APL Apollo Tubes Ltd

APL Apollo Tubes Limited

Your Directors have pleasure in presenting the Thirty Ninth (39^th) Annual Report on the business and operations of your company together with the Standalone and Consolidated Audited Financial Statements for the _nancial year ended March 31, 2024.

FINANCIAL PERFORMANCE

The Company's financial performance for the year under review along with the previous year's figures is given hereunder:

( B In Crore)

The Company's consolidated gross turnover in the financial year 2023-24 increased significantly by 12.08 % from B 16,165.95 Crores to B 18,118.80 Crores. The EBIDTA has increased by 18.56% % from B 1068.73 Crores to B1267.04 Crores for the year under review. The net profit of the Company has also increased by 14.11 % from B 641.86 Crores to B 732.44 Crores during the year under review.

DIVIDEND

The Board of Directors of the Company is pleased to recommend a dividend @275% (B 5.50 per share) as final dividend on the equity shares for the year 2023-24 subject to declaration of the same by the members at the ensuing annual general meeting. The payment of dividend will be subject to deduction of applicable taxes and shall be paid for the full year on the shares held as on the record date irrespective of the date of issue of the shares during the year.

Pursuant to Regulation 43A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (as amended), the Company has Dividend Distribution policy. During the year, there have been no changes to the policy. Hence, the same is not annexed to this report, as the same is available on our website at https://aplapollo.com/wp-content/uploads/2020/10/Dividend-Distribution-Policy.pdf

The Board of Directors of your Company, has decided not to transfer any amount to the Reserves for the year under review.

India's economic growth story continues to surprise the world amid several wars in different parts of the world, trade tensions between economies and stagnant inflations in many economies across the globe.

India's GDP registered a solid ~7.8% increase over last year, despite the high-base effect. This progress is attributable mostly to capital expenditure on infrastructure by the Central Government and domestic consumption. Manufacturing has witnessed a strong revival too with PMI rising to 59.1 in March, a 16-year high.

The simultaneous growth in manufacturing and infrastructure has provided dual advantages for the country, contributing to an upward trend in domestic finished steel consumption. APL Apollo stands out as a prominent player in this segment.

As a market leader in the structural steel space in India, APL Apollo continued to be on its high-performance trajectory in the last financial year. Healthy growth was registered in all key performance metrics.

The revenue from operations saw a 12% increase compared to the previous financial year. EBITDA surged to B 1192 Crore from B 1022 Crore in the last fiscal year, while net profit rose by 14% to B732 Crore, up from B 642 Crore the previous year. Operating cash flow in FY24 reached B 1121 Crore, marking a 16% growth from the previous year. EBITDA per tonne increased to B 4553 in FY24, up from B 4481 per tonne in FY23, attributed to the significant fluctuations in steel prices during the first half of the financial year.

The Company continued building on its three-pillar strategy – Innovation, Market Creation and ESG.

It emerged as the first company in the world to successfully develop 1000x1000 mm square tubes which are currently undergoing trials.

After the completion of its showcase Delhi hospitals project, the Company received new enquiries for 45 such projects, totalling 42 million square feet creating a visibility and 220,000 tonnes of heavy structural tubes.

On the ESG front, your Company scaled new heights. In the DJSI FY22 score, the Company stood at the 80^th percentile. Its score reached a high of 29 points, above the industry average of 22.

Macro factors: FY25 appears to be a promising year for the Company owing to the renewed infrastructure thrust given by the Government through the Union Budget 2024 with a substantial increase in the allocation over last year.

Sectoral opportunities: Just like last year, this year in the interim budget, the Indian Railways remains one of the key beneficiaries of the Union Budget 2024. The budget for 2024-25 is B 2.55 Lakh Crore, which is a 5.8% increase from the previous year.

Among other things, this budget includes plans for railway infrastructure investment, and the development of three major economic railway corridor programs namely, the Energy corridor, Mineral corridor, and Cement corridor.

Further, in a bid to modernise the expansive network, Indian Railways has initiated the Amrit Bharat Station Scheme, aimed at redeveloping 1,309 stations nationwide. As a leading player in the finished steel space, APL Apollo has participated in some of the tenders floated by the Indian Railways and is hopeful of securing some projects. When that happens, it would open a new revenue vertical for the Company.

Many new airports are coming up in tier 2 cities of India, with many urban centres getting their second one. As of July 2023, India is currently working on over USD 15 billion worth of airport projects, including expansions to its busiest airports and the construction of a new largest airport. This should help the Company in garnering healthy volumes for its heavy structural tubes.

The Company has in place adequate internal financial controls as referred in Section 134(5)(e) of the Companies Act, 2013. For the year ended March 31, 2024 the Board is of the opinion that the Company had sound Internal Financial Controls commensurate with the size and nature of its operations and are operating effectively and no reportable material weakness was observed in the system during the year.

Based on annual Internal Audit programme as approved by Audit Committee of the Board, regular internal audits are conducted covering all offices, factories and key areas of the business. The findings of the internal auditors are placed before Audit Committee, which reviews and discusses the actions taken with the management. The Audit Committee also reviews the effectiveness of company's internal controls and regularly monitors implementation of audit recommendations.

There are existing internal policies and procedures for ensuring the orderly and efficient conduct of business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

In accordance with the provisions of Section 134 (3)(a) of the Companies Act, 2013, the Annual Return, as required under Section 92 of the Act for the financial year 2023-24, is available on the Company's website at https://aplapollo.com/financial.

The Company had five wholly-owned subsidiaries as on March 31, 2024, namely Apollo Metalex Private Limited , Blue Ocean Projects Private Limited, APL Apollo Building Products Private Limited, APL Apollo Mart Limited and A P L Apollo Tubes Company LLC .

During the year under review, one Dubai based wholly owned subsidiary named APL Apollo Tubes FZE got liquidated. A report on the performance and financial position of each of the subsidiaries in form AOC-1 is annexed hereto as Annexure ‘A' and forms part of this report.

In accordance with the provisions of Section 136 of the Companies Act, 2013, the audited financial statements and related information of the subsidiaries, where applicable, will be available for inspection during regular business hours at the company's corporate office at SG center – B-37 C, Sector-132, Noida, Uttar Pradesh-201303 and the same are also available at our website i.e. https://aplapollo.com/financial.

The Company has no associate companies or joint venture companies.

Your Company neither accepted nor renewed and/or was not having any outstanding public deposits within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014, during the year under report.

As on March 31, 2024 the authorized capital of the Company stood at B 97 Crore divided into 48,50,00,000 equity shares of B 2 each.

During the financial year under review, the Company allotted 1,93,750 equity shares of B 2 each at a price of B 143.86 (including premium of B 141.86), pursuant to APL Apollo Employees Stock Option Scheme (ESOS-2015) to eligible employees of the Company and of its subsidiaries.

Pursuant to abovesaid allotments of Equity shares, the paid-up capital of the Company stands increased from B 55.47 Cr to B 55.50 Cr comprising of 27,75,24,564 equity shares of B 2 each.

The Company has neither issued shares with differential voting rights nor has issued any sweat equity shares.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and in terms of Articles of Association of the Company, Shri Sanjay Gupta and Shri Ashok Gupta will retire at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for reappointment.

During the year under review, Shri Deepak Goyal (DIN: 03056481) was appointed as Whole-time Director, designated as Director (Operations) & Group CFO of the Company w.e.f. 12^th May, 2023 for a period of five years and the requisite resolution in this regard was passed by the Shareholders on 10^th August, 2023 through Postal Ballot (through remote e-voting only).

Shri H S Upendra Kamath (DIN: 02648119) and Mrs. Asha Anil Agarwal (DIN: 09722160) were appointed as Non-Executive Independent Directors of the Company w.e.f. 30^th October, 2023 for a period of three years and the requisite resolution in this regard was passed by the Shareholders on January 26, 2024 through Postal Ballot (through remote e-voting only).

During the year under review, Shri Ameet Kumar Gupta (DlN: 00002838) resigned from the position of Independent Director of the Company w.e.f. August 5, 2023 due to his increased commitment elsewhere. The Board places on record its appreciation and gratitude for the contributions made by him during his tenure.

During the year under review, Shri Romi Sehgal (DlN: 03320454) resigned from the position of Directorship w.e.f. May 12, 2023 due to his personal pre-occupations. The Board places on record its appreciation and gratitude for the contributions made by him during his tenure.

During the year under review, Shri Chetan Khandelwal was appointed as Chief Financial Officer (KMP), of the Company w.e.f. 1^st November, 2023. Shri Deepak Kumar was relieved from the additional responsibility of Chief Financial Officer of the Company w.e.f. 1^st November, 2023.

The Board of Directors, upon recommendations of Nomination and Remuneration Committee, appointed Shri Rajeev Anand

(DIN: 02519876) as an Additional Independent Director on the Board of the Company w.e.f. May 11, 2024 subject to approval of members of the Company at the general meeting/ postal ballot.

The Board of Directors, upon recommendations of Nomination and Remuneration Committee, appointed Shri Dinesh Kumar Mittal (DIN: 00040000) as an Additional Independent Director on the Board of the Company w.e.f. May 11, 2024 subject to approval of members of the Company at the general meeting/ postal ballot.

Further, in pursuance of Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, all Independent Directors of the Company have duly confirmed validity of their respective registration with the Indian Institute of Corporate Affairs (IICA) database.

Further, in the opinion of the Board, the Independent Directors of the Company possess the requisite expertise skill and experience (including the proficiency) and are persons of high integrity and repute as well as are independent of the management.

Disclosure of ratio of the remuneration of the Executive Directors to the median remuneration of the employees of the Company and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, is annexed to this report as Annexure ‘B'. Further, particulars of employees pursuant to Rule 5(2) & 5(3) of the above Rules form part of this report. However, in terms of provisions of section 136 of the said Act, the report and accounts are being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is available for inspection at the registered office of the Company during working days of the Company up to the date of the ensuing annual general meeting.

In terms of provisions of the Companies Act, 2013, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Gurugram, (FRN117366W/W-100018), had been appointed as Statutory Auditors of the Company in the 35^th Annual General Meeting held on September 29, 2020 to hold the office from the conclusion of the said Annual General Meeting until the conclusion of the 40^th Annual General Meeting to be held in year 2025.

The reports the Auditors on the standalone and consolidated financial statements for the FY 2023-24 do not contain any qualification, reservation or adverse remark requiring any explanation on the part of the Board. The observations given therein read with the relevant notes are self-explanatory.

There are no frauds reported by the Auditors under section 143(12) of the Act.

The Company has maintained the cost records as prescribed by the Central Government under Section 148(1) of the Act.

In terms of Section 148 of the Act, the Company is required to get the audit of its cost records conducted by a Cost Accountant. In this connection, the Board of Directors of the Company in its meeting held on May 12, 2023, on the recommendation of the Audit Committee, approved the appointment of M/s Sanjay Gupta & Associates, Cost Accountants, New Delhi, (ICWAI Registration No. 000212) as the cost auditors of the Company for the year ending March 31, 2024 in place of M/s. R. J. Goel & Co., Cost Accountants.

In accordance with the provisions of Section 148(3) of the Act read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors as recommended by the Audit Committee and approved by the Board has to be ratified by the members of the Company. Accordingly, appropriate resolution will form part of the Notice convening the AGM. The approval of the members is sought for the proposed remuneration payable to the Cost Auditors for the Financial Year 2024-25. M/s. Sanjay Gupta & Associates, have vast experience in the field of cost audit and have been cost auditors of many reputed companies.

The Cost Audit Report of the Company for the Financial Year ended March 31, 2024 will be filed with the MCA after its noting by the Board. The Company has maintained accounts and records as specified under sub-section (1) of 148 of the Act.

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors had appointed M/s Parikh & Associates, Company Secretaries in practice as Secretarial Auditors to carry out the Secretarial Audit of the Company for the financial year 2023-24. The report given by them for the said financial year in the prescribed format is annexed to this report as Annexure ‘C'. The Secretarial Audit Report is self- explanatory and does not contain any qualification, reservation or adverse remark. Further, the Board in its meeting held on May 11, 2024 has re-appointed the said firm for conducting the secretarial audit for the financial year 2024-25 also.

During the financial year ended March 31, 2024, all the contracts or arrangements or transactions entered into by the Company with the related parties were in the ordinary course of business and on ‘arm's length' basis and were in compliance with the applicable provisions of the Companies Act, 2013 read with Regulation 23 of SEBI (LODR), 2015.

Further, the Company has not entered into any contract or arrangement or transaction with the related parties which were not on ‘arm's length' basis or could be considered material in accordance with the policy of the Company on materiality of related party transactions. In view of the above, it is not required to provide the specific disclosure of related party transaction in Form AOC-2.

Your Directors draw attention of the members to Note No. 40 to the Financial Statement which sets out related party disclosures.

The Company, under the APL Apollo Employee Stock Option Scheme- 2015 ("ESOS-2015), approved by the shareholders vide postal ballot resolutions on July 27, 2015 and December 22, 2015, grants share-based benefits to eligible employees of the Company and employees of subsidiaries with a view to attracting and retaining the best talent, encouraging employees to align individual performances with Company objectives, and promoting increased participation by them in the growth of the Company. The total number of equity shares to be allotted pursuant to the exercise of the stock incentives under the ESOS-2015 to the employees of the Company and its subsidiaries shall not exceed 7,50,000 equity shares. Further, a statement giving complete details under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as on March 31, 2024 is available on the website of the Company at https://aplapollo.com/. There is no material change in the said scheme during the year.

The Certificate from the Secretarial Auditors of the Company certifying that the ESOS 2015 is being implemented in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolution passed by the Members, would be placed at the Annual General Meeting for inspection by Members.

Pursuant to provisions of Section 134 sub-section 3(c) and subsection 5 of the Companies Act, 2013, your Directors to the best of their knowledge hereby state and confirm that:

a. In the preparation of the annual accounts for the year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanations relating to material departures.

b. Such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent to give a true and fair view of the Company's state of affairs as at March 31, 2024 and of the Company's profit for the year ended on that date.

c. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d. The annual financial statements have been prepared on a going concern basis. e. The internal financial controls are laid down to be followed that and such internal financial controls are adequate and . are operating effectively. f. Proper systems are devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In line with the provisions of Section 135, Schedule VII of the Companies Act, 2013, the Company has framed its Corporate Social Responsibility (CSR) policy for development of programmes and projects for the benefit of weaker sections of the society and the same has been approved by Corporate Social Responsibility Committee (CSR Committee) and the Board of Directors of the Company. The Corporate Social Responsibility (CSR) policy of the Company provides a road map for its CSR activities.

During the year under review, the Company has made contribution of B 0.54 Cr for various CSR purposes in compliance to the provisions of Companies Act, 2013 relating to Corporate Social Responsibility and has transferred B 9.84 Crores to the unspent CSR account of the Company on 29.04.2024 pertaining to ongoing projects.

The Annual Report on CSR activities for the financial year 2023- 24 containing salient features of CSR Policy and other relevant details is annexed herewith as Annexure ‘D'. The CSR Policy has been uploaded on the Company's website and may be accessed at the link:https://aplapollo.com/wp-content/uploads/2020/06/ CSR_POLICY_APL.pdf.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

In terms of Section 186 of the Companies Act, 2013 and rules framed thereunder, details of Loans, Guarantees given and Investments made have been disclosed in the Notes to the financial statements for the year ended March 31, 2024.

Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 (3)(m) of Companies Act, 2013 read with the Rule 8 (3) of the Companies (Accounts) Rules, 2014, is furnished as Annexure ‘E', forming part of this Report.

In term of Regulation 34 of the listing regulations, Management's Discussion and analysis report for the year under review, is presented in a separate section, forming an integral part of this annual report.

Your company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Corporate Governance Report is annexed to this report (Annexure ‘F').

The Corporate Governance Report which forms part of this report, also covers the following:

a) Particulars of the Board Meetings held during the financial year under review.

b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.

c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.

d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.

e) Details regarding Risk Management.

During the period under review, the Company has duly complied with the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India.

The Company has complied with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has in place a Policy on Prevention of Sexual Harassment at the Workplace in line with the provisions of the said Act and an Internal Complaints Committee has also been set up to redress complaints received regarding Sexual Harassment.

No complaint of sexual harassment was received during the financial year 2023-24.

OTHER DISCLOSURES AND REPORTING

Your Directors state that no disclosure or reporting is required with respect to the following items as there were no transactions on these items during the year under review:

1. Change in the nature of business of the Company.

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

3. Any remuneration or commission received by Managing Director of the Company, from any of its subsidiary.

4. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this report.

5. Significant or material orders passed by the regulators or courts or tribunal which impacts the going concern status and company's operations in future.

6. Material changes affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of the Report.

7. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year.

8. The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof

Yours Directors take this opportunity to express their appreciation for the co-operation received from the customers, vendors, bankers, stock exchanges, depositories, auditors, legal advisors, consultants, stakeholders, business associates, Government of India, State Governments, Regulators and local bodies during the period under review. The Directors also wish to place on record their appreciation of the devoted and dedicated services rendered by the employees of the Company.