Aarti Industries Ltd Directors Report

To

The Members of

AARTI INDUSTRIES LIMITED

Your Board of Directors ("Board”) is pleased to present this 41^st Annual Report on the performance of your Company ("the Company” or "Aarti” or "AIL”) together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2024.

[The consolidated performance of the Company and its subsidiaries has been referred to wherever required.]

1. Financial Highlights & Summary

Financial Highlights

(Rs. In Crores)

Particulars	Standalone		Consolidated
	2023-24	2022-23	2023-24	2022-23
Total Income from Operations (Gross)	6,985	7,226	7,012	7,283
Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA)	976	1,088	976	1,089
Depreciation & Amortisation	377	310	378	310
Profit from Operations before Other Income, Finance Cost and Exceptional Items	599	778	598	779
Other Income	8	0	8	1
Profit before Finance Cost	607	778	606	780
Finance Cost	211	166	211	168
Profit before Tax	396	613	395	611
Total Tax Expense	(21)	67	(21)	66
Non-controlling Interest	-	-	-	-
Net Profit for the period	417	546	416	545
Other Comprehensive Income (net of taxes)	6	(35)	6	(50)
Total Comprehensive income for the year	423	511	422	495
Earnings Per Share (H) (Basic & Diluted)	11.51	15.06	11.49	15.04
Book Value Per Share (H)	146	136	146	136

Summary

Your Company reported gross total Income at Rs6,985 Crores for FY 2023-24 as against Rs7,226 Crores for FY 2022-23. Similarly, Exports during the year were reported at Rs 3,644 Crores for FY 2023-24 as against Rs 3,517 Crores for FY 2022-23.

Likewise, the consolidated total income from operations for FY 2023-24 was at Rs7,012 Crores as compared to Rs7,283 Crores for FY 2022-23 and Exports for FY 2023-24 were reported at Rs3,621 Crores as against Rs3,573 Crores for FY 2022-23.

Consolidated Financial Statements

In accordance with the provisions of Companies Act, 2013, Regulation 33 of the Listing Regulations, and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the FY 2023-24, together with the Auditors Report, form part of this Annual Report.

2. Dividend

Your Board of Directors recommend a Dividend of Rs.1 /- (@ 20%) per share subject to approval of the Shareholders at the ensuing 41^st AGM, for the year 2023-24, resulting in a total payout Rs.36.25 Crores (Previous Year: Rs90.63 Crores).

The Dividend payout is in accordance with the Dividend Distribution Policy which is available on the website of the Company. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations”) is available on the Companys website and the web link thereto is : https://www.aarti-industries.com/investors/ GetReportRs.strcont id=b22bcY6v1 CAOIQL33MM

3. Transfer to Reserves

Your Company has transferred Rs. 42 Crores to the General Reserve (Previous Year: Rs55 Crores).

4. Subsidiary Companies, Associate & Joint Venture

As on March 31, 2024, the Company has 8 (Eight) direct subsidiaries, namely, Aarti Corporate Services Limited, Innovative Envirocare Jhagadia Limited, Aarti Polychem Private Limited, Aarti Bharuch Limited, Aarti Spechem Limited, Augene Chemical Private Limited, (w.e.f. May 18, 2023), Alchemie (Europe) Limited and Aarti Chemical Trading - FZCO (w.e.f. September 25, 2023) and 2 (Two) indirect subsidiaries namely Shanti Intermediates Private Limited, Nascent Chemical Industries Limited (both through its Holding Company: Aarti Corporate Services Limited).

The Company does not have any material subsidiary whose net worth exceeds 10% of the consolidated net worth of the Company in the immediately preceding accounting year or has generated 10% of the consolidated income of the Company during the immediately preceding accounting year. A policy on determining material subsidiaries is available on the website of the Company and the web link thereto is:

https://www.aarti-industries.com/investors/ GetReportRs.strcont id=A8DuSuG1AT8OIQL33MM

The Company does not have any associate or Joint Venture. During the year, the Board of Directors reviewed the performance of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report.

Further a statements containing salient features of the financial statement of our Subsidiaries in the prescribed format AOC-1 is included in the Report as Annexure-A and forms an integral part of this Report.

5. Share Capital & Debentures

Particulars (As on March 31, 2024)	No. of Shares	Face Value Per Share (in Rs.)	Total Amount (in Rs.)
Authorised Share Capital	60,00,00,000	5	3,00,00,00,000
Issued, Subscribed & Paid- up Share Capital	36,25,04,035	5	1,81,25,20,175

During the year 2023-24, there was no change in the authorised, issued, subscribed and paid-up share capital of the Company.

Further FY 2023-24 had been a challenging year for the specialty chemical industry amid various geopolitical conflicts, inflation, inventory corrections, demand challenges, supply chain disruptions and rising interest rates. Globally many specialty chemicals companies reported significantly weak performances which had an impact on the credit appetite of various financial institutions. AIL after having impacted significantly in Q1 of FY 2023-24, had been able to perform well and post quarter on quarter better performance, albeit being lower on an annual basis as compared to last year. On account of these major macro situations, the ability for raising debt through NCDs were impacted. Hence the company had to resort to raising its debt to domestic banks.

6. State of Affairs

The Companys State of Affairs is given in the Management Discussion and Analysis, which forms part of this Annual Report.

7. Directors and Key Managerial Personnel (KMP)

In accordance with the prevailing provisions of the Section 149 of the Companies Act, 2013 read with Regulation 17 of the Listing Regulations, as amended from time to time, as on March 31, 2024, the Board of Directors comprises of Fourteen Directors (with Six Executive Directors, One Non-Executive Non-Independent and Seven Independent Directors)

At the 40^th Annual General Meeting held on August 4, 2023, the members approved appointment of following Directors:

• Prof. Aniruddha B. Pandit (DIN: 02471158) as an Independent Director for a term of five years w.e.f June 29, 2023.

• Shri Shekhar S. Khanolkar (DIN: 02202839) as an Independent Director for a term of five years w.e.f June 29, 2023.

• Shri Ajay K. Gupta (DIN: 08619902) as Executive Director with effect from June 29, 2023.

During the year, upon completion of their term as Independent Directors; Prof. Ganapati D. Yadav (DIN: 02235661) and Smt. Priti P. Savla (DIN: 00662996), both ceased to be Directors of the Company with effect from September 23, 2023 and Dr. Vinay Gopal Nayak (DIN: 02577389) ceased to be Director of the Company with effect from December 17, 2023. The Board placed on record its appreciation for their invaluable contribution and guidance.

During the year, Non-independent Directors; Shri Kirit R Mehta (DIN: 00051703) and Shri Narendra J Salvi (DIN: 00299202), retired by rotation in the 40^th Annual General Meeting held on August 04, 2023 and had not offered themselves for re-appointment. The Board placed on record its appreciation for their invaluable contribution and guidance.

In accordance with the regulatory requirements Shri Parimal Hasmukhlal Desai (DIN: 00009272) retires by rotation in the ensuing Annual General Meeting. However, he did not offer himself for re-appointment. The Board of Directors in its meeting held on May 30, 2024, noted his request and considered to fill up the vacancy caused thereby. The Board placed on record appreciation for the technical support and his invaluable contribution and guidance towards Companys Growth and Success.

Smt. Hetal Gogri Gala (DIN: 00005499) retires by rotation and being eligible, offers herself for re-appointment. A resolution seeking members approval for her re-appointment along with other required details forms part of the Notice of Annual General Meeting.

In addition, based on recommendation of Nomination and Remuneration Committee, the Board of Directors in its meeting held on May 10, 2024, re - appointed Shri Lalitkumar Shantaram Naik (DIN: 02943588) as an Independent Director of the Company for a second term of 5 (five) years with effect from May 21, 2024. His re - appointment is subject to approval of the members at the ensuing AGM of the Company.

Further, up to the date of this Report, based on recommendation of Nomination and Remuneration Committee, the Board of Directors approved the following appointments:

• Shri Belur Krishna Murthy Sethuram (DIN: 03498701) as an Additional Director in the category of Independent Director for a period of 5 years with effect from June 01,2024.

• Shri Suyog Kalyanji Kotecha as Companys Chief Executive Officer (CEO) with effect from June 17, 2024 in place of Shri Rajendra V. Gogri, who relinquished his role as CEO effective from June 17, 2024, However Shri Rajendra V. Gogri continues to be the Chairman and Managing Director of the Company.

• Shri Suyog Kalyanji Kotecha (DIN: 10634964) as an Additional Director in the category of Executive Director for a period of 5 years with effect from June 17, 2024.

• Shri Nikhil Jaysinh Bhatia (DIN: 00414281) as an Independent Director for a period of 5 years with effect from September 15, 2024.

• Smt. Rupa Devi Singh (DIN: 02191943) as an Independent Director for a period of 5 years with effect from September 15, 2024.

• Shri Ashok Kumar Barat (DIN: 00492930) as an Independent Director for a period of 5 years with effect from September 15, 2024.

Their appointments as Directors are subject to approval of the members at the ensuing Annual General Meeting of the Company.

Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard - 2 on General Meetings, a brief profile of the Directors proposed to be appointed / re-appointed is made available, as an Annexure to the Notice of the Annual General Meeting.

Pursuant to the provisions of Regulation 34(3) read with Schedule V to the Listing Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company, certifying that none of the Directors of the Company has been debarred or disqualified from being appointed or continuing as a Director of the Company by the Securities and Exchange Board of India or by the Ministry of Corporate Affairs or by any such statutory authority. The said Certificate is annexed to the Corporate Governance Report of the Company for the Financial Year 2023-24.

Key Managerial Personnel

During the year under review, there was no change in the Key Managerial Personnel of the Company.

Independent Directors

In accordance with Section 149(7) of the Companies Act, 2013, all Independent Directors have given declarations that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations. In terms of Regulation 25(8) of the Listing Regulations, they have confirmed that they are not aware of any circumstance or situation which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after due assessment of the veracity of the same.

In the opinion of the Board of Directors, the Independent Directors fulfil the conditions specified in the Companies Act, 2013 read with the rules made thereunder as well as Listing Regulations and are independent from Management, hold the highest degree of integrity and possess expertise in their respective fields with enormous experience.

All the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

All the Independent Directors of the Company have enrolled their names in the Independent Directors Data Bank maintained by Indian Institute of Corporate Affairs ("IICA”).

Familiarisation Programme for Directors

During the year, the Company has conducted a well-structured familiarisation programme for its Directors, including those inducted during the year, so as to provide them with an opportunity to familiarise themselves with the Companys vision, mission, and values, its operational capabilities, category wise products distribution, geographies where the Company operates, Capex incurred in the last 3-5 years, ongoing Expansion Projects, R&D, Growth opportunities, Information Technology, Digital Transformation, Cyber Security, sustainability and Safety Measures taken. The programme includes one-to-one interactive sessions with the senior management team, business and functional heads among others and also visits to the Companys Plants mainly situated in the State of Gujarat.

Presentations are made on a periodical basis during the Board and Committee meetings where, comprehensive presentations are made on various aspects such as business models, new business strategies and initiatives by business leaders, risk minimization procedures, recent trends in technology, changes in domestic/ overseas industry scenario, digital transformation, state of global IT services industry, and regulatory regime affecting the Company.

During the year, the Independent Directors of the Company were familiarised and the details of familiarisation programmes imparted to them are placed on the website of the Company and the web link thereto is: https://www.aarti-industries.com/Upload/PDF/Familiarisation-Programme-FY-2023-24.pdf

8. Directors Responsibility Statement

Pursuant to the provisions of Section 134(3)(c) and 134(5) of the Act, the Directors, to the best of their knowledge and ability, confirm that for the year ended March 31, 2024

a. in the preparation of the annual financial statements for the year ended March 31, 2024, the applicable accounting standards had been followed and there are no material departures;

b. they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year and of the profit of the company for that period;

c. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities;

d. they had prepared the annual accounts on a going concern basis;

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

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

9. Meetings

During the Financial Year under review, Ten (10) Board Meetings were held. The details of the number of meetings of the Board and its Committees held during the Financial Year 2023-24 and the attendance of each Director/Member at these meetings are provided in the Corporate Governance Report forming part of the Annual Report. The intervening gap between the Board meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

10. Annual Performance Evaluation

The Company has a structured assessment process, wherein the Nomination and Remuneration Committee of the Company has laid down the criteria of performance evaluation of the Board, its Committees and the Directors, including the Chairman. The evaluations are carried out in a confidential manner and each member of the Board provides his/her feedback by rating based on various metrics.

Under the two layers evaluation process, Independent Directors evaluate the performance of the Board of Directors, Non-independent Directors and the Chairman of the Company. Later the Board of Directors evaluate performance of the Board itself, its Committees and the Board members.

Under the fast changing regulatory regime, business scenario and Industry trend, an annual performance evaluation process aims to improve the effectiveness of the Board, its Committees and the individual members.

With a specific focus on functioning of the Board, Individual Roles & Responsibilities; the criteria of assessment includes; Board Composition, governance procedures, managing conflict of interest, contribution to Companys long-term strategy, flow of information on key strategic matters, investment / Capex, opportunities, quality of discussions at the meeting, leadership, succession planning, adequacy of risk management measures and overall value creation to all the stakeholders.

Rating given by the individual member against each criteria of assessment is kept strictly confidential and the abstract / summary is presented to the Independent Directors and the Board of Directors along with the suggestions from the members for deliberation / discussion on improvements wherever required.

The Board of Directors expressed their satisfaction with the outcome of evaluation and the process followed thereof.

11. Nomination and Remuneration Policy

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations, your Company has in place a Nomination and Remuneration Policy which lays down a framework in relation to criteria and qualification for Nomination & Appointment of Directors, remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy also lays down criteria for selection and appointment of Board members. The said policy has been posted on the website of the Company and the web link thereto is: https:// www.aarti-industries.com/investors/GetReportRs.strcont id=pTvbr0JrvL0OIQL33MM

The details of this policy are given in the Corporate Governance Report.

12. Corporate Social Responsibility

Your Company through, Aarti Foundation and Dhanvallabh Charitable Trust - Our CSR arms undertake community interventions to enhance the lives of the communities. Besides our direct involvement, we partner with numerous implementing agencies to carry out need assessment and make impactful interventions. Our Focus areas during the year are;

• Education & Skill Development

• Childcare & Healthcare Facilities

• Women Empowerment & Livelihood Opportunities

• Cluster & Rural Development

• Disaster Relief & Rehabilitation

• Eradication of Hunger & Poverty

• Water Conservation & Environment

• Research & Development work for upliftment of Society

The detailed policy on Corporate Social Responsibility is available on the website of the Company and the web link thereto is:

https://www.aarti-industries.com/investors/ GetReportRs.strcont id=rQxVNvkXxIkOIQL33MM

A brief note on various CSR initiatives undertaken during the year including the composition of the CSR Committee is presented in this Annual report. The CSR annual report is annexed as Annexure-B and forms an integral part of the Report.

13. Audit Committee and Corporate Social Responsibility Committee

The details of the composition of the Audit Committee & Corporate Social Responsibility Committee, their terms of reference, details etc. are provided in the Corporate Governance Report, which forms part of this Report. During the year there were no cases where the Board had not accepted any recommendation of the Audit Committee and Corporate Social Responsibility Committee.

14. Vigil Mechanism/Whistle Blower Policy

The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud, actual or suspected leak of UPSI or violation of Companys Code of Conduct. It also provides for adequate safeguards against the victimisation of employees and allows direct access to the Chairman of the audit committee in exceptional cases.

The awareness is provided to all the employees under Aarti Online Training Module [ATOMs]. Upon joining, it is mandatory for each employee to participate and gain adequate knowledge of all the critical policies and codes to ensure Governance Level of the Company.

The said policy has been posted on the website of the Company and the web link thereto is:

https://www.aarti-industries.com/investors/ GetReportRs.strcont id=ZMPluse33MMnrACtosYOIQL33MM

The Company affirms that no person has been denied access to the Audit Committee Chairman.

15. Related Party Transactions

The Company has a Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions which is uploaded on the Companys website at the web- link given below:

https://www.aarti-industries.com/investors/ GetReportRs.strcont id=TNJu6Gnbr7sOIQL33MM

All the transactions with the related parties carried out during the FY 2023-24 are in ordinary course of business and on an arms length basis. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other Designated Persons which may have potential conflict with interest of the Company at large.

The related party transactions are approved by the Audit Committee. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of transactions. A report of factual findings arising out of the accepted procedures carried out in regard to transactions with Related Parties is given by the Statutory Auditors on quarterly basis and the same is placed before the Audit Committee. The details of related party transactions are provided in the accompanying financial statements.

In terms of Regulation 23 of Listing Regulations, the Company submits details of related party transactions on a consolidated basis as per the specified format to stock exchanges on half yearly basis.

Particulars of contracts or arrangements made with related parties

Since all related party transactions entered into by the Company were in ordinary course of business and on an arms lengths basis, disclosure in Form AOC-2 is not applicable to Company.

16. Credit Rating

Below are the details of Credit Ratings as on March 31, 2024

Facilities	CRISIL Ratings	India Ratings and Research Ratings
Long Term Issuers Rating and Bank Loan Ratings	CRISIL AA/ Stable	IND AA/ Stable
Commercial Paper	CRISL A1 +	IND A1 +

17. Deposits

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014)], during the Financial Year 2023-24 and as such no amount on account of principal or interest on deposits from public was outstanding as on March 31, 2024.

18. Particulars of Loans, Guarantees, Investments

Particulars of loans given, investments made, guarantees given during the year under review and as covered under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in the notes to the financial statements forming part of the Annual Report.

19. Particulars of Employees and related disclosures

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report and annexed as Annexure - C. As per first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the report and financial statements are being sent to the members of the Company excluding the statement of particulars of employees under Rule 5(2). However, these are available for inspection during business hours up to the date of the forthcoming AGM at the registered office of the Company. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office address of the Company.

20. Material Developments in Human Resources/ Industrial Relations Front, including number of people Employed

Employee Wellbeing and Engagement

Employee wellbeing is a top priority. Engagement survey participation reached 100% in six days, with scores rising from 4.14 to 4.42. Key improvements included recognition (+0.96), promotion transparency (+0.76), and open communication (+0.58). Notably, 129 out of 250 managers scored in the top quartile, averaging 4.49-5.

The Nirvana Calendar engaged 5002 employees in 10 sessions. Metamorphosis 2.0 involved over 3,200 team members. The Arjan recognition platform recorded 127,999 instances, a 16.19% increase from FY 2022-2023, with cross-functional recognition rising to 16.42%.

A new conversation platform achieved a 53.15% integrity rate among leaders, with a 48% success rate by March 2024. Additionally, 6,000 team members and families enrolled in the Employee Assistance Program, with counseling sessions up 42%.

Diversity and Inclusion Initiatives

Our Diversity and Inclusion policies ensure fair evaluation and performance assessment. Initiatives like Internal Job Postings (Navodaya), Individual Development Plans, and Knowledge Enhancement sessions provide equal growth opportunities. Unnati 1.0 and 2.0 drive digital transformation. All employees complete annual training on POSH, Code of Conduct, Ethics, and more. Over 400 Listening Tours foster open communication. We hired 21 female graduates, increasing female employees to 195.

Talent Management and Development

Our Talent Philosophy aims for 80% competency advancement within two years. Over 350 Managers were evaluated in the Manager Development Program, and 50 in the PACE program with Accenture. Employees are segmented using a 9-box matrix, with succession plans categorizing talent as Ready Now, Ready in 1 -3 Years, and Ready in 3+ Years.

Training and Education Programs

The Eklavya program achieved a 45% success rate, and training initiatives totaled 213,500 man-hours in FY 2023-24. The Meraki program assigned 61 mentors, and competency-based learning involved 1,600 participants.

As on March 31,2024, the Company had 6,100 permanent employees on the rolls.

21. Aarti Industries Limited Performance Stock Option Plan 2022

Your Company has implemented and through the Nomination and Remuneration Committee, administers the Aarti Industries Limited Performance Stock Option Plan 2022 ("PSOP 2022”), under which stock options are granted to the Eligible Employees, in compliance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

The particulars required to be disclosed pursuant to the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 have been uploaded on the website of the company and the web link thereto is : https:// www.aarti-industries.com/upload/pdf/psop-disclosure- as-per-sebi-format.pdf

Your Company has received a certificate from CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company that PSOP 2022 has been implemented in accordance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolution passed by the Shareholders. Any request for inspection of the said Certificate may please be sent to investorrelations@aarti-industries.com.

22. Material changes and commitment if any affecting the financial position of the company occurred between the end of the Financial Year to which this financial statements relate and the date of the report

There are no other material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which these financial statements relate and the date of the report.

23. Investor Education and Protection Fund (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules) all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the rules, the shares on which Dividend has not been paid and claimed by the Shareholders for seven consecutive years or more shall be transferred to the Demat account of the IEPF Authority. Accordingly, during the year, the Company has transferred the unclaimed and unpaid dividend of H23,08,523/-. Further, 9,250 corresponding shares were transferred to IEPF authority as per the requirement of the IEPF Rules.

24. Annual Return

Pursuant to Section 92(3) read with Section 134(3) (a) of the Companies Act, 2013, the Annual Return in form MGT- 7 as on March 31, 2024 is available on the Companys website and the web link thereto is: https:// www.aarti-industries.com/upload/pdf/form-mgt-7 fy-2023-24.pdf

25. Corporate Governance

Corporate Governance essentially involves balancing the interests of a Companys stakeholders. The Company continues to nurture a culture of good governance practices across functions, offices and manufacturing facilities.

Your Company has complied with the mandatory Corporate Governance requirements stipulated under the Listing Regulations. The separate Report on Corporate Governance is annexed hereto forming part of this report. The requisite certificate from M/s Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate Governance.

26. Managements Discussion and Analysis Report

Pursuant to Regulation 34 read with Schedule V to the Listing Regulations, Managements Discussion and Analysis for the year under review is presented in a separate section forming part of the Annual Report.

27. Business Responsibility & Sustainability Reporting (BRSR)

The Listing Regulations mandate the inclusion of the Business Responsibility & Sustainability Reporting as part of the Annual Report for top 1000 listed entities based on market capitalisation. BRSR for the year under review, as stipulated under Regulation 34 (f) of Listing Regulations is in a separate section forming part of the Annual Report. The non-financial sustainability disclosures have been independently assured by TUV India Private Limited (TUV NORD GROUP).

28. Risk Management

Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. With the vision to integrate risk management with the overall strategic and operational practices, an Enterprise Risk Management Framework has been established by AIL to enable the company to proactively respond to any changes in the business environment and to ensure sustainable business growth with stability and establish a structured approach to Risk Management at AIL.

The Committee through its risk management framework continuously identifies internal and external risks specifically faced by the Company, in particular including Financial risks, Operational risks, Business / Commercial risks, Sectoral, Project Execution Risks, Technology Risks, Sustainability (including Environment, Social & Governance (ESG) related risks), Technology, Regulatory Compliance Risks, Cyber Security risks, Geo-political risk, etc.

The Committee has designated the Company officials as a CRO (Chief Risk Officer) and Risk Owners for various types of the Risk. The Risk Owners along with the Committee members work on an appropriate risk mitigation framework and present the same along with the applicable governance reports at regular intervals. The Risk Management Committee meets periodically to ensure that appropriate methodologies, processes and systems are in place to monitor and evaluate risks associated with the business of the Company and also to monitor and oversee the implementation of the Risk Management Policy. The Committee and the Board also take necessary action as may be needed to upgrade the risk management framework as needed from time to time.

The Risk Management policy has been posted on the website of the Company and the web link thereto is:

aarti-industries.com/investors/GetReportRs.strcontid=dCIEPn8aX6wOIQL33MM

29. Compliance Management System

The Company with its sheer focus committed to achieve 100% compliance. We have adopted a third-party managed IT-based Compliance Management System. It has a repository of all applicable regulations and requisite compliances. It has an in-built alert system that sends alerts to the users and intimates concerned personnel about upcoming compliances. A module on License Management into our compliance management system is also added. Licence management system helps us in tracking the validity and renewal process of all applicable licences. We initiate the licence renewal process well in advance to avoid any delays.

30. Health and Safety:

For Safety even world class is not enough...

At AIL we live this tagline and continuously strive to better ourselves by bringing up various interventions to be world Class, Shape the Future.

At AIL, BESAFE was one of the mega interventions to provide assurance on Process Safety launched in 2019. During the last few years, BESAFE intervention has enhanced Safety Culture of AIL by several notches and now BESAFE is an integral part of AILs DNA.

AIL conducted "Aarti Suraksha Survey during FY-202223 to get a pulse on safety perception. The online survey indicated that AILs safety culture is on the verge of becoming Independent and moving towards becoming Interdependent in Bradlys curve. The survey also threw many insights, and as an outcome of the survey, a Safety Culture Enhancement program is now in place.

Keeping the BESAFE DNA of AIL intact and bringing up a new perspective of "how we can better ourselves or what more(plus) can be done to improve from hereRs.”.

AIL launched the new initiative for safety culture enhancement journey during Dec 2023.

The main objective of the BESAFE+ is to drive AIL towards an Interdependent (care for each other) Safety Maturity Level. For that we have collaborated with world leaders in safety, the dss+ (Ex Dupont). dss+ is known for building hard-hitting diagnostic solutions to help organizations improve their safety culture to the next level.

During FY 2023-24, we continued our emphasis on leading indicators which is reflected in following indicators:

1. 200+Knowledge Capsules every year: Every weekday an short communication through email on Safety topics by Corporate Safety and Compliance Head

2. 900+ Besafe Huddles : Besafe huddle is a 15 minutes online session wherein various safety related learnings are shared three days a week with 200+ participants

3. 50+ Learning from Incidents (LFI) sessions: LFI is

a 1 Hr dedicated session every month for sharing learnings from internal and external incidents with 300+ participants

4. 2000+ BBS rounds every month across organization to endorse positive safety behavior across AIL.

5. 2000+ internal inspections every month across organization in the form of GPC (General Plant Conditions) rounds to identify and correct unsafe conditions

6. 1500+ work permit audits every month to ensure compliance of the work permit conditions

7. Monthly gate meeting on 4^th day of every month in all divisions to recognise the good work in safety by on roll and contract employees

8. 12 Monthly Safety Themes every year: Every month focused efforts on one safety topic to raise awareness at the shopfloor.

9. 12 Monthly Safety video competitions every year to foster involvement of employees and encourage learning from incidents

10. Celebrations and observation of Road safety week, National Safety week, Fire services week and Process safety week across organisation foster involvement from all the levels

As a result of efforts taken in improving learning indicators significant shift is evident in the lagging indicators as below -

1. LTIFR (Loss time injury frequency rate) has dropped down from 0.37 (in 2020-21) to 0.04 (in 2023-24)

2. LTISR (Loss time injury severity rate) has dropped from 460 (in 2020-21) to 2.37 (in 2023-24)

3. 10 divisions out of 16 have crossed 1000 safe days and 8 divisions have crossed 5 Safe Million Man hours.

Process Safety:

Process safety is a cornerstone of our commitment to sustainability . It is crucial for preventing incidents and the release of harmful substances that could jeopardize human health, the environment, and nearby communities. By implementing rigorous safety measures, conducting thorough risk assessments, maintaining strict safety protocols, and developing effective emergency response plans, we ensure the highest level of protection for our employees, facilities, and the public.

During FY 2023-24, AIL embarked on a journey of Barrier Management. The purpose of Barrier Management is to consolidate the identified risk from different sources and prioritize the top risks/event with their respective preventive and mitigative barriers to ensure adequacy, reliability and effectiveness of barriers, Where we can get the benefit are

• Risk Based Process Safety

• Assurance & robust control of high risks

• Understanding of risks at shop floor level

• Risk Sensitization

• Qualitative simple approach

• Proactive Emergency Preparedness

• Company level risks are focused & well managed

"The objective is assurance that all the top risks are in control & well managed”

Top Rank Identification	Barrier Management	People Competency	Audit & Governance
Input from -	• Identification of preventive & Mitigative barrier	For Barrier Owner	Audit Programme
• HAZOP	• Adequacy Assessment	• Capabilities	Plant to company Level
• QRA	• Barrier Assurance	• Competency	Governance
• SIL & LOPA study	• Barrier Ownership	• Validation	Plant to BOD level
• Tacit Knowledge		For other people
• Internal & External Audit & other sources		Training & awareness session on Top risk & its barrier
Risk Assessment (As per Risk Matrix)
Risk Calibration & Priortization

A robust governance mechanism is set through a comprehensive process safety dashboard wherein the status of various initiatives is available at a single source. The various platforms through which progress is reviewed are the operations group review, Process Safety Council, Zone Sustainability sub-council, and Apex sustainability council.

31. Environment

As a responsible organisation, we are committed to protect the environment and prevent resource depletion. AIL has published and implemented comprehensive guidelines for the Waste management and Environmental Management system. Efficient usage of water is imperative to us, making it a high priority material topic. A considerable number of Environmental Projects have been Successfully implemented, and we are beginning to see the benefits, such as effluent reduction, waste reduction, waste conversion into valuable products, Cost Reduction, CO2 Emission Reduction and space available for new effluent which will be generated from new expansion/products.

AIL has been recognized and acknowledged by various organizations with prestigious awards as FICCI chemical and Petrochemical awards 2023, for such driving sustainability in the chemical sector, and Gold award in chemical and fertilizer sector for outstanding achievement in Environmental preservation awarded by Sustainable Development Foundation.

Environment - Water Management

Towards reducing our water footprint, we are focussing on 3R (Reduce, Reuse & Recycle) and strategizing to achieve zero-liquid discharge (ZLD) for our facilities. During FY 2023-24, AIL has taken various initiatives for Water conservation by enhancing water harvesting systems capacity, increased steam condensate recovery, increased MEE condensate recovery, STP treated water recycling and RO permeate recycling etc. Currently, 11 nos of our manufacturing sites are ZLD ready facilities. Out of the total effluent generation about 83% effluent is being recycled back into process through the ZLD system and 17% treated effluent is being sent to CETP for further treatment and discharge to deep sea. As part of water conservation, AIL has recycled steam condensate about 66% in the Boiler. Overall water withdrawal was reduced by more than 44% due to ZLD units , steam condensate recycling in Boilers, Water Harvesting initiatives,STP treated water recycling etc. Further we have planned to achieve 100% ZLD ready status within the next 2 years.

We have adopted a proactive approach for ZLD and incorporated it in the conceptualisation & designing phase of new projects. ETP final discharge parameters are connected to CPCB and SPCB portals for real time monitoring.

Environment - Air Management

AIL has provided adequate Air pollution control measures to control process and flue gas emissions like wet scrubbers, dust collectors, Bag filters, Electrostatic Precipitators (ESP) etc. AIL has implemented a dry scrubber concept (lime dosing along with solid fuel) to control SO2 emissions significantly. All have implemented LDAR programs to detect and control fugitive emissions, VOCs etc. AIL has provided online sensors for Hazardous gases. We have provided an effective emission monitoring and selection of continuous on-line stack monitors. All our manufacturing locations are carrying out ambient air quality monitoring as per NAAQS. Online stack monitoring systems (OCEMS) have been connected to CPCB and SPCB portals for real time monitoring. AIL has verified that none of the Persistent Organic Pollutants (POPs) listed by Stockholm convention is emitted from our operations.

Environment - Waste Management

Our waste management approach is systematically divided into three priorities depending upon the various operating conditions and type of waste generated. First priority is to reduce waste, second priority is 4Rs (Reuse, Recover, Recycle, Reprocess), third priority is treatment and responsible disposal in scientific manner. AIL being a responsible organisation ensures utilisation of the hazardous waste and prioritize co-processing over landfilling and incineration. We are also conducting audits of the vendors responsible for reusing processing and disposal of waste. During FY 2023-24, we have improved Hazardous waste management by taking many initiatives like Waste management guideline were implemented with digital monitoring of hazardous waste from generation to disposal, introduction of compressive checklist for all HW vehicles, all the HW vehicles are connected to Aarti Logistic Control centre and monitored

24 hrs *7. Completion of Rule 9 trials runs and obtained CPCB SOP for HCL conversion into CaCl2 had enhanced our Waste Management system. AIL is also in the process of getting its sites certified on Zero waste to landfill. We have diverted 92% of hazardous waste to recycling and the other 8% was disposed of responsibly.

32. Sustainability

AIL has integrated sustainability into its business strategy through its 4 strategic dimensions: Sustainability, People Well being, Partner Delight and Prosperity. Every dimension has its goals and objectives. These are accomplished through a well devised implementation strategy of Aarti Management System. AIL has carried out ESG risk assessment to identify top risks from ESG perspective impacting the business operations. We have also prepared mitigation measures for the identified risk by involving the relevant stakeholders. The Goals and objectives are reviewed in well established councils which are chaired by the CEO. Sub councils are formed to drive the sustainability agenda at the zone level and these sub councils report to Apex Sustainability councils.

The following accomplishments endorse our progress in the sustainability journey.

Responsible Care:

AIL has been a Responsible Care Logo holder company since April 2022. As a responsible, sustainable and value driven chemical manufacturing company, AIL is focusing continuously to enhance performance with respect to the indicators of Responsible Care codes.

EcoVadis

Our significant efforts in improving our ESG performance has led to sustaining a gold medal in EcoVadis CSR assessment, placing AIL among the top 5 percentile of companies assessed by EcoVadis.

CDP Rating

AIL has received Management band "B” for the second consecutive year in CDP Climate Change, and "B” in CDP water security in the first disclosure indicating coordinated actions towards climate issues and water security by AIL. The B rating is higher than the global and asia average for the chemical sector.

Sustainalytics Rating

Sustainalytic has maintained medium risk for 2023 with the ESG risk score of 24.5 indicating the sustained ESG practices at AIL.

International Sustainability and Carbon Certification (ISCC)

We have obtained ISCC for one of our products manufactured at Zone 2, ISCC is an international certification system covering all kinds of bio based feedstocks and renewables catering to the chemical sector. This certification paves way for manufacturing certified green products.

33. Reliability

We have initiated an Operational Excellence journey with focus to improve reliability. Different initiatives by involvement of everyone in the manufacturing are implemented as below (few of them) -

- OEE (Overall Equipment Effectiveness) improvement

OEE measurement for all the products provide insights on various improvement opportunity areas in manufacturing to focus on. In the past, OEE has improved year on year.

- Model Plant Initiative

Under the Model Plant Initiative, 5S has been launched across organizations for effective workplace management to improve upon the working efficiency and workplace safety. Its creating a positive impact to improve the way we work at the workplace in a better manner.

- Quality Circles

This is the tool wherein shop floor teams become part of critical problem solvers and contribute to the organizational goals. The best implemented teams participate in local, state, national and international forums.

- Kaizen Idea

We launched this Kaizen Idea program to capture the brilliant improvement ideas specifically from the associate family members in the areas of safety, production, quality and cost etc. This is beneficial in both tangible and in-tangible ways.

34. Statutory Auditors & Auditors Report

In accordance with the provisions of Section 139 of the Companies Act, 2013, Gokhale & Sathe, Chartered Accountants (Firm Registration No.: 103264W) were appointed as Statutory Auditor of your Company at the 39^th Annual General Meeting for a term of 5 years, to hold office from that meeting till the conclusion of 44^th Annual General Meeting to be held in 2027.

There are no qualifications, reservations or adverse remarks or disclaimer made by the Auditor in their report. The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.

35. Cost Auditors & Records

In terms of the Section 148 of the Companies Act, 2013 read with the Companies (Cost Record and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year.

The Board on the recommendation of Audit Committee has appointed Ketaki D. Visariya, Cost Accountants, (Membership No.16028) as the "Cost Auditors” of the Company for FY 2024-25. The remuneration payable to the Cost Auditor is required to be placed before the members in a General Meeting for their approval. Accordingly, a resolution for seeking members approval for the remuneration payable to Ketaki D. Visariya, Cost Accountants, is included at Item No. 13 of the Notice convening the Annual General Meeting in terms of Rule 14 of the Companies (Audit & Auditors) Rules, 2014.

The Company has maintained cost records as specified under section 148(1) of the Act.

36. Secretarial Auditor & Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company had appointed CS Sunil M. Dedhia (COP No. 2031), Proprietor of Sunil M. Dedhia & Co., Company Secretary in Practice to undertake the Secretarial Audit of the Company.

Pursuant to provisions of Section 204(1) of the Companies Act, 2013 and Regulation 24A of the Listing Regulations, the Secretarial Audit Report for the Financial Year ended March 31, 2024 issued by CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company is annexed as Annexure- D and forms an integral part of this Report. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act.

There is no qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor in their report.

37. Internal Control Systems and their adequacy

The Company has an in-house internal audit department with a team of qualified professionals. The internal audit department prepares an annual audit plan and prioritises audit activities based on the criticality of system / process gaps.

Reviews are conducted on an ongoing basis based on a comprehensive risk-based audit plan, which is approved by the Audit Committee at the beginning of each year. The Internal Audit team reviews and reports to the management and the Audit Committee about compliance with internal controls, and the efficiency and effectiveness of operations as well as the key process risks.

The Audit Committee meets every quarter to review and discuss the various Internal Audit reports, and follow up on action plans of past significant audit issues and compliance with the audit plan

Internal financial control systems of the Company are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards and relevant statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies.

Statutory Auditors Report on Internal Financial Controls as required under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 is annexed with the Independent Auditors Report.

38. Secretarial Standards Compliance

During the year under review, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant to Section 118 of the Companies Act, 2013.

39. Number of cases filed, if any, and their disposal under section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company is fully committed to uphold and maintain the dignity of every woman working with the Company. The Company has Zero tolerance towards any action on the part of any one which may fall under the ambit of Sexual Harassment at workplace. The Policy framed by the Company in this regard provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee ("ICC”) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ICC have been set up to redress complaints received regarding sexual harassment.

The status of the Complaints during the FY 2023-24 is as follows:

Particulars	No. of Complaints
Number of Complaints pending as on beginning of the Financial Year	0
Number of Complaints filed and resolved during the Financial Year	0
Number of Complaints pending as on the end of the Financial Year	0

40. Conservation of energy, technology absorption, foreign exchange earnings and outgo

Particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to time, are provided in Annexure-E to this report.

41. Significant and material orders passed by the regulators or courts

During the FY 2023-24 there has been no such significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

42. Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the Financial Year alongwith their status as at the end of the Financial Year

During the Financial Year 2023-24, there was no application made and proceeding initiated / pending by any Financial and/or Operational Creditors against your Company under the Insolvency and Bankruptcy Code, 2016 ("the Code”).

Further, there is no application or proceeding pending against your Company under the Code.

43. Details of difference between the amount of valuation at the time of one time settlement and the valuation done at the time of taking a loan from the Banks or Financial Institutions along with the reasons thereof

During the Financial Year 2023-24, the Company has not made any settlement with its bankers for any loan/facility availed or/and still in existence.

Acknowledgement

The Board of Directors places on record its sincere appreciation for the dedicated services rendered by the employees of the Company at all levels and the constructive cooperation extended by them. Your Directors would like to express their grateful appreciation for the assistance and support by all Shareholders, Government Authorities, Auditors, Financial Institutions, Customers, Employees, Suppliers, other business associates and various other stakeholders.

For and on behalf of the Board

Rajendra V. Gogri

Chairman and Managing Director

Mumbai

July 04, 2024