Your Directors are pleased to present you the 27^th Annual Report of Apollo Micro Systems Limited ("the Company” or "AMS”) along with the audited financial statements, for the financial year ended 31^st March, 2024.

1. FINANCIAL RESULTS

The audited financial statements of the Company as on 31^st March, 2024 are prepared in accordance with the relevant applicable Ind AS and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations”) and provisions of the Companies Act, 2013 ("Act”).

The summary of financial performance (standalone & consolidated) for the Financial Year ended 31st March, 2024 and the corresponding figures for the Financial Year ended 31st March, 2023 are as under:

(All amounts in ? Lakhs, except share data and where otherwise stated)

(Previous year figures have been regrouped wherever necessary to confirm to the current year's presentation)

*Effective 4 May 2023, the Company received approval from its equity shareholders for the subdivision of its equity shares with a face value of ?10 each into 10 equity shares with a face value of ?1 each

The financial statements for the year ended 31^st March, 2024 and 31^st March, 2023 have been prepared as per the Ind AS (Indian Accounting Standards). There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

2. COMPANY'S PERFORMANCE

During the year under review FY 2023-24, the standalone performance of your company was reported as under:

The revenue from operations is ? 37,163.42 lakhs against ? 29,752.60 lakhs in the previous year. The Earnings Before Interest, Tax, Depreciation & Amortization ("EBITDA") has been increased by ? 39.12% to ? 8,649.66 lakhs against ? 6,217.49 lakhs in the previous year. The Profit before Tax ("PBT") for the year under review is ? 4,489.91 lakhs as against ? 2,944.04 lakhs in the previous year. The Net profit

after tax of the Company for the year under review has been increased by 66.08% to ?3,166.90 lakhs against ?1,906.82 lakhs in the previous year. The Earning per Share (“EPS”) of the Company for the year under review is ?1.27/- (basic) and ?1.19/- (diluted) per share.

The key aspect of your Company's consolidated performance during the FY 2023-24 are as follows:

The revenue from operations is ? 37,163.42 lakhs against ? 29,752.60 lakhs in the previous year. The Earnings Before Interest, Tax, Depreciation & Amortization (“EBITDA”) has been increased by ? 38.90% to ? 8,569.13 lakhs against ? 6,169.25 lakhs in the previous year. The Profit before Tax (“PBT”) for the year under review is ? 4,409.40 lakhs as against ? 2,895.76 lakhs in the previous year. The Net profit after tax of the Company for the year under review has been increased by 66.01% to ? 3,110.66 lakhs against ? 1,873.78 lakhs in the previous year. The Earning per Share (“EPS”) of the Company for the year under review is ? 1.24/- (basic) and ?1.16/- (diluted) per share.

3. BUSINESS OUTLOOK

India is emerging as a leader of the Global South, balancing its trade, and continuing to maintain geopolitical harmony among several nations. The consistent increase in our revenue share from exporting products, particularly defense products, is clearly setting the stage for the country to take the next big leap toward becoming a world leader, both economically and as a predominantly friendly nation. However, there is serious concern due to the growing perennial conflicts across different parts of the world and the unpredictable nature of international alliances, which keeps the defense sector in an extremely vulnerable position. These scenarios have emphasized the need for self-reliance, as disruptions in the global supply chain can severely affect a country's ability to sustain itself in the event of war. The Indian Government's focus on “Make in India” and “Make for Global” has given a significant boost to the Indian industry.

4. CREDIT RATING

During the year under review, your Company has obtained the Credit Rating from Acuite Rating & Research Limited (“credit rating agency”) to its ? 393.50 Crores Line of Credit (short term 85.00 Crores

& long term 308.50 Crores) of the Company which is as follows:

The outlook on the long-term rating has been assigned as "Stable" by the credit rating agency.

5. SHARE CAPITAL

(a) Capital structure of the Company:

As on 31^st March, 2024, the Authorised Share Capital of the Company stood at ? 36,00,00,000/-(Rupees Thirty-Six Crores Only) comprising of 36,00,00,000/- (Rupees Thirty-Six Crores Only) Equity Shares of ? 1/- (Rupee One Only).

During the year under review, the company had sub divided (stock split) equity share from face value of '10/- to '1/- per share, pursuant to the shareholders' approval for Sub - division of every 1 (One) equity share of face value of '10/- (Rupees Ten only) each into 10 (Ten) equity shares of the face value of Re 1/- (Rupee One only) each, with effect from the record date Thursday, 4^th May, 2023.

During the year under review, the Company allotted 7,47,20,000 equity shares of '1/- (Rupee one each) pursuant to the conversion of warrants into equity. Consequently, as on 31^st March 2024, the issued, subscribed, and paid-up capital of the Company stood at '28,23,58,860/- comprising 28,23,58,860 equity shares of '1/- each.

(b) Status of Shares:

As the members are aware, the Company's shares are compulsorily tradable in electronic form. Out of the total paid up capital representing 28,23,58,860 equity shares, the following equity shares of the Company are in dematerialized and physical form as on 31^st March, 2024:

Note: Pursuant to the amendment in Regulation 40 of the SEBI Listing Regulations, dated June 8, 2018 & SEBI date extension circular dated Dec 03, 2018, has mandated that transfer of securities would be carried out in dematerialized form only effective April 01, 2019. So, it is requested to all the Members holding the shares in physical form to dematerialize the same for giving effect to any transfer of company's securities.

(c) Preferential issue of Share Warrants:

The company had allotted 98,85,070 convertible warrants on a preferential basis to promoters and non-promoters, with an option to convert the same into an equal number of equity shares at a price of '186/- per warrant, including a premium of '176/- per share on the face value of '10/-per share, within a period of 18 months from the date of allotment of warrants, i.e., 5th December 2022, as per the terms and conditions approved in the Extraordinary General Meeting held on 12th

November 2022. The Company had also received in-principle approval from BSE Limited and National Stock Exchange of India Limited on 22nd November 2022 for this matter.

Subsequently, due to the stock split, where one equity share of '10/- each was subdivided into 10 equity shares of '1/- each, each warrant was convertible into 10 equity shares of '1/-each. During the year under review, 74,72,000 warrants were converted into 7,47,20,000 equity shares. As of 31^st March, 2024, out of the total 98,85,070 warrants, 24,13,070 warrants remained outstanding for conversion into equity shares of '1/- each.

(d) Allotment of Equity Shares upon exercise of warrants:

During the year under review, the following allotments of equity shares took place upon the exercise of warrants:

Note: The paid-up share capital of the company prior to the aforesaid allotments i.e., as on 01^st April, 2023 was '20,76,38,860 comprising 2,07,63,886 Equity Shares of '10 each.

6. EXTRACT OF THE ANNUAL RETURN [SECTION 134 (3) (a) & SECTION 92(3)]

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2024 is available on the Company's website at https://apollo-micro.com/wp-content/uploads/2024/08/ANNUAL-RETURN-2023-24.pdf

7. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS [SECTION 134 (3) (b)]:

During the year under review, Six (6) meetings of the Board of Directors of the Company were held on 29^th May, 2023, 10^th August, 2023, 04^th September, 2023, 10^th November, 2023, 03^rd February, 2024 and 21^st March, 2024. The attendance of Directors for the above

meetings is given in the Corporate Governance Report that forms part of this annual report. The maximum interval between any two meetings did not exceed 120 days.

The Detailed information of meetings of board of directors is given in the Corporate Governance Report annexed to this annual report.

In terms of requirements of Schedule IV of the Act, a separate meeting of Independent Directors held on 27^th March, 2024 to review the performance of the Non-Independent Directors; the Chairperson; the entire Board and its Committees thereof and; assess the quality, quantity and timelines of the flow of information between the Management and the Board.

8. DIRECTOR'S RESPONSIBILITY STATEMENT [SECTION 134 (3) (c) & 134(5)]

Pursuant to Section 134(5) of the Companies Act, 2013 (the "Act"), the Board of Directors, to the best of its knowledge and ability, confirm that:

(a) in the preparation of the annual accounts for the period ended 31st March, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors have 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 of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this 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 have 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 have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

9. DETAILS OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT [SECTION 134 (3) (ca)]:

During the year under review, Statutory Auditor, Secretarial Auditor and the Cost Auditor have not reported any incident of fraud under section 143(12) of the Act.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS SECTION 134 (3)(d)]

The Board took on record the declaration and confirmation submitted by the independent directors

regarding their meeting the prescribed criteria of independence, after undertaking due assessment of the veracity of the same as required under Regulation 25 of the SEBI Listing Regulations.

The Company has received and taken on record the declarations received from the Independent Directors of the Company as required pursuant to section 149(7) of the Act stating that meet the criteria of independence as provided in section 149 (6) of the Act, as amended and Regulation 16(1)(b) of the SEBI Listing Regulations as amended. There has been no change in the circumstances affecting their status as independent directors of the Company.

10. FAMILIARISATION PROGRAMME

In compliance with the requirements of the SEBI Listing Regulations, the Company has put in place a familiarisation programme for the Independent Directors to familiarise them with their roles, rights and responsibilities as Independent Directors, the working of the Company, nature of the industry in which the Company operates, business model and so on. The same is also available on the Company website https://apollo-micro.com/investors/ under the Section “Investors”.

11. COMMITTEES OF THE BOARD

The Board of Directors has constituted various mandatory and non-mandatory Committees to deal with specific areas and activities which concern the Company and requires a closer review. The Committees are formed with approval of the Board and function under their respective Charters. These Committees play an important role in the overall management of day-to-day affairs and governance of the Company. The Board Committees meet at regular intervals and take necessary steps to perform its duties entrusted by the Board. The Minutes of the Committee Meetings are placed before the Board for noting. The Board currently has the following Committees:

(a) Audit Committee

The Audit Committee was constituted by our Board in accordance with Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations. The composition, quorum, terms of reference, function, powers, roles and scope are in accordance with Section 177 of the Act and the provisions of Regulation 18 of the SEBI Listing Regulations. All the members of the committee are financially literate and Mrs. Karunasree

Samudrala, Chartered Accountant the Chairman of the Committee is an Independent Director and possesses the relevant financial expertise.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

(b) Corporate Social Responsibility (CSR) Committee

The Company believes in undertaking business in such a way that it leads to overall development of all stake holders and society. The Company considers social responsibility as an integral part of its business activities and endeavours to utilize allocable CSR budget for the benefit of society.

The CSR Committee has been constituted as required under the provisions of section 135 of the Act. The details regarding composition, objectives, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

The Committee formulated and recommended to the Board the CSR Policy. On the recommendations of the CSR Committee, the Board approved and adopted the CSR Policy of the Company. The Corporate Social Responsibility Policy is posted under the Investors section of the Company's website at: https://apollo-micro.com/wp-content/ uploads/2017/12/CSR-POLICY.pdf

As per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, annual report on CSR is prepared and the same is enclosed as Annexure-A to this Report.

(c) Stakeholder's Relationship Committee

Stakeholder's Relationship Committee has been constituted by the Board in accordance with Section 178 (5) of the Act.

The details regarding composition, terms of references, powers, functions, scope, meetings, attendance of members and the status of complaints received during the year are included in Corporate Governance Report which forms part of the Annual Report.

(d) Nomination and Remuneration Committee

The Nomination and Remuneration Committee has been constituted by the Board in accordance with section 178 of the Act and Regulation 19 of SEBI Listing Regulations.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

Policy on Remuneration of Directors, KMPs and other employees

The Policy of the Company on remuneration of Directors, KMPs, Senior Management and other employees including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 is made available on the Company's website https://apollo-micro. com/investors/ under the section “Investors”. The website link is http://apollo-micro.com/ wp-content/uploads/2017/09/REMUNERATION_ POLICY.pdf

(e) Risk Management Committee

The Risk Management Committee was constituted pursuant to resolution of the Board, which has been entrusted with the responsibility to assist the Board in overseeing and approving the Company's enterprise-wide risk management framework.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

(f) Executive Committee of Directors & CFO

The Executive Committee of Directors and Chief Financial Officer (CFO) (“Executive Committee”) has been formed by the Board, under the provisions of Section 179(3) of the Act and rules made there under in order to have the timely and expeditious execution of routine financial matters.

The details regarding composition, terms of references, powers, responsibilities, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

(g) Securities Allotment Committee

Securities Allotment Committee was constituted pursuant to resolution of the Board, which has been entrusted with the responsibility to assist the Board in overseeing and considering the allotment of securities.

The details regarding composition, terms of references, powers, functions, scope, meetings and attendance of members are included in Corporate Governance Report which forms part of the Annual Report.

12. EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE [SECTION 134 (3) (f)]:

By the Statutory Auditor in their Report: has no qualification or adverse remarks: NIL

By Company Secretary in Practice in Secretarial Audit Report: has below mentioned observations.

◊ The Registrar of Companies, Hyderabad (ROC) had issued a show-cause notice dated 04/06/2024 for nonfiling of Cost Audit report in Form CRA-4 for FY 202223. In this connection, the Company has responded to the show cause notice on 12/07/2024 stating the nonfiling the said form was due to oversight. The Company filed the said form on 12/07/2024 and reported the same in its response to show cause notice. There is no action taken by the ROC till the date of this Report.

◊ BSE Limited levied a fine of '20,000/- plus applicable taxes w.r.t non-compliance pursuant to SEBI (Issue of Capital and Disclosure Requirements) Regulations,

2018 read with point 4, sub-point 4 of SEBI circular no. SEBI/HO/CFD/DIL2/CIR/P/2019/94 dated 19th August

2019 wherein there was a delay of one (1) day in filing the trading application for 2,29,99,990 equity shares allotted upon conversion of share warrants. The company paid the fine amount on 19th July 2023."

The Board took note of the above observations of the auditors at their meeting held on 09^th August, 2024 and resolved to ensure due compliance henceforth and make sure that the reporting's are filed on time.

Secretarial Audit Report is attached to this report as Annexure-B

13. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 [SECTION 134

(3) (g)]

During the financial year 2023-24, the Company has given loan to Ananya SIP RF Technologies Private Limited, subsidiary Company (details mentioned below) and has not given any guarantees to any person or other bodies corporate or acquired securities of any other body corporate as referred to in Section 186 of the Act and the Companies (Meetings of Board and its Powers) Rules, 2014.

Further, during the period under review, the Company invested in its Subsidiary, M/s. Apollo Defence Industries Private Limited, which was incorporated during the financial year, by subscribing to 7,600 equity shares of '10 each, amounting to a total investment of '76,000.

During the year under review, the Company has given a loan of ? 391.70 lakhs to its subsidiary M/s. Ananya SIP RF Technologies Private Limited and amount outstanding as on 31^st March, 2024 is ? 976.26 lakhs. The loan to the said subsidiary is repayable on demand with interest at 10.50% p.a.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES [RULE 8(5)(iv) OF COMPANIES (ACCOUNTS) RULES, 2014]

"Your Company has two subsidiary companies: M/s. Ananya SIP RF Technologies Private Limited (CIN: U74990TG2015PTC097610) and M/s.

Apollo Defence Industries Private Limited (CIN: U26109TS2023PTC177370). The Company holds a 51% stake in M/s. Ananya SIP RF Technologies Private Limited and a 76% stake in M/s. Apollo Defence Industries Private Limited. Apart from these, the Company does not have any joint ventures or associate companies during the year under review"

Pursuant to the provisions of Section 129, 134 and 136 of the Act read with rules made thereunder and Regulation 33 of the SEBI Listing Regulations the Company has prepared consolidated financial statements of the Company and a separate statement containing the salient features of financial statement of subsidiaries in Form AOC-1 forms part of this Annual Report as Annexure-C.

The annual financial statements and related detailed information of the subsidiary companies shall be made available to the members of the holding and subsidiary company seeking such information on all working days during business hours. The financial statements of the subsidiary company shall also be kept for inspection by

any members during working hours at the Company's registered office and that of the subsidiary companies concerned.

In accordance with Section 136 of the Act, the audited financial statements, including consolidated financial statements and related information of the Company and audited accounts of its subsidiaries, are available on website, https://apollo-micro.com/investors/. Pursuant to Section 134 of the Act read with rules made thereunder, the details of developments of subsidiaries of the Company are covered in the Management Discussion and Analysis Report which forms part of this Report.

14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES [SECTION 134 (3) (h)]

All related party transactions entered into by the Company during the financial year 2023-24 were in the ordinary course of business and on arm's length basis and in compliance with the applicable provisions of the Act and the SEBI Listing Regulations. During the financial year under review, none of the transactions entered into with related parties were material as defined under the Act and SEBI Listing Regulations.

The particulars of contract or arrangements entered into by the Company, during the financial year 202324, with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto has been disclosed in Form No. AOC -2, attached to the Board's report as Annexure-D. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company's website https://apollo-micro.com/wp-content/uploads/2017/09/policy_on_ related_party_transactions.pdf under the Section “Investors”.

15. RESERVES [SECTION 134 (3) (j)]

During the financial year 2023-24, the Board of Directors has not recommended transfer of any amount of profit to any reserves. Hence, the amount of profit for the financial year under review has been carried forward to the Statement of Profit and Loss.

16. DIVIDEND [SECTION 134 (3) (k)]

Your Directors have pleasure in recommending a dividend of 5% (? 0.05/- per Equity Share of face value of ?1/- each) on the fully paid up Equity Shares out of the profits of the Company for the financial year 202324. The said dividend, if approved by the shareholders,

would result into a cash outflow of approximately ? 1,53,24,478/-.

The dividend pay-out for the year under review has been finalized in accordance with the dividend distribution policy of the company.

17. DIVIDEND DISTRIBUTION POLICY

Regulation 43A of the SEBI Listing Regulations mandates the top 1000 listed companies based on their market capitalization to formulate a Dividend Distribution Policy. We are pleased to inform you that as on 31^st March, 2024, your Company is among the top 1000 listed entities. The Company has a Dividend Distribution Policy in place prior to the applicability under Regulation 43A of the SEBI Listing Regulations and the same is displayed on the company's website under the web link https://apollo-micro.com/wp-content/uploads/2017/12/DIVIDNED-DECLARATION-POLICY.pdf . The Policy is also annexed herewith as Annexure-E to the Board's Report.

18. MATERIAL CHANGES AND COMMITMENTS, IF ANY [SECTION 134 (3) (l)]

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of this report.

19. CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO [SECTION 134 (3) (m)]:

The Company continues its efforts to reduce and optimize the energy consumption at its manufacturing facility.

A. Conservation of Energy

The operations of the company are not energy intensive. Adequate measures are taken to conserve and reduce the energy consumption like usage of LED Lights and power saving centralized air conditioners.

Research & Development

During the year under review, we have significantly invested in development of Homing System for Light Weight Torpedoes, Actuators for SWARM and Missiles, Seeker Signal Processing Systems, Moored Mine Signal Processing Systems and other Critical Avionic Systems.

Our Research & Design team has started focusing on several Make Proposal of Tri-Services for which technology build blocks needs augmentation. We have participated in Make-II Proposals and has been awarded a Make-II project by Indian Army. The technology development requisite for such Make Proposals was also taken up by our team.

Being a technology company and our future growth is always based on the investments done on R&D from time to time, we foresee the results to hit into business by FY 2025 and FY 2026. We have spent ? 2,978.83 Lakhs/- towards our R&D activities in this Financial Year.

B. Technical Absorption

The Company works on in house Technology.

C. Foreign Exchange Earnings and Outgo:

Foreign Exchange outgo and earnings

20. ANNUAL EVALUATION ON PERFORMANCE [SECTION 134(3) (p)]:

Pursuant to the provisions of the Act and SEBI Listing Regulations, the Board has carried out an annual evaluation of performance of its own, the Committees thereof and the Director

The Board is pleased to report that the result thereof show that the Company is well-equipped in the management as well as the governance aspects.

The Independent Directors at their separate meeting held on 27^th March, 2024 reviewed the performance of Non-Independent Directors (Executive & NonExecutive), Chairperson, performance of the Board as a whole and its various committees and also assessed the quality, quantity and timelines of flow of information between the Company Management and

the Board.

The Independent Directors expressed their satisfaction on the overall functioning and effectiveness of the Board, Committees and performance of individual Non-Independent Board members and the Chairman.

The Board (excluding the Independent Directors being evaluated) has evaluated the performance of the Independent Directors on parameters such as Knowledge, Experience, Integrity, Independence of judgment, adherence to Code of Conduct, Corporate Governance, Contribution, attendance& level of participation and fulfilment of Independence Criteria etc. in accordance with the Company's "Policy https:// apollo-micro.com/wp-content/uploads/2017/09/ POLICY_FOR_EVALUATION_OF_DIRECTORS_AND_KEY_ MANAGERIAL_PERSONNEL_AND_OTHER_EMPLOYEES. pdf for evaluation of Directors and Key Managerial Personnel and other employees”.

The Board has expressed its satisfaction to the performance of the Independent Directors and appreciated the level of participation of Independent Director

21. EMPLOYEE STOCK OPTIONS SCHEME [RULE 12(9) OF COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014]:

The Company has in place the Employee Stock Option Scheme 2018 (ESOS-2018) to attract, reward, motivate and retain its employees, who have shown high levels of individual performance and for the unusual efforts, put in by them to improve the operational and financial performance of the Company, which ultimately contributes to the success of the Company.

During the financial year 2023-24, no grant of options was made to the employees of the company, under the ESOS scheme. The disclosures according to the provisions of the Act and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as on 31st March, 2024 with regard to the Apollo Employee Stock Option Scheme 2018 (ESOS-2018) are annexed to this Report as Annexure-F.

22. CHANGE IN THE NATURE OF BUSINESS [RULE 8(5) (ii) OF COMPANIES (ACCOUNTS) RULES, 2014]

There is no change in the nature of the business of the Company during the financial year 2023-24.

23. CHANGE IN THE DIRECTORS OR KEY MANAGERIAL

PERSONNEL [RULE 8(5)(iii)& 8(5)(iii)(a) OF

COMPANIES (ACCOUNTS) RULES, 2014]

The composition of the Board is in conformity with Regulation 17 of the SEBI Listing Regulations and Section 149 of the Companies Act, 2013 mentioned in Corporate Governance report attached hereto as Annexure H. There is an optimum combination of Executive and Non-Executive Directors. The Company has 8 (Eight) Directors as on 31st March, 2024. Out of the 8 (Eight) Directors 3 (Three) are Executive Directors, 3(Three) Non-Executive- Independent Directors and 2 (Two) Non- Executive Non-Independent Director. The Chairman of the Company is a non-executive independent director.

During the financial year 2023-24, the following changes took place in the composition of the Board.

* Re-appointment of Mrs. Karunasree Samudrala as the Independent Director the Company for the Second Term of 5 years from of 29^th May 2023 to 28^th May 2028.

Pursuant to the provisions of the Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with the rules framed under the SEBI Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

Ministry of Corporate Affairs vide its Notification number G.S.R. 804(E) dated October 22^nd, 2019 had amended the Companies (Appointment and Qualification of Directors) Rules, 2014 and its amendment thereof requiring the registration of Independent Directors in the databank maintained by the Indian Institute of Corporate Affairs (“MCA”) and passing the online proficiency self-assessment test conducted by the IICA within two(2) year from the date of inclusion of his/her name in the data bank.

◊ Mr. Raghupathy Goud Theegala, Independent Director has duly registered his name in the data bank of IICA w.e.f 25th February, 2020 and passed the online proficiency self-assessment test on 22nd February 2022.

◊ Mrs. Karunasree Samudrala, Independent Director has duly registered her name in the data bank of IICA w.e.f 25th February, 2020 and passed the

online proficiency self-assessment test on 10th April, 2020.

◊ Mr. Chandrashekar Matham, Independent Director has duly registered his name in the data bank of IICA w.e.f 06th August, 2024 and is exempted from taking the online proficiency self-assessment test.

In opinion of the Board, they fulfill the conditions specified in the Act and the Rules made there under for the appointment as Independent Directors and are independent of the management.

The Independent Director's possess the relevant integrity, expertise, experience and proficiency.

During the year under review, the non-executive directors the Company had no pecuniary relationship or transactions with the Company other than sitting fees, commission, if any.

During the financial year 2023-24, the following changes took place in the Key Managerial Persons (KMP's) of the Company.

1. Resignation of Mr. Vitta Chaitanya as the Company Secretary and Compliance Officer of the Company with effect from of 31^st May, 2023.

2. Appointment of Mr. Sudarshan Chiluveru, CFO as the Compliance Officer of the Company with effect from 31^st May, 2023.

3. Appointment of Mrs. Rukhya Parveen as the Company Secretary and Compliance Officer of the Company with effect from 26^th August, 2023.

Mr. Aditya Kumar Halwasiya (DIN: 08200117) retires by rotation at the ensuing 27^th Annual General Meeting and being eligible, offers himself for reappointment.

Additional information on reappointment of Mr. Aditya Kumar Halwasiya (DIN: 08200117) as director and as required under regulation 36(3) of the SEBI Listing Regulations is given in the Notice convening the forthcoming AGM.

24. DEPOSITS [RULE 8(5) (v) OF COMPANIES

(ACCOUNTS) RULES, 2014]

The Company has not accepted any deposits within the meaning of Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. There are no unpaid or unclaimed deposits as the Company has never accepted deposits within the

meaning of the Act and the rules made thereunder.

25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL [RULE 8(5) (vii) OF COMPANIES (ACCOUNTS) RULES, 2014]

During the financial year 2023-24, the Company hasn't received any significant and material orders that impact the going concern status and company's operations in future.

26. INTERNAL FINANCIAL CONTROLS [RULE 8(5)(viii) OF COMPANIES (ACCOUNTS) RULES, 2014]

The Company has kept in place adequate financial controls to check and control any defects and frauds in the Company. Adequate internal control systems commensurate with the nature of the Company's business, its size, and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Vigil Mechanism Policy and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

27. PARTICULARS OF EMPLOYEES

The information required under section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 respectively, are given in Annexure-G, which forms partof this Report.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section

136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

28. AUDITORS AND AUDIT REPORT

(a) Statutory Auditors & their Reports

M/s. S T Mohite & Co. (FRN 011410S), Hyderabad were appointed as Statutory Auditors of the Company in the Annual General Meeting held on August 25, 2022 for a period of 5 Years and holds office until the conclusion of the 30^th Annual General Meeting to be held in the calendar year 2027.

Further, the remuneration to be paid to Statutory Auditors for FY 2024-25 is ? 7.50 Lakhs plus out of pocket expenses and applicable taxes and the remuneration for the remaining tenure of their second term as Statutory Auditors shall be mutually agreed between the Board of Directors and M/s. S T Mohite & Co, from time to time.

The report of the Statutory Auditor forms part of this Annual Report and Annual Accounts 2023-24. The said report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors did not report any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3) (ca) of the Act.

Further, M/s. S T Mohite & Co. have confirmed their eligibility for their appointment as Statutory Auditors and the same are within the limits as specified in section 141 of the Companies Act, 2013 and have also confirmed that they are not disqualified from continuing as Auditors of the Company.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

(b) Internal Auditors

As per the provisions of Section 138 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors in its meeting held on 20^th May, 2024 had reappointed M/s Surya Pavan & Co, Chartered Accountants, Vijayawada (ICAI Firm Registration No. 015612S), as Internal Auditor to conduct the internal audit of the

Company for the Financial Year 2024-25 on a remuneration of '1,50,000/- per annum

The Internal Audit Report for the Financial Year 2023-24 issued by M/s Surya Pavan& Co, Chartered Accountants, Vijayawada is submitted which is self-explanatory and do not call for any further explanation of the Board.

(c) Cost Auditors

In terms of Section 148 of the Act, the Company is required to maintain cost records and have the audit of its cost records conducted by a Cost Accountant. Cost records are prepared and maintained by the Company as required under Section 148(1) of the Act.

The Board of Directors of the Company in its meeting held on 20^th May, 2024 has, on the recommendation of the Audit Committee, approved the appointment of M/s G H Reddy & Associates, Cost Accountants (Firm Registration Number - 002110) for the year ending March 31, 2025. M/s G H Reddy & Associates have experience in the field of cost audit.

The Board, also on the recommendations of the Audit Committee approved the remuneration of ?1.5 lakh (Rupees One lakh Fifty Thousand only) (excluding applicable taxes and reimbursement of out-of-pocket expenses) payable to Cost Auditors for FY 2024-25. The same is placed for ratification of Members and forms part of the Notice of the AGM.

(d) Secretarial Auditors

As per the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Board of Directors in its meeting held on 10^th August, 2023 had appointed M/s. MNM & Associates, Company Secretaries in Practice (Firm Registration No: P2017TL059600), Hyderabad as Secretarial Auditor of the Company, to conduct the Secretarial audit for the Financial Year 2023-24.

The Secretarial Audit Report, pursuant to the provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, issued by Ms. Sridevi Madati, Practicing Company Secretary, in Form MR-3 for the financial year 2023-24 is annexed to

the Board's Report as Annexure-B. The secretarial auditors' report is forming the part of this report and there are no qualifications, observations, adverse remarks or disclaimer in the said Report.

Further, the Board has approved the appointment of M/s. MNM & Associates, Company Secretaries, Hyderabad (Firm Registration No: P2017TL059600) as the Secretarial Auditor of the Company for the Financial Year 2024-25 in the Board Meeting held on 20^th May, 2024.

29. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report ("MD&A") for the year under review as stipulated under the SEBI Listing Regulations is presented in a separate section forming part of this Annual Report.

30. REPORT ON CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and as stipulated under the SEBI Listing Regulations. A separate section titled Corporate Governance Report as Annexure-H under the SEBI Listing Regulations along with a Corporate Governance Certificate from the Practicing Company Secretary in the Annexure-i and CFO Certification in compliance with Regulation 17(8) of SEBI Listing Regulations in the Annexure-J forms the part of this report.

31. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit Functions reports to the Board including Audit Committee of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

32. VIGIL MECHANISM

The Company's Board of Directors, pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, has framed 'Whistle Blower Policy' for Directors and employees of the Company. The policy is to provide a mechanism, which ensures adequate safeguards to employees and Directors from any victimisation on raising of concerns of any violations of legal or regulatory requirements, incorrect or

misrepresentation of any, financial statements and reports, and so on. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. The Whistle Blower Policy is hosted on the Company's website https://apollo-micro.com/wp-content/uploads/2017/09/WHISTLE-BLOWER-POLICY. pdf under the section “Investors”.

33. INVESTORS EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to section 124 of the Act, Dividends that are unclaimed for a period of seven years are required to be transferred to the IEPF, established by the Government of India. During the year under review, there was no outstanding amount of unclaimed dividends which was liable to be transfer to the IEPF.

34. HUMAN RELATIONS

The Company continues to have cordial and harmonious relationship with its employees and thank all employees for their cooperation and the contribution towards harmonious relationship and progress of the company.

35. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company is committed to provide work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment. The Company is also committed to promoting a work environment that is conducive to the professional growth of its employees and encourages equality of opportunity and will not tolerate any form of sexual harassment and to take all necessary steps to ensure that its employees are not subjected to any form of harassment.

Thus, in order to create a safe and conducive work environment the Company has in place a policy for prevention of sexual harassment in accordance with the requirements of the Sexual Harassment of women at workplace (prevention, Prohibition, & Redressal) Act, 2013.

Further, the Company has complied with provisions relating to constitution of Internal Complaints Committee (“ICC”) under Sexual Harassment of women at workplace (Prevention, Prohibition, & Redressal) Act, 2013. The Committee has been set up to redress

complaints received regarding sexual harassment. The detail of the committee members is available on the website of the Company https://apollo-micro.com/ wp-content/uploads/2019/09/REVISED-Workplace-Sexual-Harassment-Policy-apollo-micro-systems-limited.pdf under the section “Investors”. All employees (permanent, contractual, trainees, temporary) are covered under this policy. During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

36. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR [RULE 8(5)(xi) OF COMPANIES (ACCOUNTS) RULES, 2014]

During the year under review, the Company did not make any applications under the Insolvency and Bankruptcy Code, 2016. Additionally, there are no ongoing proceedings against the Company under the said Code.

37. DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS [RULE 8(5)(xii) OF COMPANIES (ACCOUNTS) RULES, 2014]

During the financial year under review, there has been no instance of one-time settlement with any banks or financial institutions. Therefore, no valuation differences are reported.

38. APPLICABILITY OF BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

In accordance with Regulation 34(2)(f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, the top 1,000 listed entities based on market capitalization as on 31^st March of every financial year are required to include a Business Responsibility and Sustainability Report (BRSR) as part of their Annual Report.

As of March 31, 2024, Apollo Micro Systems Limited is ranked within the top 1,000 listed entities based on its market capitalization, thereby making the BRSR applicable to the Company for the financial year 202324.

The BRSR report outlines the Company's initiatives and

performance related to sustainability and responsible business conduct, demonstrating our commitment to ESG principles.

The BRSR report has been prepared in compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and is annexed to the Board's Report as Annexure - K.

39. ACKNOWLEDGEMENTS

Sd/-

Place: Hyderabad Karunakar Reddy Baddam

Date: 09^th August, 2024 Managing Director

DIN:00790139

The Directors thank all customers, bankers, investors, shareholders, vendors and other stakeholders for their continued support and patronage during the year under review. The Board appreciates its employees for their efforts, hard work and dedication, which enabled the Company to achieve the targets and recognitions.

For and on behalf of the Board

APOLLO MICRO SYSTEMS LIMITED

Sd/-

Krishna Sai KumarAddepalli

Whole Time Director (Operations)

DIN: 03601692