Your Directors are pleased to present this Seventh Annual Report of Aarti Pharmalabs Limited ("the Company" or "APL") together
with the Audited Financial Statements for the financial year ended March 31,2026 ("year under review" or "FY 2025-26").

1. FINANCIAL HIGHLIGHTS

2. COMPANY''S PERFORMANCE

On a standalone basis, the revenue for FY 2025-26 was
'' 1,79,755 Lakhs, higher by 1.48% over the previous
year’s revenue of '' 1,77,135 Lakhs for FY 2024-25. The
PAT attributable to shareholders in FY 2025-26 was
'' 17,620 Lakhs compared to the PAT of '' 25,735 Lakhs
in FY 2024-25.

On a consolidated basis, the revenue for FY 2025¬
26 was '' 1,81,944 Lakhs, reduced by 13.48% over
the previous year’s revenue of '' 2,11,507 Lakhs. The
PAT attributable to shareholders for FY 2025-26 was
'' 17,471 Lakhs registering the degrowth of 35.86% over
the PAT of '' 27,240 Lakhs in FY 2024-25.

3. CONSOLIDATED FINANCIAL STATEMENTS

Your Directors are pleased to attach the Consolidated
Financial Statements pursuant to Section 129(3) of
the Companies Act, 2013 ("Act") and Regulation 34 of
the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations,

2015 ("Listing Regulations"), prepared in accordance
with the provisions of the Act and the Indian Accounting
Standards ("IND AS").

4. STATE OF COMPANY''S AFFAIRS

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

5. RESERVES

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

6. DIVIDEND

During the year under review, your Board has declared
an Interim Dividend of '' 1.50 (@ 30%) per equity
share of '' 5/- each aggregating to '' 1,359.87 Lakhs.
Further, Directors are pleased to recommend the Final
Dividend of '' 2 (@ 40%) per equity share of '' 5/- each
subject to approval of the Shareholders at the ensuing

Annual General Meeting ("AGM"), aggregating to a
total Dividend of '' 3.50 for FY 2025-26, resulting in a
total payout Lakhs '' 1813.59 Lakhs (Previous Year:
'' 4531.68 Lakhs). The dividend would be payable to all
Shareholders whose names appear in the Register of
Members as on Record Date.

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

Pursuant to the Finance Act, 2020, dividend income
is taxable in the hands of the shareholders effective
April 01, 2020 and the Company is required to deduct
tax at source from dividend paid to the Members at
prescribed rates as per the Income Tax Act, 2025.

7. SHARE CAPITAL

Your Company’s Equity Share Capital as on March 31,
2026 was as follows:

During the year 2025-26, the Nomination and
Remuneration Committee allotted 23,127 number
of equity shares to the employees of the Company
under "Aarti Pharma Performance Stock Option Plan
2023’’ (PSOP 2023) upon exercise of the vested stock
options. Thus, Issued, Subscribed and Paid-up Capital
of the Company stands increased to '' 45,32,88,755
comprising of 9,06,57,751 equity shares of '' 5/- each.

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

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

During FY 2025-26, the Company’s outlay towards
capital expenditure was '' 44,831 Lakhs for the
standalone Company and '' 44,831 Lakhs at the
consolidated level.

8. SUBSIDIARY/JOINT VENTURE COMPANIES

As on March 31,2026, the Company has two (2) direct
subsidiaries, namely, Aarti Pharmachem Limited and
Aarti USA Inc. and one Joint Venture Company, namely,
Ganesh Polychem Limited.

Aarti USA Inc. ceased to be a material subsidiary in
the last accounting year and continue to remain so
in the current accounting year. A policy on material
subsidiaries has been formulated and is available on
the website of the Company and the web link thereto is:
https://www.aartipharmalabs.com/investors/policy-
on-determination-of-material-subsidiary-feb-2023.pdf

During the year, the Board of Directors reviewed
the affairs of the subsidiaries and joint venture in
accordance with Section 129(3) of the Companies
Act, 2013, we have prepared consolidated financial
statements of the Company and all its subsidiaries and
joint venture, which form part of the Annual Report.

Further a statement containing salient features of the
financial statement of our Subsidiaries/Joint Venture in
the prescribed format AOC-1 is included in the Report
as Annexure-A and forms an integral part of this Report.

9. CORPORATE SOCIAL RESPONSIBILITY

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

The objective of the Company’s Corporate Social
Responsibility (''CSR’) initiatives is to improve the
quality of life of communities through long-term value
creation for all stakeholders.

For past years, the Company has undertaken various
CSR initiatives. The Company continues to address
societal challenges through societal development
programmes and remains focused on improving
the quality of life. The Company’s CSR initiatives
and related projects are undertaken through Aarti
Foundation, the principal implementation agency and
their implementing partners. Aarti Foundation, our

philanthropic arm, we design and implement social
initiatives that address critical societal needs and
contribute to long-term community resilience. Our CSR
approach is outcome-oriented and aligned with our
vision of building an equitable and resilient society.

During FY2025-26, the Company spent '' 565.20 Lakhs
towards its CSR activities demonstrating its unwavering
commitment to the well-being of the community and
society, the Company’s CSR initiatives are focused on
Education, Healthcare, Skill Development, Tribal Welfare
Livestock Development and Green Environment etc.
which positively impacted over 20,000 lives through
its CSR programmes and initiatives. We work to
strengthen access to quality and affordable healthcare
for communities especially around our operations.

During the year under review, our CSR initiatives were
executed in accordance with the annual action plan
previously approved by the Board.

The detailed Policy on Corporate Social Responsibility
is available on the website of the Company and the web
link

https://www.aartipharmalabs.com/investors/csr-

policy-feb-2023.pdf.

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

10. PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENTS

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

11. MANAGEMENT DISCUSSION AND ANALYSIS

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

12. BOARD OF DIRECTORS & KEY MANAGERIAL
PERSONNELI. Board of Directors

Your Company actively seeks to adopt global best
practices for an effective functioning of the Board
and believes in having a truly diverse Board whose
wisdom and strength can be leveraged for creating
greater stakeholder value, protection of their
interests and better corporate governance. The
Company’s Board comprises eminent persons
with proven competence and integrity, who

bring in vast experience and expertise, strategic
guidance and leadership qualities. The Board
fulfills its fiduciary responsibilities with a steadfast
commitment to safeguarding the interests of the
Company and its stakeholders.

The Board of the Company is carefully structured
to achieve an optimal balance, consisting of
Executive and Non-Executive Directors, including
two (2) Women Independent Directors. This
composition adheres strictly to the current
provisions of the Act and the Listing Regulations
ensuring compliance with governance standards.
The details of the Board of Directors and
Committees along with their composition, number
of meetings held and attendance at the meetings
during FY 2025-26 are provided in the Corporate
Governance Report which forms part of this
Report. During the Financial Year under review
Five (5) Board Meetings were held.

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

CHANGES IN THE BOARD COMPOSITION:

With a view to strengthening executive leadership
and driving long-term strategic growth and
realignment of roles and responsibilities amongst
the promoters and based on recommendation of
the Nomination and Remuneration Committee,
the Board of Directors at their meeting held
on August 07, 2026 have re-designated

Shri Rashesh C. Gogri (DIN: 00066291) as the
Managing Director for a period of five years with
effect from October 01, 2026, subject to the
approval of the shareholders at the ensuing Annual
General Meeting (AGM) and other regulatory
approvals, if any. The Board at the same meeting
based on the recommendation of the Nomination
and Remuneration Committee have re-designated
Smt. Hetal Gogri Gala (DIN:00005499) as the
Wholetime Director, liable to retire by rotation, for
a period of five years with effect from October 01,
2026, subject to the approval of the shareholders
at the ensuing Annual General Meeting (AGM) and
other regulatory approvals, if any. The resolutions
seeking approval of the Members in this regard
have been incorporated in the Notice convening
the AGM of the Company along with brief details
about them.

I n accordance with the regulatory requirements,
Shri Rajendra V. Gogri (DIN: 00061003), Non¬
Executive and Non Independent Director of the
Company shall retire by rotation at the ensuing
Annual General meeting and is eligible for

re-appointment. However, Shri Rajendra V. Gogri
expressed his desire to not offer himself for
re-appointment at the ensuing AGM. Accordingly,
he will cease to be a Director of the Company
upon retirement by rotation at the ensuing AGM.
The Board of Directors have decided to not fill up
this vacancy.

Pursuant to Regulation 36 of the Listing
Regulations read with Secretarial Standard-2 on
General Meetings, a brief profile of the Directors
proposed to be appointed/re-appointed/re-
designated is made available, as a part of the
Notice convening this AGM.

Pursuant to the provisions of Regulation 34(3)
read with Schedule V to the Listing Regulations,
the Company has obtained a Certificate from M/s
Mehta & Mehta, Practising Company Secretaries
(Firm Registration No P1996MH007500), the
Secretarial Auditor of the Company, certifying that
none of the Directors of the Company have been
debarred or disqualified from being appointed
or continuing as Directors of companies by the
Securities and Exchange Board of India (SEBI)
or by the Ministry of Corporate Affairs or by any
such statutory authority. The said Certificate is
annexed to the Corporate Governance Report of
the Company for the FY 2025-26.

Commission to Non-Executive Directors:

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

II. Key Managerial Personnel

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

1. Managing Directors;

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

b. Shri Narendra J. Salvi

2. Shri Piyush Lakhani, Chief Financial Officer.

3. Shri Jeevan Mondkar, Company Secretary
and Compliance Officer

Other than above, during the year under review,
there was no change in the Key Managerial
Personnel of the Company.

13. INDEPENDENT DIRECTORS

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

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

As required under Rule 6 of the Companies
(Appointment and Qualification of Directors) Rules,

2014, all the Independent Directors (including those
appointed during the year) have registered themselves
with the Independent Directors Databank and also
completed the online proficiency test conducted by the
Indian Institute of Corporate Affairs.

Familiarisation Programme for Independent Directors

All the Independent Directors of the Company are
made aware of their roles and responsibilities through
a formal letter of appointment, which also stipulates
various terms and conditions of their engagement.

The Senior Management makes presentations giving
an overview of the Company’s strategy, operations,
products, markets in each Board Meeting.

Pursuant to Regulation 25(7) of the Listing Regulations,
the Independent Directors of the Company were
familiarised and the details of familiarisation
programmes imparted to them during the year, are
placed on the website of the Company and the web
link athttps://www.aartipharmalabs.com/regarding-
independent-directors

14. DIRECTORS'' RESPONSIBILITY STATEMENT

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

a) in the preparation of the Annual Financial
Statements for the year ended March 31, 2026,
the applicable accounting standards have been
followed along with proper explanation relating to
material departures, if any;

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

c) the Directors had taken proper and sufficient
care for the maintenance of adequate accounting
records in accordance with the provisions of the
Act for safeguarding the Assets of the Company
and for preventing and detecting fraud and other
irregularities;

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

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

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

15. ANNUAL PERFORMANCE EVALUATION

The Board of Directors has carried out an evaluation of
its own performance, board committees, and individual
Directors pursuant to the provisions of the Act and the
SEBI Listing Regulations. A structured questionnaire
was prepared after taking into consideration various
aspects of the Board’s functioning, composition of
the Board and its Committees, culture, execution
and performance of specific duties, obligations and
governance. The evaluation was undertaken by way
of internal assessments, based on a combination of
detailed questionnaires and verbal discussions.

The performance of the Committees and Independent
Directors were evaluated by the entire Board of
Directors except for the Director being evaluated.
The performance evaluation of the Chairman, Non¬
Independent Directors and Board as a whole was
carried out by the Independent Directors was carried
out in a separate meeting of Independent Directors.
The NRC and Board reviewed the performance of
individual Directors on the basis of criteria such as the
contribution of the individual Director to the Board and
Committee meetings including preparedness on the
issues to be discussed, meaningful and constructive
contribution and inputs in meetings, etc.

As per the evaluation results, the directors were
satisfied with board effectiveness, experience, diversity,
expertise, quality of board discussions and board
meeting processes, etc. The Committees were also
found to be effective in terms of their composition,
functioning, competence of the members, compliance
with statutory obligations, role and responsibilities and
quality of discussions at the meetings.

The Board was satisfied that each director has diligently
discharged their responsibilities as board member of
the Company and had contributed meaningfully.

The Board of Directors expressed their satisfaction with
the outcome of evaluation and the process followed
thereof.

16. AUDIT COMMITTEE

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

17. AUDITORS

a) Statutory Auditor and their Report

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

The Statutory Auditors’ Report forms part of the
Annual Report. The said report does not contain
any qualification, reservation or adverse remark
for the year under review. During FY 2025-26,
there were no instances of fraud which required
the Statutory Auditors to report the same to the
Central Government under Section 143(12) of Act
and Rules framed thereunder.

b) Cost Auditor and their records

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

The Board of Directors had appointed Smt. Ketki
D. Visariya, Cost Accountants (Membership No.
16028), as the Cost Auditor of the Company for
the financial year 2026-27. The remuneration
payable to the Cost Auditor is required to be
ratified by the Shareholders. Accordingly, a
resolution seeking Shareholder’s ratification for
the remuneration payable to Smt. Ketki D. Visariya,
Cost Accountants, is included at Item No. 4 of the
Notice convening the AGM.

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

c) Secretarial Auditor and their Report

On the recommendation of the Audit Committee
and the Board, the shareholders at the 6^th Annual
General Meeting approved the appointment and
remuneration of M/s Mehta & Mehta, Practising
Company Secretaries (FRN: P1996MH007500)
as the Secretarial Auditor for a term of Five years
commencing from Financial year 2025-26.

Pursuant to provisions of Section 204(1) of the
Act and Regulation 24A of the Listing Regulations,
the Secretarial Audit Report for the Financial
Year ended March 31, 2026 issued by CS Monali
Bhandari (COP No. 10272), of M/s Mehta &
Mehta, Practising Company Secretaries and the
Secretarial Auditor of the Company in Form MR-3
is annexed as Annexure-C and forms an integral

part of this Report. During the year under review,
the Secretarial Auditor had not reported any fraud
under Section 143(12) of the Act and therefore
disclosure of details under Section 134(3)(ca) of
the Act is not applicable.

There is no qualification, reservation or adverse
remark or disclaimer made by the Auditor in their
report.

18. RISK MANAGEMENT

The Board of Directors of the Company has already
formed a Risk Management Committee to frame,
implement, and monitor the risk management plan
for the Company.The Committee is responsible for
monitoring and reviewing the risk management plan
and ensuring its effectiveness.

The Board takes responsibility for the overall process
of risk management throughout the organisation.
Through an Enterprise Risk Management programme,
our business units and corporate functions address
risks through an institutionalised approach aligned to
our objectives.

A systematic review of risks identified is subject
to a series of focused meetings of the. The Risk
Management Committee meets periodically to review
all the key risks and assess the status of mitigation
measures.

Considering the volatility, uncertainties and
unprecedented challenges involved in the businesses,
the risk management function has gained more
importance and it is imperative to manage and address
such challenges effectively.

This is facilitated by an internal audit. The Business
risk is managed through cross functional involvement
and communication across businesses. The results
of the risk assessment are presented to the senior
management.

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

We continue to closely monitor, assess and implement
mitigation plans in consideration of the turbulent
geopolitical and economic landscape. This work is
underpinned by foresight intelligence and scenario
planning to look further ahead and build resilience to
alternative futures. Our diverse global customer base
gives us the flexibility to react to regional changes in
demand by adjusting our sales mix into other markets,

while we may adjust product features or content should
we face supply challenges informed through our
enhanced supply chain risk management framework.

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

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

Your Company has always worked to be contemporary
in the application of technology for its business
processes and its interface, both within and outside
the Company. Towards this end, review of business
process, applications available and the digitisation of
process with adequate controls is an ongoing work
in progress. This calls for seamless integration with
our consumers, customers and stakeholder operating
ecosystems that can lead to a superior experience
by improving agility and responsiveness across the
business.

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

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

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

19. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY

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

Internal financial control systems of the Company
are commensurate with its size and the nature of its
operations. These have been designed to provide
reasonable assurance with regard to recording and
providing reliable financial and operational information,
complying with applicable accounting standards
and relevant statutes, safeguarding assets from
unauthorised use, executing transactions with proper
authorisation and ensuring compliance of corporate
policies.The Company continuously strives to improve
its Internal control system.

The Company has a well-defined delegation of authority
with specified limits for approval of expenditure, both
capital and revenue.

The Company has appointed Manish Modi and
Associates, Chartered Accountants as the Internal
Auditor, who periodically audits the adequacy and
effectiveness of the internal controls laid down by
the Management and suggests improvements. This
ensures that all Assets are safeguarded and protected
against loss from unauthorised use or disposition and
that the transactions are authorised, recorded and
reported diligently. Your Company’s internal control
systems are commensurate with the nature and size of
its business operations. Internal Financial Controls are
evaluated and Internal Auditors’ Reports are regularly
reviewed by the Audit Committee of the Board.

The Audit Committee also deliberates with the
management and is satisfied with the adequacy and
effectiveness of the internal financial control systems
as laid down and kept the Board of Directors informed

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

20. RELATED PARTY TRANSACTIONS

I n line with the requirements of the Companies Act,
2013 and the Listing Regulations, the Company has
a Policy on Materiality of Related Party Transactions
and dealing with Related Party Transactions which
is uploaded on the Company’s website athttps://
www.aartipharmalabs.com/investors/apl-amended-
rpt-policy-march-2026-final.pdf. During the year
under review, this Policy was amended to incorporate
the regulatory amendments. The Policy captures
framework for Related Party Transactions and intends
to ensure due and timely identification, approval,
disclosure and reporting of transactions between the
Company or its subsidiaries on one side and Related
Parties on the other, in compliance with the applicable
laws and regulations as may be amended from time to
time.

All transactions with related parties and subsequent
material modifications, if any, are placed before
the Audit Committee for its review and approval.
An omnibus approval from the Audit Committee is
obtained for the related party transactions which are
repetitive in nature, based on the criteria approved by
the Audit Committee. The Company has obtained prior
approval from the Audit Committee for all related party
transactions, except for transactions amounting to
'' 5.16 Lakhs with one of the related parties, for which
ratification was obtained subsequently. A statement
of related party transactions is presented before the
Audit Committee on a quarterly basis, specifying the
nature, value and terms and conditions of transactions.
A report of factual findings arising out of the accepted
procedures carried out in regard to transactions with
Related Parties is given by the Statutory Auditors on
quarterly basis and the same is placed before the Audit
Committee.

There are no materially significant related party
transactions made by the Company with Promoters,
Key Managerial Personnel or other Designated Persons
which may have potential conflict with interest of the
Company at large.

Since all related party transactions entered into by the
Company were in ordinary course of business and
were on an arm’s length’s basis, Form AOC-2 is not
applicable to Company. Further, there were no material
related party transactions in terms of the Listing
Regulations requiring approval of the Shareholders
during the year under review.

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

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

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

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

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

Your Company has adopted a Nomination and
Remuneration Policy ("Policy") which lays down a
framework in relation to remuneration of Directors,
Key Managerial Personnel and Senior Management
of the Company. The Policy also lays down criteria for
selection and appointment of Board Members.

The Committee also plays an important role and
is responsible for administering the Stock Options
Scheme as applicable to the eligible employees of the
Company.

22. PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under Section 197(12)
of the Companies Act, 2013 read with Rule 5(1) of
the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is annexed as
Annexure-D and forms an integral part of this Report. As
per first proviso to Section 136(1) of the Act and second
proviso of Rule 5(3) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules,
2014, the report and financial statements are being
sent to the members of the Company excluding the
statement of particulars of employees under Rule
5(2). However, these are available for inspection during
business hours up to the date of the forthcoming AGM
at the registered office of the Company. Any Member
interested in obtaining a copy of the said statement
may write to the Company Secretary at the Registered
Office address of the Company.

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

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

We firmly believe that our people are our greatest
strength and the key to our continued success. Guided

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

Empowering Our People Through Digital
Transformation

Building directly upon the insights gathered from last
year’s comprehensive Employee Satisfaction Survey
(ESS)-which revealed a strong 75% employee
satisfaction rate-we transitioned from validation to
targeted action this year. To sustain this momentum
and honour our commitment to fostering a progressive,
agile, and high-performance work culture, the
organisation embarked on a milestone HR digitalisation
journey.

We successfully rolled out a unified digital HR
ecosystem, anchored by the implementation of PMS
(Performance Management System), a revamped
Reimbursement Module, a dedicated Mobile App, and
an advanced Learning & Development (L&D) platform.

• Performance & Execution: The automated Spine
PMS has brought unprecedented transparency,
alignment, and real-time tracking to our appraisal
and goal-setting processes.

• Efficiency & Accessibility: The introduction of the
new Reimbursement Module and the integrated
Mobile App has eliminated administrative friction,
offering our workforce seamless, on-the-go
access to essential HR services.

• Skill & Growth Culture: The modern L&D platform
ensures that continuous learning is democratised,
empowering employees across all functions and
locations to upskill at their own pace.

By converting our employees’ aspirations into digital
reality, we have not only simplified daily workflows but
also deeply enhanced employee engagement, future¬
proofing our talent architecture for the growth ahead.

Performance Appraisals & Rewarding System

Recognising and rewarding performance in a fair and
timely manner remains a cornerstone of our HR strategy.
During the year, we ensured that all employees up to the
manager level received timely performance evaluations
and corresponding rewards in April 2026. For senior
managers and above, appraisals were completed by
May 2026. Notably, the average rewards provided were
significantly higher than the previous year and exceeded
the pharmaceutical industry benchmarks published in
Deloitte''s 2025-26 Pharma Report. This commitment
to market-competitive recognition strengthens our

employee value proposition and supports our efforts to
attract and retain top talent. Additionally, the appraisal
process identified key training needs, which are being
addressed through targeted development programmes.

Attrition Management

The Company recognises that optimal workforce
discipline and productivity are critical to sustaining
operational excellence. Through an appropriate
recruitment methodology, robust retention policies, and
an enriching work environment, we have consistently
strived to manage our talent architecture effectively
during a period of market-wide talent mobility, with
our attrition rate standing at 19.22% for 2025-2026. In
response to this trend, we have proactively intensified
our employee growth plans and modernised our people
practices to raise retention standards. This transition
reflects our focus on cultivating a high-performance
culture, and the heightened sense of responsibility
among our core teams continues to drive the
organisation forward.

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

Proactive Leadership & Talent Management

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

Developing a sustainable talent pool remains a key
priority for us. To this end, we successfully expanded
our talent pipeline by recruiting 8% of our workforce
as Graduate Engineer Trainees (GETs) in FY 2025¬
26. These young graduates undergo a structured
onboarding programme, followed by continuous
functional training modules to build the required
competencies before they assume key roles within the
Company. This initiative not only nurtures local talent
near our manufacturing facilities but also contributes
to reducing attrition by creating a steady pipeline of
skilled professionals ready to step in as needed.

Employee Engagement Initiatives

At APL, we believe that an engaged workforce is more
productive, innovative, and committed. To nurture
this engagement systematically, we introduced a
comprehensive annual event engagement calendar this
year and drove all activities accordingly. This structured
approach allowed us to successfully organise a variety
of initiatives, including inter-unit sports tournaments,
regional picnics, festival celebrations, Women’s
Day special events, and health & wellness camps.
Additionally, we continue to honour local cultural
traditions through site-specific poojas and gatherings,
which strengthen team bonding and promote a deep
sense of belonging. These efforts have played a vital
role in enhancing employee morale and remain central
to our long-term workforce retention strategies.

Way Forward

We believe that continuous learning and operational
efficiency are key to staying ahead of the competition.
To support this, we have systematically modernised our
workplace tools by implementing a series of advanced
modules within our integrated HRMS system, each
delivering distinct strategic benefits:

• Performance Management System (PMS): Drives
a high-performance culture by bringing absolute
transparency, objective goal alignment, and real¬
time tracking to our appraisal processes.

• Expenses & Reimbursement Module: Maximises
financial accuracy and slashes administrative
turnaround times through automated, paperless
claims processing.

• Learning & Development (L&D) Module:

Centralises capability building, empowering our
workforce across all locations with democratised
access to continuous upskilling.

• Dedicated Mobile App Service: Promotes
seamless, frictionless usage of HR services by
giving employees instant, on-the-go access to
their profiles, requests, and essential tools right
from their smartphones.

Feedback on evolving learning and development needs
is regularly captured through our self-appraisal system,
ensuring that our ongoing training initiatives remain
deeply relevant and impactful.

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

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

25. AARTI PHARMA PERFORMANCE STOCK OPTION
PLAN 2023

Aarti Pharma Performance Stock Option Plan 2023
("PSOP 2023") was approved by the shareholders at the
4^th AGM of the Company held on September 14, 2023,
under which stock options would be granted to the
eligible employees in compliance with the provisions of
the SEBI (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021.

During the year under review, the Company granted
42,000 options to eligible employees under PSOP
2023 as per the recommendation of the Nomination
and Remuneration Committee, at its meeting held
on May 10, 2025. Subsequent to March 31, 2026, the
Company granted 57,600 options to eligible employees
under PSOP 2023 as per the recommendation of the
Nomination and Remuneration Committee, at its
meeting held on May 25, 2026.

Your Company has received a certificate for FY 2025-26
from CS Monali Bhandari (COP No. 10272), M/s Mehta
& Mehta, Practising Company Secretaries and the
Secretarial Auditor of the Company that PSOP 2023 has
been implemented in accordance with the provisions of
the SEBI (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021 and the resolution passed by
the shareholders. Any request for inspection of the said
Certificate may please be sent to investorrelations@
aartipharmalabs.com

The details of the stock options granted under the
PSOP Scheme and the disclosures in compliance with
Regulation 14 of the Securities and Exchange Board
of India (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021 is available on the website
of the Company athttps://www.aartipharmalabs.
com/investors/disclosure-under-reg-14-of-sebi-
regulations-fy-2025-26.pdf

26. CORPORATE GOVERNANCE

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

Your Company has fully adhered to the mandatory
Corporate Governance requirements outlined in the
Listing Regulations. In compliance with Regulation

34 of the Listing Regulations, a dedicated Corporate
Governance Report is annexed hereto, forming
an integral part of this Report. Additionally, the
requisite certification from M/s Mehta & Mehta,
Practising Company Secretaries (Firm Registration
No P1996MH007500) is attached to the Corporate
Governance Report.

27. HEALTH AND SAFETY

At Aarti Pharmalabs Limited (APL), the health and safety
of all stakeholders—including employees, contractors,
customers, and visitors—stands as a fundamental
organisational priority. By integrating safety into every
facet of its operations, from research and development
and manufacturing to supply chain management, the
Company utilises advanced infrastructure, robust
systems, continuous training programmes, and a deep-
rooted safety culture. APL is committed to a proactive
approach in identifying and mitigating risks to maintain
a secure and compliant working environment across all
sites throughout FY 2025-26.

Governance Mechanism

Aarti Pharmalabs Limited has implemented robust
governance structures to manage its health and safety
protocols. To facilitate employee involvement and
equitable representation in safety-related decisions,
EHS Committees have been established across all
organisational levels. These groups are tasked with
assessing risks, monitoring the completion of corrective
measures, analysing incident data, and managing
escalations. The Company adopts a methodical
hierarchy for risk mitigation, focusing on elimination,
substitution, and both engineering and administrative
controls. Furthermore, a rigorous Permit to Work
protocol is maintained for high-risk operations—
including hot work, work at heights, and confined space
entry-supported by definitive safety procedures and
communication standards.

Occupational Health and Safety

Committed to high standards of occupational health
and safety, Aarti Pharmalabs Limited (APL) aligns
its operations with the ISO 45001:2018 framework.
Through the Aarti Pharma Management System
(APMS), the Company maintains an extensive
Occupational Health and Safety Management System
that applies to all employees, contractors, and visitors.

The system enforces critical protocols, including:

• Comprehensive training in chemical handling
and the correct application of personal protective
equipment (PPE).

• Strict adherence to established emergency
response procedures.

• Proactive risk identification through regular safety
drills, inspections, toolbox talks, and monthly
campaigns.

• Mandatory medical screenings during onboarding
and at periodic intervals to meet regulatory
requirements.

To enhance timely risk mitigation, APL has further
integrated a specialised software platform across
its sites to efficiently identify and resolve potential
workplace hazards.

Process Safety

To evaluate and control the risks associated with
hazardous chemical handling, APL maintains a
centralised Process Safety Laboratory utilising
sophisticated technologies like Thermal Screening
Units (TSu) and Reaction Calorimeter (RC1mx). This
internal facility produces vital information regarding
powder safety and reaction characteristics, guiding
decisions for secure processing and plant engineering.
The laboratory completed 468 TSu analyses, 132
RC1mx trials, and 133 evaluations of powder safety
throughout FY 2025-26. APL employs a systematic
four-tier framework for process safety risk assessment:
Step 1 involves Process Safety Information; Step 2
covers Hazard Checklist & HIRA; Step 3 utilises HAZOP;
and Step 4 encompasses PSSR. These stages are
further supported by occupational exposure banding
and methodologies such as FMEA, What-if analysis,
and Fault Tree Analysis. Ongoing process safety
expertise is developed across the workforce through a
combination of internal and external training initiatives.

Safety Training

To cultivate a proactive safety culture, APL facilitates
targeted and regular safety training initiatives for
its workforce. These comprehensive programmes
focus on safe work procedures, hazard identification,
the application of safety signage, and emergency
preparedness. During the 2025-26 fiscal year, the
Company successfully executed 4,339 Occupational
Health and Safety (OHS) training sessions.

Instructional delivery is managed by a combination
of external consultants and internal specialists
through various channels, including on-site safety
displays, online meetings, and traditional classroom
settings. Beyond formal training, APL reinforces safety
awareness through practical emergency drills and
dedicated safety campaigns. A key component of this
culture is the empowerment of employees, who are
encouraged to identify and report unsafe conditions
and are authorised to halt operations if they encounter
hazardous situations.

Contractor Health & Safety

To ensure all onsite activities are performed
under authorised and regulated conditions, APL
enforces rigorous safety standards for its contract
workforce. These protocols encompass mandatory
work permit systems for job authorisation and site
access, comprehensive safety induction training,
and pre-employment medical evaluations. The
Company maintains close oversight of contractors
to verify continuous adherence to established safety
benchmarks.

Customer Health & Safety

Ensuring the well-being of its clients remains a primary
objective for APL. The organisation maintains strict
alignment with international product safety benchmarks,
incorporating Globally Harmonised System (GHS)
labels and comprehensive Material Safety Data Sheets
(MSDS) into its operations. Furthermore, APL ensures
its methodologies are consistent with the European
Union’s REACH standards. The success of these safety
communication strategies and risk management
procedures is demonstrated by the fact that no
significant health or safety grievances were recorded
from customers during the 2025-26 fiscal year.

Occupational Health Centres (OHC)

In accordance with regulatory requirements, Aarti
Pharmalabs Limited (APL) delivers comprehensive
on-site occupational health services across all its
manufacturing and R&D facilities through dedicated
Occupational Health Centres (OHCs). These centres
are operated by qualified factory medical officers and
nurses, providing continuous 24x7 medical support.
A key focus of these OHCs is the management
of health risks associated with noise-intensive
machinery and exposures to corrosive chemicals,
solvents, and powders. To support rapid emergency
medical response, the facilities are equipped with
first aid resources and onsite ambulances. Under the
supervision of the Factory Medical Officer, employees
undergo regular medical surveillance via annual or
semi-annual health assessments, with follow-up care
provided to support full rehabilitation. Furthermore, all
OHCs have established mutual aid agreements with
adjacent industries and local hospitals to enhance their
emergency preparedness.

Incident Learning and Safety Culture

Through its monthly "Learning from Incidents"
forum, APL cultivates a robust safety learning culture
by reviewing and sharing incident details across
all locations to avoid recurrence. The organisation
institutionalises these lessons company-wide by
assigning Global Corrective and Preventive Actions
(CAPA). As an industry leader, APL also actively tracks

potential incidents within peer sectors and proactively
applies relevant CAPA to its own operations. Staff
members are encouraged to provide safety input via
internal software systems and anonymous suggestion
boxes. Furthermore, transparent communication and
individual accountability are promoted at every level
through open forums such as Toolbox Talks.

ENVIRONMENT

Energy Conservation & Consumption

During the current fiscal year, our aggregate energy
usage amounted to 68,166,861 gigajoules (GJ). Of
this total consumption, renewable energy sources
contributed 84,393.32 GJ. As a component of our
enduring sustainability strategy, we have launched
impactful programmes aimed at decreasing our
reliance on traditional fossil fuels. A significant number
of our facilities have moved away from furnace oil in
favour of cleaner alternatives, successfully lowering
our overall emissions. Furthermore, to advance our
renewable energy objectives, we have begun sourcing
solar-generated electricity for our Tarapur cluster from
a dedicated plant in the Akola district of Maharashtra.
This initiative is designed to utilise solar power to
balance traditional energy consumption and foster
a low-carbon operational framework throughout our
entire value chain.

Hazardous Waste Management

Aarti Pharmalabs Limited employs a systematic and
comprehensive waste management framework. We
ensure that every type of waste-whether hazardous
or non-hazardous-is meticulously segregated,
recovered, or recycled in alignment with its specific
chemical and physical characteristics. All disposal
processes strictly adhere to prevailing environmental
mandates. To minimise our ecological footprint and
maximise resource recovery, we consistently evaluate
and modernise our waste management protocols.

Water & Wastewater Management

During FY 2025-26, our aggregate water usage
totaled 461885 kiloliters (KL). This volume was
composed of both freshwater, primarily obtained
from industrial providers, and recycled or recovered
sources. Demonstrating our dedication to circular
water management, recycled water accounted for
an impressive 82.11% of our total consumption.
We persist in refining our water stewardship by
adopting sophisticated treatment methods. To ensure
responsible wastewater management, we utilise high-
efficiency systems such as Reverse Osmosis (RO) units,
Multiple Effect Evaporators (MEEs), Mechanical Vapour
Recompression (MVR), and Agitated Thin Film Dryers
(ATFD). These technologies facilitate substantial water
reclamation and minimise waste output. Furthermore,

a strict Zero Liquid Discharge (ZLD) mandate is applied
across all production facilities, guaranteeing that no
untreated effluent enters the environment and that our
operational influence on water resources is kept to a
minimum.

Product End-of-Life Management

A formal system is in place to manage the end-of-life
phase for all items produced at our sites, with each
product receiving a thorough shelf-life analysis driven
by R&D research. We provide technical expertise and
assistance for the secure, compliant treatment or
disposal of expired goods when requested by clients.
Additionally, our Extended Producer Responsibility
(EPR) initiative facilitates the systematic collection and
disposal of plastic packaging waste at the conclusion
of its lifecycle.

Our robust lifecycle management and commitment to
reducing environmental liabilities were evidenced in
FY 2025-26, during which no instances of product
end-of-life treatment were reported. This resulted
in a zero environmental footprint within this specific
category for the period.

28. BUSINESS RESPONSIBILITY & SUSTAINABILITY
REPORTING (BRSR)

The Listing Regulations mandate the inclusion of the
Business Responsibility & Sustainability Reporting as
part of the Annual Report for top 1,000 listed entities
based on market capitalisation. BRSR for the year
under review, as stipulated under Regulation 34(2) (f)
of Listing Regulations is in a separate section forming
part of the Annual Report.

29. VIGIL MECHANISM

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

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

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

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

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

The Company is committed to treating every employee
with dignity and respect. The Policy framed by the
Company in this regard provides for protection against
sexual harassment of women at workplace and for
prevention and redressal of such complaints. The
POSH Policy is gender inclusive and the framework
ensures complete anonymity and confidentiality.
The said Policy of your Company is available on the
Company’s website athttps://www.aartipharmalabs.
com/investors/prevention-of-sexual-harrasment-
policy.pdf.

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

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

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

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

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

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

31. SECRETARIAL STANDARDS

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

32. DETAILS OF DEPOSITS

During the year under review, your Company has neither
invited nor accepted any deposits from the public falling
within the ambit of Section 73 of the Act and the rules
framed thereunder. The requisite return for FY 2025-26
with respect to amount(s) not considered as deposits
has been filed.

BANK LOAN FACILITIES

Your Company continues to manage its treasury
operations efficiently and has been able to borrow
funds for its operations at competitive rates. Below are
the details of Credit Ratings as on March 31,2026:

33. ANNUAL RETURN

Pursuant to Section 92(3) read with Section 134(3)(a)
of the Act, the Annual Return of the Company in Form
MGT-7 for financial year 2025-26, is available on the
Company’s website athttps://www.aartipharmalabs.
com/investors/annual-return-fy-?0?5-?6.pdf

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

Pursuant to the demerger of pharma undertaking of Aarti
Industries Limited during FY 2022-23, proportionate
number of shares (i.e.3,13,656 shares) held by the
shareholders of Aarti Industries Limited, which were
then lying in the IEPF account, were credited to the IEPF
demat account of the Company. As at March 31, 2026,
3,06,173 (Three Lakhs Six Thousand One Hundred and
Seventy Three) equity shares are lying with IEPF. The
Final Dividend for FY 2024-25 and Interim Dividend for
FY 2025-26 accrued on such shares was credited to the
designated bank account of the IEPF authority. Further,
the final dividend for FY 2025-26, if approved by the
shareholders at the ensuing AGM, shall be credited to
the designated bank account of the IEPF authority.

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

35. COMPLIANCE MANAGEMENT SYSTEM

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

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

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

36. SWAYAM INVESTOR SELF-SERVICE PORTAL

''SWAYAM’ is a secure, user-friendly web-based
application, developed by "MUFG Intime India Private
Limited" (Formally known as "Link Intime India Pvt
Ltd."), our Registrar and Share Transfer Agents, that
empowers shareholders to effortlessly access various
services. This application can be accessed athttps://
swayam.in.mpms.mufg.com/

37. SIGNIFICANT AND MATERIAL ORDERS PASSED BY
THE REGULATORS

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

38. MATERIAL CHANGES AND COMMITMENTS, IF
ANY, AFFECTING THE FINANCIAL POSITION OF
THE COMPANY OCCURRED BETWEEN THE END OF
THE FINANCIAL YEAR TO WHICH THIS FINANCIAL
STATEMENTS RELATE AND THE DATE OF THE
REPORT

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

39. DETAILS OF APPLICATION MADE OR ANY
PROCEEDING PENDING UNDER THE INSOLVENCY
AND BANKRUPTCY CODE, 2016 DURING THE
FINANCIAL YEAR ALONG WITH THEIR STATUS AS AT
THE END OF THE FINANCIAL YEAR

During the FY 2025-26, there was no application made
and proceeding initiated / pending by any Financial
and/or Operational Creditors against your Company
under the Insolvency and Bankruptcy Code, 2016 ("the
Code").

Further, there is no application or proceeding pending
against your Company under the Code.

40. DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF
VALUATION AT THE TIME OF ONE TIME SETTLEMENT
AND THE VALUATION DONE AT THE TIME OF
TAKING A LOAN FROM THE BANKS OR FINANCIAL
INSTITUTIONS ALONG WITH THE REASONS THEREOF

During the FY 2025-26, the Company has not made any
settlement with its bankers for any loan/ facility availed
or/and still in existence.

41. GENERAL DISCLOSURES

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

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

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

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

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

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

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

42. ACKNOWLEDGEMENT

The Board of Directors place on record its sincere
appreciation for the dedicated services rendered
by the employees of the Company at all levels and
the constructive cooperation extended by them.
Your Directors would like to express their grateful
appreciation for the assistance and support by all
Shareholders, Government Authorities, Auditors,
Financial Institutions, Customers, Employees,
Suppliers, other business associates and various other
stakeholders.

For and on behalf of the Board
Aarti Pharmalabs LimitedNarendra J. Salvi Hetal Gogri Gala

Place: Mumbai Managing Director Vice Chairperson and Managing Director

Date: August 07, 2026 DIN: 00299202 DIN: 00005499

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

1. FINANCIAL HIGHLIGHTS

2. COMPANY''S PERFORMANCE

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

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

5. RESERVES

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

6. DIVIDEND

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

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

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

7. SHARE CAPITAL

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

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

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

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

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

8. SUBSIDIARY/JOINT VENTURE COMPANIES

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

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

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

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

During the year, the Board of Directors reviewed the
affairs of the subsidiaries. In accordance with Section
129(3) of the Companies Act, 2013, we have prepared
consolidated financial statements of the Company and
all its subsidiaries, which form part of the Annual Report.

Further a statement containing salient features of the
financial statement of our Subsidiaries/Jointly controlled
entity in the prescribed format AOC-1 is included in the
Report as Annexure-A and forms an integral part of this
Report.

9. CORPORATE SOCIAL RESPONSIBILITY

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

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

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

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

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

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

10. PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENTS

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

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

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

11. MANAGEMENT DISCUSSION AND ANALYSIS

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

12. BOARD OF DIRECTORS & KEY MANAGERIAL
PERSONNEL

I. Board of Directors

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

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

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

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

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

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

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

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

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

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

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

Pursuant to Regulation 36 of the Listing Regulations
read with Secretarial Standard-2 on General
Meetings, a brief profile of the Directors proposed
to be appointed/ re-appointed is made available, as
a part of the Notice convening this AGM.

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

Pursuant to the provisions of Regulation 34(3) read
with Schedule V to the Listing Regulations, the
Company has obtained a Certificate from CS Sunil
M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co.

Company Secretary in Practice and the Secretarial
Auditor of the Company, certifying that none of the
Directors of the Company have been debarred or
disqualified from being appointed or continuing
as Directors of companies by the Securities and
Exchange Board of India (SEBI) or by the Ministry of
Corporate Affairs or by any such statutory authority.
The said Certificate is annexed to the Corporate
Governance Report of the Company for the
FY 2024-25.

Commission to Non-Executive Directors:

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

II. Key Managerial Personnel

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

1. Managing Directors;

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

b. Shri Narendra J. Salvi

2. Shri Nikhil Natu, Company Secretary*;

3. Shri Piyush Lakhani, Chief Financial Officer.

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

*Resigned w.e.f October30, 2024.

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

Other than above, during the year under review, there

was no change in the Key Managerial Personnel of

the Company.

13. INDEPENDENT DIRECTORS

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

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

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

Familiarisation Programme for Independent Directors

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

14. DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

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

c) the Directors had taken proper and sufficient
care for the maintenance of adequate accounting
records in accordance with the provisions of the
Act for safeguarding the Assets of the Company
and for preventing and detecting fraud and other
irregularities;

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

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

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

15. ANNUAL PERFORMANCE EVALUATION

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

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

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

16. AUDIT COMMITTEE

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

17. AUDITORS

a) Statutory Auditor and their Report

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

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

b) Cost Auditor and their records

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

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

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

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

c) Secretarial Auditor and their Report

Pursuant to provisions of Section 204(1) of the
Act and Regulation 24A of the Listing Regulations,
the Secretarial Audit Report for the Financial Year
ended March 31, 2025 issued by CS Sunil M.
Dedhia (COP No. 2031), of Sunil M. Dedhia & Co.,
Company Secretary in Practice and the Secretarial
Auditor of the Company in Form MR-3 is annexed
as Annexure-C and forms an integral part of this
Report. During the year under review, the Secretarial
Auditor had not reported any fraud under Section
143(12) of the Act and therefore disclosure of
details under Section 134(3)(ca) of the Act is not
applicable. There is no qualification, reservation or
adverse remark or disclaimer made by the Auditor
in their report.

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

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

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

18. RISK MANAGEMENT

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

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

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

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

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

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

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

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

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

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

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

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

19. INTERNAL CONTROL SYSTEMS AND THEIR
ADEQUACY

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

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

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

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

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

20. RELATED PARTY TRANSACTIONS

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

All transactions with related parties and subsequent
material modifications, if any, are placed before the
Audit Committee for its review and approval. An omnibus
approval from the Audit Committee is obtained for the
related party transactions which are repetitive in nature,
based on the criteria approved by the Audit Committee.
A statement of related party transactions is presented
before the Audit Committee on a quarterly basis,
specifying the nature, value and terms and conditions of
transactions. A report of factual findings arising out of the
accepted procedures carried out in regard to transactions
with Related Parties is given by the Statutory Auditors on
quarterly basis and the same is placed before the Audit
Committee.

There are no materially significant related party
transactions made by the Company with Promoters, Key
Managerial Personnel or other Designated Persons which
may have potential conflict with interest of the Company
at large.

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

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

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

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

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

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

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

Your Company has adopted a Nomination and
Remuneration Policy ("Policy") which lays down a
framework in relation to remuneration of Directors, Key
Managerial Personnel and Senior Management of the
Company. The Policy also lays down criteria for selection
and appointment of Board Members.

The Committee also plays an important role and is
responsible for administering the Stock Options Scheme
as applicable to the eligible employees of the Company.

22. PARTICULARS OF EMPLOYEES AND
REMUNERATION

The information required under Section 197(12) of the
Companies Act, 2013 read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is annexed as Annexure-D and
forms an integral part of this Report. As per first proviso

to Section 136(1) of the Act and second proviso of Rule
5(3) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, the report and
financial statements are being sent to the members of
the Company excluding the statement of particulars of
employees under Rule 5(2). However, these are available
for inspection during business hours up to the date of
the forthcoming AGM at the registered office of the
Company. Any Member interested in obtaining a copy of
the said statement may write to the Company Secretary
at the Registered Office address of the Company.

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

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

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

Positive Employee Satisfaction Survey Outcomes

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

Performance Appraisals & Rewarding System

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

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

Attrition Management

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

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

Proactive Leadership & Talent Management

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

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

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

Employee Engagement Initiatives

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

Way Forward

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

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

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

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

25. AARTI PHARMA PERFORMANCE STOCK
OPTION PLAN 2023

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

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

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

Your Company has received a certificate for
FY 2024-25 from CS Sunil M. Dedhia (COP No. 2031), of
Sunil M. Dedhia & Co. Company Secretary in Practice and
the Secretarial Auditor of the Company that PSOP 2023
has been implemented in accordance with the provisions
of the SEBI (Share Based Employee Benefits and Sweat
Equity) Regulations, 2021 and the resolution passed
by the shareholders. Any request for inspection of the
said Certificate may please be sent investorrelations@
aartipharmalabs.com.

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

26. CORPORATE GOVERNANCE

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

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

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

27. HEALTH AND SAFETY

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

Governance Mechanism

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

Occupational Health and Safety

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

Process Safety

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

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

Safety Training

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

Contractor Health & Safety

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

Customer Health & Safety

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

Occupational Health Centres (OHC)

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

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

Incident Learning and Safety Culture

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

ENVIRONMENT

Energy Conservation & Consumption

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

Hazardous Waste Management

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

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

Water & Wastewater Management

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

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

Product End-of-Life Management

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

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

28. BUSINESS RESPONSIBILITY & SUSTAINABILITY
REPORTING (BRSR)

The Listing Regulations mandate the inclusion of the
Business Responsibility & Sustainability Reporting as
part of the Annual Report for top 1,000 listed entities

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

29. VIGIL MECHANISM

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

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

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

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

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

The Company is committed to treating every employee
with dignity and respect. The Policy framed by the
Company in this regard provides for protection against
sexual harassment of women at workplace and for
prevention and redressal of such complaints. The POSH
Policy is gender inclusive and the framework ensures
complete anonymity and confidentiality. The said Policy
of your Company is available on the Company''s website at
https://www.aartipharmalabs.com/investors/prevention-
of-sexual-harrasment-policy.pdf.

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

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

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

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

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

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

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

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

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

31. SECRETARIAL STANDARDS

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

32. DETAILS OF DEPOSITS

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

BANK LOAN FACILITIES

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

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

33. ANNUAL RETURN

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

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

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

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

35. COMPLIANCE MANAGEMENT SYSTEM

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

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

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

36. SWAYAM INVESTOR SELF-SERVICE PORTAL

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

37. SIGNIFICANT AND MATERIAL ORDERS PASSED
BY THE REGULATORS

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

38. MATERIAL CHANGES AND COMMITMENTS, IF
ANY, AFFECTING THE FINANCIAL POSITION
OF THE COMPANY OCCURRED BETWEEN THE
END OF THE FINANCIAL YEAR TO WHICH THIS
FINANCIAL STATEMENTS RELATE AND THE
DATE OF THE REPORT

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

39. DETAILS OF APPLICATION MADE OR
ANY PROCEEDING PENDING UNDER THE
INSOLVENCY AND BANKRUPTCY CODE, 2016
DURING THE FINANCIAL YEAR ALONGWITH
THEIR STATUS AS AT THE END OF THE
FINANCIAL YEAR

During the FY 2024-25, there was no application made
and proceeding initiated / pending by any Financial and/
or Operational Creditors against your Company under the
Insolvency and Bankruptcy Code, 2016 ("the Code").

Further, there is no application or proceeding pending
against your Company under the Code.

40. DETAILS OF DIFFERENCE BETWEEN THE
AMOUNT OF VALUATION AT THE TIME OF
ONE TIME SETTLEMENT AND THE VALUATION
DONE AT THE TIME OF TAKING A LOAN FROM
THE BANKS OR FINANCIAL INSTITUTIONS
ALONG WITH THE REASONS THEREOF

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

41. GENERAL DISCLOSURES

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

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

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

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

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

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

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

42. ACKNOWLEDGEMENT

The Board of Directors place on record its sincere
appreciation for the dedicated services rendered by
the employees of the Company at all levels and the
constructive cooperation extended by them. Your
Directors would like to express their grateful appreciation
for the assistance and support by all Shareholders,
Government Authorities, Auditors, Financial Institutions,
Customers, Employees, Suppliers, other business
associates and various other stakeholders.

For and on behalf of the Board

Narendra J. Salvi Hetal Gogri Gala

Place: Mumbai Managing Director Vice Chairperson and Managing Director

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

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

1. FINANCIAL HIGHLIGHTS & SUMMARY

Summary

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

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

Consolidated Financial Statements

In accordance with the provisions of Companies Act, 2013, Regulation 33 of the Listing Regulations, and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for

Aarti USA Inc. has generated during the previous Financial Year more than 10% of the consolidated income of the Company. Accordingly, the said Company is a material subsidiary of the Company. Except Aarti USA Inc., the Company does not have any material subsidiary whose net worth exceeds 10% of the consolidated net worth of the Company in the immediately preceding accounting year or has generated 10% of the consolidated income of the Company during the previous Financial Year. A policy on material subsidiaries had been formulated and is available on the website of the Company and the web link thereto is: https://www.aartipharmalabs. com/investors/policy-on-determination-of-material-subsidiary-feb-2023.pdf

During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report.

Further a statement containing salient features of the financial statement of our Subsidiaries/Jointly controlled entity in the prescribed format AOC-1 is included in the Report as Annexure-A and forms an integral part of this Report.

4. SHARE CAPITAL

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

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

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

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

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

5. STATE OF AFFAIRS

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

6. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

In accordance with the prevailing provisions of the Section 149 of the Companies Act, 2013 read with Regulation 17 of the Listing Regulations, as amended from time to time, as on March 31, 2023, the Board of Directors, comprises ten Directors (with two Executive Directors, three Non-Executive Non-Independent and five Independent Directors).

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

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

a. Shri Vinay Nayak,

b. Shri Bhavesh Vora,

c. Shri Vilas Gaikar,

d. Smt. Jeenal Savla,

e. Smt. Rupal Vora.

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

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

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

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

Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard-2 on General Meetings, a brief profile of the Director proposed to be re-appointed is made available, as an Annexure to the Notice of the Annual General Meeting.

Pursuant to the provisions of Regulation 34(3) read with Schedule V to the Listing Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company, certifying that none of the Directors of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India or by the Ministry of Corporate Affairs or by any such statutory authority. The said Certificate is annexed to the Corporate Governance Report of the Company for the Financial Year 2022-23.

Key Managerial Personnel

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

1. Managing Director;

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

b. Shri Narendra J. Salvi

2. Shri Nikhil Natu, Company Secretary;

3. Shri Piyush Lakhani, Chief Financial Officer.

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

7. INDEPENDENT DIRECTORS

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

In accordance with Section 149(7) of the Companies Act, 2013, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.

In the opinion of the Board of Directors, the Independent Directors fulfill the conditions specified in Companies Act, 2013 read with the Rules made thereunder as well as Listing Regulations and are independent from Management, hold the highest degree of integrity and possess expertise in their respective fields with enormous experience.

All the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

All the Independent Directors of the Company have enrolled their names in the ''Independent Directors Data Bank'' maintained by Indian Institute of Corporate Affairs ("IICA").

Familiarisation Programme for Independent Directors

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

8. DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

b. That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of

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

c. That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

9. MEETINGS

The Board of Directors met seven (7) times during the Financial Year under review. The details of the number of meetings of the Board and its Committees held during the Financial Year 2022-23 and the attendance of each Director/Member at these meetings are provided in the Corporate Governance Report forming part of the Annual Report. The intervening gap between the Board Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

10. DIVIDEND

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

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

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

Dividend Distribution Policy

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

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

11. CORPORATE SOCIAL RESPONSIBILITY

Your Company through, Aarti Foundation and Dhanvallabh Charitable Trust - Our CSR arms undertake community interventions to enhance the lives of the communities. Besides our direct involvement, we partner with numerous implementing agencies to carry out need assessment and make impactful interventions. Our Focus areas during the year have been;

• Education & Skill Development

• Childcare & Healthcare Facilities

• Women Empowerment & Livelihood Opportunities

• Cluster & Rural Development

• Disaster Relief & Rehabilitation

• Eradication of Hunger & Poverty

• Water Conservation & Environment

• Research & Development work for upliftment of Society

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

A brief note on various CSR initiatives undertaken during the year including the composition of the CSR Committee is presented in this Annual report. The CSR annual report is annexed as Annexure-B and forms an integral part of the Report.

12. AUDIT COMMITTEE

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

13. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud, actual or suspected leak of UPSI or violation of Company''s Code of Conduct. It also provides for adequate safeguards against the victimisation of employees and allows direct access to the Chairperson of the Audit Committee in exceptional cases. The said

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

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

14. RELATED PARTY TRANSACTIONS

The Company has a Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions which is uploaded on the Company''s website at the web-link given below: https://www. aartipharmalabs.com/investors/rpt-policy-feb-2023.pdf

All related party transactions that were entered into during the FY 2022-23 were on arm''s length basis and were carried out in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other Designated Persons which may have potential conflict with interest of the Company at large.

The related party transactions are approved by the Audit Committee. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of transactions. A report of factual findings arising out of the accepted procedures carried out in regard to transactions with Related Parties is given by the Statutory Auditors on quarterly basis and the same is placed before the Audit Committee.

The details of related party transactions are provided in the accompanying financial statements.

Particulars of contracts or arrangements made with related parties

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

15. BANK LOAN FACILITIES

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

16. DEPOSITS

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014)], during the Financial Year 2022-23.

17. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

The particulars of loans given, investments made, guarantees given and securities provided during the year under review and as covered under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in the notes to the standalone financial statements forming part of the Annual Report.

18. PARTICULARS OF EMPLOYEES

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

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

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

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

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

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

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

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

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

Skills & Capability Building Initiative

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

Employee Engagement

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

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

19. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

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

20. I NVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''the Rules'') all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the rules, the shares on which Dividend has not been paid and claimed by the Shareholders for seven consecutive years or more shall be transferred to the Demat account of the IEPF Authority. While no amount was required to be transferred to the IEPF, since the Company was incorporated in the year 2019 and the first dividend was paid by the Company in the current FY. However, pursuant to the Scheme, the proportionate number of shares (i.e. 313,656 shares) held by the shareholders of Aarti Industries Limited, which were lying in the IEPF account, were credited to the IEPF demat account by the Company. Further, an amount of '' 614,621 (net of TDS) towards Interim Dividend for Financial Year 2022-23 accrued on the said number of shares was also credited to the designated Bank Account of the IEPF Authority.

21. ANNUAL RETURN

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

22. CORPORATE GOVERNANCE

Corporate Governance essentially involves balancing the interests of a Company''s stakeholders. The Company continues to nurture a culture of good governance practices across functions, offices and manufacturing facilities.

Your Company has complied with the mandatory Corporate Governance requirements stipulated under the Listing Regulations. The separate Report on Corporate Governance is annexed hereto forming part of this Report. The requisite certificate from Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate Governance.

23. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

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

24. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTING (BRSR)

The Listing Regulations mandate the inclusion of the Business Responsibility & Sustainability Reporting as part of the Annual Report for top 1000 listed entities based on market capitalisation. BRSR for the year under review, as stipulated under Regulation 34(f) of Listing Regulations read with SEBI Circular No. SEBI/HO/CFD/ CMD-2/P/CIR/2021/562 dated May 10, 2021 is in a separate section forming part of the Annual Report.

25. ANNUAL BOARD EVALUATION

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

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

26. NOMINATION AND REMUNERATION POLICY

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations, your Company has in place a Nomination and Remuneration Policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The Policy also lays down criteria for selection and appointment of Board Members. The said policy has been posted on the website of the Company and the web link

thereto is: https://www.aartipharmalabs.com/investors/ nomination-and-remuneration-policy-feb-2023.pdf

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

27. RISK MANAGEMENT

Your Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. The Company aims to use risk management to take better informed decisions and improve the probability of achieving its strategic and operational objectives.

In compliance with Regulation 21 of Listing Regulations, your Company has a Risk Management Committee consisting of Shri Rashesh Gogri (Chairman), Smt. Hetal Gogri Gala, Shri Narendra J. Salvi, Shri Rajendra Gogri, Shri Parimal Desai and Dr. Vinay Nayak. The Committee through its risk management framework continuously identifies, evaluates and takes appropriate measures to mitigate/minimize various elements of risks. The Risk Management Committee periodically, to ensure that appropriate methodologies, processes and systems are in place to monitor and evaluate risks associated with the business of the Company and also to monitor and oversee the implementation of the Risk Management Policy.

The said policy has been posted on the website of the Company and the web link thereto is: https:// www.aartipharmalabs.com/investors/APL_Risk%20 Management%20Policy.pdf

28. COMPLIANCE MANAGEMENT SYSTEM

The Company with its sheer focus is committed to achieve 100% compliance. We have adopted a third-party managed IT-based Compliance Management System. It has a repository of all applicable regulations and requisite compliances. It has an in-built alert system that intimates concerned personnel about upcoming compliances.

29. HEALTH AND SAFETY:

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

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

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

Safety Performance Leading Indicators

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

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

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

Process Safety Management

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

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

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

Customer Health & Safety

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

Contractor Health & Safety

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

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

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

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

ENVIRONMENT

Energy Conservation & Consumption

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

Hazardous Waste Management

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

Water & Wastewater Management

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

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

Product End Life

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

30. STATUTORY AUDITORS & AUDITORS'' REPORT

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

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

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

There are no qualifications, reservations or adverse remarks or disclaimer made by the Auditor in their Report. The Auditors of the Company have not reported any instances of fraud committed against the Company by its officers or employees as specified under Section 143(12) of the Companies Act, 2013.

31. COST AUDITORS & RECORDS

In terms of the Section 148 of the Companies Act, 2013 read with the Companies (Cost Record and Audit) Rules, 2014, the Company is required to maintain cost accounting records and have them audited every year.

The Board accordingly, has appointed Ketki D. Visariya, Cost Accountants, (Membership No. 16028) as the "Cost Auditors" of the Company for FY 2023-24. The remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their approval. Accordingly, a resolution for seeking Member''s approval for the remuneration payable to Ketki D. Visariya, Cost Accountants, is included at Item No. 4 of the Notice convening the Annual General Meeting in terms of Rule 14 of the Companies (Audit & Auditors) Rules, 2014.

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

32. SECRETARIAL AUDITOR & REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made thereunder, the Company had appointed CS Sunil M. Dedhia (COP No. 2031), Proprietor of Sunil M. Dedhia & Co., Company Secretary in Practice to undertake the Secretarial Audit of the Company.

Pursuant to provisions of Section 204(1) of the Companies Act, 2013 and Regulation 24A of the Listing Regulations, the Secretarial Audit Report for the Financial Year ended March 31, 2023 issued by CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company is annexed as Annexure-C and forms an integral part of this Report. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Act.

There is no qualification, reservation or adverse remark or disclaimer made by the Auditor in their report. As regards the observations of the Secretarial Auditor in their Report, the same is self explanatory and need no further clarifications.

33. I NTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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

The Statutory Auditors Report on Internal Financial Controls as required under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 is annexed with the Independent Auditors'' Report.

34. SECRETARIAL STANDARDS COMPLIANCE

During the year under review, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant to Section 118 of the Companies Act, 2013.

35. NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Our Company is fully committed to uphold and maintain the dignity of every woman working with the Company. The Company has Zero tolerance towards any action on the part of any one which may fall under the ambit of ''Sexual Harassment at workplace''. The Policy framed by the Company in this regard provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints.

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

Status of the Complaints during the FY 2022-23 is as follows:

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

36. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to time, are provided in Annexure-D to this report.

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

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

38. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE FINANCIAL YEAR ALONGWITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR

During the FY 2022-23, there was no application made and proceeding initiated / pending by any Financial

and/or Operational Creditors against your Company under the Insolvency and Bankruptcy Code, 2016 ("the Code").

Further, there is no application or proceeding pending against your Company under the Code.

39. DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF VALUATION AT THE TIME OF ONETIME SETTLEMENT AND THE VALUATION DONE AT THE TIME OF TAKING A LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF During the Financial Year 2022-23, the Company has not made any settlement with its bankers for any loan/ facility availed or/and still in existence.

ACKNOWLEDGEMENT

The Board of Directors place on record its sincere appreciation for the dedicated services rendered by the employees of the Company at all levels and the constructive cooperation extended by them. Your Directors would like to express their grateful appreciation for the assistance and support by all Shareholders, Government Authorities, Auditors, Financial Institutions, Customers, Employees, Suppliers, other business associates and various other stakeholders.