ami organics ltd share price Directors report


To

The Members,

Ami Organics Limited

Your Directors are pleased to present Sixteenth (16th) Annual Report on the business and operations of the Company along with the Standalone and Consolidated Audited Financial Statements of the Company for the Financial Year ended on March 31, 2023.

1. Corporate Overview and General Information:

Your Company is a R&D driven manufacturer of pharma intermediates & specialty chemicals with varied end usage, focussed on the development and manufacturing of advanced pharmaceutical intermediates ("Pharma Intermediates"), New Chemical Entities ("NCE") and Other specialty chemicals for pharmaceuticals, agrochemicals, dyes, polymers, personal care, animal food and other Industries. Company has developed and commercialised over 520 plus products including speciality chemicals, Pharma Intermediates for APIs across 23 key therapeutic areas since inception and NCE across select high-growth high margin chronic therapeutic areas. Company added 70 plus new products during FY23. On the operational front during the FY23 Company has successfully commercialized few products using continuous flow reactors. Post introduction of flow chemistry some of the speciality products have become globally competitive. As part of endeavour to expand our capabilities, your Company has entered some long-term LOIs and contracts with some of leading global pharma companies during the FY 2022-23.

2. Financial Results: Standalone and consolidated

The Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 ("the Act"), read with Rule 7 of the (Companies Accounts) Rules, 2014.

The standalone and consolidated financial performance of the Company, for the Financial Year ended on March 31, 2023 are summarized below:

(Rs. In Lakhs except EPS Data)

Standalone Consolidated
FY.2022-23 FY.2021-22 FY.2022-23 FY.2021-22
Revenue from Operations 61673.40 52013.50 61673.45 52013.50
Other Income 431.98 276.23 431.98 276.23
Total Revenue 62105.38 52289.73 62105.43 52289.73
Expenditure 50882.91 43144.69 50,888.25 43,144.69
Profit/Loss before Tax 11222.47 9145.04 11217.18 9,145.04
Provision for Tax:
Current tax 2637.72 1672.15 2637.72 1672.15
Deferred tax 250.49 278.28 250.49 278.28
Profit/ Loss after Tax 8334.26 7194.61 8328.97 7,194.61
Other comprehensive Income /Loss 22.49 80.65 312.85 128.79
Items that will not be reclassified to profit or loss - - - 80.65
Tax impact of items that will not be reclassified to statement of profit and loss (5.66) (20.30) (5.66) (20.30)
Total comprehensive income for the year 8351.09 7254.96 8636.16 7383.75
Earnings per equity shares
1. Basic (in Rs.) 22.87 21.03 22.86 21.03
2. Diluted (in Rs.) 22.87 21.03 22.86 21.03

The Board of Directors of your Company reviews the affairs of its subsidiary company regularly. In accordance with the provisions of Section 129(3) & Section 133 of the Companies Act, 2013 ("the act"), read with the Companies (Accounts) Rules, 2014 and other relevant provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), as amended the Company has prepared Consolidated Financial Statements including requisite details of the subsidiary and joint venture.

3. Dividend:

In line with the Dividend Distribution Policy of the Company which is available on the Company?s website viz. www. amiorganics.com your Directors are pleased to recommend a final dividend at the rate of 30% i.e. of Rs. 3.00 (Three) per equity share of face value of Rs. 10/- for the financial year 2022-23. The proposed dividend, subject to approval of shareholders in the ensuing Annual General Meeting of the Company, would result in appropriation of 109.3 Miilion (inclusive of TDS). The dividend would be payable to all shareholders whose names appear in the Register of Members and the list of beneficial owners furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited as on the Record date

i.e September 18, 2023. Final Dividend once approved by members shall be disbursed within 30 days of the approval and the date of disbursement shall be communicated in advance to the Stock Exchanges, BSE Limited and National Stock Exchange of India Limited.

Dividend Distribution Policy:

In terms of regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") the Company has formulated a Dividend Distribution Policy, which is approved by the Board of Directors at their meeting held on March 22, 2022 and is uploaded on Company?s website and the link for the same is http:/www.amiorganics.com/static/dividend distribution policy.pdf

Unpaid / Unclaimed Dividend:

In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 / Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, there was no unpaid / unclaimed dividends required to be transferred during the Financial Year under review to the Investor Education and Protection Fund.

4. Change in nature of Business:

During the financial year under review, there has been no change in the nature of business of the Company.

5. Transfer to General Reserves:

During the Financial Year under review, your Company has not transferred any amount to General Reserve.

6. Changes in Subsidiaries, Joint Ventures and Associate Companies:

Ami Onco-Theranostics, LLC was incorporated as a limited liability company on January 29, 2015 in the State of Delaware, U.S.A. as an international corporate joint venture between Photolitec LLC, a limited liability company formed under the laws of New York state in the United States of America and Ami Organics Limited.

The Company has incorporated its Wholly owned subsidiary company namely "Ami Organics Electrolytes Private Limited". having certificate of incorporation dated June 30, 2022. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (‘the Act?), a statement containing salient features of the financial statements of subsidiaries, joint venture and associate?s companies in Form AOC-1 is attached as Annexure I to the Board Report.

The separate financial statements of the Subsidiary & Joint Venture are available on the website of the Company and can be accessed at www.amiorganics.com at link : http:/ www.amiorganics.com/financials-results.html

Material Subsidiaries:

The Board of Directors of the Company at its meeting had approved the policy for determining Material Subsidiaries. At present the Company does not have any Material Subsidiary. The Policy on Material Subsidiary has been posted on the website of the Company at the following link: http:/www. amiorganics.com/material subsidiary policy.pdf

7. State of Company?s Affairs and Outlook:

Business Highlights:

The year began on a very challenging note with the ongoing war in Ukraine, seasonally affected supply side impacting commodity and gas prices, increasing raw material prices, among others. All these factors added to significant cost pressure for all the companies. While supply side issues continued to pile up during the start of year, we saw muted demand environment across industries. While the start of the year was demanding, the situation gradually improved as the year progressed, albeit at a slower pace.

Your Company was able to consolidate on its key strengths like continuous research & development, long term relation with its key clients, aggressive cost controls and marketing efforts, technology adoption for increase in productivity and cost controls, quick adaptation for changing product demands, introduction of niche products through continued research and development. These efforts reaped well for your company during the testing times. Showing great resilience and sustainability, your company was able to deliver robust growth despite these challenges.

To cater to the incremental demand Company had embarked on setting brownfield project at Ankleshwar entailing a capex of Rs. 1900 Million. The existing Ankleshwar facility was demolished and work started to set up a new plant with advance technology for pharma intermediates business, scheduled to have installed capacity of 436.5 KL. Civil work for production and admin block has been completed and Machinery installation is in progress. Company has started the manpower recruitment for the new facility. The Project is on track and is slated to commence the production activity in Q4 FY24.

The Key business highlights during the financial year 202223 may be summarised as under:

• During FY23, your company has commercialised 70 new products.

• Your company has added 40 new customers in Advance Pharmaceutical Intermediates & 20 new customers in Speciality Chemical business.

• During the year, Company has incorporated wholly owned subsidiary Ami Organics Electrolytes Private Limited.

• During the year, Board approved the Capex plan of Ankleshwar Unit of Rs. 1900 Million to build a brownfield plant to support the future business growth of the company?s advanced pharmaceutical intermediates segment.

• During the year, Company has acquired an industrial plot admeasuring 8000 sq. mtr. at Plot No. 5538, in GIDC Sachin Industrial Area, Sachin, Surat and has been developed as Warehouse II for catering to the incremental warehousing requirement for its Sachin facility.

Financial Highlights of the Company:

During the financial year of review your company continued its strong growth momentum by achieving total revenue of over INR 6210 million, which was higher by 19% when compared to last year total revenue of 5229 million. Our core Advance Pharma Intermediate business aided the growth for the whole year with 22% growth year-on-year, whereas specialty chemical business grew slightly by 3%.

Key financial highlights on standalone results of our operations are as under:

• Revenue from operations for FY23 grew by 18.6% YoY to Rs. 6167 Million as compared to 5201 Million in FY 22.

• EBITDA for the full year came at Rs. 1227 Million up 16.6% as compared to Rs. 1052 Million in FY22.

• Profit after tax registered a growth of 15.8 % on Y-o-Y basis in FY23 to arrive at Rs. 833 Million as compared to 719 Million in FY22.

• Export for the year was at 59%, whereas domestic business was at 41%.

Financial Highlight of Joint Venture:

Ami Onco-Theranostics, LLC was incorporated as a limited liability company on January 29, 2015 in the State of Delaware, U.S.A. as an international corporate joint venture between Photolitec LLC, a limited liability company formed under the laws of New York state in the United States of America and Ami Organics Limited. Ami Onco-Theranostics, LLC is primarily engaged in the business of commercialising, manufacturing, marketing and selling its pharmaceutical products as authorised under the objects clause of its constitutional documents. It is a clinical research company engaged in new drug development activity. During the year of review the joint venture contributed a net loss of Rs. 2.73 Million. The joint venture company along with its co venturer Photolitec LLC has developed several technologies for cancer imaging and therapy and few of the Protocols for cancer treatment have received FDA approval in USA. Phase II clinical trials for Photodynamic Therapy (PDT) for usage in variety of cancers are ongoing. However commercialisation of joint venture company?s products / technology is awaited upon receipt of necessary regulatory approvals.

Financial Highlights of Wholly Owned Subsidiary:

Ami Organics Electrolytes was incorporated on June 30, 2022 as wholly owned subsidiary of the Ami Organics Limited. During the year of review, Company had negligible revenue and had incurred losses amounting to Rs. 2.91 Million on account of finance costs and other expenses. Company has developed two new products namely one liquid electrolyte additive to increase electro capacity of Li batteries and one for Solid battery. Company is progressing towards commercialisation of its products. Electrolyte samples are approved at plant trail scale by few customers and it expects to get some sizeable orders during the FY24.

8. Internal Financial Controls:

The Company has adequate Internal Financial Controls System over financial reporting which ensures that all transactions are authorised, recorded, and reported correctly in a timely manner. The Company?s Internal Financial Controls over financial reporting provides reasonable assurance over the integrity of financial statements of the Company.

Company has laid down Standard Operating Procedures, Policies and procedures to guide the operations of the business. Functional heads are responsible to ensure compliance with all laws and regulations and also with the policies and procedures laid down by the management. The Company tracks all amendments to Accounting Standards, the Companies Act and makes changes to the underlying systems, processes and financial controls to ensure adherence to the same.

9. Material Changes and commitments:

Your Company?s Board of Directors as on April 22, 2023 have approved the acquisition of 55% stake in Baba Fine Chemicals, a leading speciality chemicals company supplying products to the semiconductor industry, at a purchase consideration of Rs. 682.1 million subject to certain adjustments as may be required on closing of transaction. With this acquisition company intends to gain entry and diversify into semiconductor industry.

Save as mentioned elsewhere in this Report, no material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company i.e March 31, 2023 and the date of this Report.

10. Deposits:

The Company has neither accepted nor renewed any deposits during the year under review to which the provisions of the Companies (Acceptance of Deposits) Rules 2014 applies.

11. Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013:

Company has granted loan amounting to Rs. 2.1 million to its wholly owned subsidiary company, Ami Organics Electrolytes Private Limited to be used for its business purpose. Except this, there were no loans or guarantees given by the Company under Section 186 of the Companies Act, 2013 during the year under review. During the year Company made investment in the share capital of its Wholly owned subsidiary company for an amount of Rs. 0.1 Million which was within the limits approved by Board of Directors and the limits prescribed under section 186 of the Companies Act, 2013.

12. Share Capital:

As on March 31, 2023, the authorized share capital of the Company is Rs. 500 Million comprising of 50 Million equity shares of H10 each. The paid up Equity share capital of Company as on 31st March, 2023 is Rs. 3643,70,620/- divided into 364,37,062 equity shares of Rs. 10/- each. The Company?s equity shares are listed at BSE Limited and the National Stock Exchange of India Limited. The Listing fees for the financial year 2023-24 has been paid. The stock code of the Company at BSE Limited is 543349 and the Symbol at the National Stock Exchange of India Limited is AMIORG.

a. Buy Back of Securities:

Company has not bought back any of its securities during the year under review.

b. Sweat Equity:

Company has not issued any Sweat Equity Shares during the year under review.

c. Bonus Shares:

Company has not issued any bonus shares during the year under review.

d. Employees Stock Option Plan:

The Company has not provided any Stock Option Scheme to the employees during FY 2022-23. However Company has implemented Ami Organics Employees stock Option Scheme 2023 ("ESOS 2023") upon the approval of shareholders on June 4, 2023. The ESOS 2023 Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 (‘SBEB Regulations?).

e. Fresh Issue of Shares:

Company has not issued any new Shares during the year under review.

f. Issue of equity shares with differential rights as to dividend, voting or otherwise.

Company has not issued any equity shares with differential voting rights during the FY 2022-23.

13. Directors & Key Managerial Personnel:

The Company has 4 (four) Independent Directors including two Women Independent Director, namely, Mr. Girikrishna Maniar , Mr. Hetal Gandhi, Mrs. Richa Goyal and Dr. Anita Bandyopadhyay.

Key Managerial Personnel: Mr. Nareshkumar R. Patel - Chairman & Managing Director, Mr. Chetankumar C. Vaghasia -Whole Time Director, Mr. Virendra Nath Mishra - Whole time Director, Mr. Ram Mohan Lokhande- Whole Time Director, Mr. Bhavin Shah - Chief Financial Officer (CFO) and Mrs. Ekta Kumari Srivastava - Company Secretary & Compliance Officer are the Key Managerial Personnel of the Company in accordance with Sections 2(51) and 203 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or reenactments) for the time being in force).

i) Retirement by rotation:

In accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company Mr. Virendra Nath Mishra (DIN: 07815490), Whole Time Director will retire by rotation at ensuing Annual General Meeting and being eligible, he has offered himself to be re-appointed as Director. The brief profile of Mr. Virendra Nath Mishra and the resolution for his appointment as Director is given in the Notice of the 16th Annual General Meeting (AGM),The Board proposes his reappointment to the members.

ii) Resignation and Appointment of Chief Financial Officer:

During the year of review, Chief Financial Officer of the Company, Mr. Abhishek Patel resigned from his post, after completing tenure of 4 years at Company and the Board accepted his resignation w.e.f June 1, 2022. Board placed on record its appreciation for his invaluable contribution and commendable services to company during his tenure as Chief Financial Officer.

Board at its meeting held on May 21, 2022 appointed Mr. Bhavin N. Shah as the Chief Financial Officer and Key Managerial Personnel of the Company w.e.f June 1, 2022. Mr. Bhavin N. Shah is a member of "The Institute of Chartered Accountants of India " and is having

more than 18 years of rich experience in consulting, corporate accounts, and finance.

iii) Re-appointment of Mr. Girikrishna Maniar as a NonExecutive & Independent Director of the Company:

Based on the recommendation of the Board of Directors and Nomination and Remuneration Committee, shareholders at 15th Annual General Meeting held on August 09, 2022 re-appointed of Mr. Girikrishna Maniar as the Non-Executive Independent Director of the Company for second term of five (5) consecutive years on the Board of the company starting from April 23, 2023 till April 22, 2028. In the opinion of the Board Mr. Girikrishna Maniar possesses requisite integrity, expertise and experience, including the proficiency required for an independent director.

14. Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and rules made thereunder and as provided under Schedule IV of the Act and Listing Regulations, structured procedure was adopted after taking into consideration the various aspects of the Board?s functioning, composition of the Board and its various Committees, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was completed in time. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Nomination and Remuneration Committee ("NRC") has laid down proper criteria and procedure to evaluate and scrutinize performance of the Chairperson, each Executive, Non-Executive and Independent Director, Board as a whole and its Committees.

The Independent Directors at their meeting held on February 4, 2023, through discussion, evaluated the performance of non-independent directors, The Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders? Relationship Committee.

While evaluating the performance of Directors, the following points were considered:

i. Participation in Board Meetings and Board Committee Meetings.

ii. Managing relationship with other directors and management.

iii. Knowledge and Skill i.e., understanding of duties, responsibilities, refreshment of knowledge, knowledge of industry, ability to listens and to present their views.

iv. Personal attributes like maintain high standard of ethics and integrity.

v. Strategic perspectives or inputs regarding future growth of Company and its performance

Outcome of Evaluation:

The Board of the Company was satisfied with the functioning of the Board and its Committees. The Committees are functioning well and besides covering the Committees? terms of reference, as mandated by law, important issues are brought up and discussed in the Committee meetings. The Board was also satisfied with the contribution of Directors, in their individual capacities

15. Declaration by Independent Directors:

The Company has received a declaration from all Independent Directors (IDs) that they meet the criteria of independence specified under Section 149 of the Act, read with Rule 5 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1) (b) of SEBI LODR Regulations for holding the position of ID and that they shall abide by the "Code for Independent Directors" as per Schedule IV of the Act. Pursuant to IICA, Companies (Accounts) Amendments Rules, 2019 Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019 and Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 dated 22nd October, 2019, all IDs on the Board of the Company completed registration on Independent Director?s Data Bank.

Familiarisation Program for Independent Directors:

The familiarisation program seeks to update the Directors on the roles, responsibilities, rights and duties under the Act and other statutes and about the overall functioning and performance of the Company. The policy and details of familiarisation programme is available on the website of the Company at http:/www.amiorganics. com/static/uploadfiles/downloads/download 6316. pdf?20230418060136

16. Related Parties Transactions:

All related party transactions/arrangements/contracts entered into by the Company during the financial year 2022-23 were either undertaken on the basis of omnibus approval of the Audit Committee or with prior approval of the Audit Committee and/or Board. All related party transactions were at arm?s length basis and in the ordinary course of business in compliance with the applicable provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

There are no materially significant related party transactions that may have potential conflict with interest of the Company at large. Details of related party transactions entered into by the Company, in terms of Ind AS-24 have been disclosed in the notes to the standalone / consolidated financial statements forming part of this Annual Report. Form AOC-2 pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out in Annexure II to this Report.

The Company?s Related Party Transactions Policy appears on its website at www.amiorganics.com link http:/www. amiorganics.com/rptpolicy.pdf

17 Corporate Governance:

Your Company believes in adopting best practices of corporate governance. Corporate governance principles are enshrined in the spirit of Ami Organics, which form the core values of Ami Organics. These guiding principles are also articulated through the Company?s code of business conduct, Corporate Governance Guidelines, charter of various sub-committees and disclosure policy. As per Regulation 34 of the Listing Regulations, a separate section on corporate governance practices followed by your Company, together with a certificate from M/s. Kashyap Shah & Co., Company Secretaries, on compliance with corporate governance norms under the Listing Regulations, forms a part of the Annual Report.

18. Business Responsibility & Sustainability Report:

Pursuant to Regulation 34(2)(f) of the Listing Regulations and SEBI circular no. SEBI/LAD-NRO/ GN/2021/2 dated May 5, 2021, your Company provides the prescribed disclosures in new reporting requirements on Environmental, Social and Governance ("ESG") parameters called the Business Responsibility and Sustainability Report ("BRSR") which includes performance against the nine principles of the National Guidelines on Responsible Business Conduct and the report under each principle which is divided into essential and leadership indicators which forms part of this Annual Report and is also hosted on the website of the Company i.e. www.amiorganics.com.

19. Management Discussion and Analysis (MDA):

In compliance with Regulation 34 of SEBI LODR Regulations Management Discussion and Analysis for the financial year under review, as stipulated under the SEBI Listing Regulations, is presented in a separate section, which forms a part of this Annual Report.

20. Vigil Mechanism & Whistle Blower Policy:

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and Companies Meeting of Board and its powers Rules, 2014, and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements), 2015 Company has constituted a Vigil Mechanism for directors and employees to report genuine concerns. The format of reporting and the vigil mechanism and whistle blower policy is regularly updated to the employees and Directors. The Vigil Mechanism & Whistle Blower Policy has been uploaded on the website of the Company at http:/www. amiorganics.com/corporate-policies.html

21. Board Meetings:

During the FY. 2022-23, Eight (8) meetings of Board were held, the details of which have been disclosed in the corporate governance report, which forms part of the Boards report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Companies Act, 2013.

22. Committees of Board:

As required under the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as on March 31, 2023, the Board has the following committees:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders Relationship Committee

• IPO Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

• ESG Committee

During the year, all recommendations made by the committees were approved by the Board. A detailed note on the composition of the Board and its Committees, including its terms of reference is provided in the Corporate Governance Report. The composition and terms of reference of all the Committees of the Board of Directors of the Company is in line with the provisions of the Act and the Listing Regulations.

23. Risk Management

Risk Management is at the core of the business which provides framework towards risk identification, analysis & prioritization of risks, development of risk mitigation plans and reporting on the risk environment of the Company. The Board has constituted a Risk Management Committee as required under Regulation 21 of the SEBI Listing Regulations to frame, implement and monitor the risk management plan of the Company.

Risk Governance Framework is created within the Company in the following lines :

(i) Risk Management Committee : The Committee oversee implementation of mechanism of Operational Risk Management and guide the organization towards that. The Committee reports to the Board. The Committee has atleast 1 independent director.

(ii) Chief Risk Officer (CRO) : CRO is appointed by the Risk Management Committee and his role is to facilitate risk management mechanism through decentralized approach, providing support and guidance to the whole organization.

(iii) Three Lines of Defence : For proper Governance and control, the organization has three lines of defence.

First line of defence include actual functional owners throughout the organization, mainly consists of MD, EDs, KMPs, other Senior Management and Functional Heads. The company is run by these officials and they are supposed to take care of risks within their own functional areas.

Second line of defence include Chief Compliance Officer, Chief Risk Officer who do not participate in day to day operations of the company but facilitate compliance risk management process through support and guidance for other functions

Third line of defence is internal auditors who reports their observations to Audit Committee.

(iv) Risk Champions / Risk Co-ordinators (RC Group):

The organization has appointed one official from each function, who is responsible for carrying out risk management initiative within their own functional area. This is under guidance of CRO and their own functional Head. This group is called RC- Group and is instrumental for decentralized effective implementation of risk management mechanism.

24. Business Continuity Plan :

The Company has Business Continuity Plan in place, which has been designed to ensure continuity of critical processes during any disruption. The continual disruptions caused by the COVID 19 pandemic tested the BCP of the Company, nevertheless, it continued to operate in line with the procedures outlined in its Business Continuity Plan. As a result, Company was able to continue to protect and serve customers while taking care of the health of their employees.

25. Risk Management Policy:

The Company has adopted a Risk Management Policy aimed to ensure resilience for sustainable growth and sound corporate governance by having a process of risk identification and management in compliance with the provisions of the Companies Act, 2013 and the Listing Regulations.

The Company recognises that all emerging and identified risks need to be managed and mitigated to

• Protect its shareholder?s and other stakeholder?s interests;

• Achieve its business objectives; and

• Enable sustainable growth.

The risk management includes identifying types of risks and its assessment, risk handling and monitoring and reporting. The Company has framed a sound Risk Management Policy to identify and evaluate potential business risks and its mitigation and the same has become integral part of Company?s day to day operations. The key business risks identified by the Company are as follows viz. Industry Risk, Management and Operations Risk, Business Risks, Finance Risks, Market Risk, Regulatory risk, Liquidity risk, and Technology risk. The Company has worked out mitigation plans for the aforesaid risks. The risk management policy is available at the website of Company at www.amiorganics. com at the link : http:/www.amiorganics.com/risk management policy.pdf

26. Nomination and Remuneration Policy:

The Nomination and Remuneration Policy of the Company, inter alia, provides that the Nomination and Remuneration Committee shall: (i) formulate the criteria for board membership, including the appropriate mix of Executive & Non-Executive Directors; (ii) approve and recommend compensation packages and policies for Directors and Senior Management; and (iii) lay down the effective manner of performance evaluation of the Board, its Committees and the Directors.

The salient features of the Nomination and Remuneration Policy of the Company along with highlights are outlined in the Corporate Governance Report which forms part of this Report. The Policy is also available on the website of the Company at www.amiorganics.com at the link : http:/www. amiorganics.com/nomination and remuneration policy.pdf

27. Employee Stock Options:

The Company grants share-based benefits to eligible employees with a view to attracting and retaining the best talent, encouraging employees to align individual performances with Company objectives, and promoting increased participation by them in the growth of the Company.

Ami Organics Employee Stock Option Scheme 2023 ("ESOS 2023"):

On June 04, 2023, pursuant to approval by the shareholders through postal ballot, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible employees of the Company under ESOS 2023 plan. The maximum number of shares to be granted under the ESOS 2023 Plan shall not exceed 3,64,370 equity shares. Nomination and Remuneration Committee at its meeting held on June 28, 2023 approved the grant of 30,000 options to eligible employees under Tranche 1 of Ami Organics Employee Stock Option Scheme 2023 at an exercise price of Rs. 100/- per option convertible into the equity shares of face value of Rs. 10/- each of the Company and shall vest within a period of one year from the date of the grant and shall be exercisable within two years of vesting. The ESOS 2023 Scheme is available on the website of company at http:/www.amiorganics.com/ESOS2023. pdf

28. Remuneration of Directors, Key Managerial Personnel and Senior Management:

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report. The information required under Section 197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of directors and employees of the Company is set out in Annexure III & IV to this Report. Further, the Managing Director and Whole Time Directors of the Company have not received any remuneration or commission from any of its subsidiaries/other Companies.

During the year under review, none of the Non-Executive Directors of the Company had any material pecuniary relationship or transactions with the Company, other than sitting fees, payment of commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/Committee of the Company.

29. Corporate Social Responsibility (CSR):

During the financial year 2022-23, the Company has spent Rs. 13.72 Million towards CSR expenditure. The CSR initiatives of the Company were under the thrust areas of health & hygiene, education, enhancing vocational skills, environment and sanitation and rural development. Company implemented its CSR activities both directly and through various NGOs as implementing agencies. The CSR Policy of the Company is available on the website of the Company at www.amiorganics.com at the the link : http:/ www.amiorganics.com/csr policy.pdf

The Company?s CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended March 31, 2023 in accordance with Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 ("CSR Rules") is set out in Annexure V to this Report.

30. Board Diversity:

Your Company recognizes and embraces the importance of a diverse Board in its success. Company believe that a truly diverse Board will leverage differences in thought, perspective, regional and industry experience, cultural and geographical background, age, ethnicity, race, gender, knowledge and skills including expertise in financial, diversity, global business, leadership, information technology, mergers and acquisitions, Board service and governance, sales and marketing, Environmental, Social and Governance (ESG), risk management and cybersecurity and other domains, which will ensure that company retains its competitive advantage. The Board Diversity Policy adopted by the Board sets out its approach to diversity. The policy is available on our website, at www.amiorganics.com at the link http:/www.amiorganics.com/board diversity policy.pdf

31. Director?s Responsibility Statement:

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submit its Responsibility Statement for FY 2022-23;

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

ii. That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for the year under review;

iii. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv. That the Directors have prepared the annual accounts on a going concern basis and 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.

v. 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.

32. AUDITORS:

Statutory Auditors:

The Company?s Auditors M/s. Maheshwari & Co., Chartered Accountants, bearing (ICAI Registration Number: 105834W) had been appointed as statutory auditor of the company for a period of five years starting from the Annual General Meeting held for FY 2018-19 till Annual General Meeting to be held for FY 2022-23. The present term of statutory auditors shall end in the ensuing 16th AGM. It is proposed to re-appoint M/s. Maheshwari & Co., Chartered Accountants, bearing (ICAI Registration Number: 105834W) as Statutory Auditors for another term of five consecutive years from

the conclusion of the ensuing 16th Annual General Meeting till the conclusion of the 21st Annual General Meeting of Company. Their re-appointment shall be as per the provisions of the Companies Act, 2013 and rules made thereunder. They have submitted their certificate to the effect that they fulfil the requirements of Section 141 of the Companies Act, 2013

The Statutory Auditors have issued Audit Reports with unmodified opinion on the Standalone and Consolidated Financial Statements of the Company for the year ended March 31, 2023. The Notes on the Financials Statement referred to in the Audit Report are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) (f) of the Companies Act, 2013. The report of the Statutory Auditors of the Company forms part of the annual report.

During the year under review, the statutory auditors have not reported to the Audit Committee under sec-tion 143(12) of the Companies Act, 2013, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board Report

Cost Auditors:

Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, are applicable to the Company and accordingly such records are being maintained. M/s Chirag Vallabhbhai Vekariya, Cost Accountant has been appointed as Cost Auditors of the Company for the conduct of Cost Audit for the FY 2023-24. In terms of the provisions of Section 148(3) of the Act, read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is required to be ratified by the Members, accordingly, a resolution seeking ratification by the Members for the remuneration is listed in the Notice of 16th AGM as Special Business. The Cost Audit report for the FY 2021-22 was obtained from the Cost Auditors and e Form CRA 4 was filed to the Ministry of Corporate Affairs on time. The Cost Audit Report for the FY 2022-23 will be filed in due course.

Internal Auditors:

The Company has in place an adequate internal audit framework to monitor the efficacy of internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent and reasonable assurance on the adequacy and effectiveness of the organization?s risk management, internal control and governance processes. The framework is commensurate with the nature of the business, size, scale and complexity of its operations with a risk based internal audit approach.

For the FY 2022-23, Company appointed M/s K.C. Mehta & Co. LLP as the Internal Auditors for conducting Internal audit of systems and processes, providing of observations, impact and recommendation to strengthen the internal control framework and advise on internal control process gaps of the company. The Internal Auditors report to the Audit Committee on quarterly basis. Several recommendations were received from the Internal Auditors and most of them were complied by the management during the FY 2022-23. Company has reappointed M/s K.C. Mehta & Co. LLP as the Internal Auditors for conducting Internal audit of the company for FY 2023-24.

Secretarial Auditors:

The Board has appointed M/s Kashyap Shah & Co., Practicing Company Secretaries, to conduct secretarial audit for the financial year 2022-23. The secretarial audit report for the financial year ended March 31, 2023 is annexed herewith marked as Annexure VI to this report.

Additionally, in line with SEBI Circular dated February 8, 2019, an Annual Secretarial Compliance Report confirming compliance with all applicable SEBI Regulations, Circulars and Guidelines by the Company was issued by the Secretarial Auditors and filed with the Stock Exchanges within sixty days of the end of FY 2022-23. It is annexed to this report as Annexure VII. The remarks provided in the report are self-explanatory. The Secretarial Audit Report and/or Secretarial Compliance Report does not contain any qualification, reservation or adverse remark.

33. Compliance of applicable secretarial standards:

During the year of review, Company has complied with the applicable provisions of Secretarial Standards (I & II) issued by the Institute of Company Secretaries of India and approved by the Central Government under section 118(10) of the Companies Act, 2013.

34. Code for Prevention of Insider Trading:

Your Company has adopted a Code of Conduct to regulate, monitor and report trading by designated persons and their immediate relatives as per the requirements under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. The Code, inter alia, lays down the procedures to be followed by designated persons while trading/ dealing in Companys shares and sharing Unpublished Price Sensitive Information ("UPSI"). The Code covers Company?s obligation to maintain a digital database, mechanism for prevention of insider trading and handling of UPSI, and the process to familiarize with the sensitivity of UPSI. Further, it also includes code for practices and procedures for fair disclosure of unpublished price sensitive information which has been made available on the Company?s website at www.amiorganics.com at the link http:/www.amiorganics.com/code of conduct/insider trading reguations.pdf During the year of review no cases of violation of insider trading regulations were reported.

35. Disclosure under the Sexual Harassment of Women at workplace (Prevention of, Prohibition and Redressal) Act, 2013.

The Company has in place an anti-Sexual Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"). All employees (permanent, contractual, temporary, trainees) are covered under this policy. Company has constituted the Internal Complaints committee consisting of male and female employees of Company and a reputed female lawyer as an external member of the internal complaints committee. Three internal committees have been constituted at all places of business locations of the Company. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization

Company has also submitted the Annual Report under POSH Act to the District Officer of concerned locations. Regular awareness sessions and interaction programmes with female employees are held. As per the Annual Report of Internal Complaints Committee there was no case of sexual harassment complaint received during the Financial Year 2022-23.

36. Conservation of Energy, Technology Absorption and Foreign Earnings and Outgo:

[Pursuant Section 134(3)(M) Of the Companies Act, 2013 Read with Rule 8(3) of the Companies (Accounts) Rules, 2014]

Conservation of Energy:

All business units continued their efforts to improve energy usage efficiencies. Various key performance indicators like specific energy consumption (energy consumed per unit of product), energy costs were continuously tracked to monitor alignment with the Company?s overall sustainability approach. The Company is engaged in the continuous process of further energy conservation through improved operational and maintenance practices and has also undertaken effective measures to minimize energy consumption. The above measures have resulted / will result in less consumption of power, fuel and coal, ultimately resulting in savings in the cost of production.

The Company has undertaken Energy Audits in its plants to identify excess energy consumption and intends to reduce the same to the best possible extent. The Company has implemented a project for increasing condensate recovery and recycling of DM Water in its Co-Gen Power plant so as to reduce the consumption of coal and DM Water. The Company has also installed energy efficient pumping system to reduce overall load on utilities like power. Your Company continues to strive to improve operational efficiency in its operations to conservation of energy and optimization of resource consumption.

i) Steps taken for conservation of energy during FY 2022-23:

ii) To improve the operational efficiencies, following steps have been taken for conservation of energy:

Installed VFD "Variable frequency drives "in Brine Plant to control energy as per the process requirements.

Installed ATFD machines to produce the products in place reactors, filters and dryers in series to reduce power consumption.

Installed ACs with effective energy conservation.

Improvement in recovery of steam condensate water to reuse in boiler.

Auto control electricals switches installed on each reactor, ANFD, Centrifuges for lighting and saving purpose.

Company has upgraded its effluent treatment new air blower with membrane diffuser system in aeration and replaced surface aerator in ETP. This will help to improve the DO level in aeration system and also reduce energy consumption

Replacement of old high energy consumption pumps and motors with high efficiency pumps and motors to have the better control on energy savings.

Reduction in generation and distribution losses after converting into centralized operation of chilled water and sub-zero brine to save power.

iii) The steps taken by the Company for utilising alternate sources of energy.

NIL

iv) The capital investment on energy conservation equipment?s: 0.22 Million

Technology absorbtion :

i) Efforts, in brief, made towards technology absorption. Benefits derived as a result of the above efforts, e.g., product improvement, cost reduction, product development, import substitution, etc

Company strives through its indigenous in-house R&D to develop continuous process technologies in place of batch process that creates significant reduction in energy consumption, less process times. R&D and, Process engineering department has enables the innovation technologies based growth agenda of company through its technology upgradation strategies.

Technological innovation is also simultaneously focused on Safety, health & environmental issues. During the year Company focused its R&D efforts on development of new products, process improvement of its existing products, recovery of products from wastes.

During the financial year of review Company has successfully developed and commercialized 2 products under continuous flow reactors. Continuous flow reactors are more efficient and sustainable when compared to manufacturing products using traditional reactors. Company has successfully developed capabilities in Plug Flow, Catalytic fixed-bed flow, Tubular flow kind of reactors. This technology reduces the cycle time to manufacture a product, less energy consumptions which leads to lower utilization of efficient utilities. Company got benefits of less place, less energy and also less process times after establishing many flow processes / reactors compared with traditional reactors.

ii) The benefits derived like product improvement, cost reduction, product development or import substitution etc.

With the adoption of new technology using continuous flow reactors the benefits derived were increase in yield, reduction in timelines of the reaction process, proportionate reduction in cost of manufacturing and reduction in power consumption. Company increased yield of its four products, decreased consumption of raw materials in eight products, decreased consumption charge of solvent in products, recovered few products from pollutants and introduced 70 new products.

iii) In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year), following information may be furnished:

Company has not imported any technology and hence not applicable.

Expenditure incurred on Research and Development :

(Amount in Rs. Million)

Particulars 2022-2023 2021-2022
Revenue Expenditure 64.89 47.47
Capital Expenditure 12.34 22.95

Foreign Exchange Earnings and Outgo :

(Amount in Rs. Million)

Particulars 2022-2023 2021-2022
Foreign Exchange Outflows 1866.44 1210.70
(outgo)
Foreign Exchange Inflows 3243.20 3010.38
(earnings)

37. Disclosure in respect of scheme formulated under section 67(3) of the Companies act, 2013:

Company has not formulated any scheme in terms of Section 67(3) of the Companies Act, 2013 for the benefit of employees.

38. Disclosures pursuant to section 197 (14) of the Companies act, 2013:

None of the Directors of the Company are in receipt of any commission from any holding or subsidiary Company.

39. Annual Return

Pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 Annual Return of the Company for the FY 2021-2022 has been placed at website of the Company at http:/www. amiorganics.com/annualreturn.pdf

40. Awards and Recognitions:

The year gone by has been a remarkable year for the company. Company was conferred with the following prestigious awards:

i. Your Company has been assessed by the Ecovadis which has certified your company in the Bronze category in the area of environment & sustainability.

ii. Your Company has became a member of the United Nations Global Compact (UNGC) and signatory to the Climate Neutral Now Initiative assuring our commitment to minimising climate-related risks and the environmental impact of our operations.

iii. Your company has received prestigious award "Outstanding work in Research and Development" by South Gujarat Chamber of Commerce & Industries (SGCCI).

iv. Mr. Nareshkumar R. Patel, Chairman & Managing Director of Company received the prestigious "Outstanding Business Leader-Male" by Federation of Gujarat Industries (FGI)

41. Other Disclosures :

i. Statement of Deviation(s) or Variation(s)-

In terms of Regulation 32 of the Listing Regulations, there was no deviation or variation in connection with the terms of the objects of the issue mentioned in the Prospectus dated September 6, 2021, in respect of the Initial Public Offering of the Company. -

The net proceeds of the Initial Public Offer of Rs. 3000 million inclusive of preferential allotment to qualified institutions of Rs. 1000 million were utilised in accordance with the objects mentioned in the Prospectus dated September 6, 2021. As on March 31, 2023 the proceeds of the IPO were completely utilised as per the objects stated in Prospectus dated September 6, 2021. The statement of utilisation of IPO proceeds as on March 31, 2023 is provided below:

(Rs. In Millions)

Original Object Modified Object, if any Original Allocation as per Prospectus dated Sept 6, 2021 Modified allocation, if any Funds Utilised till March 31, 2023
Repayment/prepayment of certain financial facilities availed by our Company Not Applicable 1,400.00 Not Applicable 1,400.00
Funding working capital requirements of our Company Not Applicable 900.00 Not Applicable 900.00
General Corporate Purpose Not Applicable 459.31 Not Applicable 459.31
Total 2759.31 2759.31

*Offer related expenses amounted to Rs. 240.69 million

ii. Significant and Material Order passed by the Regulators/ Courts:

During the year, no significant and material order was passed by any of the Regulators or courts or tribunals in respect of any litigation involving the Company or impacting the going concern status and company?s operations in future.

iii. Disclosure under the Insolvency and Bankruptcy Code, 2016:

During the year under review, No application has been made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 during the year.

iv. Disclosure on one-time settlement with Banks or Financial Institutions:

During the year under review, no one-time settlement is done with Banks and Financial Institutions and as such there is no difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions.

42. Human Resources:

Board acknowledges the impeccable contribution of all employees, at all levels of hierarchy, whether at lower, junior, mid or senior levels. Each and every employee of the company is an important factor and contributor to the growth and success story of organization. During the period under review, the personal and industrial relations with the employees remained cordial in all respects. The management has carried out systematic appraisal of performance and imparted training at periodic intervals. The Company recognizes talent and has judiciously followed the principle of rewarding performance.

During the year Company implemented the revised minimum wages as per the Gujarat Government?s Directive and rolled out an increase of 25% in minimum wages for the workers category. During the year Company started providing free meals to all the workers including permanent and contractual workers. During the year several cultural activities and training programs for the employees were successfully organized to keep up the employees skills, knowledge motivation and zeal.

43. Cautionary Statement

Statements in this Directors? Report and Management Discussion and Analysis Report describing the Company?s 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 Company?s operations include raw material availability and its prices, cyclical demand and pricing in the Company?s principal markets, changes in Government regulations, Tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

44. Acknowledgment:

The Board takes this opportunity in expressing their gratitude and appreciation to the various Government Authorities, Company?s Stakeholders?, bankers, business associates, consultants for their continued support extended to the Company. The Board also acknowledges the continuous support received from its shareholders, stakeholders valued customers, suppliers, and employees of the Company.

On behalf of the Board For Ami Organics Limited
Place: Surat Date: August 25, 2023 Sd/- Nareshkumar R. Patel Chairman & Managing Director DIN: 00906232