Dear Members,

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, 2024. 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

During the FY 2023-24, the revenue from operations of our Company on a standalone basis was INR 4416.82 Million and the Consolidated Revenue of our Company stood at INR 8671.68 Million.

The profit after tax of our Company on a standalone basis for the FY 2023-24 was INR 324.86 Million vis-?-vis INR 283.69 Million for FY 2022-23 The consolidated profit after tax of our Company for the FY 2023-24 stood at INR 279.85 Million vis-?-vis INR 525.03 Million for the FY 2022-23.

The detailed 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 have not recommended any dividend for the Financial Year ended March 31, 2024.

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 Financial Year, there was no change in the nature of business of the Company.

5. SHARE CAPITAL

The paid-up share capital of the Company as on March 31, 2024, was INR 13,14,25,384 consisting of 6,57,12,692 equity shares at INR 2 each.

6. 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.

7. 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.

8. SUBSIDIARIES

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 & 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 appended as Annexure - I to this Report. Further, we confirm that during the Financial Year, no entities ceased to be a subsidiary of the Company.

9. 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 FY 2023-24 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.

10. MANAGEMENT'S DISCUSSION AND ANALYSIS

In 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.

11. 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.

Your company constituted a Risk Management Committee on June 29, 2024.

The Scope of the Committee shall include:

1. To formulate a detailed risk management policy which shall include:

(a) A framework for identification of internal and external risks specifically faced by the listed entity, including financial, operational, sectoral, sustainability (particularly, ESG related risks), information, cyber security or any other risk as may be determined by the Committee.

(b) Measures for risk mitigation including systems and processes for internal control of identified risks.

(c) Business continuity plan

2. To ensure that appropriate methodology, processes, and systems are in place to monitor and evaluate risks associated with the business of the Company.

3. To monitor and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems.

4. To review the risk management policy once in two years, considering the changing industry dynamics and evolving complexity.

5. To keep the Board of Directors informed about the nature and content of its discussions, recommendations, and actions to be taken.

6. The appointment, removal, and terms of remuneration of the Chief Risk Officer (if any) shall be subject to review by the Risk Management Committee.

12. 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.

13. CORPORATE SOCIAL RESPONSIBILITY (CSR)

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

The details of the constitution, meetings and terms of reference of the committee 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 to the Directors' Report.

14. HUMAN RESOURCE 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.

On a standalone basis, the Company had 880 permanent employees as of March 31, 2024.

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.

15. 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 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) 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.

During the FY 2023-24, the Company allotted 4,20,115 equity shares to the employees who exercised their ESOP Options.

Pursuant to Regulation 12(1) of the SEBI (SBEB) Regulations, 2021, the shareholders of your Company ratified the Avalon Employee Stock Option Plan – 2022, by passing a special resolution at the 24th Annual General Meeting held on September 25, 2023.

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.

16. 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 2024, as stipulated under Regulation 34(3) read with Schedule V of the Listing Regulations forms a part of this Annual Report.

17. 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.

18. NUMBER OF MEETINGS OF THE BOARD

The Board met eight (8) 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.

19. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As of March 31, 2024, the Board has eight members, consisting of one Executive Director, three Non- Executive and Non-Independent Directors and four Non- Executive - Independent Directors. One of the Independent Directors of the Board is a Woman Director.

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

Mr. Bhaskar Srinivasan (DIN:02561215) was re-appointed as a Director under Non – Independent Category by the shareholders in their meeting held on September 25, 2023.

20. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received the necessary declarations 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 met the criteria of independence laid down in Section 149(6), Code for Independent Directors of the Companies Act, 2013 and of the Listing Regulations.

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

21. BOARD EVALUATION

During the reporting period, your Company had evaluated the performance of the Board including performance of its committees, Independent Directors, Chairperson of the Board and other Directors.

22. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

During the reporting period, the Independent Directors attended various sessions to familiarize themselves with the business operations, overview on industry, corporate governance etc.

The familiarization programme is available on our website www.avalontec.com

23. COMMITTEES OF THE BOARD

As on March 31, 2024, the Board had four statutory committees: the Audit Committee, the Corporate Social Responsibility Committee, the Nomination and Remuneration Committee and the Stakeholders Relationship Committee.

In addition to the above committees, the Board of Directors of the Company constituted the Risk Management Committee on June 29, 2024. 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 committees is provided in the Corporate Governance Report, which forms part of this Annual Report.

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.

25. 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 a defined appointment and remuneration criteria which has been approved by the Board.

Attributes such as ethical standards of integrity, qualification and expertise are investigated 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 on the website at https://www.avalontec.com/

26. 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 financial year, 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.

27. REPORTING OF FRAUDS BY AUDITORS

During the financial year, 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.

28. ANNUAL RETURN

In accordance with the Companies Act, 2013, the annual return for the financial year 2022-23 in the prescribed format is available at company's website at https://www.avalontec.com/investors.

29. SECRETARIAL STANDARDS

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

30. LISTING ON STOCK EXCHANGES

The Company's equity shares are listed on BSE Limited ("BSE") and the National Stock Exchange of

India Limited ("NSE").

31. 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, 2024, 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.

32. AUDIT REPORTS AND AUDITORS AUDIT REPORTS

The Statutory Auditors' Report for FY 2023-24 does not contain any qualification, reservation, or adverse remark. The Report is enclosed with the Financial Statements in this Annual Report.

The Secretarial Auditors' Report for Financial Year 2023-24 does not contain any qualification, reservation, or adverse remark except for delay in holding Annual General Meeting for FY 2022-23, for which the Company has decided to make compounding application to the appropriate authority. The Secretarial Auditors' Report is enclosed as Annexure - VI to the Directors' Report, which forms part of this Annual Report.

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 23rd AGM of the Company till the conclusion of the 28th 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, were appointed as the Secretarial Auditor of the Company for the FY 2023-24 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.

M/s. M. Alagar & Associates, Practicing Company Secretaries, (Firm Registration Number P2011TN078800) are appointed as Secretarial Auditor of the Company for the FY 2024-25, as required under Section 204 of the Companies Act, 2013 and Rules thereunder.

33. 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.

However, your Company is maintaining the prescribed Cost Records as stipulated under the applicable Rules.

MECHANISM

The Company has established a Vigil Mechanism and 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 Chairperson 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.

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 financial year, no complaints were received by the Committee.

36. 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.

SUSTAINIBLITY REPORT

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, your Company is providing the prescribed disclosures on Environment, Social and Governance ("ESG") parameters as part of the

Business Responsibility and Sustainability Report ("BRSR"), which forms a part of the Annual Report. The BRSR includes details on performance against the nine principles of the National Guidelines on Responsible Business Conduct and a report under each principle is provided.

38. 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.