Equity Analysis

Dear Members, Your Directors have pleasure in presenting their 13th Annual Report of the Company along with Audited Financial Statement for the year ended 31st March 2024.

During the year ended 31st March 2024, Operational Revenue including other income on Standalone basis was Rs. 150.83 Lakhs and Profit / (Loss) Before Tax was Rs. (129.24) Lakhs V/s Rs. 14.47 Lakhs in previous year while Net Profit / (Loss) for the financial year ended 31st March 2024was Rs. (129.35) Lakhs V/s Rs. 12.91 Lakhs in previous year.

On a consolidated basis the operational revenue including other income was Rs. 32.85 Lakhs and Loss Before Tax was Rs 177.60 Lakhs while Net loss for the financial year ended 31st March 2024 183.98 Lakhs.

Your Company has taken several remedial steps to meet the challenges viz. measures in saving cost at all front of operations, optimize use of available resources etc.

During the year, there is no change in nature of business.

4. DIVIDEND AND RESERVE:

The Board does not recommend any dividend for the Financial Year 2023-24 in view of the current market outlook and to preserve cash. In view of the exceptional circumstances during the year 2023-24, and the good reserves position, no amount has been transferred to reserves.

The Company has increased its Authorised Capital of the Company is Rs. 16,00,00,000. The paid-up equity shares capital of the Company as on 31st March 2024 is Rs. 13,66,73,333/- (Rupees Thirteen Crores Sixty-Six Lakhs Seventy-Three Thousand Three Hundred Thirty-Three only) divided into 13,66,73,333 Equity shares of the face value of Re. 1/- (Rupee One) each. The said shares are listed on BSE Limited. The Board in their meeting held on 14th December 2024 have approved the allotment of 10,51,33,333 Rights Equity Shares fully paid up at an issue price of Re. 1.00 per Rights Equity Share. Further, the board in their meeting held on 28th May 2024 have issued upto 1,34,36,739 (One Crore Thirty Four Lakhs Thirty Six Thousand Seven Hundred Thirty Nine Only) Equity Shares at a price of Rs.19.71(Rupees Nineteen and Paise Seventy One Only) per share of face value of Re.1/- (Rupee One) each (“Equity Shares”) at a premium of Rs.18.71 (Rupees Eighteen and Paise Seventy One Only) aggregating to Rs.26,48,38,126 (Twenty Six Crore Forty Eight Lakhs Thirty Eight Thousand One Hundred Twenty Six Only) to Specified person other than Promoter Category. On 13th July 2024, the board in their meeting have allotted 1,28,27,648 (One Crore Twenty-Eight Lakhs Twenty-Seven Thousand Six Hundred Forty-Eight Only) Equity Shares of face value of Re.1/- (Rupee One) each (“Equity Shares”) at a price of Rs. 19.71(Rupees Nineteen and Paise Seventy-One Only) (Issue price) per equity share [including a premium of Rs.18.71 (Rupees Eighteen and Paise Seventy-One Only)] aggregating Rs. 25,28,32,942.08 (Rupees Twenty-Five Crore Twenty-Eight Lakhs Thirty-Two Thousand Nine Hundred Forty-Two and Paise Eight Only).

Aerpace Supercars Private Limited is Subsidiary Company of the Company. Form AOC-1 pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, is attached as “Annexure A”.

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

Pursuant to the recommendation of the Nomination and Remuneration Committee the Board at its Meeting held on 2 nd September 2023, have appointed Mr. Prem Singh Rawat as Additional Director in the capacity of Non-executive Director. Further, in Annual General Meeting held on 27th September 2023, the shareholders of the company have approved the appointment of Mr. Prem Singh Rawat as a Non-executive Director.

Also, as per the recommendation of the Nomination and Remuneration Committee the Board at its Meeting held on 14th May 2024 have appointed Mr. Ravi Soni as an Additional director in the capacity of Executive Director of the Company. Further, in Extra Ordinary General Meeting of the Company held on 27th June 2024, the shareholders of the company have approved the appointment of Mr. Ravi Soni as an Executive Director.

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Prem Singh Rawat retires by rotation and being eligible has offered herself for re-appointment.

The necessary resolutions for the appointment /re-appointment of the above-mentioned director and their brief profile have been included in the notice convening the ensuing Annual General Meeting. The brief resume of the Director seeking appointment / re-appointment at the ensuing Annual General Meeting, in pursuance of Regulation 36(3) of SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015 is annexed to the Annual General Meeting Notice.

Mrs. Amisha Shah ceased to be director of the company with effect from 30th June 2024.

All the directors of the company have confirmed that they satisfy the fit and proper criteria as prescribed under the applicable regulations and that they are not disqualified from being appointed as directors in terms of section 164(2) of the Companies act, 2013.

Mrs. Akanksha Sunny Bilaney (DIN: 07093148) and Mr. Virendra Singh Verma (DIN: 07843461)are Independent Directors of the company. The Company has received declaration of Independence from all the Independent Directors as required under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence under Section 149(6) of the Companies Act, 2013 read with Regulation 16(1)(b) of SEBI (LODR). In the opinion of the Board, the Independent Directors fulfil the said conditions of Independence. The Independent Directors have also confirmed that they have complied with the Company's Code of Business Conduct & Ethics. In terms of requirements of the Listing Regulations, the Board has identified core skills, expertise and competencies of the Directors in the context of the Company's business for effective functioning, which are detailed in the Corporate Governance Report.

The Ministry of Corporate Affairs (‘MCA') vide Notification No. G.S.R. 804(E) dated 22nd October 2019 and effective from 1 st December 2019 has introduced the provision relating to inclusion of names of Independent Directors in the Data Bank maintained by Indian Institute of Corporate Affairs (‘IICA). All Independent Directors of your Company are registered with IICA. In the opinion of the Board, Independent Directors possess the requisite integrity, experience, expertise, proficiency and qualifications.

The Board of Directors have carried out an annual evaluation of its own performance, Board Committee and individual Directors pursuant to provision of the Act and the corporate governance requirement as prescribed by the Securities and Exchange Board of India (Listing Obligation & Disclosure Requirement) Regulation, 2015. The performance of the board was evaluated by the board after taking inputs from all the Directors on the basis of criteria such as the Board Composition and structure, effectiveness of board process, information and functioning, etc. as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5th January 2017.

A structured questionnaire was prepared after taking into consideration various aspects of Board's functioning like composition of the Board and its Committees, Board culture, performance of specific duties and obligations keeping in view applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The evaluation process includes various aspects to determine the performance of Directors of the Company. The basis for this evaluation includes fulfilment of independence criteria, qualifications, knowledge, level of engagement and contribution, skills and experience in the respective fields, honesty, integrity, ethical behaviour and leadership, independence of judgment, attendance at the meetings, understanding the business, regulatory, competitive and social environment, understanding strategic issues and challenges etc. The Board of Directors expressed their satisfaction over the evaluation process.

In a separate meeting of independent directors which was held on 29th January 2024, performance of non-independent and the board as whole was evaluated, taking into account the views of executive directors and non-executive directors. Performance evaluation of independent director was done by the entire board, excluding the independent director being evaluated.

The Board recognizes the importance of a diverse composition and has adopted a “Board Diversity Policy” which sets out the approach to diversity. The Board Diversity Policy of the Company is available at www.aerpace.com.

The Company undertakes and makes necessary provision of an appropriate induction program for new Director(s) and ongoing training for existing Directors. The new Director(s) are introduced to the Company culture, through appropriate training programs. Such kind of training programs helps develop relationship of the directors with the Company and familiarize them with Company processes. The management provides such information and training either at the meeting of Board of Directors or at other places.

The induction process is designed to:

• build an understanding of the Company's processes and

• fully equip Directors to perform their role on the Board effectively

Pursuant to section 134(5) of the Companies Act, 2013, the Board, to the best of their knowledge, hereby confirmed that:

i. In the preparation of Annual Accounts and Financial Statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

ii. They have selected such accounting policies and applied them consistently and made judgment 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.

iii. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. They have prepared annual accounts on a going concern basis

v. They have laid down internal financial control to be followed by the company and that such internal financial control are adequate and were operating effectively.

vi. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business. A tentative annual calendar of the Board and Committee Meetings is informed to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings.

Notice of meeting of Directors and Committees is given well in advance to all the Directors of the Company. The agenda of the Board / Committee meetings is circulated not less than 7 days prior to the date of the meeting. The agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.

During the year under review, 06 (Six) Board Meetings were convened. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

The Company's Board has the following Committees:

Nomination & Remuneration Committee

The table below highlights the composition and attendance of the Members of the Committee. The requisite quorum was present at all the Meetings. During the financial year 2023-24, 04 (Four) meetings of Audit Committee were held on 16th May 2023, 14th August 2023 and 20th October 2023, 29th January 2024.

The Company Secretary shall act as the Secretary to the Committee.

All the recommendations made by the Audit Committee were accepted by the Board of Directors.

The terms of reference of the Audit Committee shall include but not limited to the following:

a) To recommend the appointment/re-appointment/ re-placement and terms of appointment of the Auditors of the Company.

b) To review and monitor Auditor's independence and performance and effectiveness of audit process.

c) To review with the Management the Quarterly Financial Results before submission to the Board for approval.

d) Review the adequacy of internal control system. Finding of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

e) Approval or any subsequent modification of transactions of the Company with related parties.

f) Reviewing the Company's risk management policy.

g) To scrutinize inter-corporate loans and investments made by the Company.

h) To evaluate the Internal Financial Controls and Risk Management Systems.

i) To carry out valuation of undertakings and the assets of the Company, wherever it is necessary.

j) To review, with the management, performance of Statutory and Internal Auditors, adequacy of the Internal Control System.

k) To review the functioning of the Whistle Blower Mechanism.

l) To approve appointment of Chief Financial Officer after assessing the qualifications, experience, and background etc. of the candidate

m) To carry out any other function as may be assigned to Audit Committee pursuant to any amendments to the Listing Regulations and the applicable provisions of the Act.

n) To oversee the Company's financial reporting process and disclosure of the financial information to ensure that the financial statements are correct, sufficient, and creditable.

o) To review the following information/document:

?Management Discussion and Analysis of financial condition and results of operation;

?Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;

?Management letter/letters of internal control weakness issued by the Statutory Auditors;

?Internal audit reports relating to internal control weakness;

?Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1) of the Listing Regulations.

The table below highlights the composition and attendance of the Members of the Committee. The requisite quorum was present at all the Meetings. During the financial year 2023-24, 02 (two) meetings of Nomination and Remuneration Committee were held on 2nd September 2023, 12th December 2023,

The Company Secretary shall act as the Secretary to the Committee. The broad terms of reference of the NRC, as approved by the Board, are in compliance with Section 178 of the Companies Act, 2013 which are as follows:

a. To lay down criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board of Directors a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees.

b. To formulate a criteria for evaluation of performance of Independent Directors and the Board of Directors.

c. To recommend remuneration to be paid to a director for any service rendered by him to the Company which are of a professional nature and provide an opinion, whether such Director possess the requisite qualification for the practice of such profession.

d. To identify persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with the criteria laid down and recommend to the Board of Directors their appointment and removal.

e. To decide whether to extend or continue the term of appointment of the Independent Director, on the basis of the report of performance evaluation of Independent Directors.

f. To recommend to the Board the appointment and removal of the Directors, including Independent Directors.

g. Carrying out functions as delegated by the Board of Directors from time to time.

The table below highlights the composition and attendance of the Members of the Committee. The requisite quorum was present at all the Meetings. During the financial year 2023-24, 1 (One) meeting of Stakeholders Relationship Committee were held on 29th January 2024.

The Company Secretary shall act as the Secretary to the Committee. Ms. Neha Mankame, Company Secretary, is designated as the “Compliance Officer” who oversees the redressal of the stakeholders' grievances.

Stakeholders Relationship Committee is empowered to oversee the redressal of Stakeholders complaints pertaining to transfer of shares, non-receipt of annual reports, non-receipt of declared dividends, issue of duplicate certificates, transmission /demat / remat of shares and other miscellaneous grievances.

The detailed particulars of Stakeholders complaints handled by the Company and its Registrar & Share Transfer Agent during the FY 2023-24 are as under:

Pursuant to Section 203 of the Companies Act, 2013, the Company has following Key Managerial Personnel as on 31st March 2024:

1. Mr. Milan Shah, Managing Director

2. Ms. Neha Mankame, Company Secretary & Compliance officer

3. Mr. Anand Shah, Chief Financial Officer

Ms. Shalaka Modi ceased to be Company Secretary & Compliance Officer of the Company 8th December 2023.

I. STATUTORY AUDITORS:

M/s. Singrodia & Co LLP., Chartered Accountants (Firm Registration Number: W100280) as the Statutory Auditors for the term of five consecutive years w.e.f. 2022-23 till financial year 2026-27.

Pursuant to provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and Regulation 24(A) of the SEBI (Listing Obligation & Disclosure

Requirements) Regulation, 2015, the Company has appointed Rakhi Dasgupta & Associates, Practicing Company Secretary as Secretarial Auditor of the Company.

The Secretarial audit report for the financial year ended 31st March 2024 is appended to this Report as Annexure A which is self-explanatory of qualifications, reservations, adverse remark or disclaimers made by the Secretarial Auditors, in their Report.

III. INTERNAL AUDITOR:

M/s Rohit Gondhiya & Associates Chartered Accountants (Firm Registration Number: 133649W) appointed as Internal Auditor of the Company.

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the Annual Return of the Company for the Financial Year 31st March 2024 in Form MGT-7 is uploaded on the website of the Company and can be accessed at www.aerpace.com

The industrial relations remained cordial during the year under review.

The Management Discussion and Analysis Report on the operations of the Company, as required under Regulation 34 read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as 'Listing Regulations') and as approved by the Board of Directors, is provided in a separate section and forms an integral part of this Report.

As per the provisions of Regulation 15(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the provisions related to Corporate Governance as specified in Regulations 17, 18, 19, 20, 21,22, 23, 24,24A, 25, 26, 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 and Para C, D and E of Schedule V shall not apply to a listed entity having paid up Share Capital not exceeding Rupees Ten Crores and Net worth not exceeding Rupees Twenty Five Crores, as on the last day of the previous financial year.

As on the last day of the previous financial year, the paid up Share Capital and Net worth of the Company was below the threshold limits stated above, thereby presently the Company is not required to comply with the above provisions of Corporate Governance.

Accordingly, the Report on Corporate Governance and Certificate regarding compliance of conditions of Corporate Governance are not made a part of the Annual Report.

The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The Policy broadly lays down the guiding principles, philosophy and the basis for payment of remuneration to Executive and Non-executive Directors (by way of sitting fees and commission), Key Managerial Personnel, Senior Management and other employees. The policy also provides the criteria for determining qualifications, positive attributes and Independence of Director and criteria for appointment of Key Managerial Personnel / Senior Management and performance evaluation which are considered by the Nomination and Remuneration Committee and the Board of Directors while making selection of the candidates. The details of this policy are available on the website of the Company www.aer- pace.com

The Company has put in place adequate policies and procedures to ensure that system of Internal Financial Control is commensurate with the size and nature of the Company's business. The evaluation of these internal financial controls was done through internal audit process, established within the Company and through appointing professional firm to carry out such tests by way of systematic internal audit program. Based on the review of the reported evaluations, the directors confirms that the financial statement for the year ended 31st March 2024, are in accordance with the applicable accounting standards.

The company has established a robust Risk Management system to identify & assess the key risks and ensure smooth and efficient operations of the business. Your company is aware of these risks and challenges and has put in place mechanism to ensure that they are managed and mitigate with adequate timely actions. The audit committee reviews business risk area covering operational, financial, strategic and regulatory risks.

All contracts, arrangements/ transactions entered into during the year by the company with Related Parties were in ordinary course of business and on an arm's length basis. During the year under review, the company had not entered into any contract / arrangement/ transactions with related parties which could be considered as material. The particulars of contracts or arrangements referred to in section 188 (1) of the Companies Act, 2013 with related parties and as mentioned in form AOC-2 is attached as “Annexure C”.

During the year under report, your Company has not employed any person who was in receipt of remuneration in excess of the limits specified under Section 197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The information in terms of provision of Section 197 (12) of Companies Act, 2013, read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as “Annexure D”.

Your Company considers Great Brand and Great People as its biggest asset. The Company is continued to organize various inbound and outbound training programs, recreation and team building activities to enhance employee skills and motivation. Company also conducted various workshops and events for grooming and upgrading vocational skills of the talent pool in order to meet future talent requirements.

As required by Regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Cash Flow Statement & Consolidated Statement is appended.

In accordance with section 135 of the Companies Act, 2013, the provisions related to Corporate Social Responsibility is not applicable to the company.

Particulars of the loans given, investment made, or guarantee given, or security provided are provided in Note to the Financial Statements.

Considering gender equality, the company has zero tolerance for sexual harassment at workplace. The Company has an Anti-Sexual Harassment Policy in line with the requirement of the Sexual Harassment of woman at work place (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaint receive regarding sexual harassment. In Financial Year 2023-24, there were no complaints were received from any of the employee.

i. Number of Complaints filed during the financial year - NIL

ii. Number of complaints disposed of during the financial year - NIL

iii. number of complaints pending as on end of the financial year - NIL

In pursuance to Section 177 of the Companies Act, 2013, the Company has adopted a Vigil Mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The Company promotes ethical behavior in all its business activities and has adopted a mechanism of reporting illegal or unethical behavior. The Company has a whistle blower policy wherein the employees are free to report violations of laws, rules, regulations or unethical conduct to their immediate supervisor or such other person as may be notified by the management to the employees / workers. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and provide for direct access to the Chairperson of the Audit Committee in the exceptional cases. The confidentiality of those reporting violation is maintained, and they are not subjected to any discriminatory practice. However, no violation of laws or unethical conduct etc. was brought to the notice of the Management or Audit Committee during the year ended 31st March 2024. We affirm that during the financial year 2023-24, no employee or director was denied access to the Audit Committee.

The Company has initiated to take adequate measures for conservation of energy. The Company shall explore alternative source of energy as and when the necessity arises.

The Company continues to use the latest technologies for improving the productivity and quality of its services and products.

(Rs. in Lakhs)

The company has complied with Secretarial Standards on meetings of Board of Directors and on General Meeting issued by the Institute of Company Secretaries of India in terms of Section 118 (10) of the Companies Act, 2013.

During the year, there is no material changes.

During the year, no resolutions were passed through Postal Ballot

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 1992 read with SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time, the Code of Conduct for prevention of Insider Trading and the Code for Corporate Disclosures (” Code”), as approved by the Board from time to time, are in force by the Company. The objective of this Code is to protect the interest of Shareholders at large, to prevent misuse of any price sensitive information and to prevent any insider trading activity by dealing in shares of the Company by its Directors, designated employees, and other employees. The Company also adopts the concept of Trading Window Closure, to prevent its Directors, Officers, designated employees, and other employees from trading in the securities of the Company at the time when there is unpublished price sensitive information.

There were no significant and material orders passed by the regulators or courts or tribunal which would impact the going concern status and the Company's operations in future.

The Auditors of the Company have not reported any fraud as specified under section 143(12) of the Companies Act, 2013.

There was no application made by the Company or no proceedings are pending against the Company under the Insolvency and Bankruptcy Code 2016 during the year.

The disclosure is not applicable as the Company has not undertaken any one-time settlement with the banks or financial institutions during the year.

The Company was not required to transfer any amount to the Investor Education and Protection Fund

The Board of Director take this opportunity to thank all its shareholders, valued customer, banks, government and statutory authorities, investor, and stock exchange for their continued support to the company. Your directors wish to place on record their deep sense of appreciation for the committed services by employees. Your directors acknowledge with gratitude the encouragement and support extended by our valued shareholders and the Promoters of the Company.