Aartech Solonics Ltd

LETTER TO THE SHAREHOLDERS

Dear Members of the Aartech Family,

Namaskar ! I hope you and your near and dear ones are all doing well.

Penning this annual communication never fails to trigger waves of reflection over multiple layers and this year is no exception. As our learning and experience accumulate and translate into action, yesterday's opportunities and challenges becomes today's candid reality. As your company pivots and perseveres in its journey with an eye on the triple bottom-line - people, planet, and profit; it is interesting to observe and acknowledge how we gradually evolve in the process of continuously re-discovering and re-inventing ourselves.

We completed 40 years since our incorporation on Ganesh Chaturthi Day, 24th August 1982. Words fail to express what it truly means for your company to enjoy the continued blessings, unwavering support and visionary guidance of our co-founder promoters, my respected parents - Sh. Anil Raje and Smt Chhaya Raje.

And so, it gives me great pleasure to share our journey at Aartech through FY 22-23 with all of you here and look forward to your perspectives and feedback to continue together on our way forward.

Board of Directors:

Your company welcomes Squadron Leader Supriya Chitre (Retd) as an independent director. Having served the Indian Air Force with a fruitful tenure of 10 years, she has also pursued her post graduate degree in clinical psychology from S.P. College, Pune, business management from IIM Indore and served National Defence Academy as a psychologist, counselor and instructor. She is currently the Founder and Director of Udaan Foundation which provides support services to develop physically fit and mentally agile youngsters, to raise a responsible, selfless and contributing generation for the country. Your company is privileged to have her onboard and looks forward to her directorial inputs.

I would also like to take this opportunity to acknowledge the rich and wholesome contributions of all my director colleagues on the board in various capacities. Their inputs are very helpful to assist your company in variety of matter and keep all due balance and checks in the interest of corporate governance.

Record Turnover and Highest Ever Order Book:

Your company has achieved a record turnover beating its past record last year. From a distance this may look to be reasonably expected and nothing spectacular; but it would be amiss to not mention the hustle and efforts that go on behind the scenes with an ample dose of creativity, agility, strategy, bold initiatives and sheer hard work that make this happen.

An important metric that we also like to track is our order book. This provides good visibility on the stable performance and outlook of your company, and provides a sound basis to invest our resources towards achieving desirable outcomes. I am happy to share that we have also accomplished a record in terms of our highest order book level ever till date.

Your company has a very interesting product and services mix and this keeps adapting to the tune of present day market opportunities and future potential in a bid to secure the best outcomes.

I take this opportunity to thank all our stakeholders and in particular, appreciate the hard work, dedication and commitment of all the Aartechies to make this happen. In particular, I would like to mention our young and dynamic executive management team led by Arati Nath [AAN] (CEO) consisting of (in alphabetical order) Debasis Barik [DDB] (CRO), Pradeep Vasant Narkhede [PVN] (CFO), Shailendra Singh Raghuvanshi [SSR] (COO), Sohail Hussain [SSH] (CXO) and Vivek Attri [VSA] (CMO). Together, this rock-solid team plans, executes and delivers to the directions of the board and has demonstrated a stellar performance in FY 22-23. More power to them !

Vertical and Horizontal Integration - Capacity Expansion:

Vertical integration with better asset utilization is helping achieve superior operational efficiencies in established product lines. Simultaneously, horizontal integration is opening doors to new vistas and business opportunities which synergize with our existing range of offerings. Investments into Plant & Machinery, Software and Hardware Tools, Equipment and Accessories are continuously taken up on a case-to-case basis to align with the roadmap and plans from time-to-time.

The Mandideep unit has four new areas equipped with modern amenities: Lakshya - for mission oriented jobs, Parakh - for analytics, Zayka - for community dining and Sukoon - to catch some rest and sleep ! If you are interested in a tour of our facilities, please do not hesitate to get in touch and we would be happy to coordinate a visit and interaction with our team.

We are in the process of planning for significant capacity expansion in the near future. Do stay tuned for more developments on this.

Key Breaks:

Your company continues to take new strides in tapping business opportunities with a lot of hunger and passion towards its multi-dimensional growth. Selective mentions are listed below.

Utility Sector:

Your company has secured its first order from its esteemed utility customer MPPTCL at 220kV/400kV EHV level and a Substation Automation System (SAS) order for 132kV from UPPTCL. Besides, new customers have been added to serve large market opportunities in regions of Southern India such as Tamil Nadu against stiff competition.

With these breaks, your company looks forward to new business development from various utility customers and foraying into this lucrative specialty segment in a determined manner.

Defence Sector:

I am happy to share that your company has won a prestigious order for development of a custom-built power supply equipment from Naval Physical & Oceanographic Laboratory (NPOL), a DRDO lab based in Kochi, India amidst stiff competition from large and reputed companies in this sector.

Your company has also bagged a Project Sanction Order for indigenous design and development of a custom-built power supply equipment from Mazgaon Dock Limited, Mumbai for a retrofitting application in a submarine.

This marks Aartech's foray into serving the demanding needs of the Indian Navy and will enhance our capabilities to address emerging as well as import substitution needs of the country.

Industrial Sector:

Your company successfully contributed towards a prestigious system integration project introducing Fault Current Limiter technology at IOCL's Panipat Refinery in collaboration with M/s G&W Electric Co. USA. The safety features of this technology are vital to enable several operating scenarios while preventing catastrophic situations due to electrical faults. This further paves the way for your company to participate in avenues for more widespread adoption of this technology for a large number of petrochemical plants in the time to come.

Your company is serving a large and growing portfolio of innovative customer requirements across various domains for customized cases and enclosures with delightful turn-around time and an eye for detail and quality.

Strategic Overseas Investments:

Your company has made a strategic investment in a promising UK startup working in the field of flywheel energy storage. Energy storage as a field is gaining a lot of attention due to the increased penetration of distributed renewable energy generation as well as the extensive geo-political risks associated with over- dependence on any country dominating the supply chain of precious raw materials. We believe that the flywheel energy storage technology offers some interesting solutions and will strongly enhance and complement our existing portfolio of differentiated energy storage offerings. Risk factors include product realization, product- market fitment and subsequent fund-raising rounds; typically associated with any technology-based startup venture. Our vision with this strategic investment is to leverage and co-create an active manufacturing, marketing and internationalization trajectory in the near future.

Strategic Domestic Business Partnerships:

Your company has made a strategic domestic business partnership with an Indian startup working in the field of Solid Oxide Fuel Cell (SOFC) based offerings with a focus on defence applications. This will strongly enhance and complement our existing portfolio of differentiated energy storage offerings. We believe that the fuel cell technologies have a niche use case which is increasingly attracting customers especially for critical stationary as well as mobile applications requiring high energy density with compact form factors.

Research & Development:

'Saur Stambh' - an R&D Project by Department of Science & Technology (DST), Government of India under its SERD-2019 (Solar Energy Research and Development) scheme is making healthy progress. An interim review by a designated DST panel has recommended trial demonstrations in the states of Madhya Pradesh, Himachal Pradesh, Rajasthan and NCR Region, which are being taken up. The SAUR STAMBH project integrates Low Power, Long Range, Wireless Network enabled Agri-IOT applications with Solar High-Mast Lights.

Your company also went through several qualifying levels for the New Millenium Indian Technology Leadership Initiative (NMITLI) 2022 Program in association with CSIR-AMPRI. NMITLI is a flagship program of the Council of Scientific and Industrial Research (CSIR), Ministry of Science & Technology, Govt of India. A High Powered Committee (HPC) has made several recommendations for our proposal on Indigenous Development of Ultracapacitor Technology which are under investigation by our R&D teams.

Increased Team Strength:

The growth trajectory has added significant momentum in the capabilities of your company to serve upcoming challenging opportunities and has attracted and engaged a very capable pool of experienced and talented employees, associates and consultants to pursue these growth avenues.

Subsidiaries:

Your company's subsidiaries are advancing in their respective objectives.

Faradigm Ultracapacitors Private Limited has progressed in being able to deliver industry ready offerings in energy storage. A variety of problem statements from customers and associated business opportunities are encouraging higher levels of investments in its resource base.

AIC-Aartech Solonics Private Limited, supported by Atal Innovation Mission, NITI AAYOG has continued to engage with the startup ecosystem in India and abroad and focusing on building win-win prospects with all its stakeholders. Now reaching its final year of official association with Atal Innovation Mission, NITI AAYOG; a revised business plan is under preparation to plan and decide its future course.

Re-Branding:

Your company has undertaken a major marketing initiative to engage a marketing firm to assist it in re-branding itself in line with the current and future aspirations that your company represents. Stay tuned for various initiatives to be unleashed in this direction in a systematic and purpose driven manner.

Main Board Listing:

I am pleased to report that your company is steadily progressing in its plans for main board listing on BSE as well as NSE in FY 23-24. I see it as a beginning of a long and value enriching journey which opens the door for participation from the public retail investors at large. In no uncertain terms this milestone will accomplish a long-cherished vision of the promotors of your company and we believe it will unlock tremendous value for all our stakeholders in the time to come.

Your company looks forward to your continued support into the future towards this vision.