The Directors have pleasure in presenting their 21st Annual Report on the business and operations of the Company and the accounts for the Financial Year ended March 31,2023. This being the first Report after the Initial Public Offer (IPO) and listing on Emerge platform of National Stock Exchange of India Limited, the Board welcomes all the public shareholders and look forward to your continuing faith and support.

2. State of Company’s Affair

The revenue for the year has been increased to Rs. 11,861.18 lakhs as compared to Rs. 11,741.47 Lakhs in the previous year at the same time expenditure decreased to Rs. 10,521.83 Lakhs as compared to Rs. 11,151.73 Lakhs in the previous year. The company has earned net profit of Rs. 1,420.77 Lakhs in the current year as compared to the profit of Rs. 225.94 Lakhs in the previous year, which shows an increase in Earning Per Share by 6.30 times than previous year.

3. Material Event

During the year, the Company was converted from Private Limited to Public Limited on January 03, 2023.

4. Initial Public Offer of Equity Shares

The Company initiated the process for Initial Public Offer ("IPO") of its Equity Shares during the year. The IPO was completed, and the Company got listed at the Emerge platform of National Stock Exchange of India Limited ("NSE Emerge") on July 06, 2023.

The total size of the IPO was Rs. 6,633.14 Lakhs comprising of 61,99,200 equity shares including fresh issue of 46,99,200 equity shares aggregating to Rs. 5,028.14 Lakhs and offer for sale of 15,00,000 equity shares aggregating to Rs. 1,605.00 Lakhs by selling shareholders. The proceeds realised by the Company from the IPO will be utilised as per objects of the offer disclosed in the Prospectus of the Company.

The IPO opened on June 23, 2023 and closed on June 27, 2023 and the Equity shares were allotted/ allocated at a price of Rs. 107/- per Equity Share (including a share premium of Rs. 97/- per Equity Share) on July 03, 2023.

5. Dividend

The Company has decided to sustain the growth in line with the long term growth objectives of the Company by retaining the profit and utilizing the same for opportunities in hand, therefore your Company does not recommend any dividend during the year under review.

6. Share Capital

The paid up equity capital as on March 31,2023 was Rs. 16 Crores. During the year under review, Authorised Capital of the Company was increased to Rs. 25 Crores for Public Issue of Equity Shares of the Company and listing of Equity Shares of the Company.

7. Transfer to Reserves

During the year under review, the Company has not made transfer to any Reserves.

8. Web Address of Annual Return

Draft of the Annual Return in Form MGT-7 for FY 2022-23 is available on https://www.essenspeciality.com/investorszone.html.

9. Board of Directors and Key Managerial Personnel

The Company has an appropriate mix of Executive Directors, Non-Executive Directors and Independent Directors in compliance with the applicable provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). The Board of the Company consists of eminent individuals of diverse backgrounds with skills, experience and expertise in various areas as detailed in the Corporate Governance Report forming part of the Annual Report.

During the year under review following changes occurred in Board of Directors and Key Managerial Personnel of the Company:

• Mr. Pallav Kishorbhai Doshi (DIN: 02542047), Director of the Company was designated as Wholetime Director of the Company w.e.f. January 01,2023. Further, he was re-designated as Chairman cum Wholetime Director w.e.f. February 14, 2023.

• Mr. Pratik Rajendrabhai Kothari (DIN: 03550736) and Mr. Kirit Ratanashi Vachhani (DIN: 07113088) were appointed as Non-Executive Independent Directors of the Company in a duly convened Extraordinary General Meeting held on January 01,2023.

• Ms. Karishma Rajesh Doshi (DIN: 08748863) was appointed as an Executive Director and Dr. Shital Bharatkumar Badshah (DIN: 10039677) was appointed as a Non-Executive Independent Director of the Company in duly convened Extra-ordinary General Meeting held on February 21,2023.

• Ms. Kruti Rajeshbhai Doshi (DIN: 02632833) was designated from Non-Executive Director to Executive Director w.e.f. February 21,2023.

• Mr. Romit Ajaykumar Shah (Membership No. A65641) was appointed as a Company Secretary of the Company in a Board Meeting held on July 05, 2022. Further, he was designated as Compliance Officer of the Company in accordance with provisions of SEBI Listing Regulations w.e.f. February 14, 2023.

• Mr. Jayantilal Tapubhai Jhalavadia was appointed as Chief Financial Officer of the Company w.e.f. December 01,2022.

Directors and KMPs as on March 31, 2023 are as under:

Further after the close of FY 2022-23, Mr. Romit A. Shah, Company Secretary & Compliance Officer (Membership No. A65641) resigned due to personal reasons w.e.f. July 15, 2023 and Mr. Sunny D. Mamtora (Membership No. A62890) was appointed as Company Secretary & Compliance Officer of the Company w.e.f. July 16, 2023.

In accordance with provisions of the Companies Act, 2013, Ms. Kruti Rajeshbhai Doshi (DIN: 02632833), Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

In the opinion of the Board, all the Independent Directors appointed during the year, possess the integrity, expertise and experience including the proficiency required to be Independent Directors of the Company, fulfil the conditions of independence as specified in the Act and the SEBI Listing Regulations and are independent of the management and have also complied with the Code for Independent Directors as prescribed in Schedule IV of the Companies Act, 2013.

10. Declaration from Independent Directors

The Company has received declaration from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 read with rule 6 of the Companies (Appointment and Qualification of Director) Rules, 2014 and Regulation 16 of SEBI Listing Regulations.

11. Board Evaluation

The Nomination and Remuneration Committee ("NRC") has formulated a Policy and laid down the criteria for evaluation of the Board and its Committees and the same has been adopted by the Board.

The Company got listed on July 06, 2023 on NSE Emerge and the performance evaluation of the Board and Committees for FY 2022-23 was carried out by Directors during July 2023 and the results of the same were shared with the NRC and the Board.

12. Board Meetings

The meeting of the Board of Directors was duly convened and held 11 (Eleven) times during the year under review. The details of the meetings and the attendance of the Directors are mentioned in the Corporate Governance Report forming part of the Annual Report.

13. Management Discussion and Analysis

In terms of Regulation 34(2)(e) of SEBI Listing Regulations, a detailed report on Management Discussion and Analysis (MDA) Report is included in this Report as Annexure-I.

14. Business Responsibility and Sustainability Report

In accordance with provisions of Regulation 34(2)(f) of SEBI Listing Regulations the Company being SME listed, requirement of Business Responsibility and Sustainability Report is not applicable to the Company.

15. Directors’ Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, it is hereby confirmed that

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for the year under review;

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

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

e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively.

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

16. Auditors and Auditors Reporta. Statutory Auditors

Pursuant to the provisions of section 139 of the Companies Act, 2013 and the Rules framed there under,

M/s. Rushabh R. Shah and Co., Chartered Accountants (Membership No.: 607585, FRN: 156419W), were appointed as statutory auditors of the Company for a period of five years at the 20th Annual General Meeting held on 30th September, 2022 until the conclusion of the 25th Annual General Meeting. Rushabh Shah has confirmed his eligibility to remain continue as the auditor of the Company for his remaining term.

Report given by M/s. Rushabh R. Shah and Co., Chartered Accountants on Financial Statements of the Company for FY 2022-23 are part of the Annual Report. The Notes on financial statement referred to in the Auditors' Report are self-explanatory and therefore, do not call for any further explanation or comments from the Board.

b. Cost Auditors

The Company made and maintained cost account and records as specified by the Central Government under Section 148(1) of the Companies Act, 2013. For the financial year 2022-23, M/s. Shailesh Thaker & Associates, Cost Accountants (Membership No: 6239, FRN: 101454) have conducted the audit of the cost records of the Company.

Pursuant to the provisions of Section 148 of the Companies Act, 2013, the Board of Directors, on the recommendation of Audit Committee, appointed M/s. Sagar M. Kapadiya & Co., Cost Accountants (FRN: 103615) having Mr. Sagar M. Kapadiya (Membership No: 36767) as a sole proprietor of firm, to conduct the audit of the cost records of the Company for the financial year 2023-24.

The remuneration payable to the Cost Auditor was subject to ratification by the Members at ensuing General Meeting. Accordingly, remuneration payable to M/s. Sagar M. Kapadiya & Co. was ratified by members in duly convened Extra-ordinary General Meeting held on June 11,2023.

c. Secretarial Auditors

During the year under review, provision of Secretarial Audit was not applicable to the Company as per provisions of Section 204 of the Companies Act, 2013 read with rules made thereunder.

Further, pursuant to the provisions of section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Securities and Exchange of Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Board of Directors, on the recommendation of the Audit Committee, have appointed CS Nirav D. Vekariya, Practising Company Secretary (CP No. 17709 and Peer Review No. 2442/2022) as Secretarial Auditor of the Company for the financial year ended March 31,2024.

d. Internal Auditors

Pursuant to the provisions of section 138 of the Companies Act, 2013 and the Rules framed there under, Board of Directors, on the recommendation of the Audit Committee, have appointed M/s. Savjani & Associates, Chartered Accountants (FRN: 133389W) as Internal Auditors of the Company for the financial year 2023-24.

17. Reporting of Fraud

During the year under review, the Statutory Auditors and Cost Auditors have not reported any instances of frauds committed in the Company by its Officers or Employees, to the Audit Committee or the Board of Directors under Section 143(12) of the Act, details of which needs to be mentioned in Director's Report.

18. Particulars of Loans, Guarantees or Investments

During the year, the Company has not given any loan or provided any guarantee or security in favour of other parties and has also not made any investment of its fund with any other party under Section 186 of Companies Act, 2013.

19. Particulars of Contracts or Arrangements with Related Parties

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. Details of the material related party transactions with related parties which require disclosure in the Form AOC-2, is attached herewith as Annexure-II.

20. Deposits

During the year under review, the Company has not accepted any deposits under Chapter V of the Act and, as such no amount on account of principal or interest on deposit were outstanding as of the Balance Sheet date.

21. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

A) Conservation of Energy

i. The steps taken or impact on conservation of energy: The Company has continued its efforts to improve energy efficiency with more vigour and depth. The Company continually took necessary steps to absorb and adopt the latest technologies and innovations in the Plastic Processing for Manufacturing home decor products. All machinery and equipment are continuously serviced, updated and overhauled in order to maintain them in good condition. This resulted in lesser energy consumption. Energy audits and Inter unit studies are carried out on a regular basis for taking steps for reduction of the energy consumption.

ii. The steps taken by the Company for utilizing alternate sources of energy:

a. The company has installed and commissioned 275.20 KW (DC) capacity Solar Power Plant in the state of Gujarat at Village HADAMTALA, Taluka Kotda-Sangani, District Rajkot.

b. All efforts are made to use more natural lights in offices/Factory/stores premises to optimize the consumption of energy.

iii. The capital investment on energy conservation equipment: Nil

B) Technology Absorption

i. The efforts made towards technology absorption: The Company continues to adopt and use the latest technologies to improve the productivity and quality of its products.

ii. The benefits derived like product improvement, cost reduction, product development or import substitution: Due to integrated facility and infusion of new technology, the Company is in position to offer most energy efficient products to consumers.

iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): No technology was imported during last four years

iv. The expenditure incurred on Research and Development:

22. Nomination and Remuneration Policy

For the purpose of selection of any Director, the Nomination & Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfils such other criteria with regard to age and other qualifications as laid down under the Companies Act, 2013 or other applicable laws.

The Board has framed a policy for selection, appointment/ reappointment and remuneration of Directors & Senior Management, which is available at https://www.essenspeciality.com/pdf/Policies/Nomination_and_Remuneration_Policy.pdf.

23. Risk Management Policy

The Company has adopted a Risk Management Policy which is available at https://www.essenspeciality.com/pdf/Policies/Risk_Management_Policy.pdf.

Directors are taking appropriate steps to manage various identified and unidentified potential risks affecting assets and business activities of the company. Considering the present assets positions and business volume Directors are of the opinion that the same is adequate for the Company. More details on risk management are furnished in the MDA Report forming part of this Report. There are no risks which in the opinion of the Board threaten the existence of the Company.

24. Corporate Social Responsibility

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Act, comprising of three Directors including Independent Directors. The composition and report on CSR is attached herewith as Annexure -III.

25. Vigil Mechanism/ Whistle Blower Policy

Pursuant to the provisions of Section 177 of the Act and Regulation 22 of SEBI Listing Regulations, the Company has established a Vigil Mechanism/ Whistle Blower Policy for Directors, employees, vendors, customers and other stakeholders of the Company to raise and report concerns regarding any unethical conduct, irregularity, misconduct, actual or suspected fraud or any other violation of the Policy within the Company. The vigil mechanism provides for adequate safeguards against victimisation of persons who use such mechanism and for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. The Whistle Blower Policy can be accessed on the Website of the Company at https://www.essenspeciality.com/pdf/Policies/Whistle_Blower_Policy.pdf.

26. Details of Subsidiary, Joint Venture or an Associate Companies

During the year under review, no Company became or ceased to be subsidiaries, joint ventures or associates of the Company.

27. Internal Financial control & its adequacy

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

Details of internal control system are given in the MDA Report forming part of this Report.

28. Details of Remuneration of Directors and KMPs and Particulars of Employees

Disclosure pertaining to remuneration and other details required under provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached herewith as Annexure - IV.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, during the financial year 2022-23 there were no employees drawing remuneration in excess of the limits set out in the said rules.

29. Changes in Nature of Business

During the year under review, there were no changes in the nature of business of the Company.

30. Material Changes and Commitments

There were no material changes during the year affecting the Financial Position of the Company other than issuance of fresh shares as detailed in this report.

31. Details of Significant and Material Orders Passed by the Regulators, Courts and Tribunals

No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Company's operations in future.

32. Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder and same is posted on the website of the Company and can be accessed at https://www.essenspeciality.com/pdf/Policies/Prevention_of_Sexual_Harressment_Policy.pdf.

The Company has constituted an Internal Complaints Committee ("ICC") in accordance with the Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaint pertaining to sexual harassment was received during FY 2022-23.

33. Details of Proceedings under the Insolvency and Bankruptcy Code, 2016

There are no proceedings initiated/ pending against the Company under the Insolvency and Bankruptcy Code, 2016 which materially impact the business of the Company.

34. Difference between Valuation on One Time Settlement and while availing Loan from Banks and Financial Institution:

There were no instances where the Company required the valuation for one time settlement or while taking the loan from the Banks or Financial institutions.

35. Disclosure about Secretarial Standard

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

36. Appreciation

The Directors express their appreciation to all employees of the various divisions for their diligence and contribution to performance. The Directors also record their appreciation for the support and co-operation received from franchisees, dealers, agents, suppliers, bankers and all other stakeholders. Last but not the least, the Directors wish to thank all shareholders for their continued support.