations during FY23 as compared to 29% of revenue from operations during FY22.

Profits - Consolidated

EBITDA (Earnings before interest, tax, depreciation & amortisation excluding other income) during FY23 was

Rs. 1,564 million (29%) as compared to Rs. 2,014 million (38%) during FY22, a decrease of 22%.

Profit before tax stood at Rs. 1,404 million (26%) during FY23 as against Rs. 1,711 million (32%) in the previous year, a decline of 18%. Profit after tax stood at Rs. 1,039 million during FY23 as compared to Rs. 1,238 million during the FY22, decline of 16%.

Profits - Standalone

EBITDA during the year under review was at Rs. 749 Million (24%) as compared to Rs. 727 million (27%) in the FY22. Profit before tax stood at Rs. 743 Million during FY23 as compared to Rs. 721 million in the FY22, an increase of 3%. Profit after tax stood at Rs. 555 million during FY23 as compared to Rs. 545 million during FY22, an increase of 2%.

DIVIDEND

Pursuant to the Dividend Distribution Policy of the Company, the Board recommends a final Dividend @ 50% i.e. Rs. 1/- per Equity Share of face value of Rs. 2/- each for the financial year

2022- 23 ("FY23"), aggregating to about Rs. 111.82 million (subject to deduction of taxes, as applicable) i.e. same rate of final dividend as in the previous financial year 2021-22 ("FY22"). Further, the Board of Directors of your Company had also declared an Interim Dividend @ 200% i.e. Rs. 4/- per Equity Share of face value of Rs. 2/- each for the financial year

2023- 24 ("FY24"), aggregating to about Rs. 447.30 million (subject to deduction of taxes, as applicable).

The Dividend Distribution Policy of the Company is provided as Annexure I and forms an integral part of this Report and the said policy is available on the Companys website at www.advancedenzymes.com/investors/corporate- governance/#codes-and-policies.

The final Dividend payout is subject to approval of the Members at 34th Annual General Meeting ("AGM") of your Company.

The Dividend Distribution Tax payable by domestic companies on declaration of dividend has been abolished w.e.f. April 01, 2020. Pursuant to this amendment and consequential amendments brought vide Finance Act, 2020, as the dividend by the companies is taxable in the hands of the shareholders, the Company would be under an obligation to deduct tax at source ("TDS") in accordance with the provisions of the Income Tax Act, 1961 (as amended from time to time).

RESERVES

During the FY23, your Company has not transferred any amount to the General Reserves.

EMPLOYEES STOCK OPTION PLAN

The disclosure pertaining to the details of Employees Stock Option Scheme 2015 [as amended] ("ESOP Scheme 2015"), Employees Incentive Plan 2017 ("Plan 2017") and Employees Stock Option Scheme 2022 ("ESOP 2022") are provided in Annexure II and forms part of this Report. The said disclosure is displayed on the website of the Company under the tab ‘Details of Employees Stock Option at www. advancedenzymes.com/investors/shareholder-information ESOP 2015

The Nomination & Remuneration Committee in its meeting held on February 14, 2017 granted 220,000 stock options of Rs. 2/- each to its eligible employees of the Company and the employees of subsidiaries ("Grantee"). As per the provisions of ESOP Scheme 2015, the stock options granted under the said scheme for the eligible employees/Grantees vested as follows:

(i) First tranche of 10% of stock options got vested on February 15, 2018;

(ii) Second tranche of 20% on February 15, 2019;

(iii) Third tranche of 30% on February 15, 2020, and

(iv) Fourth and last tranche of 40% on February 15, 2021. Each Option is convertible and is equivalent to One (1) Equity Share. Based on the exercise applications received, the Board / Committee allotted 23,400 Equity Shares of Rs. 2/- each (at an exercise price of Rs. 60/- each) during the year under review, under ESOP Scheme 2015 as follows:

Sr.

No.

Date of Meeting (Allotment Date) No. of shares allotted
1. May 22, 2022 5,900
2. July 21, 2022 11,250
3. September 30, 2022 4,250
4. February 11, 2023 2,000
Total o

o

<3

00

CM

In view of above, the Paid-up share capital of your Company has increased as follows (as on March 31, 2023):

Particulars

Paid-up Capital

No. of shares Amount (Rs.)
At the beginning of the year 111,800,675 223,601,350
Allotments during the year 23,400 46,800
At the end of the year 111,824,075 223,648,150

Based on the exercise applications of the Grantees and amount received thereto, total 23,400 Equity Shares of Rs. 2/- each were allotted to such Grantees by the Board during FY23 and accordingly the paid up share capital of the Company has increased from Rs. 223,601,350 to Rs. 223,648,150.

The Equity Shares allotted under ESOP Scheme 2015 are subject to lock in for a period of 1 year from the date of allotment.

During the year under review, the Board of your Company decided that there shall be no further grant under the ESOP Scheme 2015 and the Options that are already granted/ vested but not exercised shall continue till the time they are either lapsed or exercised, as per terms of the grant/ provisions of the ESOP Scheme 2015. Thereafter, the ESOP Scheme 2015 shall be deemed cancelled/terminated. As all the Options granted have either been allotted or lapsed, the ESOP Scheme 2015 stands terminated.

Employees Incentive Plan 2017

The Members of the Company have also approved the AETL Employees Incentive Plan 2017 ("Plan 2017") through trust route and related matters on May 04, 2017 through Postal Ballot. Your Company has received in-principle approval from BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). As on the date of this report, no Stock Options / Stock Appreciation Rights have been granted under the Plan 2017.

No grant of options has been made under the Plan 2017. The Board of Directors in its meeting held during the year under review, cancelled/terminated the Plan 2017.

ESOP 2022

The Members of the Company have approved the AETL Employee Stock Option Scheme 2022 ("ESOP 2022") and related matters on August 19, 2022 at the 33rd Annual General Meeting of the Company. Your Company has received in-principle approval from BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). As on the date of this report, no Stock Options have been granted under the ESOP 2022.

FINANCIAL STATEMENTS

The financial statements of your Company for the year ended March 31, 2023 are prepared in accordance with the Indian Accounting Standards ("IND AS"), read with the provisions of Section 129 and other applicable provisions, if any, of the Companies Act, 2013 ("the Act") rules framed thereunder and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (including any statutory modification(s) or re-enactments thereof for the time being in force) ["SEBI Listing Regulations"] and forms part of this Annual Report. The estimates and judgments relating to the financial statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Companys state of affairs, profits and cash flows for the year ended March 31, 2023.

SUBSIDIARIES

Your Company has twelve (12) subsidiaries as listed below: Domestic Subsidiaries:

1. Advanced Bio-Agro Tech Limited (60%) ["ABAT "];

2. Advanced EnzyTech Solutions Limited (100%) ["AESL"];

3. JC Biotech Private Limited (89.83%) ["JCB"];

4. SciTech Specialities Private Limited (51%) ["SciTech"]

5. Saiganesh Enzytech Solutions Private Limited (50%, effective from January 03, 2023) ["Saiganesh"]

In terms of the financial performances:

i. ABATs revenue for FY23 was Rs. 472 million (previous financial year ["FY22"] - Rs. 404 million), and Profit after Tax for FY23 was Rs. 60 million (FY22 - Rs. 66 million).

ii. AESLs revenue for FY23 was Rs. 134 million (FY22 - Rs. 119 million), and Profit after Tax for FY23 was Rs. 18 million (FY22 - Rs. 18 million).

iii. JCBs revenue for FY23 was Rs. 502 million (FY22 - Rs. 503 million), and Profit/(loss) after Tax for FY23 was Rs. (18) million (FY22 - Rs. 72 million).

iv. SciTechs revenue for FY23 was Rs. 353 million (FY22 - Rs. 473 million), and Profit/(loss) after Tax for FY23 was Rs. (62) million (FY22 - Rs. 37 million).

v. Saigneshs revenue for FY23 was Rs. 26 million (FY22 - Rs. 84 million), and Profit after Tax for FY23 was Rs. 2 million (FY22 - Rs. 4.68 million). Saiganesh became subsidiary of the Company effective from January 03, 2023.

International Subsidiaries:

1. Advanced Enzymes USA (100%)

A. Advanced Supplementary Technologies Corporation (100% Subsidiary of Advanced Enzymes USA);*

B. Cal-India Foods International (doing Business as Specialty Enzymes and Biotechnologies) (100% Subsidiary of Advanced Enzymes USA);

C. Enzyme Innovation Inc. (100% Subsidiary of Cal- India Foods International);

*Note: During the financial year 2022-23, the Board of Directors of respective wholly owned subsidiaries i.e. Dynamic Enzymes, Inc., USA ("DE") and Advanced Supplementary Technologies Corporation, USA ("AST") approved merger of DE and AST. Further, the State of California (USA) had approved the merger of DE into AST and consequently thereafter, DE merged into AST, and DE ceases to exist.

In terms of the consolidated financial performance of Advanced Enzymes USA, the revenue for FY23 was Rs. 1,933 million (FY22 - Rs. 2,140 million), and Profit after Tax for FY23 was Rs. 583 million (FY22 - Rs. 647 million).

2. Advanced Enzymes (Malaysia) Sdn. Bhd. (100%) ["AEM"] The Company acquired AEM in the year 2017 (incorporated in 2016). During FY20, the Board of your Company approved the discontinuation of the business and closure of AEM and to initiate the process of closure thereto, since AEM was not giving the desired results. During FY23, no business activities were carried out resulting into Nil profit in the year whereas During FY22, the assets which were no longer receivable were written-off and the liabilities which were no longer payable were written-back resulting in a (loss) about Rs. (0.60) million). AEM is currently under the process of voluntary Strike-off.

3. Advanced Enzymes Europe B.V (100%) ["AEE"]

In terms of the consolidated financial performance (including its subsidiary, evoxx technologies, GmbH), AEEs revenue for FY23 was Rs. 240 million (FY22 - Rs. 220 million), and Profit / (loss) for FY23 was Rs. (39) million (which includes about Rs. 58 million of operational gain, Rs. 7 million of other income, Rs. 9 million of deferred tax reversal, Rs. 63 million of amortization expense, and Rs. 51 million of finance cost) as compared to loss of Rs. 103 million for FY22.

4. evoxx technologies GmbH [100% subsidiary of AEE] [evoxx]

For FY23, the revenues for evoxx was Rs. 240 million (FY22 - Rs. 220 million) and had a positive impact on the bottom line by Rs. 18 million including operational gain of Rs. 36 million (FY22 - Rs 6 million operational loss) and charge of Rs. 12 million (FY22 - Rs. 14 million) of an amortization expense and finance cost of Rs. 9 million (FY22 - Rs. 9 million).

The Policy for determining Material Subsidiaries is available on the Companys website: www.advancedenzymes.com/ investors/corporate-governance. During the year under review, Cal-India Foods International in USA was Material Subsidiary of your Company based on the criteria specified in the SEBI Listing Regulations.

A separate statement containing the salient features of the financial performance of subsidiaries in the prescribed Form AOC-1 is annexed to the financial statements of the Company. The Audited Consolidated financial statements together with Auditors Report form an integral part of the Annual Report.

The individual financial statements and other reports of the Companys subsidiaries have not been attached to the financial statements of the Company for FY23. Pursuant to the provisions of Section 136 of the Act read with the SEBI Listing Regulations, the financial statements of the subsidiaries and related information

are uploaded on the website of your Company and can be accessed on the web link, www.advancedenzymes. com/investors/quarterly-updates/financial-results and also available for inspection, during working hours at the registered office of the Company on working days except Saturdays and Sundays, up to the date of 34th AGM of the Company. Any Member desirous of conducting inspection and/or of seeking information on the Annual financial statements of the Companys subsidiaries may write and intimate in advance, to the Company Secretary.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE

COMPANIES

A. During the year under review, the Board of your Company, at its meeting held on November 11, 2022, approved the following (brief of approval with update is as follows):

(i) Acquisition of an additional stake of 4.83% (i.e. 1,000,000 Equity Shares) from an existing shareholder of JC Biotech Private Limited ("JCB"), at a consideration of Rs. 68 million. The said acquisition by increase in stake in JCB was completed on January 03, 2023 and the stake of your Company in JCB has increased from existing 85% to 89.83%.

(ii) Acquisition of 50% (i.e. 19,991,663 Equity Shares) stake in Saiganesh Enzytech Solutions Private Limited ("Saiganesh"), by way of subscription to the fresh issue under Private Placement, at a consideration of Rs. 60 million. Saiganesh is primarily into extracting Latex from papaya, purifying and providing finish papain enzyme in liquid form (agriculture extraction of Papain enzyme). The Company has also entered into Share Subscription and Shareholders Agreement with Saiganesh. The said acquisition of 50% stake in Saiganesh was completed on January 03, 2023.

(iii) Conversion of loan/Inter Corporate deposits granted by your Company to Advanced Enzymes Europe B.V, Netherlands (wholly owned subsidiary) ("AEE") in to the Equity Shares of AEE to the extent of total outstanding principal and interest accrued on the mutually agreed date of conversion, in one or more tranches. On April 7, 2023, consequent to conversion of the aforesaid loan, AEE issued 2,276,837 Equity shares of a par value of EUR 1 each at a share premium of EUR 0.63 each, to your Company against outstanding loan amount including interest aggregating to EUR 3,711,244.60. AEE continues to be the wholly-owned subsidiary of your Company and there is no change in the Percentage

shareholding (100%) of your Company in AEE post conversion of loan given by your Company to AEE.

B. During the Financial year 2022-23, the Board of Directors of Saignesh Enzytech Solutions Private Limited (50% Subsidiary) ["Saiganesh"] approved the purchase of entire business undertaking of Shri Ganesh Industrial Enzymes (a partnership firm based in Burhanpur, Madhya Pradesh) ("Shri Ganesh"), through a slump sale on a going concern basis for an amount not exceeding Rs. 9 million, for the purpose of Market expansion & growth for products of Saiganesh. Shri Ganesh is involved in the business of processing Latex from papaya, purifying and providing finish papain enzyme in liquid form (agriculture extraction of Papain enzyme) i.e. same business activity as that of Saiganesh (Health care industry). The total turnover and net-worth of the Shri Ganesh for financial year 2021-22 was Rs. 57.6 Million and Rs. 10.3 million respectively. Saiganesh is in the process of completing the said purchase by way of slump sale.

C. During the Financial year 2022-23, the Board Directors of respective wholly owned subsidiaries i.e. Dynamic Enzymes, Inc., USA ("DE") and Advanced Supplementary Technologies Corporation, USA ("AST") approved the merger of DE and AST. Further, the State of California (USA) approved the merger of DE into AST. Pursuant to the above, DE merged with and into AST and consequently thereafter DE ceases to exist.

The details are available on the website of the Company at www.advancedenzymes.com/investors/ announcements-notices

Except as mentioned above, no other Company has become or ceased to be a Subsidiary, Joint Venture or Associate of the Company during the year under review.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of the operations, performance and future outlook of your Company, Subsidiaries and its Business including Risks, Opportunities and Threats are given in the Management Discussion and Analysis, as required under the SEBI Listing Regulations, which is provided in separate section and forms an integral part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Directors, to the best of their knowledge and belief and based on the information and explanations provided to them, confirm that:

a. in the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards read with requirements set out under

Schedule III to the Act, have been followed and there are no material departures from the same;

b. appropriate accounting policies have been selected and applied consistently and judgments and estimates are made reasonably and prudently so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for the year ended on that date;

c. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis;

e. Proper internal financial controls are devised to ensure compliance with all the provisions of the applicable laws and that such internal financial controls are adequate and are operating effectively; and

f. Proper systems are devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

RISK MANAGEMENT

Your Company understands that controlling risks through a formal program is a necessary component and an integral cornerstone of Corporate Governance. Your Company has adopted Risk Assessment & Management policy which embeds the vision that a robust Risk Management system ensures commensurate controls and monitoring mechanism for smooth and efficient management of Business. The Policy outlines the framework for identification, measurement, evaluation, monitoring and mitigation of various risks. The Management has also reviewed the Risk Management framework of the Company. The Risk Registers are prepared by the concerned departments wherein the respective risks are identified along with its current control activities and the mitigation plans. Thereafter, the registers are reviewed.

The Risk Management Committee constituted by the Board assists the Board in monitoring and review of Risk Management Policy of the Company including associated systems, processes, controls & strategies thereto, various risks exposures of the Company, on a periodic basis and then inform the Board about the risks assessed, their concerns and action plan with strategy for mitigation of the risks and such other functions related to risk management & mitigation as may be required by the Board, from time to time.

RELATED PARTY TRANSACTIONS

During the year under review, all transactions with the Related Parties were placed before the Audit Committee for its approval. An omnibus approval from the Audit Committee was obtained for the Related Party transactions which are repetitive in nature. The Audit Committee and the Board, reviewed all the transactions entered into pursuant to the omnibus approvals on a quarterly basis. All the transactions with Related Parties, entered into during the year under review, were in the ordinary course of business and on arms length basis in accordance with the provisions of the Act, Rules made thereunder and the SEBI Listing Regulations. Approval of the Members of the Company is also obtained in case any Related Party transaction exceeds the prescribed limits and as good corporate governance practice as there may be few transactions that may be carried out in the long-term interest of the Company. The transactions of the Company with its wholly-owned subsidiaries are exempted from approval of the Members, and hence such approvals are not obtained by the Company.

The Policy on Related Party Transactions (as amended) is available on the Companys website and can be accessed at www.advancedenzymes.com/investors/corporate- governance

As prescribed under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Account) Rules, 2014, particulars of contracts/arrangements with Related Parties are given in Form AOC-2, annexed as Annexure III to this Report.

TRANSFER TO INVESTOR EDUCATION AND

PROTECTION FUND (IEPF)

Pursuant to Section 124(6) of the Companies Act, 2013, all shares in respect of which Dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the company in the name of Investor Education and Protection Fund ("IEPF"). In view of this, your Company has transferred 4,000 unclaimed Equity Shares pertaining to financial year 2014-15 to the Demat account of IEPF during October, 2022. The details of the said shares are provided on the website of the Company at www.advancedenzymes. com/investors/shareholder-information During the year under review, the Company has transferred unclaimed Dividend of Rs. 69,710 for the financial year 201415. As on March 31, 2023, the total amount lying in the Unpaid Dividend accounts of the Company in respect of the last seven years is around 11,66,139. Details of unclaimed Dividend and Shares due for transfer with due dates and procedure to claim the same are provided in the Notes to the Notice convening 34th AGM of the Company ("AGM

Notice" / "Notice of 34th AGM") and briefly in the Corporate Governance Report which forms an integral part of this Report.

Details of Nodal Officer are displayed on the Companys website at:

www.advancedenzymes.com/investors/shareholder-

information

CORPORATE SOCIAL RESPONSIBILITY ("CSR")

The Annual Report on Corporate Social Responsibility activities has been provided in Annexure IV and the report along with all the details thereto, forms an integral part of this Report. The Composition of CSR Committee is disclosed in the said Annual Report on CSR Activities and in the Corporate Governance report section.

The Corporate Social Responsibility Policy, as amended, may be accessed on the Companys website at www. advancedenzymes.com/investors/corporate-governance.

POLICY ON CRITERIA FOR APPOINTMENT / REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES

As per the Nomination & Remuneration Policy of the Company ("Policy"), the Nomination and Remuneration Committee inter alia recommends the appointment of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel. The Policy lays down the criteria for such appointments and the framework in relation to remuneration of Directors including Managerial Personnel, KMPs and employees of the Company. The Nomination & Remuneration Committee oversees the matter of remuneration to the Executive Directors, KMPs and Senior Management Personnel and recommends to the Board, revision, if any, in the remuneration of the said Directors / Personnel subject to limits as may be approved by the Members.

The Nomination and Remuneration Policy may be accessed on the Companys website at www.advancedenzymes.com/ investors/corporate-governance.

The Board of your Company affirms that the remuneration paid to the Directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, the following changes occurred in the composition of the Board and the Key Managerial Personnel of your Company:

(i) The Board of your Company approved the appointment of Mr. Nitin Jagannath Deshmukh (DIN: 00060743) as an Additional Director (Independent) with effect from

July 01, 2022 and the Members of the Company in the 33rd AGM of the Company held on August 19, 2022 approved his appointment as an Independent Director of the Company for a period of five years effective from July 01, 2022.

(ii) The Board of your Company in its meeting held on May 13, 2023, based on the recommendation of the Nomination and Remuneration Committee:

a) Approved the appointment of Ms. Vandana R. Tilak (DIN: 10048021) as an Additional Director (Independent) with effect from July 01, 2023 to hold office up to the date of this AGM or the date up to which AGM shall be held whichever is earlier. She is not related to any of Directors of the Company. The Board recommends the appointment of Ms. Vandana R. Tilak as an Independent Director, not liable to retire by rotation, for a period of five (5) years effective from July 01, 2023 and her brief profile is provided in the Notice convening the said 34th AGM of the Company ("AGM Notice").

b) Approved the re-appointment of Mr. Vinodkumar Hiralal Jajoo (DIN: 08224980) as an Independent Director for second term with effect from February 09, 2024 to hold office for the term of five years up to the date February 08, 2029 subject to approval of shareholders at the 34th AGM of the Company. He is not related to any of Directors of the Company. The Board recommends the appointment of Mr. Vinodkumar Hiralal Jajoo as an Independent Director, not liable to retire by rotation, for the said period of five (5) years effective from February 09, 2024 and his brief profile is provided in the Notice convening the said 34th AGM of the Company ("AGM Notice").

c) Approved the re-appointment of Ms. Rajshree Patel (DIN: 08761022) as an Independent Director for second term of three years with effect from June 12, 2023 to June 11, 2026 subject to approval of shareholders at the 34th AGM of the Company. She is not related to any of Directors of the Company. The Board recommends the re-appointment of Ms. Rajshree Patel as an Independent Director, not liable to retire by rotation, for the said period of three (3) years effective from June 12, 2023 and her brief profile is provided in the AGM Notice.

Except as mentioned above, there has been no change in the composition of Board and Key Managerial Personnel of the Company, during the year under review.

DECLARATION BY THE INDEPENDENT DIRECTORS

All Independent Directors of the Company have given the following declarations stating that:

(i) they meet the criteria of Independence as defined under Regulation 16(1) of the SEBI Listing Regulations and Section 149(6) of the Companies Act, 2013 read with Schedule IV and the relevant Rules made thereunder;

(ii) they have complied with the provisions of the Code of Conduct & Ethics of the Company. The Independent Directors have confirmed that they are not aware of any circumstance or situation which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

(iii) they have complied with the provisions of Rule 6(1) and 6(2) of the Companies (Appointment and Qualifications of Directors) Rules, 2014 (as amended) with regards to the registration on the Independent Directors databank.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 (as amended).

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity. The Independent Directors of your Company have registered on the Independent Directors Databank pursuant to the provisions of Section 149 of the Companies Act, 2013 and the applicable rules thereto ("Act"). The Independent Directors, as on March 31, 2023, have informed the Company, that they have either claimed exemption or passed the online proficiency test prescribed under the Act.

RETIREMENT BY ROTATION

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Rules made thereunder and the Articles of Association of the Company, Dr. Sunny Sharma (DIN: 02267273), Non-Executive Director retires by rotation at the 34th AGM and being eligible offers himself for re-appointment. The Board recommends the said reappointment of Dr. Sunny Sharma at the 34th AGM and his brief profile is provided in the Notice convening 34th AGM of the Company.

AUDITORS AND AUDITORS REPORT STATUTORY AUDITORS

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended), M/s. MSKA & Associates, Chartered Accountants [Firms Registration No: 105047W] were appointed as Statutory Auditors for a term of five consecutive years to hold office from the conclusion of 32nd AGM up to the conclusion of the 37th AGM. The Auditors Report to the Members on the financial statements of the Company for the year ended March 31, 2023 forms a part of the Annual Report and the Auditors Report does not contain any qualification, reservation or adverse remark.

COST RECORDS AND AUDIT

The Company has maintained Cost records in accordance with the provisions of Section 148(1) of the Companies Act, 2013, during the year under review. Based on the criteria specified under the Act, the Cost Audit was not applicable for the financial year 2022-23.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Board has appointed Mr. Shiv Hari Jalan, Practicing Company Secretary (FCS No. 5703, C.P. No. 4226) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2022-23 is annexed as Annexure V and forms an integral part of this Report. The Secretarial Audit Report for the year ended March 31, 2023 does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE REPORT

The Report on Corporate Governance and the Certificate of the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance as required pursuant to the provisions of the SEBI Listing Regulations, are enclosed as Annexure VI. Declaration signed by the Whole-time Director affirming compliance with the Code of Conduct by the members of the Board and Senior Management Personnel also forms part of this Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING

Pursuant to the provisions of Regulation 34 of the SEBI Listing Regulations (as amended), top one thousand listed entities based on market capitalization (calculated as on March 31 of previous financial year) shall provide in its Annual Report, with effect from the financial year 2022-23, the Business Responsibility and Sustainability Report ("BRSR Report") in the format as specified by the Securities and Exchange Board

of India, from time to time. In view of the said provision, the BRSR report for FY23 is provided in a separate section of this Annual Report FY23 of your Company.

COMMITTEES OF THE BOARD

As per the Companies Act, 2013 and the SEBI Listing Regulations, during the year under review, the Board has five statutory Committees viz., Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee and the Risk Management Committee. The details of the composition of these Committees along with number of meetings held and attendance at the meetings are provided in the Corporate Governance Report, which forms an integral part of this Report.

VIGIL MECHANISM

Your Company had adopted Whistle Blower Policy / Vigil Mechanism Policy pursuant to the provisions of Section 177(9) of the Companies Act, 2013 and the Companies (Meetings of Board and Its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations. Details on the Vigil Mechanism of your Company have been outlined in Corporate Governance Report, which forms an integral part of this Report.

The Whistle Blower Policy may be accessed on your Companys website at www.advancedenzymes.com/ investors/corporate-governance

MEETINGS OF THE BOARD

During the year, 5 (five) meetings of the Board of Directors were held. The requisite details of the Board Meetings and the details of the Directors present are provided in the Corporate Governance Report, which forms part of this Report.

SECRETARIAL STANDARDS

During the year under review, the Company has complied with the provisions of applicable Secretarial Standards issued by the Institute of Company Secretaries of India with respect to the Board and General Meetings, as notified by the Ministry of Corporate Affairs of India.

EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Board has undertaken an Annual Evaluation of its own performance, its various Committees and individual Directors. The manner in which the performance evaluation has been carried out has been given in the Corporate Governance Report, annexed to this Report. The Board expressed its satisfaction of the evaluation process and outcome.

The Board Evaluation policy can be accessed on your Companys website at www.advancedenzymes.com/ investors/corporate-governance.

FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

Pursuant to provisions of Regulation 25(7) of the SEBI Listing Regulations, the details of familiarization program is available on the website of your Company at www. advancedenzymes.com/investors/corporate-governance. Further, upon appointment of an Independent Director, the Company issues a letter of appointment outlining his / her role, function, duties and responsibilities. The format of the letter of appointment is available on the Companys website at: www. advancedenzymes.com/investors/corporate-governance

CODE OF CONDUCT FOR PROHIBITION OF INSIDER TRADING

Your Company has in place a Code of Conduct for Prohibition of Insider Trading (known as the AETL Insider Trading Code), which lays down the process for trading in securities of the Company by the Designated Persons and to regulate, monitor and report trading by the employees of the Company either on his/her own behalf or on behalf of any other person, on the basis of Unpublished Price Sensitive Information.

The aforementioned Code, as amended, is available on the website of the Company at www.advancedenzymes.com/ investors/corporate-governance

INTERNAL CONTROL AND ITS ADEQUACY

Your Company has adopted procedures and systems for ensuring the orderly and efficient conduct of its Business, including adherence to the Companys policies, 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 financial disclosures. Your Company maintains appropriate and adequate Internal Control System / Internal Financial Control commensurate to its size and nature of operations. Your Companys Internal Control systems are tested and certified by the Internal Auditors and Statutory Auditors of the Company.

The Audit Committee periodically reviews the report(s) of the independent Internal Auditors along with the adequacy and effectiveness of Internal Control systems.

SIGNIFICANT AND MATERIAL ORDERS

During the year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and its future operations.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in Business and in the nature of Business of your Company during the year under review affecting the financial position of the Company.

MATERIAL CHANGES FROM THE DATE OF END OF FINANCIAL YEAR TILL THE DATE OF THIS REPORT

Except as otherwise mentioned in this report, there are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial year of the Company to which the financial statements relates and the date of this report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

The details of Loans and Investments under Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 (as amended), for the FY23 are given in the Standalone financial statements (Note No. 54 to the Standalone financial statements). Your Company has not provided any guarantee or security under Section 186 of the Act during the year under review.

ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return of the Company as on March 31, 2023 is available on the website of the Company at www. advancedenzymes.com

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

Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 (as amended) is furnished in Annexure VII and forms part of this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Pursuant to Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended ("Rules"), the details are disclosed in Annexure VIII to this report. In terms of Section 136(1) of the Act read with second proviso to the Rule 5 of the said Rules, the Annual Report with Annexure VIII is being sent to the Members excluding the statement of particulars of employees under Rule 5(2) and (3) of the Rules ("Information"), which forms part of this report. The Annexure VIII / Information under Rule 5(2) and (3) is available for inspection by the Members at the registered office of the Company during business hours on all working

days except Saturdays and Sundays up to the date of the AGM. Any Member interested in conducting inspection and/ or obtaining a copy of the said Annexure/Information may write to the Company Secretary at the Registered Office address of your Company.

DEPOSITS

During the year under review, your Company did not invite or accept any Deposits covered under Chapter V of the Act. There were no outstanding deposits within the meaning of Sections 73 and 74 of the Act, read together with the Companies (Acceptance of Deposits) Rules, 2014 (as amended), at the end of the year under review or the previous financial year.

CREDIT RATING

During the year under review, there is no change in the Credit Rating obtained by the Company i.e. a long term rating of CRISIL A+/Stable (Reaffirmed) and a short term rating of CRISIL A1 (Reaffirmed) for outstanding Bank loan facilities (outstanding facilities), by Credit Rating Information Services of India Limited (CRISIL).

GENERAL DISCLOSURES

During the year under review:

a) The Whole-time Director of your Company has not received any remuneration or commission from any of the subsidiaries.

b) Your Company has not issued Shares with Differential Rights as to Dividend, Voting or otherwise.

c) Your Company has devised a policy on Prevention of Sexual Harassment to comply with the provisions of the Sexual Harassment of Women at Workplace

(Prevention, Prohibition and Redressal) Act, 2013. The said policy is hosted on the Companys website at www.advancedenzymes.com. During the year under review, there were no cases / grievances reported or pending and the Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

d) There are no details to be disclosed under Section 134(3)(ca) of the Act as there has been no such fraud reported by the Auditors under Section 143(12) of the Act.

e) There are no applications made by or any proceedings pending against the Company under the Insolvency and Bankruptcy Code, 2016, during the year under review.

ACKNOWLEDGEMENTS

Your Directors acknowledge with gratitude the support received by the Company from the Banks, Government agencies/ organizations and employees of your Company. Your Directors also acknowledge with thanks the faith reposed by the Investors in the Company and look forward to their continued support for times to come.

For and on behalf of the Board of Directors of Advanced Enzyme Technologies Limited

Mukund Kabra Kedar Desai
Whole-time Director Director
DIN:00148294 DIN:00322581
Place: Nashik Place: Mumbai
Date: May 13, 2023