TO THE MEMBERS

CAPILLARY TECHNOLOGIES INDIA LIMITED

Your Directors have pleasure in presenting the 12th Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2024.

1. Financial Performance

On a consolidated basis, your Company's revenue increased to INR 5902.45mn for the current year as against INR 3226.81mn in the previous year. Your Company's net loss decreased to INR 556.1mn for the current year as against INR 943.27mn in the previous year. On a standalone basis, your Company's revenue decreased to INR 1425.79mn for the current year as against INR 1501.29mn in the previous year. Your Company's net loss decreased to INR 527.40 mn in the current year as against INR 905.56mn in the previous year.

1.2 Amount, if any, which the Board proposes to carry to any reserves

Your Company does not propose to transfer any amount to the reserves for financial year 2023-24.

1.3 Dividend

Your Company does not propose to declare any dividend for financial year 2023-24.

• Acquisition of Brierley entities and asset purchase from Tenerity

During April, 2023, the Company through its wholly owned subsidiary i.e Capillary Pte. Ltd, situated at Singapore has acquired entire stake in Capillary Technologies Europe Limited (Formerly Known as Brierley Europe Limited) established under the laws of England and wales and Capillary Brierley Inc (Formerly known as Brierley and Partners Inc) incorporated under the laws of the state of Delaware.

The Company through its wholly owned subsidiary i.e Capillary Pte. Ltd, had purchased assets from Tenerity, LLC-Delaware limited liability Company vide Asset purchase agreement dated May 04, 2023.

b Change in the nature of business

Your Company has not commenced any new business or discontinued/ sold or disposed of any of its existing businesses or hived off any segment or division during the financial year 2023-24 under review.

c Material changes and commitments, if any, affecting the financial position of the Company, having occurred since the end of the Year and till the date of the Report

In the opinion of the Board, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report, which would affect substantially the results, or the operations of your Company for the financial year in respect of which this report is made.

1.5 Details of revision of financial statement or the Report

Your Company has not revised its financial statement or the Report in respect of any of the three preceding financial years either voluntarily or pursuant to the order of a judicial authority.

People Practice

The People Practice is a strategic corporate function that operates collaboratively across all business units and centers of excellence within an organization. The People Practice team acts as a central hub for all HR-related activities and contributes to the overall success of the organization.

During the year under review, one of the key initiatives undertaken was the integration of talent acquisition tools to streamline and enhance our global recruitment process, particularly focusing on the integration of talent acquisition processes between the US and UK. This integration helped to ensure consistency, efficiency, and effectiveness in our recruitment efforts across geographical boundaries. We implemented Skillate as our primary ATS at Capillary, marking a significant milestone in our talent acquisition strategy. By leveraging Skillate's capabilities, we now aim to improve the quality of hires, reduce time-to-fill, and enhance the overall candidate experience by ensuring a seamless transition of new joiners into the organization through the "Capillary Launchpad" initiative.

This year we established Center of Excellence (‘COEs') for HR Shared Services and Talent Acquisition in India to manage activities across the globe. Key activities managed by the HR Shared Services COE include but are not limited to payroll administration, benefits administration, employee data management, and HR queries resolution. Similarly, the TA COE was responsible for designing and implementing recruitment strategies, sourcing top talent, managing candidate pipelines, and ensuring a seamless recruitment experience for both candidates and hiring managers across geographies.

The establishment of COEs for HR Shared Services and Talent Acquisition yielded significant outcomes by increasing agility and scalability to support organizational growth and expansion into new markets while maintaining service excellence.

Capillary Academy has established itself as the go-to destination for all product and department-related training programs, featuring a comprehensive array of modules and enhanced reporting mechanisms over the past twelve months. Here are the key highlights for FY year 2023-2024:

• Product bootcamps for new learners and specialized ILTs for partners conducted every quarter.

• 20+ product courses and certifications with use-case-centric content successfully launched for self-paced learning.

• 'Product Training Days' and expert/PM-led sessions organized every quarter for knowledge transfer on new feature releases.

• Curated bite-sized learning videos for quick upskilling.

• Onboarding learning paths launched for CS, CS-Hub, and PSV teams.

• 'Train the Trainer' programs implemented to develop more product experts and trainers globally.

• Gamified learning through Academy leaderboards, Academy Champions, and rewards.

As part of leadership development initiatives, JEDI and senior managers underwent personalized one-on-one coaching sessions tailored to their specific development needs and goals. These coaching sessions provided a space for leaders to reflect on their leadership style, strengths, and areas for growth while ensuring alignment between individual leadership development and organizational priorities. We conducted the First Time Manager Training programs to meet the unique needs, assimilation process and challenges faced by new leaders. These programs covered essential leadership skills, such as communication, conflict resolution, delegation, and performance management, empowering first-time managers to navigate their new roles with confidence and effectiveness. Furthermore, individual coaching engagements were conducted for individuals at various levels of the organization, including first-time managers.

Utilizing the "xto10x platform" to introduce a goal-setting framework aligned with the organization's strategic objectives last year, helped in integrating objective setting, feedback, mid-year reviews and the focal appraisals on the system. This provided an end-to-end visibility on our employees progression and performance for the course of management.

In our continuous efforts to enhance employee satisfaction, the People Practice team collaborated with HODs and managers to analyze and improve the eNPS Scores. Through pulse connects and feedback mechanisms, we identified areas for improvement and addressed concerns or challenges they may be facing.

"HR Open House" and "All Hands Meetings" were organized to facilitate transparency as well as share pertinent information about organizational policies and changes involving employees in decision-making processes.

In alignment with our goal of prioritizing employee well-being, we implemented a diverse range of wellness programs throughout the year 2023-24.

These programs were designed to address various dimensions of well-being, including physical, mental, emotional, and social aspects, fostering a holistic approach to employee wellness. From Launching of monthly health newsletter - FitCap, Annual health checkup and nutrition workshops, Monthly sports challenges, Organizing cricket and badminton tournaments, On-site fitness classes (Yoga, Zumba etc.), to stress management seminars and mindfulness sessions, our wellness programs catered to the diverse needs and interests of our workforce, promoting a healthy work environment.

(i) Authorised Capital:

The Authorised share capital of the Company is as given below:

Equity Share Capital

b. Reclassification or sub-division of the authorised share capital;

During the financial year under review, the Company has not undertaken any reclassification or sub-division of the authorised capital in terms of Companies Act 2013.

c. Reduction of share capital or buy back of shares;

The Company has not reduced nor bought back any shares.

d Change in the capital structure resulting from restructuring

There is no change in the capital structure resulting from restructuring.

e. Change in voting rights

There is no change in the voting rights.

3.2 Issue of equity shares with differential rights and Sweat Equity Shares-

During the financial year under review, the Company has neither issued equity shares with differential rights nor issued sweat equity shares in terms of Companies Act 2013.

3.3 Details of employee stock options

Pursuant to approval of the members of your Company dated October 29, 2021, the Company had adopted "Capillary Employees Stock Option Scheme- 2021" (hereinafter referred to as the "ESOP 2021"/ "Scheme") which was amended on November 30, 2021, October 10, 2023, and March 24, 2023. Under the scheme, your Company grants share-based benefits to the eligible employees by granting stock options ("Options"), with a view to attract and retain talent in and within the Company, encourage employees to strive to perform better, and ultimately incentivize such employees who exhibit traits appreciated by the Company.

Disclosure as required under Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 as on March 31, 2024:

Additional disclosure: During the year under review your company bought back 3,88,628 vested options from active and inactive employees of the Company.

3.4 Shares held in trust for the benefit of employees where the voting rights are not exercised directly by the employees-

During the financial year under review, the Company has not held any shares in trust for the benefit of employees where the voting rights are not exercised directly by the employees.

^3.5 Issue of debentures, warrants, bonds or any non-convertible securities-

During the Financial year under review, the Company has allotted 2500 Non-Convertible Debentures of face value of INR. 1,00,000/- each amounting to INR. 25,00,00,000/- (Twenty Five Crore Only) dated April 03 & April 20, 2023 to InnoVen Capital India Fund acting through its trustee, Vistra ITCL (India) Limited. The total issued and allotted Non-Convertible Debentures as on date is 6,000 of INR. 1,00,000/- each amounting to INR. 60,00,00,000/- (Sixty Crore Only).

Further during the financial year, the Company has issued and allotted 55,24,350 fully compulsorily convertible debentures (‘CCDs') on preferential offer through private placement basis dated October 30, 2023 to Avataar II Co-Investment II Ltd.

During the financial year under review, your Company has neither obtained nor revised any credit rating in respect of securities.

During the financial year under review, disclosure pursuant to Investor Education and Protection Fund under sub-section (2) of section 125 of the Act and the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 are not applicable to your Company.

6.1. Directors and Key Managerial Personnel

As on the date of this report, the Company has Six (6) directors consisting of four (4) Independent directors and two (2) Executive directors. The composition of the Board is in conformity with Section 149 and 152 of the Act.

None of the Directors on the Board:

• Holds directorships in more than ten public companies;

• Serves as Director or as independent directors in more than seven listed entities; and who are the Executive Directors serves as independent directors in more than Three listed entities are related to each other.

Necessary disclosures regarding Committee positions in other public companies as on March 31, 2024 have been made by the Directors.

The Key Managerial Personnel's of the Company as on March 31, 2024 are:

*Refer to point b-bullet two below.

a. Disqualification of Directors

None of the directors of the Company are disqualified pursuant to the provisions of Section 164 of Companies Act, 2013 or debarred or disqualified from being appointed or continuing as directors of companies by the Securities and Exchange Board of India or Ministry of Corporate Affairs or any such statutory authority.

b. Appointment / Resignation from the Board of Directors

• Mr. Sameer Garde resigned as Executive Director & CEO of the Company effective from March 31, 2024.

• Mr. Aneesh Reddy Boddu was appointed as Chief Executive officer & KMP of the Company and was relieved from the duties of vice chairman with effect from May 14, 2024.

• Based on the recommendation of the Nomination and Remuneration Committee, the Board at its meeting held on August 27, 2024, re-appointed Mr. Aneesh Reddy Boddu as the MD & CEO and Mr. Anant Choubey as the Executive Director & COO for a further period of three years effective from November 24, 2024 to November 23, 2027, subject to approval of the shareholders. The necessary resolutions for re-appointment of Mr. Aneesh & Mr. Anant forms part of the notice. The profile and particulars of experience, attributes and skills that qualify Mr. Aneesh & Mr. Anant for Board membership, are disclosed in the said Notice. The Board recommends their re-appointment.

Based on the recommendation of the Nomination and Remuneration Committee, the Board at its meeting held on August 27, 2024, re-appointed Mr. Farid Lalji Kazani, Mrs. Neelam Dhawan, Mr. Venkat R Tadanki & Mrs. Yamini Preethi Natti as Independent Director for a further period of five years effective from December 10, 2024 up to December 09, 2029, subject to approval of the shareholders. The necessary resolutions for re-appointment forms part of the notice. The profile and particulars of experience, attributes and skills that qualify Mr. Farid Lalji Kazani, Mrs. Neelam Dhawan, Mr. Venkat R Tadanki & Mrs. Yamini Preethi Natti for Board membership, are disclosed in the said Notice. The Board recommends their re-appointment.

c. Directors retiring by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Section 149 of the said Act, at least 2/3rd of the total number of Directors, excluding Independent Directors, shall be liable to retire by rotation and out of the Directors liable to retire by rotation, at least 1/3rd of the Directors shall retire by rotation at every Annual General Meeting.

In view of the above, Mr. Aneesh Reddy Boddu (DIN- 02214511), who has been longest in office since his appointment, who is liable to retire by rotation and being eligible, offers himself for re-appointment, a resolution seeking shareholders' approval for his reappointment forms part of the notice. The Board recommends his re-appointment.

d. Declaration by Independent Director

The Company has received necessary declaration from each of the Independent Directors, under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of

Independence laid down in Section 149(6) of the Companies Act, 2013 and Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act. Further, the Independent Directors have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

• Further, Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence and that they are independent of the management.

• The Independent Directors attend a Familiarization / Orientation Program on being inducted into the Board. Further, various other programmes are conducted for the benefit of Independent Directors to provide periodical updates on regulatory front, product, engineering, sales and marketing developments and any other significant matters of importance. The details of the Familiarization programmes provided by the Company is available on the Company's Website at https://www.capillarytech.com/investors.

Further the Company issues a formal letter of appointment to the Independent Directors, outlining their role, function, duties and responsibilities, the format of which is available on the Company's Website at https://www.capillarytech.com/investors.

• During the year under review and as on date of this report:

• Except for payment of professional fee to M/s. Amir Advisory Services LLP (where Mr. Farid Lalji Kazani- Independent Director is a partner) for availing advisory services, the Company did not have any pecuniary relationship or transactions with any of its Directors, other than payment of remuneration / Incentive to the Executive Directors and payment of sitting fees to Independent Directors and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board / Committees of the Company.

The Advisory Agreement dated March 14, 2023 entered with M/s. Amir Advisory Services LLP for providing advisory services on financial related matters had expired on March 01, 2024. The Audit Committee and Board of Directors approved the fresh advisory agreement with M/s. Amir Advisory Services LLP with same scope of work, for which they shall be paid INR. 1 lakh per day spent on the assignment but not exceeding total fee of INR. 9 lakh over a period of one year, which is lesser than 10% of total gross turnover/ income of the said LLP for the year 2022-23. Mr. Farid Lalji Kazani (Independent Director) and his daughter are partners of the said LLP.

• In the opinion of the Board, all the independent directors appointed during the year are persons of integrity, possesses relevant expertise and experience (including the proficiency).

• As required under Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as on date of this report the details of Independent Directors, pertaining to the online proficiency Self-Assessment test conducted by IICA are as below:

|e. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013, your Company has complied with the requirement of having at least one Independent Woman Director on the Board of the Company. Mrs. Neelam Dhawan (00871445) Chairperson and Independent Woman Director and Mrs. Yamini Preethi Natti (DIN 06533367) Independent Women Director of the Company.

f Changes in KMP

During the year under review and as on date of this report, following changes have taken place in the composition of whole time key managerial personnel (‘KMP') as per provision of section 203 of the Companies Act 2013.

• Mr. Sameer Garde resigned as Executive Director & CEO of the Company effective from March 31, 2024.

• Mr. Aneesh Reddy Boddu was appointed as Chief Executive officer & KMP of the Co mpany and was relieved from the duties of vice chairman with effect from May 14, 2024.

6.2 Board Meetings

Nine Board Meetings were held during the year under review and the gap between two meetings did not exceed one hundred and twenty days. The said meetings were held on:

6.3 Committees

As on March 31, 2024, the Board had the following seven (7) committees:

1. Audit Committee

2. Nomination & Remuneration Committee

3. Risk Management Committee

4. Stakeholders Relationship Committee

5. Corporate Social Responsibility Committee

6. Strategic and Business Development Committee and

7. Initial Public Offering (‘IPO') Committee

The details of the composition, terms of references are available on the Company's website.

6.4 Recommendations of Audit Committee

There have been no instances during the year where recommendations of the Audit Committee were not accepted by the Board.

Composition of Audit Committee:

6.7 Remuneration of Directors and Employees

• Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to your Company as on March 31, 2024.

• Statement containing details of employees as required in terms of Section 197 of the Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered Office of the Company during working hours. A copy of the statement may be obtained by shareholders by writing to the Company Secretary at the Registered & Corporate Office of the Company or at secretarial@capillarytech.com.

6.8 Remuneration received by Managing/Whole time Director from holding or subsidiary Company

No managing or whole-time director of the Company is in receipt of any remunerations/ commission from holding Company or Subsidiary Company.

j 6.9 Directors' Responsibility Statement

Your Directors hereby confirm that:

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

(b) the directors had 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 and loss of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

(e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

6.10 Internal Financial Controls and its adequacy

Your Company has an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2024, based on the criteria for internal financial control over financial reporting established by the Company. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

6.11 Frauds reported by the Auditor

During the financial year under review, pursuant to provisions of the Section 143(12) of the Companies Act, 2013, the Auditor has not reported any incident of fraud to the Audit, Risk management Committee. Your Company has adopted Fraud Prevention Policy. The Policy is available on the Investor Relations section of the website of your Company at https://www.capillarytech.com/policies/

|6.12 Adoption and review of policies

The details of the policies approved and adopted by the Board & Committees as required under the Companies Act, 2013 are provided in Annexure I to the Board's report.

^6.13 Report on Corporate Governance

The Report on Corporate Governance is not applicable to your Company.

As on March 31, 2024, our holding Company is Capillary Technologies International Pte Ltd (‘CTIPL') which holds 510,72,343 equity shares together with its nominee, representing 69.74% of the issued, subscribed and paid-up equity share capital of our Company

As on March 31, 2024, our Company had 9 (Nine) subsidiaries including 1 (one) direct and 8 (Eight) indirect outside India. The Company has closed its operations in Persuade Holding Inc (Formerly Known as Persuade Holding LLC) (Indirect Subsidiary). The Company is in the process of closing its operations in China operated through Capillary Technologies (Shanghai) Co., Ltd (Indirect Subsidiary). There are no operations in both the companies.

There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company's subsidiaries in Form No. AOC-1 as provided in Annexure II is attached to this report.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, and consolidated financial statements, are available on the Company's website at https://www.capillarytech.com/investors/annual-reports/. A copy of separate audited financial statements of our subsidiaries shall be provided to any member of the company who asks for it. All the documents stated under sub-section (1) of section 136 is available for inspection at the Registered Office of the Company during working hours. Further, members by writing to the Company Secretary at the Registered Office of the Company or at secretarial@capillarytech.com may obtain a copy of the same.

During the year, your Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

Pursuant to Section 186 of the Companies Act, 2013 disclosure on particulars relating to Loans, Advances, Guarantees and Investments (wherever applicable) are provided as part of the financial statements under note 05 & 08.

All Related party transactions that were entered into during the financial year under review, were on an arm's length basis, and in the ordinary course of business and are in compliance with the applicable provisions of the Act.

There were no materially significant Related Party Transactions made by the Company during the year that required shareholders' approval under Companies Act 2013. All Related Party Transactions are placed before the Audit Committee for approval. Further, prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for these transactions cannot be foreseen in advance.

Accordingly, the disclosure of the particulars of the related party transactions in form AOC -2 as required under Section 134(3) (h) of the Act is not applicable.

The details of related party transaction as per accounting standards is provided in Note 32 of Notes to Financial Statements (Standalone) and Note 32 of Notes to Financial Statements (Consolidated).

As per the provisions of the Companies Act, 2013, a Company meeting the specified criteria shall spend at least 2% of its average net profits for three immediately preceding financial years towards CSR activities. Accordingly, the provisions of CSR is not applicable to your Company for financial year 2023-24.

Company is part of Saas (‘software as a service') industry and does not operate any machineries, production facilities etc. As a part of corporate citizen, our Company's commitment is to improve community well-being through voluntary business practices and contribution of corporate resources leading to sustainable growth. Also, our CSR policy is well aligned to our business goals and meets or exceeds, the ethical, legal, commercial and public expectations that society has of business. Some of the steps and practices followed by the Company:

(a) Conservation of energy

(c) Foreign exchange earnings and Outgo -

Your Company has a well-defined risk management framework in place. The Board of Directors ("Board") of the Company oversee the development of Risk Management Policy and the establishment, implementation and monitoring of the Company's risk management system, in accordance with the policy. The Risk Management Committee reviews, assess and formulate the risk management system and policy of our Company from time to time and recommend for amendment or modification thereof, which shall include among others:

• A framework for identification of internal and external risks specifically faced by our Company, in particular including financial, operational, sectoral, sustainability (particularly, environment, social and governance related risks), information, cyber security risks or any other risk as may be determined by the committee;

• Measures for risk mitigation including systems and processes for internal control of identified risks; and

• Business continuity plan;

The details of the Risk Management Committee are available on Company's website. The Risk Management Policy adopted by the Company is available at https://www.capillarytech.com/policies/

Cybersecurity

As our employees operate efficiently as a hybrid workforce, we continued to remain vigilant on the evolving cybersecurity threat landscape. In our endeavour to maintain a robust cybersecurity posture, the team has remained abreast of emerging cybersecurity events globally, to achieve higher compliance and its continued sustenance. We are certified against the Information Security Management System (ISMS) Standard ISO 27001:2022 & PCI DSS 4.0. Additionally, we have also been attested on SOC 2 by an independent audit firm & will be undertaking SOC 1 too from this financial year.

During the year, our focus on cybersecurity personnel training, reskilling, and building a security culture of collective onus, encouraging shift-left, enabling the developer community with dedicated courses and resource kits went ahead as planned, together with our overall initiatives on improving cybersecurity processes, technologies, and posture.

The Company has adopted a Vigil Mechanism Policy to provide a channel to the Directors and employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the standards, codes of conduct or policies adopted by the Company from time to time. The Company is committed to adhering to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have genuine concerns about suspected misconduct to come forward and express their concerns without fear of punishment or unfair treatment. The mechanism provides for adequate safeguards against victimization of Directors and employees to avail of the mechanism and also provide for direct access to the Vigilance Officer. The Whistle Blower Policy adopted by the Company is available on Website of the Company at https://www.capillarytech.com/policies/

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

M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration no. 001076N/N500013), were appointed as the Statutory Auditors of the Company at the AGM held on September 29, 2022 for a term of five consecutive years from the conclusion of 10th Annual General Meeting ("AGM") till the conclusion of 15th AGM of the Company in accordance with the provisions of Section 139 of the Act.

The Report given by the Statutory Auditors on the standalone financial statements of the Company and the consolidated financial statements of the Company for the financial year ended March 31, 2024 forms part of this Annual Report.

M/s. BMP & Co, LLP, firm of practicing Company Secretaries ("Secretarial Auditors"), carried out the secretarial audit for FY 2024 in compliance with the Act and the Rules made thereunder, and other applicable regulations as amended and other laws specifically applicable to your Company. The Secretarial Audit Report in form MR-3 for FY 2024 is attached to this Report as Annexure - III. The said Report does not contain any qualification, reservation or adverse remark or disclaimer by the Secretarial Auditors.

Cost Auditor & records

a. The provisions of appointment of Cost Auditor pursuant to section 146 read with Companies (Cost Records and Audit) Rules, 2014 are not applicable to your Company during the financial year 2023-24.

Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is not required by the Company and accordingly such accounts and records are neither made and nor maintained.

Internal Audit

b. Protiviti India Member Private Limited (independent internal auditor) were appointed to carry out internal audit to ensure the adequacy of the internal control system and adherence to policies and practices. The Audit Committee regularly reviews the reports submitted by the independent internal auditor and the adequacy and effectiveness of internal controls.

The Reports given by the Statutory Auditors on the standalone financial statements and the consolidated financial statements of the Company for FY 2024 form part of the Annual Report. The Reports do not contain any qualification, reservation or adverse remark or disclaimer by the Statutory Auditors.

During the year under review, the Company has complied with all the applicable Secretarial Standards issued by Institute of Company Secretaries of India (‘ICSI'). The Company has also voluntarily adopted & complied with SS-4 (Report on Board of Directors).

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

During the year under review, there was no instances where Company has failed to complete or implement any corporate action within the specified time limit.

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013 read with the rules made thereunder, the Annual Return (Form MGT-7) of the Company has been disclosed on the website of the Company and Web Link thereto is: https://www.capillarytech.com/investors/regulation-46-of-sebi-lodr/

(a) The consolidated financial statement is also being presented in addition to the standalone financial statement of the Company.

(b) The Company has not opted for any one time settlement from the Banks or Financial Institutions.

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 (POSH) and the rules made thereunder. The Policy aims to provide protection to employees at workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has not received any complaints pertaining to sexual harassment during the financial year. Also, that no cases were filed, disposed of and pending as on date of this report.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

In commitment to keep in line with the Green Initiatives and going beyond it, electronic copy of the Notice of 12th Annual General Meeting of the Company including the Annual Report for FY 2023-24 are being sent to all Members of the Company / Depository Participant(s).

In terms of Environmental responsibility, the Company actively works to minimize its ecological footprint by reducing carbon emissions, conserving energy and water, and adopting environmentally friendly practices.

• Capillary Technologies has a strong focus on sustainability. The company emphasizes envi- ronmentally-friendly practices such as reducing energy footprint, encouraging staff to engage in eco-friendly behaviors like using reusable utensils and avoiding plastic, planning social initiatives like tree plantation drives and e-waste reduction, and having Environment and Sustainability management plans in place.

• We, as such, have a minimalistic carbon footprint/emission. Our workspace size is maintained at a requirements level and we strive to ensure optimum usage of power across our office spaces.

• Our solutions are hosted on AWS and we inherit the sustainability measures and efforts undertaken by AWS

• We work with Recykle, a waste management marketplace to ensure responsible e-waste management practices and plan to be a 100% processed e-waste company by 2025.

• This year, we tied up with another NGO on afforestation. Instead of trophies, we planted trees for speakers through the NGO, SankalpTaru: https://sankalptaru.org/

• Our employee and customer gifting solution is also sourced through local NGOs. Recently we sourced handmade diaries from and jute bags from a women's group in uttarakhand https://www.purkalstreeshakti.org/

• We undertake many such initiatives with regional NGOs in every country.

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions, Central and State Governments for their consistent support and encouragement to the Company.

Your directors sincerely appreciate all employees of the Company and its Holding and subsidiaries for their hard work and commitment.