apollo micro systems ltd Directors report

(Previous year figures have been regrouped wherever necessary to confirm to the current year?s presentation)

The financial statements for the year ended 31st March,

2023 and 31st March, 2022 have been prepared as per the Ind AS (Indian Accounting Standards). There are no material changes and commitments affecting the financial position of the financial year and the date of

2. COMPANY?S PERFORMANCE

During the year under review FY 2022-23, the standalone performance of your company was reported as under:

The revenue from operations is 29,752.60 lakhs against 24,319.11 lakhs in the previous year. The Earnings Before Interest, Tax, Depreciation & Amortization the Company between the end of ("EBITDA") has been increased by 34.34% to 6,217.49 report.

lakhs against 4,628.20 lakhs in the previous year. The Profit before Tax ("PBT") for the year under review is 2,944.02 lakhs as against 2,025.76 lakhs in the previous year. The Net profit after tax of the Company the year under review has been increased by 30.43% to 1,906.79 lakhs against 1,461.94 lakhs in the previous year. The Earning per Share ("EPS") of the Company for the year under review is 9.18/- (basic) and 6.22/- (diluted) per share.

The key aspect of your Company?s consolidated performance during the FY 2022-23 are as follows:

The revenue from operations is 29,752.60 lakhs against 24,319.11 lakhs in the previous year. The Earnings Before Interest, Tax, Depreciation & Amortization ("EBITDA") has been increased by 33.31% to 6,169.25 lakhs against 4,627.67 lakhs in the previous year. The Profit before Tax ("PBT") for the year under review is 2,895.73 lakhs as against 2,025.13 lakhs in the previous year. The Net profit after tax of the Company the year under review has been increased by 28.21% to 1,873.75 lakhs against 1,461.52 lakhs in the previous year. The Earning per Share ("EPS") of the Company for the year under review is 9.02/- (basic) and 6.11/- (diluted) per share.

3. BUSINESS OUTLOOK

As world is witnessing a Military aggression across nations and an unconventional war practice being followed for sustenance in the war field and constant thrust to gain or regain new and old positions in the war-torn lands it has become very important for every country to keep themselves equipped under any eventuality. This has become more important in the present times as the present war has given some hard lessons of isolation and alliances by countries. So why are we talking about this?. Yes, we are talking about this as the present situation has given an alarm to all countries not only to equip themselves with Defence equipment but also to choose a long-term Defence ally for supply of Defence equipment and technology. This scenario has given an unprecedented opportunity to India and Defence ecosystem in India. Although the world is continuing to face challenges through semiconductor war the growing demands in Defence equipment across world and more so in India with a thrust for Make in India and 100% Self Reliance has kept the Defence Growth story on strong foot. Although some term this as sunrise industry, we term this as Industry where now the UV Index is at peak and convert this energy for better growth of the Defence companies for a sustained business for the years to come. The huge encouragement given by Govt of India is also supporting the local industry to aspire and export various products and technologies across the world.

4. CREDIT RATING

During the year under review, your Company has obtained the Credit Rating from Acuite Rating & Research Limited ("credit rating agency") to its 260.00 Crores Line of Credit (short term 210 Crores & long term 50

The outlook on the long-term & Short-Term rating has been assigned as "Stable" by the credit rating agency.

5. SHARE CAPITAL

(a) Changes in Capital structure of the Company

During the year under review, the Authorised Share Capital of the Company was increased from

27,00,00,000/- (Rupees Twenty Seven Crores Only) divided into 2,70,00,000 (Two Crores Seventy Lakhs Only) Equity Shares of 10/- (Rupees Ten Only) each to 36,00,00,000/- (Rupees Thirty Six Crores Only) divided into 3,60,00,000 (Three Crores Sixty Lakhs Only) Equity Shares of 10/- (Rupees Ten Only) each by the addition there to a sum of 9,00,00,000/- (Rupees Nine Crores Only) divided into 90,00,000 (Ninety Lakhs) Equity Shares of 10/- (Rupees Ten Only) each.

Further, the Company sought approval of members through postal ballot for sub-division of 1 Equity Share of the face value of 10/- per share to 10 Equity Shares of face value of 1/- per share. Accordingly the Authorised share capital of the Company as on 31^st March 2023, stands at 36,00,00,000/- (Rupees

Thirty Six Crores Only) divided into 36,00,00,000 (Thirty Six Crores Only) Equity Shares of 1/- (Rupee One Only) each.

As on 31st March, 2023 Paid-up capital of the Company stood at 20,76,38,860/- comprising of 2,07,63,886 equity shares of 10/- each. This is subsequent to the sub-division of one equity share of your Company having face value of 10/- into Ten equity shares of face value of 1/- each and consequent alteration in the Capital Clause of the

Memorandum of Association of the Company which was approved by the Share Holders on 28^th Day of

March 2023. The effective date / record date for the same is 4th May 2023.

(b) Status of Shares

As the members are aware, the Company?s shares are compulsorily tradable in electronic form. Out of the total paid up capital representing 2,07,63,886 equity shares, the following equity shares of the

Note: Pursuant to the amendment in Regulation 40 of the SEBI Listing Regulations, dated June 8, 2018 & SEBI date extension circular dated Dec 03, 2018, has mandated that transfer of securities would be carried out in dematerialized form only effective April 01, 2019. So, it is requested to all the Members holding the shares in physical form to dematerialize the same for giving effect to any transfer of company?s securities.

(c) Preferential issue of Share Warrants

During the year the company has taken approval from Shareholders to issue 1,01,00,070 warrants to promoters and non-promoters in accordance with provisions of SEBI (ICDR) Regulations, 2018. The

Company has applied to BSE Limited and National Stock Exchange of India Limited for the in-principle approval and the same is received from both the

Stock Exchanges for 98,85,070 warrants on 22

November 2022.

6. EXTRACT OF THE ANNUAL RETURN [SECTION 134 (3) (a) & SECTION 92(3)]

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Company?s website at https://apollo-micro.com/wp-content/uploads/2023/09/Annual-Return-F.Y.-2022-2023.pdf

7. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS [SECTION 134 (3) (b)]:

During the year under review, Seven (7) meetings of the Board of Directors of the Company were held on 28^th May, 2022, 23^rd July 2022, 12^th August, 2022, 13^th

October, 2022, 12^th November, 2022, 21^st January, 2023 and 10^th February 2023. The attendance of Directors for the above meetings is given in the Corporate Governance Report that forms part of this annual report. The maximum interval between any two meetings did not exceed 120 days.

The Detailed information of meetings of board of directors is given in the Corporate Governance Report annexed to this annual report.

In terms of requirements of Schedule IV of the Act, a separate meeting of Independent Directors held on 10^th February 2023 to review the performance of the

Non-Independent Directors; the Chairperson; the entire

Board and its Committees thereof and; assess the quality, quantity and timelines of the flow of information between the Management and the Board.

8. DIRECTOR?S RESPONSIBILITY STATEMENT [SECTION 134 (3) (c) & 134(5)]

Pursuant to Section 134(5) of the Companies Act, 2013 (the "Act"), the Board of Directors, to the best of its knowledge and ability, confirm that:

(a) in the preparation of the annual accounts for the period ended 31st March, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the the profit of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

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

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

9. DETAILS OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THAN THOSE WHICH ARE REPORTABLETOTHECENTRALGOVERNMENT[SECTION 134 (3) (ca)]:

During the year under review, Statutory Auditor, Secretarial Auditor and the Cost Auditor have not reported any incident of fraud under section 143(12) of the Act.

STATEMENTONDECLARATIONGIVENBYINDEPENDENT DIRECTORS SECTION 134 (3)(d)]

The Board took on record the declaration and confirmation submitted by the independent directors regarding their meeting the prescribed criteria of independence, after undertaking due assessment of the veracity of the same as required under Regulation 25 of the SEBI Listing

Regulations.

The Company has received and taken on record the declarations received from the Independent Directors of the Company as required pursuant to section 149(7) of the Act stating that meet the criteria of independence as provided in section 149 (6) of the Act, as amended and

Regulation 16(1)(b) of the SEBI Listing Regulations as amended. There has been no change in the circumstancesyearand of affecting their status as independent directors of the

Company.

10. FAMILIARISATION PROGRAMME

In compliance with the requirements of the SEBI Listing

Regulations, the Company has put in place a familiarisation programme for the Independent Directors to familiarise them with their roles, rights and responsibilities as

Independent Directors, the working of the Company, nature of the industry in which the Company operates, business model and so on. The same is also available on the Company website https://apollo-micro.com/investors/ https://apollo-micro.com/investors/ under the Section

"Investors".

11. COMMITTEES OF THE BOARD

The Board of Directors has constituted various mandatory and non-mandatory Committees to deal with specific areas and activities which concern the Company and requires a closer review. The Committees are formed with approval of the Board and function under their respective Charters. These Committees play an important role in the overall management of day-today affairs and governance of the Company. The Board Committees meet at regular intervals and take necessary steps to perform its duties entrusted by the Board. The Minutes of the Committee Meetings are placed before the Board for noting. The Board currently has the following Committees:

(a) Audit Committee

The Audit Committee was constituted by our Board in accordance with Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations. The composition, quorum, terms of reference, function, powers, roles and scope are in accordance with Section 177 of the Act and the provisions of Regulation 18 of the SEBI Listing

Regulations. All the members of the committee are financially literate and Mrs Karunasree Samudrala,

Chartered Accountant the Chairman of the Committee is an Independent Director and possesses the relevant financial expertise.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

(b) Corporate Social Responsibility (CSR) Committee

The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and society. The Company considers social responsibility as an integral part of its business activities and endeavours to utilize allocable CSR budget for the benefit of society.

The CSR Committee has been constituted as required under the provisions of section 135 of the

Act. The details regarding composition, objectives, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

The Committee formulated and recommended to the

Board the CSR Policy. On the recommendations of the

CSR Committee, the Board approved and adopted the CSR Policy of the Company. The Corporate Social Responsibility Policy is posted under the Investors section of the Company?s website at: https://apollo-micro.com/wp-content/uploads/2017/12/CSR-POLICY.pdf

As per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, annual report on CSR is prepared and the same is enclosed as Annexure-A to this Report.

(c) Stakeholder?s Relationship Committee

Stakeholder?s Relationship Committee has been constituted by the Board in accordance with Section

178 (5) of the Act.

The details regarding composition, terms of references, powers, functions, scope, meetings, attendance of members and the status of complaints received during the year are included in Corporate Governance Report which forms part of the Annual Report.

(d) Nomination and Remuneration Committee

The Nomination and Remuneration Committee has been constituted by the Board in accordance with section 178 of the Act and Regulation 19 of SEBI

Listing Regulations.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

Policy on Remuneration of Directors, KMPs and other employees

The Policy of the Company on remuneration of Directors, KMPs, Senior Management and other employees including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 is made available on the Company?s website https://apollo-micro. com/investors/ under the section "Investors". The website link is http://apollo-micro.com/wp-content/ uploads/2017/09/REMUNERATION_POLICY.pdf

(e) Risk Management Committee

The Risk Management Committee was constituted pursuant to resolution of the Board, which has been entrusted with the responsibility to assist the Board in overseeing and approving the Company?s enterprise-wide risk management framework.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

(f) Executive Committee of Directors & CFO

The Executive Committee of Directors and Chief Financial Officer (CFO) ("Executive Committee") has been formed by the Board, under the provisions of Section 179(3) of the Act and rules made there under in order to have the timely and expeditious execution of routine financial matters.

The details regarding composition, terms of references, powers, responsibilities, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

(g) Securities Allotment Committee

Securities Allotment Committee was constituted pursuant to resolution of the Board, which has been entrusted with the responsibility to assist the Board in overseeing and considering the allotment of securities.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

12. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE [SECTION 134 (3) (f)]:

By the Statutory Auditor in their Report: has no qualification or adverse remarks: NIL

By Company Secretary in Practice in Secretarial Audit Report: has below mentioned observations.

The Company has made delay of 8 days in filing of disclosures of related party transactions, pertaining to Quarter ended 31-March-2022, with National

Stock Exchange of India Limited.

The Company has made delay of 23 days in appointment of Independent Director between October 13, 2022 to November 04, 2022, for the Quarter ended 31/12/2022. The requirement of an Independent Director is due to appointment of another Non-Executive Director.

The Company has appointed M/s. G H Reddy & Associates, Cost Accountants (Firm Registration

Number - 002110), for carrying out cost audit for Financial Year 2021-22. However, the cost audit report has not been filed by the Company with Registrar of Companies, for the

31st March, 2022 as on date of this report.

The Board took note of the above observations of the auditors at their meeting held on 10^th August 2023 and resolved to ensure due compliance henceforth and make sure that all reportings are filed on time.

Secretarial Audit Report is attached to this report as

Annexure-B

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 [SECTION 134 (3) (g)]

During the financial year 2022-23, the Company has given loan to Ananya SIP RF Technologies Private

Limited, subsidiary Company (details mentioned below) and has not given any guarantees to any person or other bodies corporate or acquired securities of any other body corporate as referred to in Section 186 of the Act and the Companies (Meetings of Board and its Powers) Rules, 2014. Further, the company has not made any investment during the period under review.

During the year under review, the Company has given a loan of 222.95 lakhs and amount outstanding as on 31 March 2023 is 593.00 lakhs. The loan to subsidiary is repayable on demand with interest at 9.80% p.a.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES [RULE 8(5)(iv) OF COMPANIES (ACCOUNTS) RULES, 2014]

Your Company has one (1) subsidiary company. M/s

Ananya SIP RF Technologies Private Limited (CIN: U74990TG2015PTC097610) is the subsidiary of the Company with 51% stake in the aforementioned

Company other than that the Company does not have any joint ventures/Associate Companies during the year under review.

Pursuant to the provisions of Section 129, 134 and 136 of the Act read with rules made thereunder and

Regulation 33 of the SEBI Listing Regulations the Company has prepared consolidated financial statements of the Company and a separate statement containing the salient features of financial statement of subsidiary in Form AOC-1 forms part of this Annual Report as

Annexure-C.

The annual financial statements and related detailed information of the subsidiary companies shall be made available to the members of the holding and subsidiary company seeking such information on all working days during business hours. The financial statements of the subsidiary company shall also be kept for inspection by any members during working hours at the Company?s registered office and that of the subsidiary company concerned. financial year 2022-23. The

In accordance with Section 136 of the Act, the audited financial statements, including consolidated financial statements and related information of the Company and audited accounts of its subsidiary, are available on website, https://apollo-micro.com/investors/.

Pursuant to Section 134 of the Act read with rules made thereunder, the details of developments of subsidiary of the Company are covered in the Management Discussion and Analysis Report which forms part of this Report.

14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES [SECTION 134 (3) (h)]

All related party transactions entered into by the

Company during the financial year 2022-23 were in the ordinary course of business and on arm?s length basis and in compliance with the applicable provisions of the Act and the SEBI Listing Regulations. During the financial year under review, none of the transactions entered into with related parties were material as defined Act and SEBI Listing Regulations.

The particulars of contract or arrangements entered into by the Company, during the financial year 2022-23, with related parties referred to in sub-section (1) of section

188 of the Companies Act, 2013 including certain arm?s length transactions under third proviso thereto has been disclosed in Form No. AOC -2, attached to the Board?s report as Annexure-D. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company?s website https://apollo-micro.com/wp-content/uploads/2017/09/policy_on_related_party_ transactions.pdf under the Section "Investors".

15. RESERVES [SECTION 134 (3) (j)]

During the financial year 2022-23, the Board of Directors has not recommended transfer of any amount of profit to any reserves. Hence, the amount of profit for the financial year under review has been carried forward to theStatementofProfit Loss . and

16. DIVIDEND [SECTION 134 (3) (k)]

Your Directors have pleasure in recommending a dividend of 2.5% ( 0.025/- per Equity Share of face value of 1/- each) on the fully paid up Equity Shares out of the saidoftheCompanyforthe dividend, if approved by the shareholders, would result into a cash outflow of approximately 76,62,239/- (assuming the conversion of 98,85,070 warrants issued and allotted on 5th December 2022 into equity shares)

The dividend pay-out for the year under review has been finalized in accordance with the dividend distribution policy of the company.

17. DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the SEBI Listing Regulations mandates top 1000 Listed Companies based on their market capitalization to formulate Dividend Distribution Policy. As per Regulation 43A of SEBI Listing

Regulations, your company has voluntarily adopted the Dividend Distribution policy.

Accordingly, the policy was adopted to set out parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to the shareholders. The Policy is also available on theunder Company?s website under the web link https://apollo-micro.com/wp-content/uploads/2017/12/DIVIDNED-DECLARATION-POLICY.pdf. The Policy is also annexed herewith as Annexure-E to the Board?s Report.

18. MATERIAL CHANGES AND COMMITMENTS, IF ANY [SECTION 134 (3) (l)]

There were 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 relate and the date of this report.

19. CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO [SECTION 134 (3) (m)]:

The Company continues its efforts to reduce and optimize the energy consumption at its manufacturing facility.

A. Conservation of Energy

The operations of the company are not energy intensive. Adequate measures are taken to conserve and reduce the energy consumption like usage of LED Lights and power saving centralized air conditioners.

Research & Development

During the year under review, we have significantly invested in developing state of the art Naval technologies, Drones & Jammers, Varied Fuses for Artillery and Weapons, Actuators for Avionics Platforms.

Our Research & Design team has done significant study on futuristic requirements and problem statements of Armed forces in India and other countries and has initiated these development activities to meet their pressing requirements.

We foresee these technologies would give exponential benefit in future. We have been working closely with our clients in improvising these technologies and testing them for their end use and the results are more than satisfactory and we are confident of they getting inducted in various projects from time to time.

Being a technology company and our future growth is always based on the investments done on R&D from time to time, we foresee the results to hit into business by FY 2024 and FY 2025. We have spent 2,661.22 Lakhs/- towards our R&D activities in this

Financial Year.

B. Technical Absorption

20. ANNUAL EVALUATION ON PERFORMANCE [SECTION 134(3) (p)]:

Pursuant to the provisions of the Act and SEBI Listing

Regulations, the Board has carried out an annual evaluation of performance of its own, the Committees thereof and the Director

The Board is pleased to report that the result thereof show that the Company is well-equipped in the management as well as the governance aspects.

The Independent Directors at their separate meeting held on 10^th February, 2023 reviewed the performance of Non-Independent Directors (Executive & Non- Executive), Chairperson, performance of the Board as a whole and its various committees and also assessed the quality, quantity and timelines of flow of information between the Company Management and the Board.

The Independent Directors expressed their satisfaction on the overall functioning and effectiveness of the

Board, Committees and performance of individual

Non-Independent Board members and the Chairman.

The Board (excluding the Independent Directors being evaluated) has evaluated the performance of the Independent Directors on parameters such as

Knowledge, Experience, Integrity, Independence of judgment, adherence to Code of Conduct, Corporate

Governance, Contribution, attendance& level of participation and fulfilment of Independence Criteria etc. in accordance with the Company?s "Policy as available on the website of the Company under the web link https://apollo-micro.com/wp-content/uploads/2017/09/ POLICY_FOR_EVALUATION_OF_DIRECTORS_AND_KEY_ MANAGERIAL_PERSONNEL_AND_OTHER_EMPLOYEES. pdf for evaluation of Directors and Key Managerial Personnel and other employees".

The Board has expressed its satisfaction to the performance of the Independent Directors and appreciated the level of participation of Independent Director

21. EMPLOYEE STOCK OPTIONS SCHEME [RULE 12(9) OF COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014]:

The Company has in place the Employee Stock Option Scheme 2018 (ESOS-2018) to attract, reward, motivate and retain its employees, who have shown high levels of individual performance and for the unusual efforts, put in by them to improve the operational and financial performance of the contributes to the success of the Company.

During the financial year 2022-was made to the employees of the company, under the

ESOS scheme. The disclosures according to the provisions of the Act and SEBI (Share Based Employee Benefits)

Regulations, 2014 as on 31st March, 2023 with regard to the Apollo Employee Stock Option Scheme 2018 (ESOS-2018) are annexed to this Report as Annexure-F.

22. CHANGE IN THE NATURE OF BUSINESS [RULE 8(5)(ii) OF COMPANIES (ACCOUNTS) RULES, 2014]

There is no change in the nature of the business of the Company during the financial year 2022-23.

23. CHANGE IN THE DIRECTORS OR KEY MANAGERIAL PERSONNEL [RULE 8(5)(iii)& 8(5)(iii)(a) OF COMPANIES (ACCOUNTS) RULES, 2014]

The composition of the Board is in conformity with

Regulation 17 of the SEBI Listing Regulations and Section 149 of the Companies Act, 2013 except to the extent mentioned in Corporate Governance report attached hereto as Annexure H. There is an optimum combination of Executive and Non-Executive Directors. The Company has 8 (Eight) Directors as on 31st March, 2023. Out of the 8 (Eight) Directors 3 (Three) are Executive Directors, 3(Three) Non-Executive- Independent Directors and 2 (Two) Non- Executive Non-Independent Director. The Chairman of the Company is a non-executive independent director.

During the financial year 2022-23, the following changes occurred in Board composition.

1. Appointment of Mrs. Kavya Gorla (DIN 06407238) as the Director of the Company w.e.f 13th October 2022. Shareholders? approval has been taken in the Extra ordinary General Meeting held on 12th

November 2022

2. Appointment of Dr. Chandrashekar Matham (DIN: 09844975) as the Director of the Company, in the capacity of Independent Director, with effect from 21st January 2023. Shareholders? approval has been taken through Postal Ballot dated 28th March 2023.

3. Appointment of Mr. Aditya Kumar Halwasiya (DIN: which ultimately 08200117) as the Director of the Company, in the capacity of Non-Executive Non-Independent no grantofoptions Director, with effect from 21st January 2023. Shareholders? approval has been taken through

Postal Ballot dated 28th March 2023.

4. Re-appointment of Mrs. Karunasree Samudrala as the

Independent Director the Company for the Second Term of 5 years from of 29th May 2023 to 28th May 2028. 5. Resignation of Sri Lakshmi Reddy Vangeti (DIN: 02757567) from the Board w.e.f. 04th November 2022.

6. Re-appointment of Mr. Karunakar Reddy

Baddam (DIN: 00790139) as Managing Director ("MD") of the Company, for a further period of 5 (five) years commencing from April 1,

2022 till March 31, 2027(both days inclusive).

7. Re-appointment ofproficiency self-assessment test on Mr. Venkata Siva Prasad

Chandrapati (DIN: 03601703), as Whole Time Director (Technical) of the Company, for a further period of 5 (five)years commencing from August 22,

2022 till August 21, 2027 (both days inclusive)

8. Re-appointment of Mr. Krishna Sai Kumar

Addepalli (DIN: 03601692), as Whole Time Director

(Operations) of the Company, for a further period of 5 (five)years commencing from August 22, 2022 till

August 21, 2027 (both days inclusive)

9. Re-appointment of Mr. Raghupathy Goud Theegala (DIN: 07785738), who has submitted a declaration that he meets the criteria of Independence as provided under the Act and the Listing Regulations, as an Independent Director, not liable to retire by rotation, for a further period of 5 (five) years from

August 22, 2022 till August 21, 2027 (both days inclusive) financial Further in compliance with SEBI Listing Regulations, consent of the shareholders for the appointment/reappointment was taken within 3 months of appointment by the Board through postal ballot.

Pursuant to the provisions of the Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with the rules framed under the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

Ministry of Corporate Affairs vide its Notification number G.S.R. 804(E) dated October 22^nd, 2019 had tion Qualifica amendedtheCompanies(Appointmentand of Directors) Rules, 2014 and its amendment thereof requiring the registration of Independent Directors in the databank maintained by the Indian Institute of Corporate Affairs ("IICA") and passing the online proficiency self-assessment test conducted by the IICA within two(2) year from the date of inclusion of his/ her name in the data bank.

Mr. Raghupathy Goud Theegala, Independent

Director has duly registered his name in the data bank of IICA w.e.f 25^th February, 2020 and passed 22 theonline ^nd February 2022.

Mrs. Karunasree Samudrala, Independent Director has duly registered her name in the data bank of IICA w.e.f 25^th February, 2020 and passed the online proficiency self-assessment test on 10 ^th April, 2020.

In opinion of the Board, they fulfill the conditions specified in the Act and the Rules made there under for the appointment as Independent Directors and are independent of the management.

The Independent Director?s possess the relevant integrity, expertise, experience and proficiency.

During the year under review, the non-executive directors the Company had no pecuniary relationship or transactions with the Company other than sitting fees, commission, if any.

year 2022-23, there was no change Duringthe in the Key Managerial Persons (KMP?s) of the Company.

Mrs. Kavya Gorla (DIN:06407238) retires by rotation at the ensuing 26^th Annual General Meeting and being eligible, offers herself for

Additional information on reappointment of Mrs. Kavya

Gorla (DIN:06407238) as director and as required under regulation 36 of the SEBI Listing Regulations is given in the Notice convening the forthcoming AGM.

24. DEPOSITS [RULE 8(5) (v) OF COMPANIES (ACCOUNTS) RULES, 2014]

The Company has not accepted any deposits within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. There are no unpaid or unclaimed deposits as the Company has never accepted deposits within the meaning of the Act and the rules made thereunder.

25. SIGNIFICANT AND MATERIAL ORDERS [RULE 8(5) (vii) OF COMPANIES (ACCOUNTS) RULES, 2014]

During the financial year 2022-23, the Company hasn?t received any significant and material orders that impact the going concern status and company?s operations in future.

26. INTERNAL FINANCIAL CONTROLS [RULE 8(5)(viii) OF COMPANIES (ACCOUNTS) RULES, 2014]

The Company has kept in place adequate controls to check and control any defects and frauds in the Company. Adequate internal control systems commensurate with the nature of the Company?s business, its size, and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

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

27. PARTICULARS OF EMPLOYEES

The information required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 respectively, are given in Annexure-G, which forms partof this Report.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies

(Appointment and Remuneration of Managerial

Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

28. AUDITORS AND AUDIT REPORT

(a) Statutory Auditors & their Reports

M/s. S T Mohite & Co. (FRN 011410S), Hyderabad were appointed as Statutory Auditors of the Company in the Annual General Meeting held on August 25, 2022 for a period of 5 Years and holds office until the conclusion of the 30^th Annual General Meeting to be held in the calendar year 2027.

Further, the remuneration to be paid to Statutory

Auditors for FY 2023-24 is 7.50 Lakhs plus out of pocket expenses and applicable taxes and the remuneration for the remaining tenure of their second term as Statutory Auditors shall be mutually agreed between the Board of Directors and M/s. S T Mohite & Co, from time to time.

The above proposal forms part of the Notice of the AGM for your approval.

The report of the Statutory Auditor forms part of this Annual Report and Annual Accounts 2022-23. The said report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors did not report any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section

134(3) (ca) of the Act.

Further, M/s. S T Mohite & Co. have confirmed eligibility for their appointment as Statutory Auditors and the same are within the limits as specified in section 141 of the Companies Act, 2013 and have also confirmedthat they are not disqualified from continuing as Auditors of the Company.

The Notes on financial statement referred to in the Auditors? Report are self-explanatory and do not call for any further comments.

(b) Internal Auditors

As per the provisions of Section 138 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors had appointed M/s Surya Pavan & Co, Chartered Accountants, Vijayawada (ICAI

Firm Registration No. 015612S), as Internal Auditor to conduct the internal audit of the Company for the Financial Year 2023-24 on a remuneration of 1,50,000/- per annum.

The Internal Audit Report for the Financial Year 2022-23 issued by M/s Surya Pavan& Co, Chartered Accountants, Vijayawada is submitted which is self-explanatory and do not call for any further explanation of the Board.

(c) Cost Auditors

In terms of Section 148 of the Act, the Company is required to maintain cost records and have the audit of its cost records conducted by a Cost Accountant. Cost records are prepared and maintained by the Company as required under Section 148(1) of the Act.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, approved the appointment of M/s G H Reddy & Associates, Cost Accountants (Firm Registration Number – 002110) for the year ending March 31, 2024. M/s G H Reddy & Associates have experienceinthefieldof cost audit.

The Board, also on the recommendations of the Audit Committee approved the remuneration of 1.5 lakh (Rupees One lakh Fifty Thousand only) (excluding applicable taxes and reimbursement of out-of-pocket expenses) payable to Cost Auditors for FY 2023-24. The same is placed for ratification of Members and forms part of the Notice of the AGM.

(d) Secretarial Auditors

As per the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors had appointed Mr. Venkatesh Reddy Datla, Practicing Company Secretary, Hyderabad (Membership No: 36504; CP No: 14074), as Secretarial Auditor to conduct the Secretarial audit of the Company for the Financial Year 2022-23.

The Secretarial Audit Report, pursuant to the provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, issued by Mr. Venkatesh

Reddy Datla, Practicing Company Secretary, in Form MR-3 for the financial year 2022-23 is annexed to the Board?s Report as Annexure-B. The secretarial auditors? report is forming the part of this report and there are no qualifications, observations, adverse remarks or disclaimer in the said Report.

Further, the Board has approved the appointment of M/s. MNM & Associates, Company Secretaries,

Hyderabad (Firm Registration No : P2017TL059600) as the Secretarial Auditor of the Company for the

Financial Year 2023-24 in the Board Meeting held on

10^th August 2023.

29. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report

("MD&A") for the year under review as stipulated under the SEBI Listing Regulations is presented in a separate section forming part of this Annual Report.

30. REPORT ON CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and as stipulated under the SEBI Listing Regulations.

A separate section titled Corporate Governance Report as Annexure-H under the SEBI Listing Regulations along with a Corporate Governance Certificate from the

Practicing Company Secretary in the Annexure-I and

CFO Certification in compliance with Regulation 17(8) of SEBI Listing Regulations in the Annexure-J forms the part of this report.

31. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit Functions reports to the Board including Audit Committee of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

32. VIGIL MECHANISM

The Company?s Board of Directors, pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, has framed ‘Whistle Blower Policy? for Directors and employees of the Company. The policy is to provide a mechanism, which ensures adequate safeguards to employees and Directors from any victimisation on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial employees of the Company have the right/option to report their concern/grievance to the Chairman of the

Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. The Whistle Blower Policy is hosted on the Company?s website https://apollo-micro. com/wp-content/uploads/2017/09/WHISTLE-BLOWER-POLICY.pdf under the section "Investors".

33. INVESTORS EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to section 124 of the Act, Dividends that are unclaimed for a period of seven years are required to be transferred to the IEPF, established by the Government of India. During the year under review, there was no outstanding amount of unclaimed dividends which was liable to be transfer to the IEPF.

34. HUMAN RELATIONS

The Company continues to have cordial and harmonious relationship with its employees and thank all employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

35. POLICY ON SEXUAL HARASSMENT

Your Company is committed to provide work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment. The Company is also committed to promoting a work environment that is conducive to the professional growth of its employees and encourages equality of opportunity and will not tolerate any form of sexual harassment and to take all necessary steps to ensure that its employees are not subjected to any form of harassment.

Thus, in order to create a safe and conducive work environment the Company has in place a policy for and reports, and so on. The prevention of sexual harassment in accordance with the requirements of the Sexual Harassment of women at workplace (prevention, Prohibition, & Redressal) Act, 2013.

Further, the Company has complied with provisions relating to constitution of Internal Complaints

Committee ("ICC") under Sexual Harassment of women at workplace (Prevention, Prohibition, & Redressal) Act, 2013. The Committee has been set up to redress complaints received regarding sexual harassment. The detail of the committee members is available on the website of the Company https://apollo-micro.com/wp-content/uploads/2019/09/REVISED-Workplace-Sexual-Harassment-Policy-apollo-micro-systems-limited.pdf under the section "Investors". All employees (permanent, contractual, trainees, temporary) are covered under this policy. During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013.

36. ACKNOWLEDGEMENTS

The Directors thank all customers, bankers, investors, shareholders, vendors and other stakeholders for their continued support and patronage during the year under review. The Board appreciates its employees for their efforts, hard work and dedication, which enabled the