The Board of Directors are pleased to present the report on the business and operations of your Company (“the Company” or “Avalon”), along with the Audited Financial Statements for the financial year ended March 31, 2023. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

1. RESULTS OF OUR OPERATIONS AND STATE OF AFFAIRS

State of Affairs and Financial Overview

The Board of Directors are pleased to report on the increased level of revenue during the year.

During the period under review, the revenue from operations of our Company on a standalone basis was INR 4793.71 Millions, which is higher by 10.31% over the previous year revenue of INR 4345.62 Million.

The Consolidated Revenue of our Company stood at INR 9447.19 Million for the Financial Year 2022-23, which has grown by 12.37% as against the consolidated revenue of INR 8407.18 Million.

During the period under review, the profit after tax of our Company on a standalone basis for the FY 2022-23 was INR 283.69 Million vis-a-vis INR 272.31 Million for FY 2021-22.

The consolidated profit after tax of our Company for the FY 2022-23 stood at INR 525.03 Million visa-vis INR 674.58 Million for the FY 2021-22.

The detailed business performance and segmental overview is provided in the Management Discussion and Analysis, forming a part of this Annual Report.

2. DIVIDEND:

Considering the growth and investment prospects of your Company, the Board of Directors of your company has not recommended any dividend for the Financial Year ended March 31, 2023.

3. TRANSFER TO RESERVES

Your Company does not propose to transfer any amount to General Reserve.

4. CHANGE IN NATURE OF BUSINESS, IF ANY

During the year under review, there was no change in the nature of business of the Company.

5. CONVERSION INTO PUBLIC LIMITED COMPANY

Pursuant to the special resolution passed by the members of the Company at the Extraordinary General Meeting held on July 06, 2022, and subsequent to the approval of the Registrar of Companies on July 29, 2022, the Company was converted from a Private Company into a Public Company. Accordingly, the name of the Company was changed from ‘Avalon Technologies Private Limited’ to ‘Avalon Technologies Limited’.

6. INITIAL PUBLIC OFFERING AND LISTING

During the Financial Year, the members of the Company approved the Initial Public Offer through

fresh issuance of equity shares and Offer for Sale at the Extraordinary General Meeting held on August 02, 2022.

Consequently, the issue opened on April 03, 2023, and closed on April 06, 2023. Your Company successfully completed its Initial Public Offering (ipo) and raised ' 865 crores, comprising of fresh issue ' 320 crores and through offer for sale ' 545 crores.

Pursuant to the Initial Public Offer, we wish to inform you that the equity shares of the Company was listed in the National Stock Exchange of India Ltd (“NSE”) and the BSE Limited (“BSE”) on 18.04.2023. Your Company confirms that it has paid the Annual Listing Fees for the year 2023-24 to NSE and BSE Limited.

7. SHARE CAPITAL

The paid-up share capital of the Company as on March 31, 2023 (Pre-IPO) stood at ' 11,59,06,256 consisting of 5,79,53,128 equity shares of '2/- each.

Details of Corporate Action & Allotments made during the year.

During the Financial Year 2022-23, pursuant to a resolution of our Board passed in their meeting held on June 24, 2022, and a resolution of our Shareholders passed in their extraordinary general meeting held on June 27, 2022, each fully paid -up equity share of our Company of face value '100 was split into 50 equity shares of '2 each. Accordingly, the number of shares increased from 1,59,667 shares to 79,83,350 shares without any change in the paid-up share-capital.

Post-IPO allotment and listing of shares on the Stock Exchange, the share-capital of the Company stands at ' 13,05,85,154 consisting of 6,52,92,577 equity shares of ' 2/- each.

8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, guarantees and investments provided by the Company under Section 186 of the Companies Act, 2013 (“the Act”) has been set out in the Notes to the Standalone Financial Statements of the Company, forming a part of this Annual Report.

9. PUBLIC DEPOSITS

Your Company has not accepted any deposits from the public under Chapter V of the Companies Act, 2013. As such, no amount of principal or interest was outstanding as of the Balance Sheet date.

10. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has three subsidiaries, including two wholly owned subsidiaries, which are provided below.

a) Avalon Technology and Services Private Limited - Wholly-Owned & Material Subsidiary

b) Sienna ECAD Technologies Private Limited -Subsidiary

c) ABV Electronics Inc. (DBA Sienna Corporation) - Foreign Wholly-Owned Subsidiary & Material Subsidiary.

Pursuant to Section 129(3) of the Act, 2013, a statement containing the salient features of the financial statements of subsidiaries in the prescribed Form AOC-1 is annexed as Annexure - I to this Report. Further, we confirm that during the Financial Year, no entities ceased to be a subsidiary, associate of the Company.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

During the Financial Year, all the Related Party Transactions entered into by the Company were during the ordinary course of business on an arm's length basis and there were no contracts, arrangements or transactions entered during Financial Year 2022-23 that fall under the scope of Section 188(1) of the Companies Act, 2013. As required under the Act, the prescribed Form AOC-2 is appended as Annexure - II to the Board's report.

12. MANAGEMENT’S DISCUSSION AND ANALYSIS

I n terms of the provisions of Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), the Management’s Discussion and Analysis Report is disclosed separately in this Annual Report.

13. RISK MANAGEMENT FRAMEWORK

Your Company continuously evaluates and monitors the various internal and external risks surrounding its business environment and seeks to mitigate and minimise any challenges or adverse impact on its business objectives. The Board formulates strategies for the systematic and proactive management of risk factors to boost Company Performance and effective decision making. The same is implemented by the Executive Management of the Company and monitored by the Board of Directors.

14. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

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

15. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The main objective of the CSR Initiatives of the Company is to ensure environmental sustainability and protection and development of flora and fauna. The Company's CSR Policy is available on our website at www.avalontec.com.

The Annual Report on our CSR activities is appended as Annexure-III to the Board’s report.

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company at the Board Meeting held on July 19, 2022, reconstituted a CSR Committee comprising of three directors, including one Independent Director. The details of the constitution, meetings and terms of reference of the committees forms a part of the Corporate Governance Report.

The brief outline of the initiatives undertaken by the Company on CSR Activities during the reporting period is enclosed as Annexure III.

16. HUMAN RESOURCES MANAGEMENT

Our employees are our most important assets. We are committed to hiring and retaining the best

talent. In order to achieve the same, we focus on promoting a collaborative and transparent organization culture, and also rewarding the meritorious performance.

The Company had 830 employees as of March 31, 2023.

Pursuant to Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the ratio of the remuneration of each director to the median employee's remuneration and such other details are provided as Annexure - IV to this Report.

17. EMPLOYEE STOCK OPTIONS

Your Company has an Employee Stock Option plan in force i.e., Avalon - Employee Stock Option Plan - 2022 (“ESOP Plan”). Under the ESOP Plan, your Company granted share-based benefits to eligible employees of the Company as well as its subsidiaries, companies with a view to attract and retain the best talent and to promote increased participation by them in the growth of the Company.

Avalon - Employee Stock Option Plan -2022

On July 07, 2022, pursuant to approval by way of Special Resolution by the shareholders in the AGM, the Board has been authorized to introduce, offer, issue, and provide share-based incentives to eligible employees of the Company and its subsidiaries under the Avalon - Employee Stock Option Plan - 2022.

The maximum number of shares under this plan shall not exceed 30,00,000 (Thirty Lakhs Shares) equity shares. The ESOPs granted under the ESOP Plan shall vest based on the achievement of defined annual performance parameters as determined by the administrator (the Nomination and Remuneration Committee). Each of these performance parameters will be distinct for the purposes of calculation of the quantity of shares to vest based on performance. These instruments will generally vest between a minimum of one and a maximum of seven years from the grant date.

Pursuant to the requirements of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, (“SEBI SBEB Regulations”), the certificate issued by the Secretarial Auditor of the Company confirming that the Plan has been implemented in accordance with the said Regulations, is enclosed herewith as Annexure V.

Further, the details required as per Regulation 14 read with Part F of Schedule I of the SEBI SBEB Regulations are provided as an Annexure - V to this Report.

18. CORPORATE GOVERNANCE

The Corporate Governance practice of our Company is a true reflection of the values and morale of the Company. Avalon is committed to implement the best practices of Corporate Governance and to manage the affairs of the Company with integrity, transparency and accountability as the driving forces. We believe that this practice will continue to contribute to the growing success of the Company and enhancing our relationship with the stakeholders. We focus on maximizing shareholder value legally, ethically and sustainably. At AVALON, the Board exercises its fiduciary responsibilities in the widest sense of the term.

The Corporate Governance Report for the Financial Year 2023, as stipulated under Regulation 34(3) read with Schedule V of the Listing Regulations forms a part of this Annual Report.

19. BOARD DIVERSITY

The Company recognizes and embraces the importance of a diverse Board in its success. We believe that a truly diverse Board will bring a balance in thought, perspective, regional and industry experience, cultural and geographical background, age, ethnicity, race, gender, knowledge and skills including expertise in financial, business, leadership, information technology, sales and marketing and Environmental, Social and Governance (esg), risk management and cybersecurity and other domains, which will ensure that Avalon retains its competitive advantage.

20. NUMBER OF MEETINGS OF THE BOARD

The Board met fifteen (15) times during the financial year. The meeting details are provided in the corporate governance report that forms part of this Annual Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Companies Act, 2013.

21. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As of March 31, 2023, the Board has eight members, consisting of one Executive Director, three NonExecutive and Non-Independent Directors and four Independent Directors. One of the Independent Directors of the Board is a Woman Director.

The details of Board and committee composition, tenure of directors, areas of expertise, terms of reference and other details are available in the Corporate Governance Report that forms a part of this Annual Report.

a) Changes in Composition of the Board

Mr. Chandar Pattabhiram (DIN: 09606151)

was appointed as an Additional Director under Independent Category by the Board of Directors at their meeting held on July 07, 2022. The members of the Company, vide the Extraordinary General Meeting held on July 07, 2022, approved the appointment of Mr. Chandar Pattabhiram as Independent Director of the Company for a period of 5 years.

Mr. Venkataramani Anantharamakrishnan (DIN: 00277816) was appointed as an Additional Director under Independent Category by the Board of Directors at their meeting held on July 07, 2022. The members of the Company, vide the Extraordinary General Meeting held on July 07, 2022, approved the appointment of Mr. Venkataramani Anantharamakrishnan as Independent Director of the Company for a period of 5 years.

Mr. T.P. Imbichammad (DIN: 00634769)

tendered his resignation from the designation of Managing Director of the Company with effect from July 12, 2022.

Subsequently, Mr. Kunhamed Bicha (DIN: 00819707) was appointed as the Managing Director of the Company with effect from July 12, 2022, by the Board of Directors at their meeting held on July 12, 2022. The members of the Company approved the appointment of Mr. Kunhamed Bicha as the Managing Director of the Company at the Extraordinary General Meeting held on July 12, 2022 for a period of 5 years.

Mr. Byas Unnikrishnan Nambisan (DIN: 01342141) was appointed as an Additional Director under Independent Category by the Board of Directors at their meeting held on July 19, 2022. The members of the Company, vide the Extraordinary General Meeting held on July 19, 2022, approved the appointment of Mr. Byas Unnikrishnan Nambisan as Independent Director of the Company for a period of 5 years.

Ms. Sabitha Rao (DIN: 06908122) was appointed as an Additional Director under Independent Category by the Board of Directors at their meeting held on July 19, 2022. The members of the Company, vide the Extraordinary General Meeting held on July 19, 2022, approved the appointment of Ms. Sabitha

Rao as Independent Director of the Company for a period of 5 years. Unfortunately, Ms. Sabitha Rao expired on December 31, 2022 due to her health issues.

Ms. Nandita Abraham (DIN: 01006030) was

appointed as an Additional Director under Independent Category by the Board at their meeting held on February 07, 2023, on the recommendation of the Nomination and Remuneration Committee. The members of the Company, vide the Extraordinary General Meeting held on February 08, 2023, approved the appointment of Ms. Nandita Abraham as Independent Director of the Company for a period of 5 years w.e.f. February 08, 2023.

b) Appointment of Key Managerial Personnel Mr. Subramanian Ramanathan (also referred to as “R.M. Subramanian”) was appointed as the Chief Financial Officer of the Company and designated as Key Managerial Personnel (“KMP”) with effect from July 07, 2022.

In line with the provisions of Section 2(51) read with Section 203 of the Act read with applicable Rules, the below mentioned are the KMPs of the Company as on date:

• Mr. Kunhamed Bicha - Managing Director

• Mr. R.M. Subramanian - Chief Financial Officer

• Dr. Rajesh Vijayakumar - Company Secretary

As per the provisions of Section 152 of the Companies Act, 2013, Mr. Bhaskar Srinivasan, NonExecutive Director of the Company is liable to retire at the ensuing AGM, and being eligible, seeks reappointment.

22. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received the necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 read with Regulation 16(1)(b) read with Regulation 25(8) of the Listing Regulations, that they meet the criteria of independence laid down in Section 149(6), Code for independent directors of the Companies Act, 2013 and of the Listing Regulations.

I n the opinion of the Board, all the Independent Directors of the Company possess the requisite integrity, expertise, experience to perform their duties effectively.

23. BOARD EVALUATION

Your Company had listed its equity securities with the National Stock Exchange of India Ltd (“NSE”) and BSE Limited (“BSE”) on 18.04.2023.

Furthermore, the paid-up capital of the Company is below the threshold limit prescribed under Rule 8(4) of the Companies (Accounts) Rules, 2014 for performance evaluation of Board. Hence, the Board Evaluation for the Financial Year ended 2022 - 2023 is not applicable.

24. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

The company had listed its equity securities with the National Stock Exchange of India Ltd (“NSE”) and with BSE Limited (“BSE”) on 18.04.2023. Therefore, the company has not conducted familiarization program to the Independent directors for the reporting period (FY 2022-23). The same shall be implemented by the Company from the upcoming Financial Year onwards.

Further, at the time of the appointment of an independent director(s), the Company issued a formal letter of appointment outlining his / her role, function, duties and responsibilities.

The format of the letter of appointment is available on our website www.avalontec.com

25. COMMITTEES OF THE BOARD

As on March 31, 2023, the Board had five committees: the Audit Committee, the Corporate Social Responsibility Committee, the Nomination and Remuneration Committee, the Initial Public Offer (IPO) Committee, the Stakeholders Relationship Committee.

All committees comprise combination of Independent Directors and Non - Independent Directors in compliance with the Listing Regulations and the provisions of the Companies Act 2013.

During the year, all recommendations made by the committees were approved by the Board.

A detailed note on the composition of the Board and its committees is provided in the Corporate Governance Report, which forms part of this Annual Report.

26. INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

The Board has adopted adequate policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention and detection of fraud, error-reporting mechanisms, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

27. POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

The Company has in place, a policy for appointment and remuneration of Directors, Key Managerial Personnel and Senior Management and also a defined appointment and remuneration criteria which has been approved by the Board.

Attributes such as ethical standards of integrity, qualification and expertise are looked into during the time of appointment. The Nomination and Remuneration Committee ensures that the relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. The criteria of making payments to non-executive directors are provided in the Nomination and Remuneration Policy provided in the website at https://www.avalontec.com/

28. 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 the Company's operations in future.

During the year under review, no application was made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

There were no instances where your Company required valuation to be done at the time of one time settlement or while taking loan from the Banks or Financial Institutions.

29. REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board's report.

30. ANNUAL RETURN

I n accordance with the Companies Act, 2013, the annual return for the financial year 2021-22 in the prescribed format is available at company's website at https://www.avalontec.com/investors.

31. SECRETARIAL STANDARDS

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India (“ICSI”).

32. LISTING ON STOCK EXCHANGES

The Company's shares are listed on BSE Limited (“BSE”)and the National Stock Exchange of India Limited (“NSE”).

33. DIRECTORS’ RESPONSIBILITY STATEMENT

The financial statements are prepared in accordance with the Indian Accounting Standards (ind AS) under the provisions of the Companies Act, 2013 and guidelines issued by SEBI. The Ind AS are prescribed under Section 133 of the Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.

Further as per Section 134 (3) (c), we, the Directors confirm that:

(a) In preparation of the annual accounts for the Financial Year ended March 31, 2023, the applicable accounting standards have been followed and there are no material departures.

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

(c) we have taken proper and sufficient care towards 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) we have prepared the annual accounts on a going concern basis.

(e) we have laid down internal financial controls, which are adequate and are operating effectively.

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

34. AUDIT REPORTS AND AUDITORS AUDIT REPORTS

The Statutory Auditors' Report for Financial Year 2022-2023 does not contain any qualification, reservation, or adverse remark. The Report is enclosed with the Financial Statements in this Annual Report.

The Secretarial Auditor's Report for Financial Year 2022-2023 does not contain any qualification, reservation, or adverse remark. The Secretarial Auditor's Report is enclosed as Annexure - VI to the Board's report, which forms part of this Annual Report.

The Certificate issued by Practicing Company Secretary confirming compliance with conditions of corporate governance as stipulated under Part E of Schedule V of the Listing Regulations, for Financial Year 2022-2023 is enclosed as Annexure - A to the Corporate Governance Report, which forms part of this Annual Report.

AUDITORS

Statutory Auditor

M/s. Varma & Varma, Chartered Accountants (Firm registration number 004532S) (“Varma & Varma”) was appointed as the Statutory Auditors of the Company on May 05, 2022, to hold office for the term of five consecutive years from the conclusion of the 23^rd AGM of the Company till the conclusion of the 28^th AGM to be held in 2027, as required under Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.

Secretarial Auditor

M/s. M. Alagar & Associates, Practicing Company Secretaries, (Firm Registration Number P2011TN078800) are appointed as Secretarial Auditor of the Company for the Financial Year 2023-2024, as required under Section 204 of the Companies Act, 2013 and Rules thereunder.

M/s. JM Associates, Practicing Company Secretaries, were appointed as the Secretarial Auditor of the Company for the Financial Year 2022-23 and the Secretarial Audit Report provided by them in Form MR-3 has been provided as Annexure VI to this Report, forming a part of the Annual Report.

35. COST RECORDS AND COST AUDIT

Your Company is located and operating from MEPZ, which is a Special Economic Zone and therefore as per Rule 4(3)(ii) of the Companies (Cost Records and Audit) Rules 2014, cost audit is not applicable. Your Company is maintaining the prescribed Cost Records as stipulated under the applicable Rules.

36. DETAILS OF IMPLEMENTATION OF VIGIL MECHANISM

The Company has established a Vigil Mechanism and has also formulated a Whistle Blower Policy as per the provisions of Section 177(9) of the Companies Act, 2013 read with Regulation 22 of the Listing Regulations. The Policy also provides for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases. All Employees of the Company are eligible to make Protected Disclosures under the Policy in

relation to matters including ethical, legal and moral standards of the Company.

37. DISCLOSURE PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (“POSH ACT”)

The Company has formulated a Policy for the prevention of Sexual Harassment of Women at Workplace. The main objective of the Policy is to provide a work environment that is safe and free from sexual or gender-based harassment. The said Policy is also available at the website of the Company at https://www.avalontec.com/ investors/. All employees of Avalon and its group companies are governed by this policy, with appropriate adjustments, to accommodate local, legal or contractual requirements.

The Company has constituted an Internal Complaints Committee (“Committee”), including an external member, in compliance with the provisions of the POSH Act. During the year under review, no complaints were received by the Committee.

38. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars, as prescribed under sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as Annexure - VII to the Board's report, which forms part of this Annual Report.

39. ACKNOWLEDGMENTS

Your Directors would like to convey their gratitude to all the clients, vendors, investors, bankers and the employees of our Company. We place on record our appreciation for the contribution and tremendous effort made by our employees at all levels. Our consistent growth was made possible by their hard work, cooperation and support.

We thank the governments of various countries where we have our operations. We thank the Government of India, particularly the Ministry of Labour and Employment, the Ministry of New and Renewable Energy, the Ministry of Communications, the Ministry of Electronics and Information Technology (Dept of IT), the Ministry of Commerce and Industry, the Ministry of Finance, the Ministry of Corporate Affairs, the Central Board of Direct Taxes, the Central Board of Indirect Taxes and Customs, GST authorities, the Reserve Bank of India, Securities and Exchange Board of India (SEBI), various departments under the state governments, the Special Economic Zones (SEZs) - Chennai, and other government agencies for their support, and look forward to their continued support in the future.

For and behalf of the Board of Directors of AVALON TECHNOLOGIES LIMITED

(Formerly known as 'Avalon Technologies Private Limited')

Sd/-

Kunhamed Bicha

Place: Chennai Chairman and Managing Director Date: August 28, 2023 DIN: 00819707