The Board of Aether Industries Limited take pleasure in presenting the 10^th Board Report of the Company, together with the Standalone Audited Statement of Accounts and the Auditors' Report of the Company for the Financial Year ended March 31, 2022.

Financial Summary and Highlights

Financial performance of the Company for the Financial Year ended March 31, 2022 is summarized as below

Business operations and affairs of the Company

The Fiscal Year 2022, begun with smooth flow in operations as compared to the last year which was impacted due to the outbreak of CoVID-19 in the whole world. The Company was able to operate at efficient level and maintained the annual growth rate, this year as well. The Company added some new facilities and products, which helped the Company to grow even further.

The Management at the operational level, with the extensive support of the employees, made it possible to achieve the organizational activities at the desired levels / targets and the cumulative efforts turned the budgets into achievements.

The Revenue from Operations in current Fiscal Year were reported at T5,900.47 MM, compared to T4,498.16 MM in the previous Fiscal Year, thereby showing a growth of 31.2%. Further, EBITDA, in the current Fiscal Year reported at T1,750.81 MM, compared to T1,161.32 MM in the previous Fiscal Year, registered a growth of 50.8% year on year. The Net Profit of the Company in the current Fiscal Year was T 1,089.29 MM, which accounted for an increase of 53.2% against the previous Fiscal Year's Net Profit of T711.19 MM.

Dividend

Considering various requirements for more CAPEX towards infrastructure and scale-up, along with other business expansions, the Board has not recommended any dividend this year.

Environment, Social & Governance

Sustainability - the symbiotic essence between the nature and biodiversity and also amongst the past, present and the future - has been the core thought around everything that we do, individually and also collectively.

The CoVID-19 pandemic pressed the reset button of our planet, impacting every one of its inhabitants. While technological advances accelerate, it is worth noting the fact that peoples' expectations from life have changed. Safety, good health and socio-economic security have become predominant in that order. The Company has strived to behave responsibly in that manner and has aligned the practices which are taking care of all the above factors.

With the motive of keeping ESG in line with the business operations, the Company, during the period under review took the sustainability performance test conducted by EcoVadis and secured seventy-five percentile in it, with Silver Medal rating. There are only 25% companies in the world with this rating.

Also, the Company became a member of Global Compact Network (India), part of the United Nations Global Compact, to create responsible business values.

Reserves

For the Fiscal Year 2022, the Company has transferred ?1,089.29 MM to the General Reserves.

Insurance

The Company has taken adequate insurance to cover the risks to its employees, properties (land and buildings), plants, equipment, other assets and third parties. The Company has also in-place the Directors & Officers Insurance Policy.

Change in Nature of the Business

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

Details of revision of Financial Statement or Annual Report

No revision of the Financial Statements or Annual Report has been made during Financial Year ended March 31, 2022 neither in any of the preceding three Fiscal Years.

Accounting treatment

The Company was adhering to the Generally Accepted Accounting Principles as per the Indian GAAP. However, with effect from April 2018, the Company resorted to adhering to the Indian Accounting Standards (Ind AS) for going ahead with the IPO. Hence, from this Fiscal Year 2022 onwards, the Company has adopted the Indian Accounting Standards (Ind-AS).

Subsidiary, Associate and Joint Venture entities

The Company does not have any Subsidiary, Associate or Joint Venture entities.

Management Discussion and Analysis Report

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

Business Responsibility Report

The Business Responsibility Report in terms of Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the Fiscal Year under review is attached herewith.

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

There have been no material changes and commitments, which have occurred between the end of the Fiscal Year to which the Financial Statements relate and the date of this Report, which affect the financial position of the Company.

The Company had filed the Draft Red Herring Prospectus (DRHP) with SEBI for the Initial Public Offering (IPO) of its Equity Shares. During the Fiscal Year under review, the Company received the in-principal approval from the BSE Limited and the National Stock Exchange of India Limited.

Share Capital Structure

During the year under review, the Company has increased its Authorised Share Capital.

The Company raised the Authorised Share Capital by ?1000 MM. Authorised Share Capital at the end of the Fiscal Year stood at ? 1400 MM, bifurcated as mentioned here under:

Authorized Capital:

?1,40,00,00,000/- (Rupees One Thousand Four Hundred Million only), comprised of 14,00,00,000 (Fourteen Million) Equity Shares of ?10/- each.

The Company's issued share capital structure was as mentioned here under:

Issued, Subscribed and Paid-up Capital:

?1,12,69,13,970/- (Rupees One Hundred Twelve Crores Sixty-Nine Lakh Thirteen Thousand Nine Hundred Seventy only), comprised of 11,26,91,397 (Eleven Crores Twenty-Six Lakh Ninety-One Thousand Three Hundred Ninety Seven) Equity Shares of ?10/- each.

All the shares of the Company are in dematerialisation form.

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

• Raising Capital through Private Placement

The Company raised ?1,03,17,96,720/- (Rupees One Hundred Three Crores Seventeen Lakhs Ninety Six Thousand Seven Hundred Twenty only), through private placement by allotting 16,07,160 (Sixteen Lakhs Seven Thousand One Hundred Sixty) Equity Shares of face value of ? 10/- each at a premium of ?632/- each. 6,22,085 Equity Shares (0.55% holding) )issued to IIFL Special Opportunities Fund - Series 9 and 6,37,640 Equity Shares issued to White Oak Group (3,18,820 Equity Shares, being 0.57% holding to India Acorn Fund Ltd, Mauritius and 3,18,820 Equity Shares to Ashoka India Equity Investment Trust Plc, London).

• Capitalisation of Reserves

Company allotted Bonus shares from Free Reserves and Security Premium in the ratio of 10:1 (10 Equity Shares for 1 Equity Share) to the existing shareholders, total of 10,09,85,670 (Ten Crores Nine Lakhs Eighty Five Thousand Six Hundred Seventy) Equity Shares of ?10 each, amounting to ?1,00,98,56,700 (Rupees One Hundred Crores Ninety-Eight Lakhs Fifty-Six Thousand Seven Hundred only).

Credit rating of the Company

The Company with its continuous outstanding performance, has secured more better credit ratings. In the current Fiscal Year, once again, the Company has maintained the excellent upward trend and the credit rating of the Company is CRISIL A- for long term ratings and CRISIL A2 for short term ratings, appraised by M/s. CRISIL Ratings Limited.

The rating was opted on credit exposure of T275 Cr. (enhanced from previous exposure of T203.17 Cr. for the Fiscal Year 2021). Company's continuous outstanding performance at optimum level made this achievable consecutively in this Fiscal Year as well.

Transfer of amounts to Investor Education and Protection Fund

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

Board and its Committees

The Board of the Company met at regular intervals as specified under the norms under the Companies Act, 2013 for discussing and reviewing various Board and other strategic matters For more details, kindly refer the Corporate Governance Report. Total 12 Board Meetings were convened during the Fiscal Year under review.

Business transactions were all well-arranged throughout the Fiscal Year under review and accordingly Board Meetings were planned-out well with optimum participation.

Board of Directors and Key Managerial Personnel

The Board of the Company is duly constituted, comprising adequate number of Executive, Non-Executive, Women Directors and Independent Directors At the beginning of the Fiscal Year, there were nine Directors on the Board of the Company. However, taking into consideration the requirements with respect to SEBI ICDR Regulations, 2018 and SEBI LODR Regulations, 2015, numerous changes in the Board took place in the Fiscal Year under review.

Following changes took place in the Board and Key Managerial Personnel during the period :

Mr. Ashwin Jayantilal Desai, Managing Director of the Company has attained the age of seventy years and Special Resolution was passed in the Annual General Meeting held on September 18, 2021 for his continuous employment.

Corporate Social Responsibility

During the Fiscal Year under review, the Company fulfilled its CSR obligation of T12.19 MM. Details of CSR activities in accordance with Section 135 read with Schedule VII of the Companies Act, 2013, is provided in Annexure along with details of the CSR Committee composition.

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

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

Directors retirement by rotation

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

Declaration by Independent Directors

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

The Board's evaluation

The Board evaluated the effectiveness of its functioning and that of the Committees and of Individual Directors by seeking their inputs on various aspects of the Board / the Committee governance.

The aspects covered in the evaluation included the contribution to and monitoring of corporate governance practices, participation in the long-term strategic planning and the fulfilment of Directors' obligations and fiduciary responsibilities, including but not limited to, active participation at the Board and the Committee meetings. The Chairman of the Board had one-on-one meeting with the Independent Directors and the Chairman of the Nomination and Remuneration Committee had one-on-one meeting with the Executive and Non-Executive Directors These meetings were intended to obtain Directors' inputs on effectiveness of the Board / the Committee processes. The Board considered and discussed the inputs received from the Directors Further, the Independent Directors at their meeting, reviewed the performance of the Board, Chairman of the Board and of Non-Executive Directors The Policy can be accessed at: https://aether.co.in/wp-content/uploads/2022/08/ Board-Evaluation-Policy.pdf

Familiarization program for Independent Directors

In the reporting Fiscal Year, a familiarization program was hosted by the Company for its Independent Directors Detail of such program is hosted on the website of the Company, accessible at: https://aether.co.in/wp-content/uploads/2022/07/ Familiarisation%20program%20of%20ID.pdf

Directors' Responsibility Statement

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

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

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

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

d. The Directors had prepared the annual accounts on a going concern basis; and

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

Internal Financial Controls

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

1. That IFCS are commensurate with the size and nature of its operations.

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

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

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

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

Deposits

The Company has not accepted any deposit from general public within the meaning of Section 73 of the Companies Act,

2013 and Rules framed thereunder.

Loans, Guarantees and Investments

During the year under review, the Company has not made / given / advanced any Loans, Guarantees and Investments

covered under Section 186 of the Companies Act, 2013.

Related Party Transactions

All the Related Party Transactions that were entered into during the Fiscal Year were in the ordinary course of business and at

arm's length price There are no materially significant Related Party Transactions made by the Company with Promoters (incl.

Promoter Group individuals), Directors, Key Managerial Personnel, Group

Companies or any such designated persons, which are covered under purview of Material Related Party Transactions.

Particulars of such transactions with related parties are duly noted on accounts forming part of the Financial Statements.

Further details of transaction entered with the related parties as defined under Section 2(76) and Section 188 of the Companies Act, 2013, taking into consideration the SEBI LODR Regulations, 2015, are attached herewith as Annexure-A for your kind perusal and information.

Energy conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

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

a. Conservation of Energy

• the steps taken or impact on conservation of energy:

The Company is taking all the efforts to save electricity and other resources to conserve energy and utilise the same optimally.

Strict adherence is cultivated in all the members in the Company to save electricity and other resources.

The Company through the Purchase Power Agreement, using the capacity of 1.2 MW electricity generated through the solar, installed close to the end of the Fiscal Year, as a result of it, total 4.85 Lakh unit of electricity was saved out with that. Further, additional 100 TR Brine Chiller for the new utility, additional 75HP Cooling Tower and DP 60 air compressor were installed.

The Company has installed Variable Frequency Devices (VFDs) along with Distributed Control System (DCS), dedicated automated dedicated energy meters in various high-power consuming equipment to optimize the usage.

• The steps taken by the company for utilizing alternate sources of energy:

The Company has entered into a Purchase Power Agreement to avail the benefit in the form of rebate from the electricity consumed for the manufacturing facility. The service provider will produce the electricity through solar power plant installed and that will lead to redemption in the electricity bills.

• The capital investment on energy conservation equipment (Solar Power):

The Company has, for the Solar Captive Power Agreement, invested ?220 MM, up to March 31, 2022. The total project cost is approximately ?650 MM, which will be completed in the next Fiscal Year 2023.

b. Technology Absorption

• The efforts made towards technology absorption:

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

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

c. Foreign Exchange Earnings and Outgo

The Foreign Exchange earned and the Foreign Exchange outgo during the Fiscal Year 2022:

Earning: T2,568.17 MM Outgo: ?1,059.97 MM

Annual Return

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

Risk Management

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

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

Vigil Mechanism

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

Once again in this Fiscal Year under review as well, no such instances have been reported under unethical and prohibited context. Vigil Mechanism cum Whistle Blower Policy is placed on the website of the Company, accessible at: https:// aether.co.in/wp-content/uploads/2022/08/Whistle-Blower-Policy-Vigil-Mechanism.pdf.

Regulatory action

During the reporting period, an Order dated February 3, 2022, was passed by the Ministry of Corporate Affairs, for the application filed by the Company for condonation of delay in filing of the Special Resolution dated January 12, 2016 for issue of Preference Shares in accordance with Section 42 and 55 of the Companies Act, 2013. No monetary penalty or punishment was levied therein. Apart from it, no such significant and material orders were passed by any Regulators, Courts or Tribunals that could impact the going concern status and operations of the Company in future.

Statutory Auditors and their Report

Statutory Auditors for the Fiscal Year 2021-22 were M/s. Birju S. Shah & Associates, Chartered Accountants, Surat, who were appointed in the 9th Annual General Meeting held on September 18, 2021 for four years, till the conclusion of the Annual General Meeting for the Fiscal Year 2025.

Alike the previous Fiscal Year, no such observations (including any qualification, reservation, adverse remark or

disclaimer) are stated by the Auditors in their Audit Report that may call for any explanation from the Directors. Further, notes to accounts referred to in the Auditor's Report are self-explanatory in nature.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules framed thereunder, M/s. Dhiren R. Dave & Company, Company Secretary in practise was appointed as the Secretarial Auditor of the Company for the Fiscal Year 2022. They undertook the Secretarial Audit activity with utmost depth and integrity. All the conducts of the Company were found in line with the stipulated norms and the compliance system was found in-line with the laws and no instance of any material misconduct found in the audit.

The Secretarial Audit Report for the Fiscal Year ended March 31, 2022 is annexed herewith as Annexure-C. The Report does not contain any qualification, reservations, adverse remarks or disclaimer.

Cost Audit

Maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, is maintained by the Company and accordingly such accounts and records are made and maintained. For the Fiscal Year under review, M/s. Ashvin Ambaliya & Associates, Cost Accountants undertook the Cost Audit of the Company and they have been re-appointed by the Board on recommendation of the Audit Committee for the Fiscal Year 2023 and their remuneration is included in the Notice of the forthcoming Annual General Meeting of the Company, seeking ratification by the Members.

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

Internal Audit

The Board appointed Ms. Ishita H. Rathod, Cost Accountant as the Internal Auditor of the Company as per Section 138 of the Companies Act, 2013 to conduct the Internal Audit of the Company, for Fiscal Year under review.

Employee Stock Option Scheme

Pursuant to the Resolutions of the Board of Directors dated November 18, 2021 and Shareholders' Resolution dated November 18, 2021, Company has instituted Aether Industries Limited Employees Stock Option Plan Scheme 2021 (hereinafter "ESOS Scheme 2021"). The ESOS Scheme 2021 is in-compliance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. However, the same is placed before the Members of the Company for their ratification as per the mentioned norms.

The Company has introduced the Aether Industries Limited Employees Stock Option Scheme 2021 (AIL ESOS 2021) primarily with a view to attract, retain, incentivise and motivate the existing employees of the Company. The AIL ESOS 2021 contemplates grant of options to the eligible employees, as may be determined in due compliance of SEBI SBEB Regulations and provisions of the AIL ESOS 2021. After vesting of options, the Eligible Employees earn a right (but not an obligation) to exercise the vested options within the exercise period and obtain equity shares of the Company subject to payment of exercise price and satisfaction of any tax obligation arising thereon.

The Nomination and Remuneration Committee (Committee) of the Company shall administer AIL ESOS 2021. All questions of interpretation of the AIL ESOS 2021 shall be determined by the Committee and such determination shall be final and binding upon all persons having an interest in AIL ESOS 2021. Details of it are mentioned in the Annexure-D.

Reporting of frauds by Auditors

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

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

Remuneration detail of employees

Pursuant to the Rule 5(1) of Companies (Appointment and Remuneration) Rules, 2014, statement regarding top ten employees in terms of remuneration drawn and other details of the employees as prescribed has to be provided in the Board Report. Currently, there are no employee who draw the remuneration above the limit prescribed therein hence, no details are provided therefor. Other details regarding the same is attached as Annexure-E.

Corporate Insolvency Resolution process initiated under the Insolvency and Bankruptcy Code, 2016

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

Secretarial Standards

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

Human Resources and Industrial Relations

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

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

The Company has aligned and collaborated R&D activities with many institutions and Universities of India. Company has associated with National Chemical Laboratory (NCL, Pune), Institute of Chemical Technology (ICT, erstwhile UDCT, Mumbai), Uka Tarsadia University (UTU, Bardoli) and Sardar Vallabhbhai National Institute of Technology (SVNIT, Surat).

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

Environment, Health and Safety Protection

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

The Company started the sustainability reporting for ESG and as on March 31, 2022 the same was under preparation.

The final report would be available in Fiscal Year 2023 and put up on the website of the Company.

Appreciation and Acknowledgement

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

For and behalf of Board of Directors Ashwin Desai - Managing Director DIN: 00038386

Rohan Desai - Whole Time Director DIN: 00038379

Place: Surat | Date: July 25, 2022