Arrowhead Seperation Engineering Ltd

To

The Members,

Your Directors take pleasure in presenting their Thirty Third Annual Report on the Business and Operations of the Company and the Accounts for the Financial Year ended 31^st March, 2024 (period under review).

1. FINANCIAL PERFORMANCE OF THE COMPANY:

The summary of the financial performance for the financial year ended March 31, 2024 and the previous financial year ended March 31, 2023 is given below:

Being a Market Making Company, most of the Company's investments are in the securities of listed companies. Accordingly most of its revenue is in nature of trade income on investments in listed companies. On account of resilient growth in the capital markets and increased investor interest in SME listed stocks; Company witnessed a Top line growth.

2. REVIEW OF OPERATIONS

The Total Income of the Company stood at ? 2489.03 lacs for the year ended March 31, 2024 as against ? 2171.57 lacs in the previous year. The Company made a net profit of ? 203.59 lacs for the year ended March 31, 2024 as compared to the net profit of ? 102.37 lacs in the previous year.

3. CASH FLOW STATEMENTS

As required under regulation 34 of the SEBI (LODR) Regulations, 2015, a Cash Flow Statement forms part of Annual Report.

4. TRANSFER TO RESERVES IN TERMS OF SECTION 134 (3) (J) OF THE COMPANIES ACT, 2013

The Board has decided not to transfer any amount to the Reserves for the year under review.

5. DIVIDEND:

The dividend policy for the year under review has been formulated taking into consideration of growth of the company and to conserve resources, the Directors do not recommend any dividend for year ended March 31, 2024.

6. TRANSFER OF UNPAID AND UNCLAIMED DIVIDENDS TO INVESTOR EDUCATION AND PROTECTION FUND

The Ministry of Corporate Affairs under Sections 124 and 125 of the Companies Act, 2013 requires dividends that are not encashed/ claimed by the shareholders for a period of seven consecutive years, to be transferred to the Investor Education and Protection Fund (IEPF). In FY 2023-24, there was no amount due for transfer to IEPF.

7. SHARE CAPITAL

The authorized share capital of the company is Rs. 2,00,00,000/- (Rupees Two Crores Only) divided into 20,00,000 (Rupees Twenty Lakh Only) equity shares of Rs. 10/- (Rupees Ten Only)

The Paid up capital of the Company was increased from Rs. 1,31,33,250/- (Rupees One Crore Thirty One Lakh Thirty Three Thousand Two Hundred and Fifty) divided into 13,13,325 (Thirteen Lakhs Thirteen Thousand Three Hundred and Twenty Five) Equity shares of Rs. 10/- (Rupees Ten Only) each to Rs. 1,87,13,250 (Rupees One Crore Eighty Seven Lakh Thirteen Thousand Two Hundred and Fifty) divided into 18,71,325 (Eighteen Lakhs Seventy One Thousand Three Hundred and Twenty Five) Equity shares of Rs. 10/- (Rupees Ten Only) each - pursuant to Shareholders Resolution passed at the Extra Ordinary General Meeting held on June 02, 2023.

Company has appointed M/s Cameo Corporate Services Limited as the Registrar and Transfer Agent of the Company.

8. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT:

Management's Discussion and Analysis Report for the year under review, in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations") and SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 (the "Amended Listing Regulations"), is presented in a separate section forming part of the Annual Report as Annexure III".

9. CHANGE IN NATURE OF BUSINESS, IF ANY

There has been no change in nature of business of the Company during the FY under review.

10. DISCLOSURES BY DIRECTORS

The Board of Directors has submitted notice of interest in Form MBP 1 under Section 184(1) as well as intimation by directors in Form DIR 8 under Section 164(2) and declarations as to compliance with the Code of Conduct of the Company.

Certificate of Non-Disqualification of Directors received from JNG & Co., Practicing Company Secretary is annexed to the Board's Report as "Annexure IV".

11. SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY

The Company does not have any Subsidiary, Joint venture or an Associate Company.

12. MATERIAL CHANGES AND COMMITMENTS

The Company has obtained the status of being listed on BSE SME Platform with effect from November 28, 2023. The Company managed to raise ? 1,300.14 Lakhs by initial public offer of 5,58,000 equity shares of ? 10 each through its prospectus dated November 08, 2023. Further stakeholder may find the Prospectus though link: https://www.arrowhead- dryers.com/ipo.php

Listing on Stock Exchanges:

The Company has obtained the status of being listed on BSE SME Platform with effect from November 28, 2023. The Company managed to raise ? 1,300.14 Lakhs by initial public offer of 5,58,000 equity shares of ? 10/- each through its Prospectus dated November 08, 2023. Further 5,58,000 Equity Shares of face value of Rs. 10/- each were available under the Offer, at Issue Price of Rs. 233/-. The Offer opened for subscription on November 16, 2023 and closed on November 20, 2023. The Equity shares of Arrowhead have been listed on BSE SME Platform on November 28, 2023.

The above were the material changes and commitments affecting the financial position of the company which have occurred during the period under review.

13. EXTRACT OF ANNUAL RETURN:

The Annual Return of the Company as on 31^st March, 2024 is available on the website of the Company at https ://www. arrowhead-dryers.com.

14. CHANGE IN SHARE CAPITAL:

During the period under review and as on the date of this report following changes took place in the Paid up capital of the Company as it was increased from Rs. 1,31,33,250/- (Rupees One Crore Thirty One Lakh Thirty Three Thousand Two Hundred and Fifty) divided into 13,13,325 (Thirteen Lakhs Thirteen Thousand Three Hundred and Twenty Five) Equity shares of Rs. 10/- (Rupees Ten Only) each to Rs. 1,87,13,250 (Rupees One Crore Eighty Seven Lakh Thirteen Thousand Two Hundred and Fifty) divided into 18,71,325 (Eighteen Lakhs Seventy One Thousand Three Hundred and Twenty Five) Equity shares of Rs. 10/- (Rupees Ten Only) each pursuant to Shareholders Resolution passed at the Extra Ordinary General Meeting held on June 02, 2023.

Further, as mentioned above the share capital of the company was increased by allotting 5,58,000 Equity Shares of face value of Rs. 10/- each fully paid up for cash at a price of Rs. 233/- per equity share capital (including Rs. 223/- premium per equity share) aggregating to Rs. 13,00,14,000/- (Rupees Thirteen Crore Fourteen Thousand Only) under Initial Public Offering (IPO) as on November 22, 2023. The aforementioned equity shares of the Company got listed on BSE SME Platform on November 28, 2023.

15. FAMILIARISATION PROGRAMME FOR DIRECTORS

As a practice, all Directors (including Independent Directors) inducted to the Board go through a structured orientation programme. Presentations are made by Senior Management giving an overview of the operations, to familiarise the new Directors with the Company's business operations. The Directors are given an orientation on the products of the business, group structure and subsidiaries, Board constitution and procedures, matters reserved for the Board, and the major risks and risk management strategy of the Company.

During the year under review, Two (2) new Independent Directors viz. Ms. Priyanka Moondra Rathi and Mr. Nikhil Malpani were inducted to the Board.

16. DIRECTORS AND KEY MANAGERIAL PERSONNEL: i. Change in Directors and Key Managerial personnel

During the period under review and as on the date of this report following are the changes that took place in the Board Structure:

ii. Retirement by Rotation of the Directors

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ajit Mundle, Chairman & Managing Director of the Company, retires by rotation and offers himself for reappointment.

The brief resume of Mr. Ajit Mundle, the nature of his expertise in specific functional areas, names of the companies in which he has held directorships, his shareholding etc. are furnished in the Annexure - A to the notice of the ensuing AGM.

iii. Independent Directors

Our Company has received annual declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence provided in Section 149(6) of the Companies Act, 2013 and Regulations 16(1) (b) & 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances, which may affect their status as Independent Director during the year.

The Independent Directors met on 25^th March, 2024, without the attendance of Non-Independent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole; the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

17. BOARD MEETINGS:

The Company held ten meetings of its Board of Directors during the year on May 05, 2023, May 29, 2023, June 05, 2023, June 17, 2023, June 21, 2023, June 27, 2023, September 28, 2024, November 22, 2024, December 18, 2023 and February 22, 2024.

(a) Audit Committee:

The Audit Committee, as per Section 177 of Companies Act, 2013, was constituted on June 05, 2023 under the chairmanship of Mr. Nikhil Malpani. After constitution the committee met Three (3) times with full attendance of all the members. The composition of the Audit Committee as at March 31, 2024 and details of the Members participation at the Meetings of the Committee are as under:

The Committee is governed by a Charter which is in line with the regulatory requirements mandated by the Companies Act, 2013. Some of the important functions performed by the Committee are:

Financial Reporting and Related Processes:

• Oversight of the Company's financial reporting process and financial information submitted to the Stock Exchanges, regulatory authorities or the public.

• Reviewing with the Management, the Half Yearly Unaudited Financial Statements and the Auditor's Limited Review Report thereon / Audited Annual Financial Statements and Auditors' Report thereon before submission to the Board for approval. This would, inter alia, include reviewing changes in the accounting policies and reasons for the same, major accounting estimates based on exercise of judgement by the Management, significant adjustments made in the Financial Statements and / or recommendation, if any, made by the Statutory Auditors in this regard.

• Review the Management Discussion & Analysis of financial and operational performance.

• Discuss with the Statutory Auditors its judgement about the quality and appropriateness of the Company's accounting principles with reference to the Accounting Standard Policy.

• Review the investments made by the Company.

All the Members on the Audit Committee have the requisite qualification for appointment on the Committee and possess sound knowledge of finance, accounting practices and internal controls.

The Auditors, Internal Auditors, Chief Financial Officer are invited to attend the meetings of the Committee. The Company Secretary acts as the Secretary to the Committee.

(b) Nomination and Remuneration Committee:

The Nomination and Remuneration Committee, as per Section 178(1) of Companies Act, 2013, was constituted on June 05, 2023 under the Chairmanship of Mrs. Mayuri Rupareliya. After constitution the committee met once with full attendance of all the members. The composition of the Nomination and Remuneration Committee as at March 31, 2024 and details of the Members participation at the Meetings of the Committee are as under:

The terms of reference of the Committee as per Companies Act 2013 and SEBI (LODR) 2015, include the following:

• Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board of directors a policy relating to, the remuneration of the directors, key managerial personnel and other employees;

• For every appointment of an independent director, the Nomination and Remuneration Committee shall evaluate the balance of skills, knowledge and experience on the Board and on the basis of such evaluation, prepare a description of the role and capabilities required of an independent director. The person recommended to the Board for appointment as an independent director shall have the capabilities identified in such description. For the purpose of identifying suitable candidates, the Committee may:

a) Use the services of an external agencies, if required;

b) Consider candidates from a wide range of backgrounds, having due regard to diversity; and

c) Consider the time commitments of the candidates.

• Formulation of criteria for evaluation of performance of independent directors and the board of directors;

• Devising a policy on diversity of board of directors;

• Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the board of directors their appointment and removal.

• Whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.

• Recommend to the board, all remuneration, in whatever form, payable to senior management.

The Company has formulated a Remuneration Policy which is annexed to the Board's Report in "Annexure I".

(c) Stakeholders Relationship Committee:

The Stakeholders Relationship Committee, as per Section 178 (5) of Companies Act, 2013, is under Chairmanship of Mrs. Mayuri Rupareliya as at March 31, 2024. The Committee is governed by a Charter, which is in line with the regulatory requirements mandated by the Companies Act, 2013. During the year, the committee met one time with full attendance of all the members. The composition of the Stakeholders Relationship Committee as at March 31, 2024 and details of the Members participation at the Meetings of the Committee are as under:

The terms of reference of the Committee are:

• Resolving the grievances of the security holders of the listed entity including complaints related to transfer/transmission of shares, non-receipt of annual report, non-receipt of declared dividends, issue of new/duplicate certificates, general meetings etc.

• Review of measures taken for effective exercise of voting rights by shareholders.

• Review of adherence to the service standards adopted by the listed entity in respect of various services being rendered by the Registrar & Share Transfer Agent.

• Review of the various measures and initiatives taken by the listed entity for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual reports/statutory notices by the shareholders of the company.

During the year, no complaints were received from shareholders. There are no balance complaints. The Company had no share transfers pending as on March 31, 2024.

Ms. Radhika Bhootra, Company Secretary is the Compliance Officer of the Company w.e.f. June 05, 2023.

19. BOARD'S PERFORMANCE EVALUATION:

The Board of Directors carried out an annual evaluation of the Board itself, its Committees and individual Directors. The entire Board carried out performance evaluation of each Independent Director excluding the Independent Director being evaluated. The Nomination Remuneration Committee also carried out evaluation of every director's performance.

The evaluation was done after taking into consideration inputs received from the Directors, setting out parameters of evaluation. Evaluation parameters of the Board and Committees were mainly based on Disclosure of Information, Key functions of the Board and Committees, Responsibilities of the Board and Committees, etc. Evaluation parameters of

Individual Directors including the Chairman of the Board and Independent Directors were based on Knowledge to Perform the Role, Time and Level of Participation, Performance of Duties and Level of Oversight and Professional Conduct etc.

Independent Directors in their separate meeting evaluated the performance of Non-Independent Directors, Chairman of the Board and the Board as a whole.

20. CORPORATE SOCIAL RESPONSIBILITY

The Company does not fall under the criteria laid under the provisions of Section 135 of the Companies Act 2013 and rules framed there under for the year ended 31^st March 2024. Therefore, the provisions of Corporate Social Responsibility are not applicable to the Company during the period.

i. Statutory Auditors:

The Board has re-appointed M/s B.B. Gusani & Associates (FRN: 140785W), Chartered Accountants as the statutory auditors of the Company for term of five consecutive years, for Financial year 2023-24 to Financial Year 2027-28, from the conclusion of 32^nd Annual General Meeting, held in 2023 till the conclusion of the 37^th Annual General Meeting to be held in the year 2028, as approved by shareholders of the Company.

ii. Secretarial Auditor:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed JNG & CO., a firm of Company Secretaries in Practice (CP No. 8108), to undertake the Secretarial Audit of the Company for the F.Y. 2023-24 and F.Y. 2024-25. The Secretarial Audit Report for F.Y. 2023-24 is annexed herewith as "Annexure II".

iii. Cost Auditor:

The Company does not fall within the provisions of Section 148 of the Companies Act, 2013, as read with the Companies (Cost Records and Audit) Rules, 2014. Therefore, the maintenance of cost records and the applicability of cost audits, as specified by the Central Government under Section 148 of the Companies Act, 2013, are not applicable to the Company.

iv. Internal Auditor:

The Board of Directors based on the recommendation of the Audit Committee and pursuant to the provisions of section 138 of the Act read with the Companies (Accounts) Rules, 2014, has appointed M/s. DGMS & Co., (Firm Registration Number 0112187W) Chartered Accountants, Mumbai as the Internal Auditors of the Company for the financial year 2023-24 and 2024-25. The Internal Auditor conducts the internal audit of the functions and operations of the Company and reports to the Audit Committee and Board.

22. AUDITOR'S REPORT:

The Auditor's Report and Secretarial Auditor's Report does not contain any qualifications, reservations or adverse remarks. Report of the Auditors are given as an Annexure which forms part of this report.

23. VIGIL MECHANISM / WHISTLE - BLOWER POLICY:

Pursuant to the provisions of Section 177(9) of the Act, read with the Rules made thereunder, the Company has adopted a Whistle-Blower Policy for Directors and Employees to report genuine concerns and to provide adequate safeguards against victimization of persons who may use such mechanism. The functioning process of this mechanism has been more elaborately mentioned in the Corporate Governance Report which forms part of this Annual Report. The said Policy is available on Company's website at https://www.arrowhead-dryers.com/policies.php.

24. INTERNAL AUDIT & CONTROLS:

Pursuant to provisions of Section 138 read with rules made there under, the Board has appointed M/s. DGMS & Co., Chartered Accountants, as an Internal Auditors of the Company to check the internal controls and functioning of the activities and recommend ways of improvement. The Internal Audit is carried out on half yearly basis; the report is placed in the Audit Committee Meeting and the Board Meeting for their consideration and direction.

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2023-24.

25. RISK ASSESSMENT AND MANAGEMENT:

The Company has been on a continuous basis reviewing and streamlining its various operational and business risks involved in its business as part of its risk management policy. The Company also takes all efforts to train its employees from time to time to handle and minimize these risks.

26. LISTING WITH STOCK EXCHANGES:

During the period under review, Arrowhead Seperation Engineering Limited got listed on the SME Platform of the BSE Limited on November 28, 2024. It has paid the Annual Listing Fees for the year 2024-25 to BSE Limited.

27. COMPLIANCE WITH SECRETARIAL STANDARDS:

In terms of Section 118(10) of the Act, the Company is complying with the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by Central Government with respect to Meetings of the Board of Directors and General Meetings.

28. *PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under Section 197 & Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given below.

a) The median remuneration of employees of the Company during the financial year is Rs. 430113.84

b) Percentage increase/decrease in the median remuneration of employees in the financial year 2023-24 : Not Applicable

c) Number of permanent employees on the rolls of the Company as on March 31, 2024: 51 (Fifty One).

d) It is hereby affirmed that the remuneration paid during the year is as per the Remuneration policy of the Company.

e) There is no employee covered under the provisions of section 197(14) of the Companies Act, 2013.

There was no employee in the Company who drew remuneration of Rs. 1,00,00,000/ - per annum during the period under review. Hence, the Company is not required to disclose any information as per Rule 5(2) of the Companies (Appointment and Remuneration) Rules, 2014.

29. POLICIES AND DISCLOSURE REQUIREMENTS:

In terms of provisions of the Companies Act, 2013 the Company has adopted following policies which are available on its website https://www.arrowhead-dryers.com/policies.php.

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

i. Conservation of Energy

a) The steps taken or impact on conservation of energy - The Operations of the Company are not energy intensive. However, adequate measures have been initiated for conservation of energy.

b) The steps taken by the Company for utilizing alternate source of energy - Company shall consider on adoption of alternate source of energy as and when necessities.

c) The Capital Investment on energy conversation equipment - No Capital Investment yet.

36. SIGNIFICANT AND MATERIAL ORDERS:

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future.

37. FRAUD REPORTING

There have been no frauds reported by the Auditors of the Company to the Audit Committee or the Board of Directors under sub-section (12) of section 143 of the Companies Act, 2013 during the financial year.

38. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION. PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has in place an Anti-Sexual Harassment Policy in line with the Requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and an Internal Complaints Committee has been set up to redress complaints received regarding Sexual Harassment at workplace, with a mechanism of lodging & redress the complaints. All employees (permanent, contractual, temporary, trainees, etc.) are covered under this policy.

Your Directors further state that pursuant to the requirements of Section 22 of Sexual Harassment of Women at Work place (Prevention, Prohibition & Redressal) Act, 2013 read with Rules there under, the Company has not received any complaint of sexual harassment during the year under review.

39. HUMAN RESOURCES:

The Company has established an organization structure that is agile and focused on delivering business results. With regular communication and sustained efforts it is ensuring that employees are aligned on common objectives and have the right information on business evolution.

40. CORPORATE GOVERNANCE:

In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 exempts companies which have listed their specified securities on SME Exchange from compliance with corporate governance provisions.

Since the equity share capital of your Company is listed exclusively on the SME Platform of BSE, the Company is exempted from compliance with Corporate Governance requirements, and accordingly the reporting requirements like Corporate Governance Report, Business Responsibility Report etc. are not applicable to the Company.

41. DISCLOSURES:

The following disclosures are not applicable to the company:

1. The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year alongwith their status as at the end of the financial year.

2. The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

42. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:

i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures.

ii. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

iii. They have 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.

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

v. They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.

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

43. CAUTIONARY STATEMENTS:

Statements in this Annual Report, particularly those which relate to Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may constitute ‘forward looking statements' within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.

44. ACKNOWLEDGEMENTS:

The Directors would like to express deep sense of appreciation for the assistance and co-operation received from the Financial Institutions, Banks, Government Authorities and Shareholders and for the devoted service by the Executives, staff and workers of the Company. The Directors express their gratitude towards each one of them.