Directors Report of Aarti Pharmalabs Ltd.

Mar 31, 2025

Your Directors are pleased to present this Sixth Annual Report of Aarti Pharmalabs Limited ("the Company" or "APL") together
with the Audited Financial Statements for the financial year ended March 31, 2025 ("year under review" or "FY 2024-25").

1. FINANCIAL HIGHLIGHTS

Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Total Income from Operations (Gross)	177,135	1,50,213	2,11,507	1,85,261
EBITDA	42,654	34,616	46,436	38,605
Depreciation & Amortisation	7,906	6,601	8,690	7,324
Profit from Operations before Other Income, Finance Costs and Exceptional Items	34,748	28,014	37,746	31,281
Other Income	1,449	1,101	1,012	490
Profit before Finance Costs	36,197	29,115	38,758	31,771
Finance Costs	2,563	1,663	2,690	1,721
Profit before Tax	33,634	27,452	36,068	30,049
Total Tax Expenses	7,899	7,387	8,828	8,359
Non-controlling Interest	-	0	-	0
Net Profit for the period	25,735	20,065	27,240	21,690
Other Comprehensive Income (net of taxes)	(516)	13.31	(975)	(45.12)
Total Comprehensive income for the year	25,219	20,078	26,265	21,645
Earnings Per Share ('')	28.39	22.14	30.06	23.93
(Basic & Diluted)	28.38	22.14	30.04	23.93
Book Value Per Share ('')	203	179	220	194

2. COMPANY''S PERFORMANCE

On a standalone basis, the revenue for FY 2024-25
was '' 1,78,584 lakhs, higher by 18 % over the previous
year''s revenue of ''1,51,314 lakhs in FY 2023-24. The
PAT attributable to shareholders in FY 2024-25 was
'' 25,735 lakhs registering a growth of 28 % over the PAT
of ''20,065 lakhs in FY 2023-24.

On a consolidated basis, the revenue for FY 2024-25
was '' 2,12,519 lakhs, higher by 14 % over the previous
year''s revenue of ''1,85,750 lakhs. The profit after tax
("PAT") attributable to shareholders and non-controlling
interests for FY 2024-25 and FY 2023-24 was '' 27,240
lakhs and ''21,690 lakhs, respectively and registering
a growth of 26 % over the PAT of ''21,690 lakhs in
FY 2023-24.

3. CONSOLIDATED FINANCIAL STATEMENTS

Your Directors are pleased to attach the Consolidated
Financial Statements pursuant to Section 129(3) of
the Companies Act, 2013 ("Act") and Regulation 34 of
the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations,
2015 ("Listing Regulations"), prepared in accordance
with the provisions of the Act and the Indian Accounting
Standards ("IND AS").

4. STATE OF COMPANY''S AFFAIRS

The state of your Company''s affairs is given in the
Management Discussion and Analysis, which forms part
of this Annual Report.

5. RESERVES

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

6. DIVIDEND

During the year under review, your Board has declared
an Interim Dividend of ''2.50 (@ 50%) per equity share
of '' 5/- each aggregating to ''2,265.65 lakhs. Further,
Directors are pleased to recommend the Final Dividend
of '' 2.50( @50%) per equity share of '' 5/- each subject
to approval of the Shareholders at the ensuing Annual
General Meeting ("AGM"), aggregating to a total Dividend
of ''5 for FY 2024-25, resulting in a total payout
'' 4,531.68 lakhs (Previous Year: ''2,718.78 lakhs). The
dividend would be payable to all Shareholders whose
names appear in the Register of Members as on Record
Date.

The Dividend payout is in accordance with the Dividend
Distribution Policy, which is available on the website
of the Company. As per Regulation 43A of the SEBI
(Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations"), the top 1,000
listed companies shall formulate a Dividend Distribution
Policy. Accordingly, the Policy was adopted to set out the
parameters and circumstances that will be taken into
account by the Board in determining the distribution
of dividend to its shareholders and/or retaining profits
earned by the Company. The Policy is available on the
website of the Company and the web link thereto is
https://www.aartipharmalabs.com/investors/dividend-
distribution-policy-feb-2023.pdf

I n view of the changes made under the Income Tax
Act, 1961, by the Finance Act, 2020, dividends paid or
distributed by the Company shall be taxable in the hands
of the Shareholders. The Company shall, accordingly,
make the payment of the Final Dividend after deduction
of tax at source (TDS).

7. SHARE CAPITAL

Your Company''s Equity Share Capital as on March 31,
2025 was as follows:

Particulars	No. of Shares	Face Value Per Share (in '')	Total Amount (in '')
Authorized Share Capital	10,00,00,000	5	50,00,00,000
Issued, Subscribed & Paid-up Share Capital	9,06,34,624	5	45,31,73,120

During the year 2024-25, 8616 number of equity shares
were allotted on March 10, 2025 to the employees of the
Company under Aarti Pharma Performance Stock Option
Plan 2023'' (PSOP 2023). Thus, Issued, Subscribed and
Paid-up Capital of the Company stands increased to
'' 45,31,73,120 comprising of 9,06,34,624 equity shares
of '' 5/- each.

The shares so allotted rank pari passu with the existing
share capital of the Company. Apart from the same, there
was no other change in the share capital of the Company.

The Company has not defaulted on payment of any dues
to the financial lenders.

During FY 2024-25, the Company''s outlay towards
capital expenditure was '' 43,332 lakhs for the standalone
Company and '' 44,388 lakhs at the consolidated level.

8. SUBSIDIARY/JOINT VENTURE COMPANIES

As on March 31, 2025, the Company has two (2) direct
subsidiaries, namely, Aarti Pharmachem Limited and
Aarti USA Inc. and one Joint Venture Company, namely,
Ganesh Polychem Limited. The said Joint Venture was
effective from the beginning of this financial year, i.e.,
from April 01, 2025.

Aarti USA Inc. has generated turnover during the previous
Financial Year more than 10% of the consolidated turnover
of the Company. Accordingly, the said Company was
material subsidiary of the Company in the immediately
preceeding accounting year. However it ceased to be
material subsidiary in the current accounting year. A
policy on material subsidiaries has been formulated and
is available on the website of the Company and the web
link thereto is:

https://www.aartipharmalabs.com/investors/policy-on-

determination-of-material-subsidiary-feb-2023.pdf

During the year, the Board of Directors reviewed the
affairs 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 statement containing salient features of the
financial statement of our Subsidiaries/Jointly controlled
entity in the prescribed format AOC-1 is included in the
Report as Annexure-A and forms an integral part of this
Report.

9. CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social
Responsibility (‘CSR'') Committee in terms of the

requirements of Section 135 of the Act read with the
rules made thereunder. The composition, detailed
terms of reference of the CSR Committee, attendance
at its meetings and other details have been provided
in the Corporate Governance Report. The primary role
of this Committee is to approve the CSR activities to
be undertaken, allocate the necessary expenditure
and oversee the execution and effectiveness of these
initiatives.

The Company believes that Corporate Social goes beyond
philanthropy and hence we encompass comprehensive
community development and sustainability initiatives. We
focus on water conservation, health and hygiene, waste
management, regenerative agriculture, skill development,
education, social advancement , gender equality, women
empowerment, and rural development. Through these
efforts, we aim to foster holistic community development
and drive meaningful change.

During the year under review, our CSR initiatives were
executed in accordance with the annual action plan
previously approved by the Board. These activities,
which are distinctly separate from our normal business
operations, focus on pivotal and relevant areas such
as livelihood and financial inclusion, animal welfare,
agriculture, community development, education, and
healthcare. Our aim is to continue focusing on these
areas to achieve meaningful and positive outcomes that
contribute to the Sustainable Development Goals.

The detailed Policy on Corporate Social Responsibility is
available on the website of the Company and the web link
https://www.aartipharmalabs.com/investors/csr-policy-
feb-2023.pdf.

The CSR Annual Report which contains a brief note on
various CSR initiatives undertaken during the year is
annexed as Annexure-B and forms an integral part of
this Report.

10. PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENTS

Pursuant to the provisions of section 134(3)(g) of the Act,
details of loans, guarantees and investments covered
under section 186(4) of the Act are given in the notes
to the Audited Standalone Financial Statements, which
forms part of the Annual Report.

During the year, the Company has entered into a Share
Subscription and Shareholder''s Agreement with Pro-zeal
Green Power Private Limited (Promoter Company),Pro-
Zeal Green Energy Five Private Limited, Special Purpose

Vehicle (SPV) formed for developing, constructing,
operating and maintaining a solar power plant, for
acquisition of 26.25% of the Equity Shares/ Voting Rights
of SPV and investing through Compulsory Convertible
Debentures.

11. MANAGEMENT DISCUSSION AND ANALYSIS

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

12. BOARD OF DIRECTORS & KEY MANAGERIAL
PERSONNEL

I. Board of Directors

Your Company actively seeks to adopt global best
practices for an effective functioning of the Board
and believes in having a truly diverse Board whose
wisdom and strength can be leveraged for creating
greater stakeholder value, protection of their
interests and better corporate governance. The
Company''s Board comprises eminent persons with
proven competence and integrity, who bring in vast
experience and expertise, strategic guidance and
leadership qualities. The Board fulfills its fiduciary
responsibilities with a steadfast commitment to
safeguarding the interests of the Company and its
stakeholders.

The Board of the Company is carefully structured to
achieve an optimal balance, consisting of Executive
and Non-Executive Directors, including two (2)
Women Independent Directors. This composition
adheres strictly to the current provisions of the Act
and the Listing Regulations ensuring compliance
with governance standards. The details of the
Board of Directors and Committees along with
their composition, number of meetings held and
attendance at the meetings during FY 2024-25 are
provided in the Corporate Governance Report which
forms part of this Report. During the Financial Year
under review Seven (7) Board Meetings were held.

Additionally, all directors of the Company have
confirmed that they are not disqualified from being
appointed as Directors, in accordance with Section
164 of the Act.

In accordance with the regulatory requirements, Shri
Parimal H. Desai (DIN: 00009272), Non-Executive and
Non Independent Director of the Company retires by
rotation in the ensuing Annual General Meeting and,
being eligible, offers himself for re-appointment.
The Board recommends his re-appointment for the
consideration of the Shareholders.

During the year your Company''s Board at its meeting
held on May 13, 2024, based on the recommendation
of the Nomination and Remuneration Committee,
approved the appointment of the following Directors;

1. Shri Pradeep Thakur (DIN: 00685992) as an
Additional Director in the category of Non¬
Executive Independent Director; and

2. Smt. Nehal Garewal (DIN: 01750146) as an
Additional Director in the category of Non¬
Executive Director.

The said appointments were affirmed by the
Shareholders at their meeting held on August 07,
2024.

Shri. Jeevan Mondkar was appointed as the Company
Secretary and Compliance Officer w.e.f. December
13, 2024, upon the resignation of Shri. Nikhil Natu
as the Company Secretary and Compliance Officer
of the Company w.e.f October 30, 2024.

The Board places on record its appreciation for Shri.
Nikhil Natu for the valuable contribution provided to
the Company.

Further, the term of Smt. Rupal Vora, Non¬
Executive Independent Director of Company shall
end with effect from October 16, 2025. Thus, the
Board at its meeting held on August 12, 2025
the recommendation of the Nomination and
Remuneration Committee has recommended the
re-appointment of Shri Rupal Vora to the members
for approval at the ensuing AGM.

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
a part of the Notice convening this AGM.

Ms. Vora fulfils the criteria of independence
under Regulation 16(1)(b) and Regulation 25(8)
of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements)
Regulations, 2015 (‘SEBI Listing Regulations'') and
Section 149(6) of the Act, 2013.

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 have been debarred or
disqualified from being appointed or continuing
as Directors of companies by the Securities and
Exchange Board of India (SEBI) 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
FY 2024-25.

Commission to Non-Executive Directors:

Your Directors at their meeting held on May 13, 2024,
on the recommendation of the Nomination and
Remuneration Committee, approved the proposal for
payment of commission to Non-Executive Directors
as a percentage of profit. The said proposal was
approved by the Shareholders'' at the Annual General
Meeting held on August 07, 2024. The Non-Executive
Independent Directors of the Company are entitled
to sitting fee and commission as per the statutory
provisions and within the limits approved by the
Shareholders which was approved by the Board
of Directors as per the recommendation of the
Nomination and Remuneration Committee.

Sr. No.	Name of the Director	Amount of Commission (In '')
1	Shri Rashesh C. Gogri	8,85,000
2	Shri Rajendra V. Gogri	7,89,000
3	Shri Parimal H. Desai	6,28,000
4	Dr. Vinay G. Nayak	12,07,000
5	Shri Bhavesh R. Vora	11,42,000
6	Prof Vilas G. Gaikar	9,50,000
7	Smt. Rupal A. Vora	5,64,000
8	Smt. Jeenal K. Savla	12,39,000
9	Shri Pradeep Thakur	5,00,000
10	Smt. Nehal Garewal	5,00,000
TOTAL		84,04,000

II. Key Managerial Personnel

As on the date of this Report, the Key Managerial
Personnel of the Company, in accordance with the
provisions of Section 2(51) and Section 203 of the
Act include:

1. Managing Directors;

a. Smt. Hetal Gogri Gala (additionally she
has also been designated as the Vice
Chairperson)

b. Shri Narendra J. Salvi

2. Shri Nikhil Natu, Company Secretary*;

3. Shri Piyush Lakhani, Chief Financial Officer.

4. Shri Jeevan Mondkar, Company Secretary and
Compliance officer**.

*Resigned w.e.f October30, 2024.

**Appointed w.e.f December 13, 2024.

Other than above, during the year under review, there

was no change in the Key Managerial Personnel of

the Company.

13. INDEPENDENT DIRECTORS

The Company has received requisite declarations
from all the Independent Directors of the Company
confirming that they meet the criteria of independence
prescribed under Section 149(6) of the Act read with
Rule 5 of the Companies (Appointment and Qualification
of Directors) Rules, 2014 and Regulation 16(1)(b) of the
Listing Regulations. The Independent Directors have also
confirmed that they are not aware of any circumstance
or situation that exists or may be reasonably anticipated
that could impair or impact their ability to discharge
their duties with an objective independent judgment
and without any external influence. These declarations
include confirmations that they are not barred from
holding the office of director by any SEBI order or any
other authoritative body. In the opinion of the Board,
all the Independent Directors satisfy the criteria of
independence as defined under the Act, rules framed
thereunder and the Listing Regulations, and that they
are independent of the Management of the Company.
Furthermore, they have affirmed their adherence to the
Code of Conduct outlined in Schedule IV of the Act.

In the opinion of the Board, all Independent Directors
possess requisite qualifications, experience, expertise,
proficiency and hold high standards of integrity for the
purpose of Rule 8(5)(iii a) of the Companies (Accounts)
Rules, 2014. In terms of the requirements under the
Listing Regulations, the Board has identified a list of key
skills, expertise and core competencies of the Board,
including the Independent Directors, details of which are
provided as part of the Corporate Governance Report.

As required under Rule 6 of the Companies (Appointment
and Qualification of Directors) Rules, 2014, all the
Independent Directors (including those appointed
during the year) have registered themselves with the
Independent Directors Databank and also completed the
online proficiency test conducted by the Indian Institute
of Corporate Affairs.

Familiarisation Programme for Independent Directors

All the Independent Directors of the Company are made
aware of their roles and responsibilities through a formal
letter of appointment, which also stipulates various
terms and conditions of their engagement. Pursuant
to Regulation 25(7) of the Listing Regulations, the
Independent Directors of the Company were familiarised
and the details of familiarization programmes imparted
to them during the year, are placed on the website
of the Company and the web link at https://www.
aartipharmalabs.com/regarding-independent-directors

14. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) and 134(5) of the Act, the
Directors of your Company, to the best of their knowledge
and based on the information and explanations received
from the Company, confirm that:

a) in the preparation of the Annual Financial Statements
for the year ended March 31, 2025, the applicable
accounting standards have been followed along with
proper explanation relating to material departures, if
any;

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 Financial 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
Act for safeguarding the Assets of the Company
and for preventing and detecting fraud and other
irregularities;

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

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

f) 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.

15. ANNUAL PERFORMANCE EVALUATION

Pursuant to the provisions of the Act and the Listing
Regulations, a structured questionnaire was prepared

after taking into consideration various aspects of the
Board''s functioning, composition of the Board and
its Committees, culture, execution and performance
of specific duties, obligations and governance.
The evaluation was undertaken by way of internal
assessments, based on a combination of detailed
questionnaires and verbal discussions.

The performance of the Committees and Independent
Directors were evaluated by the entire Board of Directors
except for the Director being evaluated. The performance
evaluation of the Chairman, Non-Independent Directors
and Board as a whole was carried out by the Independent
Directors. The Board of Directors expressed their
satisfaction with the outcome of evaluation and the
process followed thereof.

16. AUDIT COMMITTEE

The details of the composition of the Audit Committee,
terms of reference, meetings held, etc. are provided in
the Corporate Governance Report, which forms part of
this Report. During the year under review, there were
no instances where the Board had not accepted any
recommendation of the Audit Committee.

17. AUDITORS

a) Statutory Auditor and their Report

In accordance with the provisions of Section 139
of the Act, Gokhale & Sathe, Chartered Accountants
(Firm Registration. No. 103264W) were appointed
as the Statutory Auditors of the Company at the 4^th
AGM for a term of 5 (five) years to hold office till the
conclusion of 9^th AGM to be held in the year FY 2028.

The Statutory Auditors'' Report forms part of the
Annual Report. The said report does not contain
any qualification, reservation or adverse remark
for the year under review. During FY 2024-25, there
were no instances of fraud which required the
Statutory Auditors to report the same to the Central
Government under Section 143(12) of Act and Rules
framed thereunder.

b) Cost Auditor and their records

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

The Board has appointed Ketki D. Visariya,
Cost Accountants, (Membership No. 16028),

as the Cost Auditor of the Company for FY
2025-26. The remuneration payable to the
Cost Auditor is required to be placed before
the Shareholders in a General Meeting for their
approval. Accordingly, a resolution seeking
Shareholder''s ratification for the remuneration
payable to Ketki D. Visariya, Cost Accountants,
is included at Item No. 5 of the Notice convening
the AGM.

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

c) Secretarial Auditor and their Report

Pursuant to provisions of Section 204(1) of the
Act and Regulation 24A of the Listing Regulations,
the Secretarial Audit Report for the Financial Year
ended March 31, 2025 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 in Form MR-3 is annexed
as Annexure-C 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 and therefore disclosure of
details under Section 134(3)(ca) of the Act is not
applicable. There is no qualification, reservation or
adverse remark or disclaimer made by the Auditor
in their report.

Pursuant to regulation 24A(2) of the SEBI Listing
Regulations, a report on secretarial compliance for
FY2025 has been issued by CS Sunil M. Dedhia and
the same is submitted with the stock exchanges
within the given timeframe. The report will also be
made available on the website of the Company.

Pursuant to Section 179,204 of the Act read with
the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, and
Regulation 24A of the Listing Regulations, the
Board and Audit committee has recommended M/s
Mehta & Mehta, Practising Company Secretaries
(FRN:P1996MH007500) as the Secretarial Auditor
of the Company to undertake the Secretarial Audit
of the Company for term of five years commencing
from FY 2025-26 subject to approval of members
at the ensuing AGM.

Brief resume and other details of proposed
secretarial auditors, forms part of the Notice of
ensuing AGM. M/s Mehta & Mehta, Practising
Company Secretaries have given their consent to
act as Secretarial Auditors of the Company. They
have also confirmed that they are not disqualified
to be appointed as Secretarial Auditors in terms of
provisions of the Act & Rules made thereunder and
SEBI Listing Regulations.

18. RISK MANAGEMENT

The Board takes responsibility for the overall process of
risk management throughout the organization. Through
an Enterprise Risk Management program, our business
units and corporate functions address risks through
an institutionalized approach aligned to our objectives.
This is facilitated by an internal audit. The Business risk
is managed through cross functional involvement and
communication across businesses. The results of the risk
assessment are presented to the senior management.
The Risk Management Committee reviews business
risk areas covering operational, financial, strategic and
regulatory risks.

There have been no changes in our internal control over
financial reporting that occurred during the period covered
by this annual report that have materially affected, or are
reasonably likely to materially affect, our internal control
over financial reporting.

During FY25, we assessed the effectiveness of the Internal
Control over Financial Reporting and has determined that
our Internal Control over Financial Reporting as at March
31, 2025, is effective.

We continue to closely monitor, assess and implement
mitigation plans in consideration of the turbulent
geopolitical and economic landscape. This work is
underpinned by foresight intelligence and scenario
planning to look further ahead and build resilience to
alternative futures. Our diverse global customer base
gives us the flexibility to react to regional changes in
demand by adjusting our sales mix into other markets,
while we may adjust product features or content
should we face supply challenges informed through our
enhanced supply chain risk management framework.

We continue to monitor and assess the global tariff
environments to manage their ramifications as
effectively as possible, and take mitigating actions such
as implementing cost discipline, pricing actions, evaluate
our offerings and improving geographical mix.

Risk Management is an integral and important aspect
of Corporate Governance. Your Company believes that a
robust Risk Management Framework ensures adequate
controls and monitoring mechanisms for smooth and
efficient running of the business. A risk-aware Company
is better equipped to maximize shareholder value.

Your Company has always worked to be contemporary
in the application of technology for its business
processes and its interface, both within and outside the
Company. Towards this end, review of business process,

applications available and the digitisation of process
with adequate controls is an ongoing work in progress.
This calls for seamless integration with our consumers,
customers and stakeholder operating ecosystems that
can lead to a superior experience by improving agility
and responsiveness across the business.

Cybersecurity is essential for any organisation to protect
its digital assets from cyber-attacks, data breaches, and
other security threats. Technology plays a critical role
in cybersecurity and your Company has implemented
several measures to enhance its Cybersecurity measures
on the principles of Identify, Protect, Detect, Respond and
Recover.

Your Company has constituted a Risk Management
Committee ("RMC"), which assists the Board in
monitoring and overseeing implementation of the
Risk Management Policy, including evaluating the
adequacy of risk management systems and such other
functions as mandated under the Listing Regulations
and as the Board may deem fit from time to time. The
Risk Management Policy also covers identification of
elements of risk which, in the opinion of the Board, may
threaten the existence of the Company.

Your Board has adopted a Risk Management Policy,
which is available on the Company''s website at https://
www.aartipharmalabs.com/investors/APL Risk%20
Management%20Policy.pdf

The details of the composition of the RMC, terms
of reference, meetings held, etc. are provided in the
Corporate Governance Report, which forms part of this
Report.

19. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY

Your company has robust internal financial controls (IFC)
systems, in line with the requirements of the Companies
Act 2013. This system enhances transparency and
accountability in the organization''s process of designing
and implementing internal controls.

These systems facilitate mapping with role-based
authority to business and functional teams, ensuring
smooth operations across the organization. The
company''s internal control systems are commensurate
with the nature & size of its business considering both
financial & non-financial controls.

The Company has appointed Manish Modi and
Associates, Chartered Accountants as the Internal
Auditor, who periodically audits the adequacy and

effectiveness of the internal controls laid down by the
Management and suggests improvements. This ensures
that all Assets are safeguarded and protected against
loss from unauthorised use or disposition and that the
transactions are authorised, recorded and reported
diligently. Your Company''s internal control systems are
commensurate with the nature and size of its business
operations. Internal Financial Controls are evaluated and
Internal Auditors'' Reports are regularly reviewed by the
Audit Committee of the Board.

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

20. RELATED PARTY TRANSACTIONS

The Company has a Policy on Materiality of Related Party
T ransactions and dealing with Related Party T ransactions
which is uploaded on the Company''s website at
https://www.aartipharmalabs.com/investors/apl-rpt-
policy-revised-feb-2025-final.pdf. The Policy captures
framework for Related Party Transactions and intends to
ensure due and timely identification, approval, disclosure
and reporting of transactions between the Company or its
subsidiaries on one side and Related Parties on the other,
in compliance with the applicable laws and regulations
as may be amended from time to time.

All transactions with related parties and subsequent
material modifications, if any, are placed before the
Audit Committee for its review and approval. An omnibus
approval from the Audit Committee is obtained for the
related party transactions which are repetitive in nature,
based on the criteria approved by the Audit Committee.
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.

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.

Since all related party transactions entered into by the
Company were in ordinary course of business and were
on an arm''s length''s basis, Form AOC-2 is not applicable

to Company. Further, there were no material related party
transactions in terms of the Listing Regulations requiring
approval of the Shareholders during the year under review.

Pursuant to Regulation 23(9) of the SEBI Listing
Regulations, your Company has filed the reports on
related party transactions with the Stock Exchanges
within statutory timelines. Besides, the details of related
party transactions are provided in the accompanying
financial statements.

21. NOMINATION AND REMUNERATION
COMMITTEE ("NRC") AND NRC POLICY

Pursuant to Section 178(3) of the Act and Regulation
19 of Listing Regulations your Company has framed
a policy on Directors'' appointment and remuneration
and other matters which is available on the website of
your Company and link for the same is https://www.
aartipharmalabs.com/investors/nomination-and-
remuneration-policy-feb-2023.pdf

The Remuneration Policy for selection of Directors and
determining Directors'' independence sets out the guiding
principles for the NRC for identifying the persons who
are qualified to become the Directors. Your Company''s
Remuneration Policy is directed towards rewarding
performance based on review of achievements. The
Remuneration Policy is in consonance with existing
industry practice.

The composition of the Committee, attendance at its
meetings and other details have been provided as part
of the Corporate Governance Report.

Your Company has adopted a Nomination and
Remuneration Policy ("Policy") which lays down a
framework in relation to 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 Committee also plays an important role and is
responsible for administering the Stock Options Scheme
as applicable to the eligible employees of the Company.

22. PARTICULARS OF EMPLOYEES AND
REMUNERATION

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 is annexed as Annexure-D and
forms an integral part of this Report. As per first proviso

to Section 136(1) of the Act and second proviso of Rule
5(3) 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.

23. MATERIAL DEVELOPMENTS IN HUMAN
RESOURCES/INDUSTRIAL RELATIONS FRONT,
INCLUDING NUMBER OF PEOPLE EMPLOYED

At APL, our focus is "Right person for right job at right
time", keeping this in mind we recruit people with the
relevant experience and academic background and
ensure long term engagement brings results in win-win
situations for both employees as well as the organisation.
We believe our people are assets in the organisation and
invest quality time in nurturing their talent, improving
productivity consistently and providing growth paths for
them. People at APL are proud of their association with
the company.

We firmly believe that our people are our greatest
strength and the key to our continued success. Guided
by this belief, our HR Department remains dedicated
to attracting, developing, engaging, and retaining talent
through people-centric policies and industry-leading
practices. Our consistent focus on nurturing human
capital enables us to deliver on our business goals while
fostering a culture of trust, growth, and mutual success.

Positive Employee Satisfaction Survey Outcomes

In line with our commitment to fostering a progressive
and healthy work culture, we conducted a comprehensive
Employee Satisfaction Survey (ESS) covering all functions
and locations. We are pleased to share that 75% of our
employees reported high levels of satisfaction, reaffirming
that our initiatives and work environment align well with
their expectations and aspirations. The insights gained
from this survey are being actively leveraged to further
enhance our people practices and deepen employee
engagement across the organisation.

Performance Appraisals & Rewarding System

Recognising and rewarding performance in a fair and
timely manner remains a cornerstone of our HR strategy.
During the year, we ensured that all employees up to the
manager level received timely performance evaluations

and corresponding rewards in April 2025. For senior
managers and above, appraisals were completed by
May 2025. Notably, the average rewards provided were
significantly higher than the previous year and exceeded
the pharmaceutical industry benchmarks published in
Deloitte''s 2024-25 Pharma Report. This commitment
to market-competitive recognition strengthens our
employee value proposition and supports our efforts to
attract and retain top talent. Additionally, the appraisal
process identified key training needs, which are being
addressed through targeted development programmes.

Attrition Management

The Company recognises that optimal workforce
discipline and productivity are critical to sustaining
operational excellence. Through an appropriate
recruitment methodology, robust retention policies, and
an enriching work environment, we have consistently
strived to reduce the attrition rate and implement
specific employee growth plans. As a result, we have
successfully reduced our attrition rate to 11%, which is
lower than the industry benchmark of 14% for 2024¬
2025. This achievement reflects the heightened sense
of responsibility and commitment among our employees
towards their work and the organisation.

I n addition, we are committed to promoting gender
equality by increasing recruitment opportunities for
women, both at our offices and factory locations. While
the industry average for female representation stands
at 27%, over the next two years we aim to significantly
increase the number of female employees across all
levels.

Proactive Leadership & Talent Management

The Company has customised its organisational
structure to align with evolving business requirements
and to provide clarity on roles and responsibilities within
each function. We have placed strong emphasis on
strengthening second-line leadership across all critical
areas. During the year, we identified high-potential
employees at various levels and invested in preparing
them for larger roles and greater responsibilities. This
structured approach to succession planning ensures
organisational stability and enhances our readiness to
meet future challenges effectively. Clear role definitions
and functional targets further support accountability and
performance.

Developing a sustainable talent pool remains a key priority
for us. To this end, we have partnered with reputed Tier II
engineering colleges near our manufacturing facilities to
recruit Graduate Engineer Trainees (GETs). These young
graduates undergo a structured onboarding programme,

followed by continuous functional training modules to
build the required competencies before they assume key
roles within the Company. This initiative not only nurtures
local talent but also contributes to reducing attrition by
creating a steady pipeline of skilled professionals ready
to step in as needed.

Employee Engagement Initiatives

At APL, we believe that an engaged workforce is more
productive, innovative, and committed. To nurture this
engagement, we organised a variety of activities during
the year including inter-unit sports tournaments, regional
picnics, festival celebrations, Women''s Day special
events, and health & wellness camps. Additionally, we
honour local cultural traditions through site-specific
poojas and gatherings, which strengthen team bonding
and promote a sense of belonging. These efforts have
played a vital role in enhancing employee morale and
have directly contributed to the reduction in our attrition
rate.

Way Forward

We believe that continuous learning is key to staying
ahead of the competition. To support this, we have
implemented a robust Learning Management System
(LMS) and plan to establish a specialised Learning &
Development (L&D) department to further enhance
our training capabilities. Feedback on learning and
development needs is regularly captured through our
self-appraisal system, ensuring that training initiatives
remain relevant and impactful.

We firmly believe that investing in our people today builds
a stronger, more resilient organisation for tomorrow. As
our people grow, so does APL - together, we are creating
a workplace that is agile, inclusive, and prepared for
sustained success. We have invested in LMS software
and are actively developing a dedicated training and
talent management team to take our capability-building
efforts to the next level.

24. ENERGY CONSERVATION, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO

The information on conservation of energy, technology
absorption and foreign exchange earnings and outgo
stipulated under Section 134(3)(m) of the Act read with
Rule 8(3) of the Companies (Accounts) Rules, 2014 is
given in Annexure -E and forms an integral part of this
Report.

25. AARTI PHARMA PERFORMANCE STOCK
OPTION PLAN 2023

Aarti Pharma Performance Stock Option Plan 2023
("PSOP 2023") was approved by the shareholders at the

4^th AGM of the Company held on September 14, 2023,
under which stock options would be granted to the
eligible employees in compliance with the provisions
of the SEBI (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021.

Pursuant to the PSOP 2023, the Company had granted
40,000 options to eligible employees as per the
recommendation of the Nomination and Remuneration
Committee, at its meeting held on May 13, 2024. Further
the Committee has granted 42,000 options to eligible
employees on May 10, 2025

Your Company has received a certificate for
FY 2024-25 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 2023
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 investorrelations@
aartipharmalabs.com.

The details of the stock options granted under the
PSOP Scheme and the disclosures in compliance with
Regulation 14 of the and Exchange Board of India (Share
Based Employee Benefits and Sweat Equity) Regulations,
2021 is available on the website of the Company at
www.aartipharmalabs.com/other-disclosures.

26. CORPORATE GOVERNANCE

Your Company upholds a strong corporate governance
framework, built on the foundation of effective
leadership, well-defined policies, streamlined processes,
and a deeply ingrained legacy of values. The Board, in
collaboration with the management team, establishes
and drives the Company''s principles, ensuring that
business operations align with these core values.
These ethics and standards are seamlessly woven into
the Company''s culture, business practices, disclosure
policies, and stakeholder relationships, maintaining
alignment with international best practices and
exemplary corporate conduct.

Your Company has fully adhered to the mandatory
Corporate Governance requirements outlined in the
Listing Regulations. In compliance with Regulation
34 of the Listing Regulations, a dedicated Corporate
Governance Report is annexed hereto, forming an integral
part of this Report. Additionally, the requisite certification

from Gokhale & Sathe, Chartered Accountants, is
enclosed within the Corporate Governance Report.

27. HEALTH AND SAFETY

At Aarti Pharmalabs Limited (APL), ensuring the health
and safety of all stakeholders-employees, contractors,
customers, and visitors-is a core organizational priority.
The company integrates safety into every aspect of its
operations, from manufacturing and R&D to supply
chain activities through robust systems, advanced
infrastructure, continuous training, and a strong safety
culture. APL aims to proactively identify and mitigate
risks, ensuring a secure and compliant working
environment across all sites during FY 2024-25.

Governance Mechanism

APL has established strong governance mechanisms to
oversee its health and safety framework. EHS Committees
are operational at all levels, ensuring fair representation
of employees and enabling active participation in
health and safety decisions. These committees are
responsible for reviewing risk assessments, ensuring the
implementation of corrective actions, tracking incident
reports, and addressing escalations. Risk mitigation
follows a structured hierarchy: Elimination, Substitution,
Engineering controls, and Administrative controls. The
company enforces a strict Permit to Work system for
high-risk activities such as confined space entry, hot
work, and work at heights, with clear safety protocols,
communication requirements, and control measures.

Occupational Health and Safety

APL prioritizes occupational health and safety
across all business functions, ensuring alignment
with ISO 45001:2018 standards. The company has
established a comprehensive Occupational Health and
Safety Management System under the Aarti Pharma
Management System (APMS), covering all employees,
contractors, and visitors. The system mandates thorough
training in chemical handling, proper usage of personal
protective equipment (PPE), and adherence to emergency
response protocols. Regular safety drills, toolbox
talks, inspections, and monthly safety campaigns are
conducted to proactively identify and control workplace
risks. Additionally, all employees undergo medical
screening at onboarding and periodically thereafter,
based on regulatory requirements. APL also introduced
software platform at sites to identify and eliminate the
risks timely.

Process Safety

APL operates a centralized Process Safety Laboratory
equipped with advanced technologies such as Reaction
Calorimeter (RC1 mx) and Thermal Screening Units (TSu)

to assess and manage the risks of handling hazardous
chemicals. This in-house facility generates crucial data
on reaction behavior and powder safety, which informs
safe plant design and processing decisions. During
FY 2024-25, the lab performed 396 TSu sample analyses,
119 RClmx tests, and 91 powder safety evaluations. The
company follows a structured four-stage process safety
risk assessment framework: Step 1 (Process Safety
Information), Step 2 (Hazard Checklist & HIRA), Step 3
(HAZOP), and Step 4 (PSSR), supplemented by tools such
as Fault Tree Analysis, FMEA, What-if and occupational
exposure banding. External and internal training sessions
continuously build process safety capabilities within the
workforce.

Safety Training

APL conducts regular, targeted safety training
programs designed to instill a proactive safety culture.
These sessions cover hazard identification, safe work
procedures, emergency preparedness, and the use
of safety signage. In FY 2024-25, APL conducted
2280 Occupational Health and Safety (OHS) training
sessions. The company''s in-house experts, along with
external consultants, deliver sessions via classroom
formats, online meetings and on-site safety displays.
Employees are encouraged to report unsafe conditions
and empowered to stop work if they encounter any
hazardous situation. Awareness is further reinforced
through safety campaigns and practical emergency
drills.

Contractor Health & Safety

APL has implemented stringent safety protocols for
contractors working on its premises. These include
pre-employment medical fitness evaluations, thorough
induction training on safety protocols, and a mandatory
work permit system to control site access and job
authorization. Contractors are monitored closely for
compliance with safety norms, ensuring that all work is
conducted under controlled and authorized conditions.

Customer Health & Safety

Customer safety is a top priority for APL. The company
adheres to globally accepted product safety standards,
including the use of GHS-compliant labels and Material
Safety Data Sheets (MSDS). APL also aligns its practices
with the European Union''s REACH regulations. In
FY 2024-25, APL reported zero major complaints
related to customer health and safety, reflecting the
effectiveness of its product safety communication and
hazard mitigation protocols.

Occupational Health Centres (OHC)

APL provides robust on-site occupational healthcare
services at all manufacturing and R&D locations through

Occupational Health Centres (OHCs) as per regulatory
mandates. Each centre is staffed by trained factory
medical officers, supported by qualified nurses. These
centres offer 24x7 coverage for medical needs, with
specific emphasis on managing exposures related
to powder, solvents, corrosive chemicals, and noise¬
intensive machinery. Onsite ambulances and first aid
facilities ensure timely emergency response. Periodic
medical surveillance, including annual or semi-annual
health checkups, is conducted, and follow-up care is
ensured until complete rehabilitation, as overseen by
the Factory Medical Officer. All Occupational Health
Centres (OHCs) maintain mutual aid arrangements with
neighbouring industries and nearby hospitals located
close to operational sites.

Incident Learning and Safety Culture

APL fosters a strong culture of safety learning through
its monthly "Learning from Incidents" forum, where
all incidents are reviewed and shared across sites to
prevent recurrence. Global Corrective and Preventive
Actions (CAPA) are assigned to ensure learnings
are institutionalized company-wide. As a leading
organization, APL proactively monitors potential
incidents occurring in peer industry segments and
implements relevant CAPA at its own sites. Employees
are empowered to contribute safety suggestions through
both anonymous drop boxes and internal software
platforms. Open forums like Toolbox Talks encourage
candid discussions and reinforce accountability across
all organizational levels.

ENVIRONMENT

Energy Conservation & Consumption

During the fiscal year under review, our total energy
consumption stood at 1,353,826.70 gigajoules (GJ). Out
of total energy consumption stands 51,026.5 gigajoules
(GJ) from renewable energy sources. As part of our
long-term sustainability agenda, we have undertaken
significant initiatives to reduce our dependence on
conventional fossil fuels. Notably, multiple facilities have
successfully transitioned from furnace oil to cleaner
energy alternatives, thereby lowering overall emissions.
In line with our renewable energy goals, we have also
started getting renewable electricity from a solar power
plant to our Tarapur cluster via a facility located in Akola
district, Maharashtra. This project aims to harness solar
energy to offset conventional energy usage and promote
a low-carbon operational model across our value chain.

Hazardous Waste Management

We maintain a robust and systematic approach to
waste management, ensuring that all hazardous and
non-hazardous wastes generated across our facilities
are carefully segregated, recovered, recycled, or

disposed of in strict accordance with their physical and
chemical properties and in compliance with applicable
environmental regulations. Our waste management
procedures are routinely reviewed and upgraded to
enhance material recovery and reduce the environmental
burden.

Water & Wastewater Management

In FY 2024-25, our total water consumption reached
5,91,301 kiloliters (KL), sourced from both freshwater
and recycled/recovered streams. Remarkably, 31%
of this total consumption was met through recycled
water, underscoring our commitment to circular water
use. Freshwater is primarily drawn from industrial
supply bodies, while we continue to improve our water
stewardship through advanced treatment technologies.

To manage wastewater responsibly, we have
implemented high-efficiency treatment systems,
including Reverse Osmosis (RO) units, Multiple Effect
Evaporators (MEEs), Mechanical Vapour Recompression
(MVR) systems, and Agitated Thin Film Dryers (ATFD).
These systems enable significant water recovery and
reduce waste discharge. A Zero Liquid Discharge (ZLD)
policy is rigorously enforced at all manufacturing units,
ensuring that no untreated effluent is released into the
environment and our operational water impact remains
minimal.

Product End-of-Life Management

We have institutionalized a structured process
for managing the end-of-life stage of all products
manufactured at our facilities. Each product undergoes
a comprehensive shelf-life evaluation based on detailed
research and development assessments. Upon client
request, we offer technical support and guidance
to ensure safe and compliant disposal or treatment
of expired products. We have also implemented an
Extended Producer Responsibility (EPR) program to
ensure the effective collection, treatment, and disposal
of all plastic waste generated from the packaging of
products and raw materials at the end of its lifecycle.

Significantly, during FY 2024-25, there were no reported
cases requiring product end-of-life treatment, resulting
in zero environmental impact under this category. This
reflects our effective product lifecycle management
practices and our continued emphasis on minimizing
environmental liability from our offerings.

28. 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 1,000 listed entities

based on market capitalisation. BRSR for the year under
review, as stipulated under Regulation 34(f) of Listing
Regulations read with SEBI Circular No. SEBI/HO/CFD/
CMD-2/P/CIR/2021/562 dated May 10, 2021 is in a
separate section forming part of the Annual Report.

29. VIGIL MECHANISM

The Vigil Mechanism as envisaged in the Act and the
Rules prescribed thereunder and the Listing Regulations
is implemented through the Company''s Vigil Mechanism
Policy. The said Policy of your Company is available on
the Company''s website at https://www.aartipharmalabs.
com/investors/vigil-mechanism-policy-feb-2023.pdf

It enables the Directors, employees and all stakeholders of
the Company to report genuine concerns (about unethical
behaviour, actual or suspected fraud, or violation of the
Code) and provides for adequate safeguards against
victimisation of persons who use such mechanism and
makes provision for direct access to the Chairman of the
Audit Committee.

No whistle-blower complaints have been received during
the year under review.

30. THE SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013

The Company believes that every woman employee
should have the opportunity to work in an environment
free from any conduct which can be considered as Sexual
Harassment. The Company has Zero Tolerance towards
sexual harassment at the workplace.

The Company is committed to treating every employee
with dignity and respect. 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 POSH
Policy is gender inclusive and the framework ensures
complete anonymity and confidentiality. The said Policy
of your Company is available on the Company''s website at
https://www.aartipharmalabs.com/investors/prevention-
of-sexual-harrasment-policy.pdf.

I nternal Complaints Committees (ICC) has been set
up to redress complaints received regarding sexual
harassment.

During the year under review, your Company has not
received any complaint pertaining to sexual harassment.
Following are the details of complaints received,
disposed and pending more than 90 days:

Number of sexual harassment complaints received
during the financial year -Nil.

Number of complaints disposed of during the year - N.A.

Number of cases pending for more than 90 days- N.A.

Additionally the Company has complied with the
provisions of Maternity Benefit Act , 1961.

Pursuant to the requirements of Rule 8(2)(ii)(b) of the
Companies (Accounts) Rules, 2014 (as amended), the
Company confirms that it has duly complied with the
provisions of the Maternity Benefit Act, 1961 during the
financial year under review.

The Company remains committed to providing a
supportive and inclusive workplace for all employees
and has ensured that all benefits and safeguards under
the said Act have been extended to eligible women
employees.

Further, awareness sessions have been conducted
to apprise employees of their rights, and appropriate
internal systems have been maintained to facilitate
timely disbursement of maternity benefits.

31. SECRETARIAL STANDARDS

The Company has generally complied with all the
applicable provisions of Secretarial Standard on
Meetings of Board of Directors (SS-1) and Secretarial
Standard on General Meetings (SS-2), respectively
issued by Institute of Company Secretaries of India

32. DETAILS OF DEPOSITS

During the year under review, your Company has neither
invited nor accepted any deposits from the public falling
within the ambit of Section 73 of the Act and the rules
framed thereunder. The requisite return for FY 2024-25
with respect to amount(s) not considered as deposits
has been filed.

BANK LOAN FACILITIES

Your Company continues to manage its treasury
operations efficiently and has been able to borrow funds
for its operations at competitive rates. During the year
under review, your Company had below rating for its
bank loan facilities of '' 700 Crs, which were revalidated
from time to time;

Rating Agency	CRISIL Rating Limited
Rating	CRISIL A / Stable (Assigned)

On July 17, 2025, CRISIL Ratings Limited (‘CRISIL
Ratings'') has upgraded the credit ratings for long-term
bank loan facilities of the Company to "Crisil AA-/Stable"
and the same was intimated to stock exchanges .

33. ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a)
of the Act, the Annual Return of the Company in Form
MGT-7 for financial year 2024-25, is available on the
Company''s website at https://www.aartipharmalabs.
com/annual-return

34. INVESTOR EDUCATION AND PROTECTION
FUND (“IEPF")

Pursuant to the demerger of pharma undertaking of
Aarti Industries Limited during FY 2022-23, proportionate
number of shares (i.e.3,13,656 shares) held by the
shareholders of Aarti Industries Limited, which were then
lying in the IEPF account, were credited to the IEPF demat
account of the Company. As at March 31,2025, 3,13,656
(Three Lakh Thirteen thousand Six Hundred and Fifty Six)
equity shares are lying with IEPF. The Final Dividend for
FY 2023-24 and Interim Dividend for FY 2024-25 accrued
on such shares was credited to the designated bank
account of the IEPF authority. Further, the final dividend
for FY 2024-25, if approved by the shareholders at the
ensuing AGM, shall be credited to the designated bank
account of the IEPF authority.

Except for the above, no amount is due to be transferred
to the IEPF Account.

35. COMPLIANCE MANAGEMENT SYSTEM

Your Company has deployed a Statutory Compliance
Mechanism providing guidance on broad categories
of applicable laws and processes for monitoring
compliance.

I n furtherance to this, your Company has instituted
an online compliance management system within
the organization to monitor compliances and provide
updates to the senior management on a periodic basis.

The Audit Committee and the Board periodically monitor
the status of compliances with applicable laws.

36. SWAYAM INVESTOR SELF-SERVICE PORTAL

‘SWAYAM'' is a secure, user-friendly web-based
application, developed by "MUFG Intime india Private
Limited" (Formally known as "Link Intime India Pvt Ltd."),
our Registrar and Share T ransfer Agents, that empowers
shareholders to effortlessly access various services.
This application can be accessed at https://swayam.
in.mpms.mufg.com/

37. SIGNIFICANT AND MATERIAL ORDERS PASSED
BY THE REGULATORS

During the year under review, no significant material
orders were passed by the Regulators or Courts or
Tribunals impacting the going concern status and the
Company''s operations.

38. MATERIAL CHANGES AND COMMITMENTS, 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 were no other material changes and commitments
affecting the financial position of the Company, which
had occurred between the end of the Financial Year to
which these financial statements relate and the date of
the Report.

39. 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 FY 2024-25, 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.

40. 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 FY 2024-25, the Company has not made any
settlement with its bankers for any loan/ facility availed
or/and still in existence.

41. GENERAL DISCLOSURES

The Managing Director(s) have not received any
remuneration or commission from the subsidiary of your
Company.

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

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

2. I ssue of Shares (including Sweat Equity Shares)
to employees of the Company under any Scheme
save and except Employees Stock Option Schemes
(ESOP) referred to in this Report.

3. Voting rights which are not directly exercised by the
employees in respect of shares for the subscription
/ purchase of which loan was given by the Company
(as there is no scheme pursuant to which such
persons can beneficially hold shares as envisaged
under section 67(3)(c) of the Act).

4. There has been no change in the nature of business
of your Company.

5. There was no revision of financial statements and
Board''s Report of your Company during the year
under review.

42. ACKNOWLEDGEMENT

The Board of Directors place 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

Narendra J. Salvi Hetal Gogri Gala

Place: Mumbai Managing Director Vice Chairperson and Managing Director

Date: August 12, 2025 DIN: 00299202 DIN: 00005499

---

Mar 31, 2023

The Directors present this Fourth Annual Report of your Company ("the Company" or "Aarti Pharmalabs Limited") together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2023.

1. FINANCIAL HIGHLIGHTS & SUMMARY

Rs. In lakhs except EPS and Book Value
Particulars		Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Total Income from Operations (Gross)	1,51,125	94,102	1,94,523	1,19,994
EBITDA	30,962	18,230	34,437	20,946
Depreciation & Amortisation	5,577	3,723	6,254	4,212
Profit from Operations before Other Income, Finance Costs and Exceptional Items	25,256	14,255	27,951	16,483
Other Income	128	251	232	251
Profit before Finance Costs	25,384	14,506	28,183	16,734
Finance Costs	2,049	1,134	2,105	1,196
Profit before Tax	23,336	13,373	26,077	15,538
Total Tax Expenses	6,163	2,700	6,728	3,313
Non-controlling Interest	0	0	0	0
Net Profit for the period	17,173	10,673	19,349	12,225
Other Comprehensive Income (net of taxes)	-70	707	-345	707
Total Comprehensive income for the year	17,103	11,379	19,005	12,932
Earnings Per Share (?) (Basic & Diluted)	18.95	11.78	21.35	13.49
Book Value Per Share (?)	159	142	172	153

Summary

Your Company reported Gross Total Income at '' 1,51,253 lakhs for FY 2022-23 as against '' 94,353 lakhs for FY 2021-22. Similarly the exports for the year were at '' 66,307 lakhs for FY 2022-23 as against '' 40,391 lakhs for FY 2021-22.

Likewise the Consolidated Total income from operations for FY 2022-23 stood at '' 1,94,755 lakhs as compared to '' 1,20,246 lakhs for FY 2021-22 and exports for FY 2022-23 was '' 79,298 lakhs v/s '' 48,059 lakhs for FY 2021-22.

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 2022-23, together with the Auditors'' Report, form part of this Annual Report.

2. TRANSFER TO RESERVES

Your Company has not transferred any amount to any Reserve for the Financial Year 2022-23.

3. SUBSIDIARY COMPANIES

As on March 31, 2023, the Company has two (2) direct subsidiaries, namely, Aarti Pharmachem Limited and Aarti USA Inc. These companies, which were erstwhile subsidiaries of Aarti Industries Limited, became the subsidiaries of the Company pursuant to the Scheme of Arrangement (''Scheme'') between Aarti Industries Limited and Aarti Pharmalabs Limited and their respective shareholders. The Hon''ble National Company Law Tribunal (''NCLT''), Ahmedabad Bench, vide its order dated September 21, 2022 approved the Scheme.

Aarti USA Inc. has generated during the previous Financial Year more than 10% of the consolidated income of the Company. Accordingly, the said Company is a material subsidiary of the Company. Except Aarti USA Inc., 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 previous Financial Year. A policy on material subsidiaries had been formulated and is available on the website of the Company and the web link thereto is: https://www.aartipharmalabs. com/investors/policy-on-determination-of-material-subsidiary-feb-2023.pdf

During the year, the Board of Directors reviewed the affairs 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 statement containing salient features of the financial statement of our Subsidiaries/Jointly controlled entity in the prescribed format AOC-1 is included in the Report as Annexure-A and forms an integral part of this Report.

4. SHARE CAPITAL

Your Company''s Equity Share Capital as on March 31, 2023 was as follows:

Particulars	No. of	Face Value	Total
	Shares	Per Share	Amount
		(in '')	(in '')
Authorized Share Capital	10,00,00,000	5	50,00,00,000
Issued, Subscribed & Paid-up Share Capital	9,06,26,008	5	45,31,30,040

Pursuant to the Scheme of Arrangement (''Scheme'') for demerger of pharma undertaking of Aarti Industries Limited into Aarti Pharmalabs Limited, which was approved by the Hon''ble NCLT, Ahmedabad Bench vide its Order dated September 21, 2022, the authorised share capital was reorganized and increased from '' 50,00,000 (Rupees Fifty lakhs only) divided into 5,00,000 equity shares of '' 10 each to '' 50,00,00,000 (Rupees Fifty Crores only) divided into 10,00,00,000 equity shares of '' 5 each.

Further, as per the Scheme, the initial issued and paid up equity share capital of the Company, comprising 2,50,000 shares of '' 10/- each, aggregating to '' 25,00,000/- was

canceled. Further, as on October 21, 2022, i.e. Record Date determined pursuant to the provisions of the Scheme, the Company had issued and allotted 1 (One) Equity Share of '' 5/- each fully paid up of the Company for every 4 (Four) Equity shares of '' 5/- each fully paid up held in Aarti Industries Limited (''AIL!) to each member of AIL, whose name was recorded in the register of members of AIL as holding shares on the Record Date. Pursuant to the said allotment of Equity Shares, the paid-up share capital of the Company is '' 45,31,30,040/-consisting of 9,06,26,008 equity shares of '' 5/- each.

During the year 2022-23, apart from the above, there was no change in the authorized and paid up share capital of the Company.

5. STATE OF AFFAIRS

The state of your Company''s affairs is given in the Management Discussion and Analysis, which forms part of this Annual Report.

6. 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, 2023, the Board of Directors, comprises ten Directors (with two Executive Directors, three Non-Executive Non-Independent and five Independent Directors).

The composition of the Board of the Company was revised in view of the listing of shares of the Company on the Stock Exchanges and the proposals were approved at the Board Meeting held on October 17, 2022. Further, the said appointments were approved by the Shareholders through Postal Ballot on January 10, 2023, as below;

1. Appointment as Non-Executive Independent Director of the Company of the following persons;

a. Shri Vinay Nayak,

b. Shri Bhavesh Vora,

c. Shri Vilas Gaikar,

d. Smt. Jeenal Savla,

e. Smt. Rupal Vora.

2. Appointment of Shri Parimal Desai as NonExecutive Director of the Company;

3. Appointment of Smt. Hetal Gogri Gala as Vice Chairperson and Managing Director of the Company;

4. Appointment of Shri Narendra Salvi as Managing Director of the Company;

In accordance with the regulatory requirements, Shri Rajendra V. Gogri (DIN: 00061003), NonExecutive Director of the Company retires by rotation in the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members.

Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard-2 on General Meetings, a brief profile of the Director proposed to be 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 have been debarred or disqualified from being appointed or continuing as Directors of companies 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 2022-23.

Key Managerial Personnel

In accordance with the provisions of Section 203 of the Companies Act 2013 read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board at its meeting held on October 17, 2022, approved the appointment of the following persons as the Company''s Key Managerial Personnel effective from the even date;

1. Managing Director;

a. Smt. Hetal Gogri Gala (additionally she has been designated as the Vice Chairperson)

b. Shri Narendra J. Salvi

2. Shri Nikhil Natu, Company Secretary;

3. Shri Piyush Lakhani, Chief Financial Officer.

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

7. INDEPENDENT DIRECTORS

Statement on declaration given by Independent Directors under sub-section (6) of section 149

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 laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.

In the opinion of the Board of Directors, the Independent Directors fulfill the conditions specified in 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 Independent Directors

The Company has a Familiarisation programme for its Independent Directors which is imparted at the time of appointment of an Independent Director on Board as well as annually. During the year, the Independent Directors of the Company were familiarised and the details of familiarization programmes imparted to them are placed on the website of the Company and the web link thereto is:https://www.aartipharmalabs.com/ investors7familiarization-programme-fy2022-23.pdf

8. DIRECTORS'' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. That in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. That 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 Financial Year and of the profit and loss of the Company for that period;

c. That the Directors 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. That Directors have prepared the annual accounts on a going concern basis;

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

f. 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.

9. MEETINGS

The Board of Directors met seven (7) times during the Financial Year under review. The details of the number of meetings of the Board and its Committees held during the Financial Year 2022-23 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. DIVIDEND

During the year, the Company has declared an Interim Dividend of '' 2/- (@ 40%) each per share.Thus, the total payout towards Dividend was '' 1,812.52 lakhs (Previous Year: Nil).

Your Board of Directors do not recommend a Final Dividend for the year under review.

The dividend payout was in accordance with the Dividend Distribution Policy which is available on the website of the Company.

Dividend Distribution Policy

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the top 1000 listed companies shall formulate a Dividend Distribution Policy. Accordingly, the policy was adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/or retaining profits earned by the

Company. The Policy is available on the website of the Company and the web link thereto is: https://www. aartipharmalabs.com/investors/dividend-distribution-policy-feb-2023.pdf

11. 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 have been;

• 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.aartipharmalabs.com/ investors/csr-policy-feb-2023.pdf.

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.

12. AUDIT COMMITTEE

The details of the composition of the Audit Committee, terms of reference, meetings held, 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.

13. 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 Company''s Code of Conduct. It also provides for adequate safeguards against the victimisation of employees and allows direct access to the Chairperson of the Audit Committee in exceptional cases. The said

policy has been posted on the website of the Company and the web link thereto is: https://www.aartipharmalabs. com/investors/vigil-mechanism-policy-feb-2023.pdf

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

14. 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 Company''s website at the web-link given below: https://www. aartipharmalabs.com/investors/rpt-policy-feb-2023.pdf

All related party transactions that were entered into during the FY 2022-23 were on arm''s length basis and were carried out in the ordinary course of the business. 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.

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 were on an arm''s length''s basis, Form AOC-2 is not applicable to Company.

15. BANK LOAN FACILITIES

Your Company continues to manage its treasury operations efficiently and has been able to borrow funds for its operations at competitive rates. During the Financial Year, your Company had below rating for its bank loan facilities of '' 400 Crores, which were revalidated from time to time:

Rating Agency	CRISIL Rating Limited
Rating	CRISIL A / Stable (Assigned)

16. 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 2022-23.

17. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

The particulars of loans given, investments made, guarantees given and securities provided 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 standalone financial statements forming part of the Annual Report.

18. PARTICULARS OF EMPLOYEES

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this Report.

In terms of Section 136(1) of the Companies Act, 2013, the Report and the Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company for a copy of it.

Material Developments in Human Resources/Industrial Relations Front, including number of people Employed At APL, our focus is "Right person for right job at right time", keeping this in mind we recruit people with the relevant experience and academic background and ensure long term engagement brings results in win-win situations for both employees as well as the organisation. We believe our people are assets in the organisation and invest quality time in nurturing their talent, improving productivity consistently and providing growth paths for them. People at APL are proud of their association with the company.

At APL, employee well-being and growth form the core of everything we do and we consistently strive to co-create culture that help us in building a world-class experience for our people. We have many cases of promotion from within. Employees have joined as a Fresher and grown as a Functional leader over a period taking functional responsibilities, over a period of time. We identify potential employees for future leadership and provide them the platform for growth, putting them on fast-track This has helped strengthening employees bonding thus during the last year employee turnover has come down by ~ 1% i.e. from 11.81% in the year 2020-21 to 11.08%

in the year 2022-23. To meet our growth aspirations, we on-boarded around 397 bright talents during the last year and created various growth avenues for our internal talent, thus accomplishing 7% internal growth transitions in FY 2021-22.

We believe fairness and equal treatment to all the employees across the organisation. We have well defined performance evaluation and rewarding systems. We consistently foster performance culture. We identify the training needs during the PMS and plan for the necessary training during the year and monitor the same through annual training calendar. The basic philosophy is organisation grows if the people grow.

We also enter into an agreement with our Union Employees from time to time; maintain a healthy and peaceful environment. We recognise the right of employees of collective bargaining.

Recognition and Reward for Bright Stars - "Employee of the Month"

Employees play pivotal role ensuring success of the organisation. Nurturing their talent, innovations, rewarding and recognising their contributions appropriately encourages employees to give their best to the organisation. Every month Recognition and Reward Committee assess the deserving employees based upon their contributions / suggestions for bringing effectiveness in the processes with respect to productivity improvement, innovation and self- initiatives etc.

Skills & Capability Building Initiative

Highly skilled employee is an integral part to meet with changing business needs. The best results of employees'' endeavour will determine the excellence in Product Quality and Services to the customer. We have invested 16000 man-hours on Skills and Competencies building programme, enabling employees to meet with future challenges. Also the special Skill development programme is designed for Operative Staff focussed with the right combination of knowledge and practical execution based curriculum.

Employee Engagement

Engaged workforce is the most productive source for the organisation in their success, delivering the best of their abilities with greater sense of belongingness and commitment at their jobs. We at APL believe every small step contributes value to employees'' Work-Life-Balance. Celebrating employees'' special moments (Birthdays / Anniversary / Regional Festivals), extending support to foster intellectual growth through various Learning

and Development initiatives to nurture conviviality and happiness culture at workplace.

19. MATERIAL CHANGES AND COMMITMENTS, 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 were no other material changes and commitments affecting the financial position of the Company, which had occurred between the end of the Financial Year to which these financial statements relate and the date of the Report.

20. I NVESTOR 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. While no amount was required to be transferred to the IEPF, since the Company was incorporated in the year 2019 and the first dividend was paid by the Company in the current FY. However, pursuant to the Scheme, the proportionate number of shares (i.e. 313,656 shares) held by the shareholders of Aarti Industries Limited, which were lying in the IEPF account, were credited to the IEPF demat account by the Company. Further, an amount of '' 614,621 (net of TDS) towards Interim Dividend for Financial Year 2022-23 accrued on the said number of shares was also credited to the designated Bank Account of the IEPF Authority.

21. ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return as on March 31, 2023 is available in prescribed format on the Company''s website on www.aartipharmalabs.com.

22. CORPORATE GOVERNANCE

Corporate Governance essentially involves balancing the interests of a Company''s 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 Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate Governance.

23. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

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

24. 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 read with SEBI Circular No. SEBI/HO/CFD/ CMD-2/P/CIR/2021/562 dated May 10, 2021 is in a separate section forming part of the Annual Report.

25. ANNUAL BOARD EVALUATION

Pursuant to the provisions of Companies Act, 2013 and the Listing Regulations, a structured questionnaire was prepared after taking into consideration various aspects of the Board''s functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.

The performance of the Committees and Independent Directors were evaluated by the entire Board of Directors except for the Director being evaluated. The performance evaluation of the Chairman, Non-Independent Directors and Board as a whole was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the outcome of evaluation and the process followed thereof.

26. 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 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.aartipharmalabs.com/investors/ nomination-and-remuneration-policy-feb-2023.pdf

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

27. RISK MANAGEMENT

Your 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. The Company aims to use risk management to take better informed decisions and improve the probability of achieving its strategic and operational objectives.

In compliance with Regulation 21 of Listing Regulations, your Company has a Risk Management Committee consisting of Shri Rashesh Gogri (Chairman), Smt. Hetal Gogri Gala, Shri Narendra J. Salvi, Shri Rajendra Gogri, Shri Parimal Desai and Dr. Vinay Nayak. The Committee through its risk management framework continuously identifies, evaluates and takes appropriate measures to mitigate/minimize various elements of risks. The Risk Management Committee 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 said policy has been posted on the website of the Company and the web link thereto is: https:// www.aartipharmalabs.com/investors/APL_Risk%20 Management%20Policy.pdf

28. COMPLIANCE MANAGEMENT SYSTEM

The Company with its sheer focus is 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 intimates concerned personnel about upcoming compliances.

29. HEALTH AND SAFETY:

Your Company is committed to maintain the world-class standards of health, safety, security, human rights, environment protection, product quality and processes, while conducting all its business operations, services, and expansion activities. In its pursuit of the said objectives, the Company has been investing heavily in areas such as Process Automation for increased safety and reduction of human error element, enhanced level of training on Process and Behaviour based

safety requirements, adoption of expensive but safe & environment friendly production processes, installation of bioreactors, chemical ROs, multiple effect evaporator, MVR, latest PVA gel technology and so on to ensure the improvement in Reduction, Quality/Recovery and Reuse of effluents & other utilities.

Aarti Pharmalabs Limited has implemented comprehensive safety programs for its employees, including training on chemical handling, personal protective equipment (PPE) usage, and emergency response. The Company conducts safety drills, safety audits, and safety inspections to identify and mitigate potential hazards at the workplace, ensuring a safe working environment for its employees.

Safety Performance Leading Indicators

The Company has established Process Hazard Analysis (PHA), which involves analysing processes to identify potential hazards and determine ways to minimise or eliminate them during R&D level. Besides, powder safety is ensured by us, which involves taking necessary precautions when handling powder-based materials such as dust or combustible liquids. The Company has achieved more than 98% compliance in powder safety during the year under review.

The Company performs cross site audits, which involve auditing various sites for compliance with safety regulations and standards. Such audit engagements help improve safety standards by identifying potential hazards & improves skill of EHS professionals across the Company. The Company had performed a Regulatory Audit (in EHS) by a third party during the year under review. Further, the Company has established the ''Near Miss Reporting'' with the help of advanced technologies to eliminate potential risk which may result in an incident.

With a view to ensure safety and well-being of our people, the Company has developed and adopted a robust, comprehensive and reliable Occupational Health and Safety Management System under Aarti Pharma Management System. All our employees, contract employees and visitors are covered under the Company''s Occupational Health and Safety Management System.

Process Safety Management

APL has well established process safety procedures, practices and systems to evaluate the risk associated with manufacturing processes of hazardous chemicals. The Chemical Reaction Hazard and Fire & Explosion Hazard testing data required for interpretation and informed decision-making during plant design and processing are generated in house through developed

in-house infrastructure and capability. Besides, the Company conducts Powder Safety studies eg. MIE, MIT, LIT, Powder Resistivity, etc., for all new and existing powder handling operations.

The Company has a centralised Process Safety Lab consisting of Reaction Calorimeter (RC1e) and two Thermals Screening Units (TSu). During the year under review, a total 1,618 TSu samples were analysed and 176 RC1e tests were performed.

Customer Health & Safety

The Health and Safety of our Customer is of paramount importance and we are committed towards it.The Company follows GHS labelling and MSDS for documenting and communicating product specifications, hazards, and mitigation measures. Besides, APL subscribes to the best practices prescribed by the European Union''s Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulations. During the year under review, we did not receive any major complaint for health and safety issues from our customers.

Contractor Health & Safety

With a view to ensure our Contractor''s Health & Safety, the Company has established the following checks;

- Thorough screening and evaluation of Contractors for medical fitness before permitting them to commence work,

- I mparting Training to the Contractors so that they understand the safety protocols that need to be followed while at work,

- Implementation of Work permit system so that only authorised personnel can access the site and perform their duties safely.

ENVIRONMENT

Energy Conservation & Consumption

During the year under review, our consumption of energy from both renewable and non-renewable sources was 250,463 GJ. Of the total energy used in our manufacturing plants and R&D center, 3.5% comes from renewable sources. We have also started switching over from furnace oil to cleaner fuel for several of our facilities. To further reduce dependency on fossil fuels, we are planning to install solar power panels at almost all our facilities.

Hazardous Waste Management

All hazardous and non hazardous wastes generated from our facilities are segregated, recovered, recycled and disposed as per their individual characteristics, in compliance with all regulations.

Water & Wastewater Management

Our total water consumption for FY 2022-23 was 716,243 KL, including both fresh and recycled/recovered water. Out of our total water consumption, over 43.5% is recycled water and our primary source of the freshwater is industrial bodies.

The Company continuously improves its wastewater management and output. We have installed wastewater treatment plants and water recovery plants consisting of state-of-the-art reverse osmosis units (RO), multiple-effect evaporators (MEEs) and agitated thin film dryers (ATFD) to recover water from the wastewater. Further, a zero liquid discharge policy across all units has been adopted.

Product End Life

The Company has a complete process of handling the product at the end of life. Every product which is manufactured at our facility has defined shelf life based on the study carried out at our R&D. We support our customer, if requested, in treatment of the product at the end of its shelf life. During the FY 2022-23, there were zero cases of product end life treatment and hence there was no environmental impact.

30. STATUTORY AUDITORS & AUDITORS'' REPORT

During the year under review, Jatin Vora & Associates Chartered Accountants (Firm Registration No: 118024W), had expressed their inability to continue as the Statutory Auditor of the Company, since the firm was not subject to ''peer review'' and thereby, not eligible to be appointed as Statutory Auditor of a listed company. Thus, the Board of Directors at their meeting held on November 29, 2022 had appointed Gokhale & Sathe, Chartered Accountants (Firm Registration No. 103264W), as Statutory Auditors of the Company to fill the casual vacancy caused by the resignation of Jatin Vora & Associates. Further, the appointment of Gokhale & Sathe, Chartered Accountants was approved by the Shareholders through Postal Ballot on January 10, 2023, such that they would hold the office until the conclusion of the ensuing Annual General Meeting.

In view of the above, the Board on the recommendation of the Audit Committee has recommended the appointment of Gokhale & Sathe, Chartered Accountants (Firm Registration. No. 103264W) as the Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of 9^th Annual General Meeting to be held in 2028. At the request of the Company,

Gokhale & Sathe have communicated their eligibility and willingness to accept the office, if appointed. The members are requested to appoint Auditors and to fix their remuneration as mentioned at Item No. 3 of the notice.

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.

31. 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 accordingly, has appointed Ketki D. Visariya, Cost Accountants, (Membership No. 16028) as the "Cost Auditors" of the Company for FY 2023-24. 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 Member''s approval for the remuneration payable to Ketki D. Visariya, Cost Accountants, is included at Item No. 4 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.

32. 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, 2023 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-C 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 Auditor in their report. As regards the observations of the Secretarial Auditor in their Report, the same is self explanatory and need no further clarifications.

33. I NTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has clearly laid down policies, guidelines and procedures that form part of internal control systems, which provide for automatic checks and balances. Your Company has maintained a proper and adequate system of internal controls. The Company has appointed Manish Modi and Associates as an Internal Auditor who periodically audits the adequacy and effectiveness of the internal controls laid down by the Management and suggests improvements. This ensures that all Assets are safeguarded and protected against loss from unauthorised use or disposition and that the transactions are authorised, recorded and reported diligently. Your Company''s internal control systems are commensurate with the nature and size of its business operations. Internal Financial Controls are evaluated and Internal Auditors'' Reports are regularly reviewed by the Audit Committee of the Board.

The 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.

34. 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.

35. 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

Our 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.

Internal Complaints Committees (ICC) has been set up to redress complaints received regarding sexual harassment at each location and meetings are held periodically and records are maintained in prescribed format.

Status of the Complaints during the FY 2022-23 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

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

36. 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-D to this report.

37. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year, the Hon''ble National Company Law Tribunal (NCLT), Ahmedabad Bench vide its order dated September 21, 2022 approved the Scheme of Arrangement (Scheme) between Aarti Industries Limited (Demerged Company) and Aarti Pharmalabs Limited (Resulting Company) and their respective shareholders under the provisions of Section 230-232 of Companies Act, 2013.

38. 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 FY 2022-23, 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.

39. DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF VALUATION AT THE TIME OF ONETIME 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 2022-23, 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 place 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.