Aether Industries Ltd

To,

The Members,

Aether Industries Limited

The Board of Aether Industries Limited take pleasure in presenting the 12th Board Report along with other Reports of the Company, together with the Standalone and Consolidated Audited Statement of Accounts and the Auditors' Report of the Company for the Financial Year ended March 31, 2024. Financial Summary and Highlights

Business operations and affairs of the Company

The Fiscal Year 2024, begun well in-line with the previous fiscal year. The Company was initially able to operate at an efficient level, later on November 29, 2023 the Company met with an accident which had a significant impact over performance of the Company.

The Management at the operational level, with the extensive support of the employees, strived to work best with limited resources after the unfortunate accident.

The Revenue from Operations in current Fiscal Year were reported at 5,956.69 MM, compared to 6,510.74 MM in the previous Fiscal Year. EBITDA, in the current Fiscal Year reported at 1,619.49 MM, compared to 2,028.16 MM in the previous Fiscal Year. The Profit after Tax of the Company in the current Fiscal Year was 880.98 MM against the previous Fiscal Year's Profit after Tax of 1,304.17 MM.

Subsidiary, Associate and Joint Venture entities

The Company does not have any Associate or Joint Venture entities. However, a Wholly Owned Subsidiary Company is incorporated, details are mentioned in Form AOC-1, as Annexure-A.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the Fiscal Year under review is included in the Annual Report.

Business Responsibility and Sustainability Report

As the Company falls under top 500 listed Companies of India basis the MCap, the Business Responsibility and Sustainability Report (BRSR) in terms of Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the Fiscal Year is attached herewith.

Material changes and commitments during after the end of the Fiscal Year

Except the financial reporting related to fire accident dated November 29, 2023, there have been no material changes and commitments, which have occurred between the end of the Fiscal Year to which the Financial Statements relate and the date of this Report, which affect the financial position of the Company.

Change in Nature of the Business

During the Fiscal Year under review, Company pursued the existing stream of business operations without introducing any new business venture. Business activity of the Company remained unchanged throughout the Fiscal Year.

Details of revision of Financial Statement or Annual Report

No revision of the Financial Statements or Annual Report has been made during Financial Year ended March 31, 2024 neither in any of the preceding three Fiscal Years.

Accounting treatment

Since the listing of the Company, the Company resorted to adhering to the Indian Accounting Standards (Ind AS).

Share Capital Structure

During the year under review, the Authorised Share Capital of the Company remains unchanged.

Authorized Capital

1,47,50,00,000 (Rupees One Hundred Forty-seven Crore Fifty Lakh only), comprised of 14,75,00,000 (Fourteen Crore Seventy-five Lakh) Equity Shares of 10 each.

The Company's issued share capital structure is as mentioned below:

Issued, Subscribed and Paid-up Capital

1,32,55,02,730 (Rupees One Hundred Thirty-two Crore Fifty-five Lakh Two Thousand Seven Hundred Thirty only), comprised of 13,25,5,0273 (Thirteen Crore Twenty-five Lakh Fifty Thousand Two Hundred Seventy-Three) Equity Shares of 10 each.

All the shares of the Company are in dematerialisation form.

During the Fiscal Year under review, in two instances, the issued share capital of the Company was increased, as mentioned here:

Qualified Institutional Placement (QIP)

On June 22, 2023, Company issued 80,12,820 Equity Shares through QIP vide book building process. Shares were issued at 936, of which 926 was share premium. Post this, all the Equity Shares were listed on BSE Limited and National Stock Exchange of India Limited (NSE). The Company raised total 7,49,99,99,520 through the QIP.

Allotment of Shares under ESOS

Through Aether Employee Stock Option Scheme 2021 (AIL ESOS 2021), the Company issued and allotted 26,732 Equity Shares at 321 each to 235 employees, upon exercising their option, total 85,80,972 was received through this allotment.

Credit rating of the Company

The Company has secured increased credit ratings. In the current Fiscal Year, the Company has maintained an excellent upward trend and the credit rating of the Company is ICRA A+ for long-term ratings and ICRA A1 for short-term ratings, appraised by M/s. ICRA Limited.

The rating was opted on credit exposure of 132.80 Cr. Company's performance at considering other external factors made this achievable.

Transfer of amounts to Investor Education and Protection Fund

The Company does not have any funds lying unpaid or unclaimed for a period of seven years. Therefore, there were no funds which were required to be transferred to Investor Education and Protection Fund.

Board and its Committees

The Board of the Company met at regular intervals as specified under the norms under the Companies Act, 2013 for discussing and reviewing various Board and other strategic matters. For more details, kindly refer the Corporate Governance Report. Total 6 (six) Board Meetings were convened during the Fiscal Year under review.

Business transactions were well-arranged throughout the Fiscal Year under review and accordingly, optimum participation was reported from the Board of Directors.

Board of Directors and Key Managerial Personnel

The Board of the Company is duly constituted, comprising an adequate number of Executive, Non-Executive, Women Directors and Independent Directors.

At present, the Board is comprised of a total 12 (twelve) Board members, including 3 (women) members. There are 4 (four) Executive Directors, 2 Non-Executive Directors and 6 Independent Directors.

During the year, Dr. James (Jim) William Ringer was appointed as the Chief Technology Officer (CTO) of the Company w.e.f. March 1, 2024.

Corporate Social Responsibility

During the Fiscal Year under review, the Company fulfilled its CSR obligation of 27.65 MM above the requirement, the total CSR expenditure reported to 27.97 MM. Details of CSR activities in accordance with Section 135 read with Schedule VII of the Companies Act, 2013, are provided in the Annexure along with details of the CSR Committee composition.

The Annual Report on CSR is annexed as Annexure-C to this Report.

The CSR Policy of the Company is available on the website of the Company at: https://aether.co.in/wp-content/ uploads/2022/08/CSR-Policy.pdf

Directors' retirement by rotation

According to the provisions of Section 152(6) of the Companies Act, 2013 and as per terms framed under the Articles of Association of the Company, Mr. Rohan Ashwin Desai and Ms. Ishita Surendra Manjrekar will be retiring by rotation at the forthcoming Annual General Meeting and being eligible, to offer themselves for reappointment. The Board recommends their re-appointment.

Declaration by Independent Directors

The Board of Directors of the Company hereby confirm that all the Independent Directors have been duly appointed by the Company and they have given the declaration that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013 and as per the SEBI (LODR) Regulations, 2015.

The Board's evaluation

The Board evaluated the effectiveness of its functioning and that of the Committees and of Individual Directors by seeking their inputs on various aspects of the Board / the Committee governance. Also, several new initiatives were introduced for the overall evaluation of the Board.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of Directors' obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and the Committee meetings. The Chairman of the Board had one-on-one meeting with the Independent Directors and the Chairman of the Nomination and Remuneration Committee had one-on-one meeting with the Executive and Non-Executive Directors These meetings were intended to obtain Directors' inputs on effectiveness of the Board / the Committee processes. The Board considered and discussed the inputs received from the Directors and also basis their critical input during the fire accident was taken into consideration. Further, the Independent Directors at their meeting, reviewed the performance of the Board, Chairman of the Board and of Non-Executive Directors

The Policy can be accessed at: https://aether.co.in/wp-content/uploads/2024/09/BoardEvaluationPolicy.pdf

Familiarization program for Independent Directors

In the reporting Fiscal Year, 2 (two) familiarization program including a site visit was hosted by the Company for its Independent Directors. Details of such program is hosted on the website of the Company, accessible at: https://aether.co.in/wp-content/uploads/2024/08/FamiliarisationProgram of Independent Directors - FINAL.pdf

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors of the Company confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The Directors 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 Fiscal Year and of the profit and loss of the Company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis; and (e) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Internal Financial Controls

The Internal Financial Control System (IFCS) of the Company has been set out upon considering the following measures:

(a) That IFCS are commensurate with the size and nature of its operations.

(b) All legal and statutory compliances are ensured on a monthly basis. Non-compliance, if any, is seriously taken by the management and corrective actions are taken immediately. Any amendment is regularly updated by internal as well as external agencies in the system.

(c) Approval of all transactions is ensured through a pre-approved Delegation of Authority Schedule which is reviewed periodically by the Management. (d) The Company follows a robust internal audit process. Transaction audits are conducted regularly to ensure the accuracy of financial reporting, and the safeguard and protection of all the assets. Verification of Fixed Assets is done on an annual basis. The audit reports for the above audits are compiled and submitted to the Board of Directors for review and necessary action.

Internal Financial Controls

The Internal Financial Control System (IFCS) of the Company has been set out upon considering the following measures:

(a) That IFCS are commensurate with the size and nature of its operations.

(b) All legal and statutory compliances are ensured on a monthly basis. Non-compliance, if any, is seriously taken by the management and corrective actions are taken immediately. Any amendment is regularly updated by internal as well as external agencies in the system.

(c) Approval of all transactions is ensured through a pre-approved Delegation of Authority Schedule which is reviewed periodically by the Management.

(d) The Company follows a robust internal audit process. Transaction audits are conducted regularly to ensure the accuracy of financial reporting, and the safeguard and protection of all the assets. Verification of Fixed Assets is done on an annual basis. The audit reports for the above audits are compiled and submitted to the Board of Directors for review and necessary action.

(e) The Company follows a robust internal audit process. Transaction audits are conducted regularly to ensure the accuracy of financial reporting, and the safeguard and protection of all the assets. Verification of Fixed Assets is done on an annual basis. The audit reports for the above audits are compiled and submitted to the Board of Directors for review and necessary action.

The Company has tried to put the best in class IFCS for the optimum output.

Deposits

The Company has not accepted any deposit from the general public within the meaning of Section 73 of the Companies Act, 2013 and Rules framed thereunder.

Loans, Guarantees and Investments

During the year under review, the Company has given an unsecured loan worth 1,045.55 MM to M/s. Aether Speciality Chemicals Limited, the Wholly Owned Subsidiary, during the reporting period.

Related Party Transactions

All the Related Party Transactions that were entered into during the Fiscal Year were in the ordinary course of business and at arm's length price.

There are no materially significant Related Party Transactions made by the Company with Promoters (incl. Promoter Group individuals), Directors, Key Managerial Personnel and Group Companies.

Companies or any such designated persons, which are covered under the purview of Material Related Party Transactions. Particulars of such transactions with related parties are duly noted on accounts forming part of the Financial Statements.

Energy conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

Information on conservation of Energy, Technology Absorption, Foreign Exchange Earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are mentioned here under:

(a) Conservation of Energy

The steps taken or impact on conservation of energy:

The Company is taking all the efforts to save electricity and other resources to conserve energy and utilise the same optimally. Strict adherence is cultivated in all the members in the Company to save electricity and other resources. The Company through the Purchase Power Agreement, using the capacity of 1.6 MW electricity generated through the solar, installed close to the end of the Fiscal Year, as a result of it, total 4.85 Lakh unit of electricity was saved out with that. Further, additional 100 TR Brine Chiller for the new utility, additional 75HP Cooling Tower and DP 60 air compressor were installed. The Company has installed Variable Frequency Devices (VFDs) along with Distributed Control System (DCS), dedicated automated dedicated energy meters in various high-power consuming equipment to optimize the usage.

(b) The steps taken by the company for utilizing alternate sources of energy

The Company has entered into a Purchase Power Agreement to avail the benefit in the form of rebate from the electricity consumed for the manufacturing facility. The service provider will produce the electricity through solar power plant installed and that will lead to redemption in the electricity bills. The Company has ordered the execution of 15 MW Solar Power Project (Auto-Tracker Modules) under Captive Power Producer (CPP) segment of which 5MW Solar Power Plant is operational and function now.

The capital investment in energy conservation equipment (Solar Power):

The Company has, for the Solar Captive Power Agreement, invested 374.63 MM, up to March 31, 2024.

The efforts made towards technology absorption:

The Company has developed its own technologies for the development of various products and services, which it is selling/imparting to its various customers, all over the world.

The Company has installed an in-house Solvent Recovery Plant (‘SRP') for recovering the materials from mixed solvents generated and the recovered materials are again usable for the manufacturing process. That has led to eliminate dependency on the outside job work for recovery from solvents as a cost-effective measure through reduction in job work charges, which were exorbitant till the last Fiscal Year.

(a) Foreign Exchange Earnings and Outgo

The Foreign Exchange earned and the Foreign Exchange outgo during the Fiscal Year 2024: Earning: 2,300.21 MM Outgo: 1,097.85 MM.

Annual Return

The web-link of Annual Return as in Form No. MGT-7 is https://aether.co.in/investor-relations/#financial-performance-and-presentation, for your kind perusal and information.

Risk Management

A formal, enterprise wide approach to Risk Management is being adopted by the Company and key risks are being managed within a unitary framework. As a formal roll-out, all business divisions and corporate functions will embrace Risk Management Policy and Guidelines, and to make use of these in the decision making. Key business risks and their mitigation are considered in the annual / strategic business plans and in periodic management reviews. The risk management process in our multi-business, multi-site operations, over the period of time have been embedded into the Company's business systems and processes, such that Company's response to risk remain current and dynamic as per conditions.

This also became helpful during the fire accident at the Manufacturing Site-2.

The Company has also formed a Risk Management Committee, details of which are mentioned in the Corporate Governance Report, as Annexure-G.

Vigil Mechanism

The Company has established a Vigil Mechanism cum Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The Policy has a systematic mechanism for Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or policy.

This mechanism is also being reviewed by the Board of Directors every quarter in their Meeting and suggests improvements / feedback / thereon, if any.

Once again in this Fiscal Year under review as well, no such instances have been reported under unethical and prohibited context. Vigil Mechanism cum Whistle Blower Policy is placed on the website of the Company, accessible at: https://aether.co.in/wp-content/uploads/2024/09/WhistleBlowerPolicyVigilMechanism.pdf

Regulatory action

During the year under review, the Gujarat Pollution Control Board (the GPCB) ordered a monetary fine of 5.00 MM as Interim Damage Compensation to the Company for the fire accident and temporary closure of the affected site of fire accident.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules framed thereunder, M/s. Dhirren R. Dave & Company, Company Secretary in practice was appointed as the Secretarial Auditor of the Company for the Fiscal Year 2024. They undertook the Secretarial Audit activity with utmost depth and integrity. All the conducts of the Company were found in line with the stipulated norms and the compliance system was found in line with the laws and no instance of any material misconduct was found in the audit.

The Secretarial Audit Report for the Fiscal Year ended March 31, 2024, is annexed herewith as Annexure-D. The Report does not contain any qualifications, reservations, adverse remarks or disclaimers.

Cost Audit

Maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, is maintained by the Company and accordingly such accounts and records are made and maintained. For the Fiscal Year under review, M/s. Ashvin Ambaliya & Associates, Cost Accountants undertook the Cost Audit of the Company. The Board on the recommendation of the Audit Committee for the Fiscal Year 2025, have approved their remuneration, which is included in the Notice of the forthcoming Annual General Meeting of the Company, seeking ratification by the Members.

The Cost Auditor has confirmed that their appointment is within the purview of Section 143 of the Companies Act, 2013 and they confirm that they are free from any disqualification.

Internal Audit

The Board appointed Ms. Ishita H. Rathod, Cost & Management Accountant as the Internal Auditor of the

Company as per Section 138 of the Companies Act, 2013 to conduct the Internal Audit of the Company, for Fiscal Year under review.

Employee Stock Option Scheme

Pursuant to the Resolutions of the Board of Directors dated November 18, 2021, and Shareholders' Resolution dated November 18, 2021, the Company has instituted Aether Industries Limited Employees Stock Option Plan Scheme 2021 (hereinafter "ESOS Scheme 2021"). The ESOS Scheme 2021 is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, later duly ratified by the Shareholders as well in the Annual General Meeting.

The Company has introduced the Aether Industries Limited Employees Stock Option Scheme 2021 (AIL ESOS 2021) primarily with a view to attract, retain, incentivise and motivate the existing employees of the Company. The AIL ESOS 2021 contemplates grant of options to eligible employees, as may be determined in due compliance of SEBI SBEB Regulations and provisions of the AIL ESOS 2021.

After vesting of options, the Eligible Employees earn a right (but not an obligation) to exercise the vested options within the exercise period and obtain equity shares of the Company subject to payment of exercise price and satisfaction of any tax obligation arising thereon. On November 20, 2023, the second allotment was executed of total 26,732 Options, detailed in Annexure-E.

Secretarial Standards

The Company has duly complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India on the Board and the General Meetings of the Company (SS-1 and SS-2) from time to time.

Reporting of frauds by Auditors

There is no qualification, reservation or adverse remarks made by M/s. Birju S. Shah & Associates, Statutory Auditors in their Audit Report, M/s. Dhirren R. Dave & Company, Secretarial Auditors in their Secretarial Audit Report, and Ms. Ishita H. Rathod, Internal Auditor in her Internal Audit Report.

Apart from it, no such instance of fraud committed to Company by its employees or officers has been reported to the Audit Committee under Section 143(12) of the Companies Act, 2013.

Remuneration detail of employees

Pursuant to Rule 5(1) of Companies (Appointment and Remuneration) Rules, 2014, a statement regarding top ten employees in terms of remuneration drawn and other details of the employees as prescribed has to be provided in the Board Report. Details regarding the same are attached as Annexure-F.

Human Resources and Industrial Relations

The Company takes pride in the commitment, competence and dedication of its employees in all areas of the business. The Company has a structured induction process at all locations and management development programs to upgrade the skills of managers and other employees. Objective appraisal systems based on Key Result Areas (KRAs) are in place for various employees and the system is always being implemented towards an unbiased appraisal system.

The Company is committed to nurturing, enhancing and retaining its top talent through superior learning and organizational development. This is a part of our Corporate HR function and is a critical pillar to support the organization's growth.

The Company has aligned and collaborated R&D activities with many institutions and Universities in India. Company has associated with National Chemical Laboratory (NCL, Pune), Institute of Chemical Technology (ICT, erstwhile UDCT, Mumbai), Uka Tarsadia University (UTU, Bardoli) and Sardar Vallabhbhai National Institute of Technology (SVNIT, Surat). Also, it has contributed towards the programs for chemical engineer aspirants which, includes industrial training.

The Company has its own sponsored PhD programs which are ongoing for getting PhD research and degree done for its R&D team with above named Institutes.

Environment, Health and Safety Protection

The Company's Health and Safety Policy commits to comply with applicable legal and other requirements concerning Occupational Health, Safety and Environment matters The Company has a due system for environmental issues, health and safety issues concerned with the employees and the same is reviewed at regular intervals.

Disruption of activities due to fire accident

On November 29, 2023, an unfortunate accident of fire break-out resulted in the loss of 11 precious lives and 23 workers were injured. The Company completely took the onus of the accident and has compensated the relatives of the deceased. The families of the deceased were compensated with 5.00 MM per family, acknowledging the tragic loss they have experienced. Additionally, the injured workers were promptly hospitalized and provided with the best treatment, with all expenses covered by the Company. In case of any permanent disabilities as a result of the accident, such employees were declared compensation with Rs. 2.5 MM each, though no permanent disabilities were reported.

Furthermore, the Company received closure notices from both the Factory Inspector and the Gujarat Pollution Control Board (GPCB), accompanied by a fine of 5.00 MM. Despite this setback, the other manufacturing facilities (1 and 3) have resumed operations. The Company is committed to ensuring sustainability in terms of the safety and welfare of its human resources and has taken utmost care ever since the accident happened.

As of March 31, 2024, the affected manufacturing facility was partially operative with permission from GPCB and the revocation order is also expected soon for the remaining area.

Anti-Sexual Harassment Policy

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. The same is mentioned in the Corporate Governance Report.

Appreciation and Acknowledgement

The Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. The Board places on record its appreciation for the support and cooperation, your company has been receiving from its Suppliers, Retailers, Dealers & Distributors and others associated with the Company. The Directors also take this opportunity to thank all Clients, Vendors, Banks, Regulatory Authorities, Government and every Stakeholder for their continuous support.

For Aether Industries Limited

Ashwin Desai - Managing Director DIN: 00038386

Rohan Desai - Whole Time Director DIN: 00038379

Place: Surat / Date: July 19, 2024