Aarvi Encon Ltd Management Discussions

A. Global Economy

The global economy remained relatively resilient during the early part of FY2025-26, supported by stable macroeconomic conditions, easing inflationary pressures, and resilient consumer demand across advanced and emerging economies. Economic activity in the United States remained firm, driven by a healthy labour market and continued investments in artificial intelligence, technology and infrastructure, while Chinas growth remained relatively subdued amid persistent weakness in the real estate sector and softer domestic demand.

Global economic activity during the year was influenced by evolving trade policies, shifting financial conditions, and changing geopolitical dynamics. Tariff measures and export restrictions among major economies accelerated supply chain diversification and prompted businesses to strengthen operational resilience. However, these developments also contributed to elevated policy uncertainty and moderated the pace of global trade growth.

Inflationary pressures eased across several major economies, enabling many central banks to gradually adopt a more accommodative monetary policy stance. However, policymakers remained cautious as geopolitical uncertainties, commodity price volatility, and evolving trade dynamics continued to pose risks to the inflation outlook and broader financial stability. Economic momentum moderated during the latter part of the fiscal year as geopolitical tensions, particularly in the Middle East, intensified. The resulting uncertainty led to volatility in energy and commodity markets, disrupted trade flows, and dampened investment activity. Financial markets also experienced heightened volatility, with elevated bond yields and cautious investor sentiment impacting capital flows, particularly across emerging economies.

Despite these challenges, investments in artificial intelligence (AI), cloud computing, digital infrastructure, automation, clean energy, and advanced manufacturing continued to support business investment and productivity across several economies. These structural trends, together with ongoing supply chain diversification, remained key drivers of long-term global economic resilience. According to the International Monetary Fund (IMF), global economic growth is projected at approximately

3.1% in calendar year 2026, remaining below its long-term historical average. While continued expansion in services and technology-led investments is expected to support growth, geopolitical developments, trade-related uncertainties, tighter financial conditions, and commodity price volatility are likely to moderate the pace of global economic activity.

Looking ahead, the global economy is expected to remain resilient despite a challenging operating environment. Continued digital transformation, wider adoption of artificial intelligence, clean energy investments, and supply chain diversification are expected to support medium-term growth. Nevertheless, geopolitical tensions, evolving trade policies, and financial market volatility are expected to remain key monitorable risks to the global economic outlook.

Source: https://www.imf.org/-/media/files/publications/ weo/2026/april/english/text.pdf https://www.reuters.com/business/imf-sees-steady-global-growth-2026-ai-boom-offsets-trade-headwinds-2026-01-19/?.com

B. Indian Economy

India remained one of the fastest-growing major economies during FY2025-26, demonstrating resilience despite an uncertain global environment marked by geopolitical tensions, commodity price volatility, and evolving trade dynamics. Growth was supported by strong domestic demand, continued public capital expenditure, stable financial conditions, and sustained policy support, reflecting the strength of the countrys macroeconomic fundamentals. According to the Ministry of Statistics and Programme Implementation (MoSPI), Indias real Gross Domestic Product (GDP) expanded by 7.7% during FY2025-26. Economic activity was primarily driven by robust private consumption and sustained investments in infrastructure, while the services sector continued to exhibit strong momentum. Manufacturing activity also improved gradually, supported by government initiatives such as the Production Linked Incentive (PLI) scheme and continued capacity expansion across key industries.

On the external front, global trade moderation, uneven demand across export markets, and evolving trade policies created headwinds for Indias merchandise exports during the year. At the same time, the Government continued to strengthen Indias long-term trade competitiveness through ongoing Free Trade Agreement (FTA) negotiations and deeper economic engagement with strategic partner countries, supporting greater integration with global value chains.

Inflation remained broadly within the Reserve Bank of Indias target range during the year, with consumer price inflation moderating to approximately 3.4% in March 2026, aided by easing food prices and supply-side interventions. In view of the evolving macroeconomic environment, the Reserve Bank of India maintained a calibrated and data-dependent monetary policy approach, balancing growth objectives with price stability while keeping the policy repo rate at 5.25% in June 2026.

Indias financial system remained resilient, supported by healthy bank balance sheets, improved asset quality, adequate capitalisation, and steady credit growth. The Indian Rupee witnessed moderate depreciation against the US Dollar during the year, reflecting global risk aversion, geopolitical developments, and evolving trade dynamics. Nevertheless, the countrys strong foreign exchange reserves, prudent macroeconomic management, and resilient banking system continued to provide stability against external shocks.

Looking ahead, the Reserve Bank of India projects economic growth of around 6.6% in FY 2026-27, reflecting a gradual moderation from the previous year amid global uncertainties and evolving trade conditions. Over the medium term, Indias growth outlook remains supported by favourable demographics, continued infrastructure development, rapid digitalisation, manufacturing expansion, and ongoing structural reforms. However, geopolitical developments, commodity price volatility, external demand conditions, and global financial market uncertainty will continue to remain key monitorable risks to the growth outlook.

Source: https://www.reuters.com/world/india/indias-central-bank-holds-rates-iran-war-upends-economic-outlook-2026-04-08/ https://www.moneycontrol.com/news/business/ economy/rbi-lifts-fy26-gdp-growth-estimate-to-7-6-sees-fy27-slowing-to-6-9-13883085.html https://economictimes.indiatimes.com/news/ economy/indicators/rbi-expected-to-hold-rates-amid-economic-growth-concerns-says-crisil-report/ articleshow/130594350.cms https://www.business-standard.com/economy/news/ gdp-growth-may-slip-to-6-if-indian-crude-averages-120-barrel-in-fy27-ey-126042900676_1.html https://www.mospi.gov.in/uploads/latestReleases/ latest_release_1780655857536_5ac01869-ca4a-422d-b7a7-57b81da60932_Press_Note_on_GDP_ Estimates_for_Q4_2025-26_and_PE_FY_2025-26_F.pdf https://economictimes.indiatimes.com/news/ economy/indicators/rbi-gdp-growth-forecast-fy-2026-27-mpc-meeting-india-economic-outlook-gdp-forecast-india/articleshow/131519300. cms?from=mdr

C. Global Staffing

The global staffing and recruitment industry witnessed steady expansion during FY 2025–26, supported by increasing demand for skilled professionals, workforce flexibility, and technology-enabled hiring solutions. The global recruitment market is estimated at approximately USD 968.33 billion in 2026 and is projected to reach USD 2,932.15 billion by 2035, registering a compound annual growth rate (CAGR) of approximately 13.1% during the forecast period. Growth is being driven by increasing demand for specialised talent, outsourcing of recruitment functions, digital transformation, and evolving workforce strategies across industries.

Technology continued to reshape the staffing landscape, with Artificial Intelligence (AI), automation, applicant tracking systems, and data-driven recruitment becoming integral to hiring processes. Organisations increasingly adopted skills-based hiring and digital recruitment solutions to improve candidate sourcing, streamline hiring, and enhance workforce productivity. At the same time, flexible workforce models, including contract staffing, project-based hiring, and remote work, continued to gain traction as businesses sought greater operational agility.

Demand for staffing services remained robust across engineering, infrastructure, manufacturing, renewable energy, healthcare, information technology, financial services, logistics, and Global Capability Centres (GCCs). Continued investments in industrialisation, digital transformation, energy transition, infrastructure development, and economic diversification across Asia-Pacific and the Middle East created significant opportunities for specialised staffing providers. Persistent skill shortages and changing workforce expectations further reinforced the need for professional recruitment and workforce management services.

Looking ahead, the global staffing industry is expected to maintain a positive growth trajectory, supported by continued digitalisation, wider adoption of Artificial Intelligence, increasing investments across industrial sectors, and sustained demand for specialised talent. Staffing companies with strong domain expertise, technology-enabled recruitment capabilities, global delivery models, and scalable workforce solutions are expected to play an increasingly strategic role in helping organisations address evolving talent requirements and support long-term business growth.

Recruitment Trends Evolving in 2026

1. AI-Driven and Skills-Based Hiring: Artificial Intelligence (AI), automation, and predictive analytics aretransformingrecruitmentbystreamliningcandidate sourcing, screening, and workforce planning. At the same time, organisations are increasingly adopting skills-based hiring practices, placing greater emphasis on competencies and practical expertise to address evolving talent requirements.

2. Flexible Workforce and Remote Hiring: Hybrid work models, remote hiring, and contract staffing continue to gain momentum as organisations seek greater workforce flexibility and access to wider talent pools. Cross-border hiring and digital onboarding have become integral components of modern recruitment strategies, enabling businesses to efficiently source specialised talent across geographies.

3. Rising Demand for Specialised Talent: Growing investments in digital transformation, infrastructure, manufacturing, renewable energy, healthcare, engineering, and Global Capability Centres (GCCs) are driving sustained demand for highly skilled professionals. This has reinforced the importance of specialised staffing partners in addressing critical talent shortages across industries.

4. Diversity, Inclusion and Workforce Agility:

Organisations are increasingly integrating diversity, equity, and inclusion (DEI) into their talent strategies while expanding the use of flexible workforce models. The continued growth of gig and project-based employment is enabling businesses to respond more effectively to changing market conditions while improving workforce agility and operational efficiency.

5. Localization of Supply Chains: As organisations diversify supply chains and regionalise operations, demand for skilled professionals is increasing across emerging markets, particularly in India, Southeast Asia, and the Middle East. This trend is creating new opportunities for staffing companies with strong regional presence and multi-country workforce capabilities.

Source:

• https://www.businessresearchinsights.com/ market-reports/recruitment-market-106353

• https://recruiterflow.com/blog/recruitment-trends/

• https://www.corporatenavigators.com/articles/ candidate-sourcing/data-driven-hiring-2026/

•https://www.kornferry.com/insights/featured-topics/talent-recruitment-articles/ai-in-recruitment trends

• https://www.imd.org/ibyimd/talent/workplace-trends-for-2026/

• https://sqmagazine.co.uk/remote-hiring-statistics/

• https://www.talentmsh.com/insights/hiring-recruiting-trends-statistics

• https://www.oncoreservices.com/news-resources/global-staffing-industry-trends-2026

D. Indian Staffing

The Indian staffing and recruitment industry witnessed strong growth during FY 2025–26, supported by favourable demographics, increasing workforce formalisation, rapid digitalisation, and rising demand for skilled professionals across industries. The Indian staffing and recruitment market is projected to reach approximately USD 48.5 billion by 2030, expanding at a compound annual growth rate (CAGR) of around 13.2% during the forecast period. Growth is expected to be driven by increasing workforce formalisation, rapid digitalisation, wider adoption of flexible staffing models, Recruitment Process Outsourcing (RPO), and growing demand for organised workforce solutions across industries.

The organised staffing industry demonstrated resilience despite a cautious global environment. Indias flexi staffing industry added approximately 1.18 lakh formal jobs during FY 2025–26, taking the workforce represented by Indian Staffing Federation (ISF) members to nearly 1.91 million, reflecting an 8% year-on-year increase. Continued workforce formalisation, increasing participation of young professionals in organised employment, and wider adoption of flexible staffing models reinforced the industrys role in employment generation while enhancing workforce productivity and organisational agility.

Demand for staffing services remained robust across engineering, infrastructure, manufacturing, information technology, banking, financial services and insurance (BFSI), healthcare, logistics, retail, and Global Capability Centres (GCCs). Continued investments under the Production Linked Incentive (PLI) scheme, infrastructure development, manufacturing expansion, digital transformation, and rapid growth of GCCs accelerated demand for specialised talent across technical and professional domains. Organisations increasingly leveraged temporary staffing, contract hiring, and outsourced recruitment solutions to improve operational flexibility, optimise costs, and address evolving workforce requirements. Growing demand for professionals in artificial intelligence (AI), cloud computing, cybersecurity, engineering, and digital services further reflects the structural shift towards specialised talent acquisition.

Looking ahead, Indias staffing industry is expected to maintain a robust growth trajectory, supported by continued economic expansion, infrastructure development, manufacturing growth, rapid digitalisation, and increasing demand for skilled professionals. The continued expansion of Global Capability Centres (GCCs), rising investments in manufacturing and infrastructure, wider adoption of flexible workforce models, and sustained workforce formalisationareexpectedtostrengthentheorganised staffing ecosystem, positioning the industry as a key enabler of Indias long-term employment generation, productivity enhancement, and economic growth. Source:

• https://www.kenresearch.com/industry-reports/ india-staffing-and-recruiting-market

• https://www.indianstaffingfederation.org/ research.php

•https://www.businessworld.in/article/flexi-staffing-industry-records-8-growth-adds-1-18-lakh-jobs-in-fy26-report-610080

• https://www.businessmarketinsights.com/ reports/india-staffing-and-recruitment-market

E. Gig Economy

Indias gig economy witnessed robust growth during FY 2025–26, emerging as an important pillar of the countrys evolving employment landscape. The gig workforce increased from 7.7 million in FY 2020–21 to nearly 12 million in FY 2024–25, reflecting a 55% growth over four years and accounting for more than 2% of Indias total workforce. Supported by increasing digitalisation, widespread smartphone adoption, growth in digital payment infrastructure, and the rising acceptance of platform-based employment, the gig workforce is projected to reach 23.5 million by 2029–30, representing 6.7% of the non-agricultural workforce and highlighting the sectors growing contribution to employment generation and economic activity.

The expansion of the gig economy is being driven by increasing demand for flexible workforce solutions across engineering, e-commerce, logistics, transportation, information technology, healthcare, financial services, consulting, and professional services. The sector is also witnessing a gradual shift towards higher-value and knowledge-based roles, with growing demand for professionals in artificial intelligence (AI), software development, engineering, finance, digital marketing, cybersecurity, and data analytics, as organisations increasingly adopt project-based, outcome-oriented, and flexible work models. The policy and regulatory ecosystem continued to evolve during the year with greater emphasis on extending social security, financial inclusion, skill development, and worker welfare for gig and platform workers. Government initiatives and policy reforms are expected to strengthen workforce formalisation while improving access to social protection, enhancing worker participation, and creating a more sustainable and resilient gig economy.

Looking ahead, Indias gig economy is expected to maintain a strong growth trajectory, supported by favourable demographics, continued digital transformation, expansion of platform-based businesses, and increasing demand for flexible workforce solutions. As organisations increasingly adopt agile workforce strategies, organised staffing companies are well positioned to complement the gig ecosystem by providing compliant, skilled, and scalable workforce solutions for project-based, technical, and specialised talent requirements. Source: • https://www.pib.gov.in/PressReleasePage. a s p x ? P R I D = 1 8 3 7 2 7 7 & r e g = 4 8 & l a n g = 2 https://www.businesstoday.in/union-budget/ story/india-has-12-million-gig-workers-2-of-total-workforce-economic-survey-513429-2026-01-29 • https://www.ilo.org/publications/expansion-gig-and-platform-economy-india-opportunities-employer-and • h t t p s : / / w w w . n i t i . g o v . i n / s i t e s / d e f a u l t / files/2023-06/Policy_Brief_India%27s_ B o o m i n g _ G i g _ a n d _ P l a t f o r m _ Economy_27062022.pdf

F. Emerging Industry Trends

1. Workforce Transformation: Indias workforce is undergoing a structural transformation, supported by favourable demographics, rapid digitalisation, increasing workforce formalisation, and rising participation in organised employment. The growing adoption of flexible staffing, project-based hiring, and technology-enabled recruitment is reshaping talent acquisition across industries while expanding access to skilled professionals beyond metropolitan centres.

2. AI-led Global Capability Centres (GCCs): India has strengthened its position as the worlds largest GCC destination, hosting 2,117 Global Capability Centres employing approximately 2.36 million professionals and generating USD 98.4 billion in revenue during FY2026. GCCs are increasingly driving innovation in Artificial Intelligence, digital engineering, cybersecurity, product development, and enterprise transformation, creating significant demand for specialised talent and managed workforce solutions.

3. Manufacturing & Infrastructure-led Employment:

Government initiatives such as Make in India, the Production Linked Incentive (PLI) Scheme, PM Gati Shakti, semiconductor and defence manufacturing programmes, renewable energy expansion, and large-scale infrastructure investments continue to generate strong demand for engineering, EPC, operations & maintenance, and technical manpower across industries.

4. AI, Automation & Skills-based Hiring: Artificial Intelligence, automation, cloud computing, cybersecurity,anddigitalengineeringaretransforming workforce requirements globally. Organisations are increasingly adopting AI-enabled recruitment, predictive workforce planning, and skills-based hiring to improve productivity while addressing shortages of specialised technical talent. These trends are accelerating investments in upskilling, reskilling, and technology-enabled workforce solutions.

5. Indias Engineering & Technical Talent Advantage:

Indias large talent pool, favourable demographics, and expanding base of engineering and technical professionals continue to position the country as a preferred destination for industrial projects, digital engineering, energy transition, and global capability centres, supporting long-term demand for specialised staffing services.

G. Challenges & Risks

1. Global Economic & Geopolitical Uncertainty: Rising geopolitical tensions, evolving trade policies, commodity price volatility, and a slowdown in global economic activity may impact business confidence, delay capital expenditure, and moderate hiring activity across infrastructure, manufacturing, energy, and industrial sectors. These developments could affect the pace of workforce expansion and project execution.

2. AI-led Workforce Disruption: The rapid adoption of Artificial Intelligence (AI), automation, and digital technologies is reshaping workforce requirements across industries. While AI is improving productivity and creating demand for high-skilled professionals, it may reduce demand for certain routine and repetitive roles, accelerating the need for workforce reskilling and upskilling. Staffing companies will need to continuously adapt their talent strategies, technology capabilities, and recruitment processes to address evolving employment patterns.

3. Shortage of Skilled Talent: Increasing demand for professionals in engineering, renewable energy, artificial intelligence (AI), semiconductors, digital technologies, advanced manufacturing, and Global Capability Centres (GCCs) continues to outpace talent availability. The widening skill gap may intensify competition for qualified professionals, increase hiring costs, and lengthen recruitment cycles.

4. Regulatory & Labour Law Changes: Changes in labour regulations, employment laws, taxation policies, social security requirements, and compliance frameworks may influence workforce management practices and increase compliance obligations for staffing companies and their clients.

5. Project Execution & Hiring Cyclicality: Delays in infrastructure, EPC, manufacturing, oil & gas, or renewable energy projects, along with fluctuations in corporate hiring plans, may impact manpower demand and recruitment activity.

6. Competitive Intensity: The organised staffing industry continues to witness intense competition from domestic, multinational, and technology-enabled recruitment firms, leading to pricing pressure, higher client expectations, and continuous innovation in service delivery.

COMPANY OVERVIEW

Aarvi Encon Limited ("Aarvi" or "the Company") is a leading provider of Engineering, Technical Staffing, Engineering Services and Manpower Outsourcing solutions, serving clients across infrastructure, energy, manufacturing and industrial sectors. Established in 1987 and headquartered in Mumbai, the Company has built a strong reputation over nearly four decades by delivering specialized engineering and project support services across the entire project lifecycle, from engineering and procurement to construction, commissioning, operations and maintenance.

The Company caters to a diverse range of industries including Oil & Gas, Refineries, Petrochemicals, Fertilizers, Power, Renewable Energy, Infrastructure, Metals & Minerals, Cement, Railways, Metro, Telecommunications, City Gas Distribution (CGD), LNG, Manufacturing and EPC sectors. With an extensive pan-India network and a growing international presence in the Middle East and Southeast Asia, Aarvi continues to strengthen its position as a trusted engineering and technical workforce partner to leading domestic and multinational organizations. During FY 2025-26, the Company continued to expand its service portfolio and geographical reach while maintaining its focus on operational excellence, customer satisfaction and compliance. The Companys strategic emphasis on Operations & Maintenance (O&M), renewable energy, engineering services, permanent recruitment, IT staffing and overseas operations enabled it to capitalize on emerging opportunities across infrastructure and industrial sectors.

The Company reported another year of healthy operational performance with consolidated revenue of approximately 650 crore, reflecting robust growth over the previous year, supported by increased order inflows, improved execution capabilities and strong client relationships. Profitability also improved significantly during the year, demonstrating the resilience of the Companys business model and operational efficiencies.

Aarvi remains committed to delivering sustainable value through innovation, technology-driven recruitment, operational excellence, strong governance standards and continuous investment in human capital. The Company continues to leverage its diversified business portfolio and long-standing client relationships to strengthen its market leadership in technical staffing and engineering services.

Industry Structure and Developments

India continues to be one of the fastest-growing major economies globally, supported by significant investments in infrastructure, manufacturing, energy transition and industrial development. Government initiatives such as the National Infrastructure Pipeline (NIP), PM Gati Shakti, Make in India, National Green Hydrogen Mission, expansion of renewable energy capacity and increasing investments in oil & gas, railways and urban infrastructure are expected to generate substantial demand for engineering services and skilled technical manpower. The Engineering, Procurement and Construction (EPC) sector continues to witness strong project awards across refineries, petrochemicals, renewable energy, power transmission, city gas distribution, manufacturing and transportation infrastructure. Simultaneously, industries are increasingly adopting flexible staffing models, outsourcing specialized engineering functions and focusing on operational efficiency, thereby creating significant opportunities for organized technical staffing companies.

Internationally, demand for skilled engineering professionals remains strong across the Middle East and Southeast Asia owing to continued investments in energy, infrastructure and industrial expansion. These trends provide attractive opportunities for companies with established recruitment capabilities and international execution experience.

Opportunities and Outlook

The Company believes that the long-term business outlook remains positive, supported by favorable macroeconomic trends and increasing demand for specialized engineering services.

Key opportunities include:

• Continued investments by the Government of India in infrastructure, transportation, manufacturing and industrial corridors.

• Strong capital expenditure by Oil & Gas, Refinery, Petrochemical and Chemical industries.

• Rapid expansion of Renewable Energy including Solar, Wind, Green Hydrogen and Energy Storage projects.

• Increasing outsourcing of engineering, technical staffing and project management services by domestic and multinational organizations.

• Growing demand for Operations & Maintenance (O&M) services throughout the lifecycle of industrial assets.

• Expansion of the Companys international operations, particularly across the Middle East and Southeast Asia.

• Growth opportunities in permanent recruitment, IT staffing, digital engineering and specialized engineering consultancy services.

• Increasing adoption of technology-enabled recruitment platforms, workforce digitization and AI-assisted talent acquisition.

With its established brand, experienced management team, diversified client base, robust compliance framework and extensive technical talent network, Aarvi Encon is well positioned to capitalize on these opportunities and achieve sustainable long-term growth. Recent contract wins and continued expansion of international operations further reinforce the Companys growth prospects.

Concerns

Like any engineering services and staffing organization, the Company operates in an evolving business environment and remains exposed to certain business risks. The management continuously evaluates these risks and implements appropriate mitigation measures. Major risks include:

• Cyclical slowdown in capital expenditure by infrastructure, energy and industrial sectors.

• Intense competition from domestic and international staffing and engineering service providers leading to pricing pressures.

• Dependence on project execution timelines and delays in client decision-making.

• Talent acquisition and retention challenges arising from increasing demand for skilled engineering professionals.

• Changes in labour laws, taxation, regulatory requirements and compliance obligations.

• Rising employee costs and inflationary pressures impacting operating margins.

• Foreign exchange fluctuations affecting international operations.

• Geopolitical developments in overseas markets.

• Customer concentration and credit risks.

• Cybersecurity and information technology risks associated with digital operations.

The Company has established a comprehensive risk management framework, robust internal control systems, periodic management reviews and compliance monitoring mechanisms to effectively identify, assess and mitigate these risks.

Future Outlook

The management remains optimistic about the Companys long-term growth prospects. Indias continued focus on infrastructure development, manufacturing expansion, renewable energy, industrial modernization and digital transformation is expected to sustain demand for engineering and technical manpower solutions.

The Company will continue to focus on:

• Expanding its domestic and international presence.

• Strengthening Operations & Maintenance and Engineering Services businesses.

• Increasing participation in renewable energy and manufacturing sectors.

• Leveraging technology to improve recruitment efficiency and operational productivity.

• Diversifying its customer base and service offerings.

• Maintaining strong corporate governance, compliance standards and sustainable business practices.

Supported by its experienced leadership, established client relationships, diversified business portfolio and sound financial position, Aarvi Encon Limited is well positioned to deliver sustainable growth and create long-term value for its shareholders and other stakeholders.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

• Aarvi Encon Limited maintains a robust internal financial control framework that is fully commensurate with the size, scale, and complex nature of its technical staffing operations [Internal Control Framework]. Operating under the strict mandate of Section 143(3) (i) of the Companies Act, these structured systems ensure the orderly and efficient conduct of business across all domestic and international engineering projects. The primary architecture focuses on safeguarding company assets, preventing and detecting operational fraud, ensuring data accuracy, and preparing reliable financial statements in a timely manner.

• To preserve absolute objectivity and transparency, the companys internal audit function is completely decentralized from daily management and reports directly to the Chairman of the Audit Committee. This independent oversight mechanism continuously evaluates the adequacy and operational efficacy of corporate policies, risk mitigation guidelines, and accounting workflows.

• The statutory auditors have formally validated the adequacy of these internal financial controls, confirming that they are operating effectively without any material weaknesses. As heavy industrial plants and Global Capability Centers (GCCs) modernize, the management proactively updates its digital verification systems to address emerging cybersecurity and compliance risks.

RESULTS OF OUR OPERATIONS:

The function-wise classification of the Consolidated Statement of Profit and Loss is as follows:

Particulars	FY 2025-26	FY 2024-25	% of Revenue FY 2025-26	% of Revenue FY 2024-25	Remarks
Revenue from Operations	649	510	100.00%	100.00%	Revenue increased by approximately 27.25%, driven by higher business volumes, expansion of operations and improved order execution across business segments.
Employee Benefit Expenses	488	377	75.19%	73.92%	Increase attributable to higher manpower deployment, annual salary revisions and business expansion during the year.
Other Expenses	138	120	21.26%	23.53%	Increase mainly due to higher operational activities, though controlled cost management resulted in a lower percentage of revenue.
Total Expenditure	626	497	96.46%	97.45%	Increase in line with revenue growth while maintaining operational efficiencies.
EBITDA	25	16	3.85%	3.14%	Improved operating profitability due to higher revenue and better operational efficiency.
Finance Cost	3	3	0.46%	0.59%	Finance costs remained stable despite higher business operations, reflecting prudent financial management.
Depreciation & Amortisation Other Income	2 2	2 2	0.31% 0.31%	0.39% 0.39%	Largely remained stable during the year. Other income remained consistent with the previous year.
Profit Before Tax	20	11	3.08%	2.16%	Improved significantly on account of higher operating profits and better cost management.
Current Tax	2	1	0.31%	0.20%	Tax expense remained broadly in line with taxable income.
Profit After Tax	17	10	2.62%	1.96%	PATincreasedbyapproximately 70%, reflecting improved profitability and operational performance.

Consolidated Performance

• Revenue from Operations increased from 510 crore in FY 2024-25 to 649 crore in FY 2025-26, registering a growth of approximately 27.25%.

• Profit Before Tax increased from 11 crore to 19 crore, representing a growth of approximately 72.73%.

• Profit After Tax increased from 10 crore to 17 crore, registering a growth of approximately 70.00%.

• The Company continued to maintain a healthy working capital position while supporting higher business volumes.

Significant changes in key financial ratios as compared to the previous year:

Particulars	FY 2025-26	FY 2024-25	Y-o-Y Change	Reasons
Debtors Turnover (Days)	57.50	82.57	-30.36%	Improvementinreceivablecollectionefficiency and better working capital management.
Interest Coverage Ratio	7.89	4.65	69.77%	The Interest Coverage Ratio increased from 4.65 to 7.89 mainly due to higher operating profit (EBIT) during FY 2025-26 and lower finance costs resulting from reduced borrowings or improved debt management.
Net Capital Turnover Ratio	7.27	6.18	17.50%	Higher revenue generated from efficient utilization of working capital.
Current Ratio	2.05	2.03	0.71%	Marginal increase in current assets over current liabilities during the year.
Debt-Equity Ratio	0.19	0.21	-12.06%	The Debt-Equity Ratio reduced owing to lower debt levels and improved net worth, indicating a stronger capital structure and reduced financial leverage.
Operating Profit Margin (%)	3.51%	2.80%	25.42%	The Operating Profit Margin improved owing to higher operating profitability driven by improved revenue and effective management of operating costs.
Net Profit Margin (%)	2.71%	1.97%	37.78%	The Net Profit Margin improved by improved operational efficiency, better cost management, and enhanced overall financial performance.
Return on Net Worth (%)	13.71%	9.38%	46.15%	Due to increase in profits as compared to previous year.
Return on Investment (%)	12.01%	7.38%	62.85%	Due to increase in profits as compared to previous year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

Aarvi Encon Limited has significantly expanded its workforce infrastructure to manage a massive pool of 8,272 employees and technical professionals across its domestic and international client sites. This specialized engineering headcount is strategically divided to balance corporate governance and field execution, comprising 312 core permanent corporate employees, 7960 dedicated contract staff and contract professionals. This robust human resource network allows the company to rapidly fulfill complex, large-scale technical staffing mandates for heavy industries, infrastructure systems, and emerging green energy projects.

The core mandate of Aarvis Human Resources division remains focused on upgrading technical competencies, improving performance management systems, and facilitating seamless cross-functional teamwork. By leveraging modern digital recruitment platforms, the HR team has successfully minimized onboarding timelines and accelerated international deployment workflows across complex global regulatory zones. These structured talent pipelines ensure that clients receive highly skilled engineers who are fully equipped to operate automated industrial systems and modern clean-energy setups. On the industrial relations front, Aarvi Encon maintains an exceptional record of harmonious workplace relations, resulting in zero labor disputes, strikes, or operational disruptions. The management strictly enforces rigorous statutory compliance, localized labor laws, and strict workplace safety standards across all active deployment zones. This dedicated focus on worker welfare, proper social security mapping, and robust risk insurance coverage ensures long-term operational continuity and cements Aarvis position as a preferred institutional talent partner.