Dear Members, Your Directors have pleasure in presenting their Fifteenth (15th) Annual Report of Aerpace
Industries Limited (hereinafter referred to as "the Company") along with the Audited Financial Statements of the
Company for the Financial Year ended March 31,2026 (hereinafter referred to as "financial year under review" or
"year under review" or "year" or "FY 2025-2026").

In compliance with the applicable provisions of the Companies Act, 2013, (including any statutory modification^)
or re-enactment(s) thereof, for time being in force) (hereinafter referred to as "Act") and the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred
to as "SEBI Listing Regulations"), this Report covers the financial performance and other developments in respect
of the Company during the financial year ended March 31,2026 and upto the date of the Board Meeting held on
August 11, 2026 to approve this Report.

A summary of the financial performance of your Company forthe financial year ended March 31,2026, is asunder:

(Rs. in Lakhs)

During the financial year ended March 31,2026, the Company recorded operational revenue, including other
income, of Rs403.96 Lakhs on a standalone basis, as compared to Rs302.06 Lakhs in the previous financial year.The
Loss Before Tax stood at Rs1,222.55 Lakhs, as against Rs495.69 Lakhs in the previous financial year. The Net Loss for
the financial year ended March 31,2026, was Rs1,200.29 Lakhs, as compared to a Net Loss of Rs483.67 Lakhs in the
previous financial year.

On a consolidated basis, the operational revenue, including other income, stood at Rs22.13 Lakhs, as compared to
Rs59.44 Lakhs in the previous financial year. The Loss Before Tax was Rs1,674.97 Lakhs, as against T751.62 Lakhs in
the previous financial year, while the Net Loss for the financial year ended March 31,2026, stood at Rs1,650.30
Lakhs, as compared to a Net Loss of T739.43 Lakhs in the previous financial year.

In view of the above, the Company has undertaken various remedial measures to address the challenges and
improve its financial performance, including measures aimed at reducing costs across all areas of operations,
optimizing the utilization of available resources, and improving overall operational efficiency.

During the financial year, the Company implemented certain operational/business updates and expanded
specific business activities. However, these changes do not result in any alteration in the principal nature of
business of the Company. The Company continues to operate in the same line of business as carried on
during the previous year.

During the financial year under review, the Company has incurred losses. In view of the losses incurred and
after considering the financial position of the Company, the Board of Directors has not recommended any
dividend for the financial year ended March 31,2026. The Board believes that conserving the available
financial resources is essential for maintaining operational stability and supporting the Company's future
business objectives. Accordingly, no amount has been transferred to the General Reserve during the year
under review.

The loss incurred during the financial year has been carried forward under the head Retained Earnings in the
Financial Statements of the Company.

As on March 31, 2026, the Authorized Share Capital of the Company stood at Rs. 40,00,00,000 (Rupees Forty
Crores only) divided into 40,00,00,000 (Forty Crores) equity shares of Re. 1/- (Rupee One only) each. The
Paid-up Share Capital as on March 31,2026 was Rs. 15,38,57,982 (Rupees Fifteen Crores Thirty-Eight Lakhs
Fifty-Seven Thousand Nine Hundred Eighty-Two only) divided into 15,38,57,982 (Fifteen Crores Thirty-Eight
Lakhs Fifty-Seven Thousand Nine Hundred Eighty-Two) Equity Shares of Re. 1/- (Rupee One only) each. There
was no change in the share capital structure of the Company during the financial year under review.

During the year under review, the Company has not issued shares with differential voting rights, bonus shares
and sweat equity shares. The Company has also not carried out any buyback of its equity shares during the
said financial year.

Further, as on date of this report, the Company has proposed to issue and allot upto 1,50,00,000 warrants
convertible into equity shares at the price of Rs. 32.55 (Rupees Thirty-Two and Fifty-Five Paise), aggregating
upto Rs. 48,82,50,000 (Rupees Forty-Eight Crore Eighty-Two Lakhs Fifty Thousand) in one or more tranches,
on a preferential basis to N.K. Family Private Trust (Proposed Allottee) subject to the approval of Members
through Postal Ballot.

Pursuant to Schedule V to the SEBI Listing Regulations, the following Reports/Certificates forms part of the
Annual Report:

-the Report on Corporate Governance;

-the Certificate duly signed by the Managing Director and Chief Financial Officer on the Financial Statements
of the Company for the year ended March 31, 2026, as submitted to the Board of Directors at its meeting held
on May 11, 2026;

-the declaration by the Managing Director regarding compliance by the Board members and senior
management personnel with the Company's Code of Conduct; and

-An analysis of the Business and Financial Performance is given in the Management Discussion and Analysis,
which forms a part of the Annual Report.

The Certificate issued by the Secretarial Auditor of the Company, confirming compliance with the conditions
of Corporate Governance as stipulated under Schedule V to the SEBI Listing Regulations is annexed to this
report as "Annexure A".

The Management Discussion and Analysis Report, forthe financial year under review as stipulated under
Regulation 34 of SEBI Listing Regulations, capturing Company's performance, industry trends and other
material changes with respect to your Company is forming part of this Annual Report.

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

During the year under review, the Company acquired 75% of the equity share capital of Aerpace General
Trading LLC on January 19, 2026. Consequently, Aerpace General Trading LLC became a subsidiary of the
Company. As on March 31, 2026, the Company had two subsidiaries, namely, Aerpace General Trading LLC
and Aerpace Supercars Private Limited.

A statement containing the salient features of the financial statements of the Company's subsidiaries in Form
AOC-1, pursuant to the first proviso to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the
Companies (Accounts) Rules, 2014, is annexed to this Report as Annexure B. In accordance with the
provisions of Section 136 of the Companies Act, 2013, the standalone and consolidated financial statements
of the Company, along with the financial statements of its subsidiaries and all other relevant documents, are
available on the Company's website at www.aerpace.com.

The Company does not have any associate company, joint venture or holding company as on March 31, 2026.

Pursuant to the provisions of Section 186 of the Companies Act, 2013, the particulars of loans granted,
guarantees given and investments made by the Company during the financial year under review are provided
in the notes to the Financial Statements forming part of this Annual Report.

During the year, the Company granted loans to its subsidiary company(ies) in compliance with the provisions
of the Companies Act, 2013 and other applicable laws. The details thereof are disclosed in Note No. 7 to the
Financial Statements.

The Company has established a robust Risk Management system to identify & assess the key risks and
ensure smooth and efficient operations of the business. Your Company is aware of these risks and challenges
and has put in place mechanism to ensure that they are managed and mitigate with adequate timely actions.
The audit committee reviews business risk area covering operational, financial, strategic and regulatory risks.

The Board of Directors of your Company have adopted policies and procedures for ensuring the orderly and
efficient conduct of its business, including adherence to your Company's policies, safeguarding of its assets,
prevention and detection of frauds and errors, accuracy and completeness of the accounting records and
timely preparation of reliable financial disclosures.

The Related Party Transactions ("RPTs") entered into during the financial under review, were on an arm's
length basis and were carried out in the ordinary course of business. As required under SEBI Listing
Regulations, the Company has adopted and updated its Policy on Materiality of Related Party Transactions
and on Dealing with Related Party Transactions in compliance with the applicable provisions of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The
updated Policy is available on the Company's website and can be accessed at www.aerpace.com.

Further, pursuant to Section 188 of the Act and Regulation 23 of the SEBI Listing Regulations, all material RPTs
shall require prior approval of the members through a resolution. Consent of the members by way of Ordinary
Resolution is sought by the Company for the material contracts/ arrangements/transactions proposed to be
entered into by the Company at the ensuing AGM shall be valid upto the date of the next AGM for a period not
exceeding fifteen months.

Pursuant to Regulation 23 of the SEBI Listing Regulations, a related party transaction shall be considered
material if it exceeds the threshold limits prescribed under the SEBI Listing Regulations and therefore requires
approval of the Members of the Company. In this regard, during the year under review, the Company had

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obtained the necessary approval of the Members for potential material related party transactions. The details
of Related Party Transactions as required under the applicable accounting standards are disclosed in the
notes to the Financial Statements forming part of the Annual Report. The particulars of contracts or
arrangements referred to in section 188 (1) of the Companies Act, 2013 with related parties and as mentioned
in form AOC-2 is attached as "Annexure C".

Members may note that the details of RPTs as required under Ind AS 24 are reported in the explanatory notes
to the financial statements. Pursuant to Regulation 23(9) of the SEBI Listing Regulations, your Company has
filed the reports on RPTs with BSE.

The following is the Board Composition as on March 31, 2026 and as on date of this report:

*As on the date of this Report, Mr. Rajnish Kumar and Mr. Nikunj Kampani have been appointed as Advisors to
the Board pursuant to the approval of the Board of Directors at its meeting held on July 09, 2026.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 read with Companies
(Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Sanjay Ram
Takale (DIN: 07111445) and Mr. Prem Singh Rawat (DIN: 01423453), Non-Executive Directors of the Company,
retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for
re-appointment. The Board recommends their re-appointment for the approval of the Members.

The Director of the Company have confirmed that they satisfy the fit and proper criteria as prescribed under
the applicable regulations and that they are not disqualified from being appointed as directors in terms of
section 164(2) of the Companies act, 2013.

Pursuant to Section 203 of the Companies Act, 2013, the Company has following Key Managerial Personnel
as on March 31, 2026 and as on the date of this report:

1. Mr. Milan Shah Bhupendra, Managing Director (Redesignated as Non-Executive Director w.e.f. 12.05.2026)

2. Mr. Anand Manoj Shah, Chief Financial Officer [Redesignated as Managing Director & CFO w.e.f. 12.05.2026)

3. Ms. Neha Mankame, Company Secretary & Compliance Officer (Resigned on 28.02.2026)

4. Ms. Prachi Pa rag Kela, Company Secretary & Compliance Officer (Appointed w.e.f. 11.05.2026)

During the year, there were following changes in the composition of the Board of Directors and Key
Managerial Personnel:

1. As per the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held
on 26th September, 2025 had appointed Mr. Prakash Gaur (DIN: 02246745) as an Additional Director in the
capacity of Non-Executive Director of the Company and Ms. Darshana Avadhoot Sawant (DIN: 10130596) as
an Additional Director in the capacity of Non-Executive Independent Director of the Company. Further, in Extra
Ordinary General Meeting of the Company held on 24th December, 2025, the shareholders of the company
had approved the appointment of Mr. Prakash Gaur (DIN: 02246745) as Non-Executive Director and Ms.
Darshana Avadhoot Sawant (DIN: 10130596) as Non-Executive Independent Director of the Company.

2. Ms. Neha Mankame resigned as Company Secretary & Compliance Officer on 28.02.2026.

After the end of financial year, there were following changes in the composition of the Board:

1. Ms. Darshana Avadhoot Sawant (DIN: 10130596) had resigned from the position of Non-Executive
Independent Director of the Company with effect from April 14,2026.

2. The Board of Directors at its Meeting held on 11th May, 2026 had re-designated Mr. Milan Shah Bhupendra
(DIN: 08163535) from the position of Managing Director to Non-Executive Director of the Company with effect
from 12th May, 2026, Also, Mr. Anand Manoj Shah (DIN: 11709310) was redesignated/ elevated from Chief
Financial Officer to Managing Director & Chief Financial Officer subject to the approval of members with effect
from 12th May, 2026.

3. Mr. Virendra Singh Verma (DIN: 07843461) resigned from the position of Non-Executive Independent
Director of the Company with effect from June 09,2026

4. Ms. Anshu Shukla Pandey (DIN: 11809932) was appointed as an Additional Non-Executive Independent
Director of the Company with effect from July 10,2026 for a period of 5 years subject to approval of members.

The necessary resolutions for the redesignation of directors and their brief profile have been included in the
notice convening the ensuing Annual General Meeting. The brief resume of the Director seeking
re-designation at the ensuing Annual General Meeting, in pursuance of Regulation 36(3) of SEBI (Listing
Obligation & Disclosure Requirements) Regulation, 2015 is annexed to the Annual General Meeting Notice.

The Company have following Independent Director as on March 31, 2026 and as on the date of this report:

1. Mrs. Akanksha Sunny Bilaney (DIN: 07093148)

2. Mr. Virendra Singh Verma (DIN: 07843461) (resigned w.e.f. June 09, 2026)

3. Ms. Darshana Avadhoot Sawant (DIN: 10130596) (resigned w.e.f. April 14, 2026)

4. Ms. Anshu Shukla Pandey (DIN: 11809932) (appointed w.e.f. July 10, 2026)

The Company has received declaration of Independence from all the Independent Directors as required
under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence
under Section 149(6) of the Companies Act, 2013 read with Regulation 16(1)(b) of SEBI (LODR).

All Independent Directors have furnished the declarations that they meet the criteria of independence as
provided under Section 149(6) of the Act and Regulation 16 of SEBI Listing Regulations, as amended from time
to time and abide by Code of Conduct for Directors and Senior Management Personnel framed by the
Company and as prescribed in Schedule IV to the Act. Further, they have confirmed that there has been no
change in the circumstances or situation which exist or may be reasonably anticipated, that could impair or
impact the ability of Independent Directors to discharge their duties with an objective independent judgment
and without any external influence. The Independent Directors hold high standards of integrity, expertise and
experience (including proficiency).

During the year under review, the Independent Directors of the Company had no pecuniary relationship or
transactions with the Company, other than sitting fees, paid to them for attending meetings of the Board of the
Company.

In the opinion of the Board, all our Independent Directors possess requisite qualifications, experience,
expertise and hold high standards of integrity for the purpose of Rule 8(5)(iii)(a) of the Companies (Accounts)
Rules, 2014. List of key skills, expertise and core competencies of the Board, including the Independent
Directors, is provided in the Corporate Governance Report annexed to this Annual Report.

The Board has taken on record the following disclosures and confirmations submitted by the Directors and
KMP of the Company:

-Disclosure of interest pursuant to Section 184(1) read with Section 189(2) of the Act, submitted by the
Directors and KMP of the Company;

-Declaration confirming that they are not disqualified from being appointed or continuing as Directors in
terms of Section 164(2) of the Act, submitted by the Directors of the Company;

-Declaration regarding compliance with the Code of Conduct for Directors and Senior Management
Personnel of the Company, submitted by the Directors and KMP of the Company; and

-Confirmation that they are not debarred from holding the office of Director by virtue of any order passed by
the Securities and Exchange Board of India ("SEBI") or any other statutory/regulatory authority, submitted by
the Directors of the Company.

The Board of Directors comprises individuals possessing diverse skills, expertise and rich professional
experience across varied domains, thereby enhancing the quality, effectiveness and overall performance of
the Board. The Members of the Board, including the Members of the various Committees constituted
thereunder, provide invaluable guidance, strategic direction, and mature counsel to the management of the
Company, thereby contributing meaningfully to its governance and long-term objectives.

In recognition of the value of diversity in board composition, the Company has adopted a Board Diversity
Policy which can be accessed at www.aerpace.com.

In accordance with the provisions of Section 178 of the Act and Regulation 19 read with Part D of Schedule II to
the SEBI Listing Regulations, the Company has formulated a Nomination and Remuneration Policy ("NRC
Policy"), which inter alia sets out the guiding principles for the Nomination and Remuneration Committee for
identifying and recommending to the Board of Directors persons who are qualified to be appointed as
Directors or Senior Managerial Personnel of the Company; the criteria for determining the independence of
Directors proposed to be appointed as Independent Directors of the Company; and the criteria and
framework for determining the remuneration payable to the Key Managerial Personnel, and Senior
Management Personnel of the Company.

The NRC Policy is available on the website of the Company and may be accessed at the following link:
www.aerpace.com.

During the financial year ended March 31,2026, the Board met 7 (Seven) times i.e., May 14,2025, July 17,2025,
August 14, 2025, September 26, 2025, November 12, 2025, December 12, 2025 and February 12, 2026. The
intervening gap between the two consecutive meetings did not exceed one hundred and twenty days and the
necessary quorum was present for all the meetings held during the year.

-fully equip Directors to perform their role on the Board effectively

The Statutory Auditors' Report for the financial year ended March 31, 2026, on the financial statements of the
Company is a part of this Annual Report. The Auditors' Report for the year

The Report of the Secretarial Auditor in Form MR-3 for the financial year ended March 31, 2026, is enclosed as
"Annexure-D" to this Report. The Report does not contain any qualification, reservation or adverse remark
except the matters reported in Annexure reported in "Annexure I"

Your Company has adopted a Code of Conduct to regulate, monitor and report trading by designated persons
their immediate relatives and connected persons as per the requirements under the Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations, 2015. This Code of Conduct also incorporates a code
of practices and procedures for fair disclosure of unpublished price sensitive information which has been
made available on the Company's website and can be accessed at www.aerpace.com.

The industrial relations remained cordial during the year review.

i) . During the year under review, the provisions relating to credit rating were not applicable to the Company, as
the Company has neither issued any debt securities, including Non-Convertible Debentures (NCDs) or
commercial papers, nor accepted any public deposits requiring such rating.