ARC Insulation & Insulators Ltd Management Discussions

(1) Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements ⁽²⁾ EBITDA is calculated as Profit before tax + Depreciation + Finance Costs - Other Income. (3) ‘EBITDA Margin is calculated as EBITDA divided by Revenue from Operations. (4) ‘PAT Margin is calculated as PAT for the period/year divided by revenue from operations. (5) Net worth as defined under Regulation 2(1)(hh)of the SEBI ICDR Regulations means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation (6) Return on Equity is ratio of Profit after Tax and Average Shareholder Equity (7) Return on Capital Employed is calculated as EBIT divided by Average capital employed, which is defined as shareholders equity plus total debt. Here, EBIT is calculated as Profit before tax + Finance Costs – Other Income.

Notes:

(1) Average Revenue per Ton: Total revenue from operations divided by total actual production (tons). (2) Average Revenue Per Customer: Total revenue from operations divided by total number of customers.

For further detail on Key Performance Indicators of our company, please refer Chapter Titled "Basis of Offer Price" on page 120 of this Red Herring Prospectus.

1. Company Background

The Company was originally incorporated on September 10, 2008, as a Private Limited Company in the name of "ARC Insulation & Insulators Private Limited" under the provisions of the Companies Act, 1956 bearing Corporate Identification Number U18109WB2008PTC129263 issued by the Deputy Registrar of Companies, West Bengal. Subsequently, pursuant to a Special Resolution of our Shareholders passed in the Extra-Ordinary General Meeting held on June 11, 2024, our Company was converted from a Private Limited Company to Public Limited Company and consequently, the name of our Company was changed to ‘ARC Insulation & Insulators Limited and a Fresh Certificate of Incorporation consequent to Conversion was issued on August 5, 2024 bearing Corporate Identification Number U18109WB2008PLC129263 issued by the Registrar of Companies, Central Processing Centre.

The company is engaged in manufacturing and supply of Fiber Reinforced Polymers / Glass Fiber Reinforced Polymers ("FRP/GFRP") composite/constituency products. Our offerings include FRP/GFRP Rebars, FRP/GFRP Granting Walkways, FRP/GFRP Pipelines, FRP/GFRP Tubes, FRP/GFRP Fencing for Transformers, FRP/GFRP Cable Trays, and other related products designed for industrial, energy and marines sectors. In addition to our core business, the company acquired the ongoing business of our promoter, ‘M/s ARC Insulation & Insulators, a sole proprietorship, through a business transfer agreement dated June 01, 2009. Under our brand name "ARC", we supply our products for application in diverse industries including Infrastructure, Power, Cooling Tower, Chemical, Composite, Electrical Substation, Metal & Mining.

1.1 Basis of preparation of financial statements

(a) The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the provisions of the Companies Act, 2013 and the Companies (Accounting Standards) Rules 2014, as prescribed. The financial statements have been prepared under the historical cost convention on accrual basis. (b) The preparation of the financial statements requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

The Restated Financial Information of ARC Insulation & Insulators Limited (formerly, ARC Insulation & Insulators Private Limited) comprise of Restated Statement of Assets and Liabilities as at 31 March, 2025; 31 March, 2024 and 31 March, 2023, the Restated Statement of Profit and Loss, Restated Cash Flow Statement, Significant Accounting Policies to the Restated Financial Information and Notes to the Restated Financial Information. These Restated Financial Information have been prepared by the management of the company for the proposed inclusion in the Red Herring Prospectus (RHP) prepared by the Company in connection with its proposed Initial Public Offer ("IPO") in terms of the requirements of, 1) Section 26 and 28 of Part I of Chapter III of the companies Act, 2013 ("the act"); 2) The securities and Exchange Board India (issue of Capital and Disclose Requirements) Regulations, 2018, as amended ("ICDR Regulations")

3) The Guidance Note on Reports in company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended (the "Guidance Note").

These Restated Financial Information have been compiled by the Companys management from Audited Financial Statements of the company as at and for the financial years ended March 31, 2025, March 31, 2024 and March 31, 2023 prepared in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act, which have been approved by the Board of Directors at their meetings held on August 07, 2025, September 02, 2024 and September 20, 2023 respectively.

These Restated Financial Information have been approved by the Board of Directors of the Company on August 07, 2025.

(c) The preparation of the financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known / materialize.

1.2 Revenue Recognition

(a) The company generally follows the mercantile system of accounting and recognizes Income & Expenditure on accrual basis. (b) Revenue is recognised to the extent that it is possible that, the economic benefits will flow to the company and the revenue can be reliably estimated and collectability is reasonably assured. (c) Revenue from sale of goods & services are recognised when goods/service is fully supplied/provided to our customer and when there are no longer any unfulfilled obligations. The performance obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms. (d) Revenue is measured on the basis of sale price, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the Government such as goods and service tax etc. Accumulated experience is used to estimate the provision for such discounts and rebates. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur. (e) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

1.3 Property, Plant & Equipment and Intangible Assets & Depreciation (A) Property, Plant and Equipment

(a) Property, Plant and Equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition or construction of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes after deducting trade discounts, rebates and any directly attributable cost of bringing the item to its working condition for its intended use. (b) Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance cost are charged to the statement of profit and loss during the period in which they are incurred. (c) Gains or losses that arise on disposal or retirement of an asset are measured as the difference between net disposal proceeds and the carrying value of property, plant and equipment and are recognised in the statement of profit and loss when the same is derecognised. (d) Depreciation is calculated on pro rata basis on Written down value method (WDV) based on estimated useful Life as prescribed under Part C of Schedule - II of the Companies Act, 2013. Freehold land is not depreciated.(e) Intangible asset purchased are initially measured at cost. The cost of an intangible assets comprises its purchase price including duties and taxes and any costs directly attributable to making the assets ready for their intended use. The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a written down value basis over the period of their estimated useful lives.

1.4 Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the assets net selling price and value in use, which is determined by the present value of the estimated future cash flows.

1.5.Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments.

1.6 Inventories

The inventories are maintained as cost or NRV whichever is lower. Cost is determined on FIFO basis.

1.7 Employee Benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contribution to the provident fund is charged to the statement of profit and loss for the year when an employee renders the related services.

Leave encashment to the employees are accounted for as & when the same is claimed by eligible employees.

(a) Borrowing costs that are directly attributable to the acquisition of qualifying assets are capitalized for the period until the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes substantial period of time to get ready for its intended use. (b) Other Borrowing costs are recognized as expense in the period in which they are incurred. Current investments or Long-term investments are carried at cost. However, provision for diminutions in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss

1.9 Taxes on Income

Tax expense comprises of current tax and deferred tax.

Current income tax is measured at the amount expected to be paid to the tax authorities, computed in accordance with the applicable tax rates and tax laws. Deferred Tax arising on account of "timing differences" and which are capable of reversal in one or more subsequent periods is recognized, using the tax rates and tax laws that are enacted or substantively enacted. Deferred tax asset is recognized only to the extent there is reasonable certainty with respect to reversal of the same in future years as a matter of prudence.

1.10 Earnings per share (EPS)

(a) Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. (b) For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

Prior Period and Extraordinary items and Changes in Accounting Policies having material impact on the financial affairs of the Company are disclosed in financial statements if any.

(a) Provision involving substantial degree of estimation in measurements is recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. (b) Contingent Liabilities are shown by way of notes to the Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. (c) A Contingent Asset is not recognized in the Accounts.

(a) Business Segments:

Based on the guiding principles given in Accounting Standard 17 (AS - 17) on Segment Reporting issued by ICAI, the Company has only one reportable Business Segment which is engaged in business of manufacturing and supply of Fiber Reinforced Polymers / Glass Fiber Reinforced Polymers ("FRP/GFRP") composite/constituency products. Accordingly, the figures appearing in these financial statements relate to the Companys single Business Segment. (b) Geographical Segments: The Company activities / operations are confined to India and as such there is only one geographical segment. Accordingly, the figures appearing in these financial statements relate to the Companys single geographical segment..

Foreign exchange transactions are recorded at the rate prevailing on the date of respective transaction. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rates on that date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction. Exchange differences arising on foreign exchange transactions settled during the year and on restatement as at the balance sheet date are recognized in the statement of profit and loss for the year.

Balance of Debtors & Creditors & Loans & advances Taken & giving are subject to confirmation and subject to consequential adjustments, if any. Debtors & creditors balance has been shown separately and the advances received and paid from/to the parties is shown as advance from customer and advance to suppliers.

1.16 Regrouping

Previous years figures have been regrouped and reclassified wherever necessary to match with current year grouping and classification.

Government Grants are recognised where there is reasonable assurance that the company has complied with the conditions attached to them and that the grant will be received. Revenue grants are recognised in the statement of Profit and Loss and are shown under Other Income. Capital grants are recognised in Reserves in case the same is for a project as a whole. If these are for a specific asset, then the same is reduced from the cost of the concerned asset for which it is received.

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are promoting education, promoting gender equality by empowering women, healthcare, environment sustainability, art and culture, destitute care and rehabilitation, disaster relief, COVID-19 relief and rural development projects. The company is required to expense on CSR activities during F.Y. 2024-25. The relevant details have been disclosed in Annexure 1.18.

Discussion on Results of Operation

The following discussion on results of operations should be read in conjunction with the Restated Financial Results of our Company for the financial years ended March 31, 2025, 2024 and 2023.

The following table sets forth select financial data from our Financial Statements as Restated Profit and Loss for the financial year ended March 31, 2025, 2024, and 2023 the components of which are also expressed as a percentage of total revenue for such periods:

Total Income: Our total income comprises of revenue from operations and other income.

Revenue from operations: Our revenue from operations comprises of Sale of finished goods including Exports and Other Operating Revenue which consist of revenue from freight income.

Other Income: Our other income consists of Interest Income, Profit on sale of assets, Foreign Gain and Other Non-Operating Income which includes changes in Gratuity Actuarial Assumption.

Expenses: Our expenses comprise of Cost of Material Consumed, Change in Inventories, Employee Benefit Expenses, Finance Cost, Depreciation and Amortisation Expenses and Other Expenses.

Cost of Raw Material Consumed: Our Raw Material consumed consists of change in stock of Raw Material, Purchases of Raw materials and Direct Expenses.

Direct Expenses: Direct Expenses consists of Consumables, Direct Wages, Power and Fuel, Freight Inward and Other Direct Expenses.

Changes in Inventories: Our Changes in Inventories comprises of change in Stock of Finished goods from the beginning of the year to the end of the year.

Employee Benefit Expenses: Our employee benefit expense consists of Salaries Wages & Bonus, Contribution to provident and other funds, Directors Remuneration and Gratuity.

Finance Cost: Our finance costs comprise of Interest on Bank Loan and bank charges.

Depreciation and amortisation expenses: Tangible assets are depreciated over periods corresponding to their estimated useful lives. Depreciation includes depreciation charged on Property, Plant & Equipment & Intangible Assets excluding freehold land.

Other expenses: Advertisement & Publicity , Auditor Remuneration, Bad Debt, Balance written off, Bank & Other charges, Business promotion, Business seminar Expenses, Calibration charge, Certification & Inspection Expenses, Commission on sales, Communication expenses, Stores & spares, Computer Expenses, Car Expenses, Discount Allowed, Delivery Expenses, Donation Expenses, Forex Loss (Net), Forex Loss (net), Foreign Tour Expenses, Freight Charges, Fuel Charges, G.P.S Tracking Charges, Gst Reversal Expenses, General Expenses, Insurance expenses, Interest paid on GST, Interest paid on TDS/ TDS demand, Internet Expenses, Legal & Profession Charges, License & Subscription Fee, Loss in Transit, Loss on sale of Fixed assets, Lab Expenses, Market development expenditure amortised, Miscellaneous Expenses, Office Expenses, Other Expenses, Penalty for GST, Postage & Telecommunication, Printing & Stationery, Prior Years Interest Difference, Power and Fuel Expenses, Packing expenses, Rates & Taxes, Rent, Repairs & Maintanance, Research & Development, Roc Fees, Round off, Security Charges, Selling and Administration Expenses, Services expenses, Software Expenses, Spare Parts, Statutory payments, Testing Charges, Travelling and conveyance, Tender expenses.

Tax Expenses: Income taxes are accounted for in accordance with Accounting Standard – 22 on "Accounting for Taxes on Income" ("AS-22"), prescribed under the Companies (Accounting Standards) Rules, 2006. Our Company provides for current tax as well as deferred tax, as applicable. Provision for current taxes is made at the current tax rates after taking into consideration the benefits available to our Company under the provisions of the Income Tax Act, 1961. Deferred tax arises from the timing differences between book profits and taxable profits that originate in one period and are capable of reversal in one or more subsequent periods and is measured using the tax rates and laws applicable as of the date of the financial statements. Our Company provides for deferred tax asset / liability on such timing differences subject to prudent considerations in respect of deferred tax assets.

Total Income: Our Total Income increased by 431.95 lakhs, from 2,883.37 lakhs for the financial year ended March 31, 2024 to 3,315.32 lakhs for the financial year ended March 31, 2025, due to the factors described below:

Our Revenue from operations increased by 426.17 lakhs, from 2,845.47 lakhs for the financial year ended March 31, 2024 to 3,271.64 lakhs for the financial year ended March 31, 2025, representing a growth of 14.98% on account of addition of new customers, repetitive orders from existing customers and new geographical expansion within the domestic markets. Domestic sales of finished goods had increased to 3,205.33 lakhs in F.Y. 2024-25 as compared to 2,782.26 lakhs in F.Y. 2023-24 on account of business expansion and additional orders executed. For further details please refer

Key Operational Performance Indicators under "Basis for Offer Price" chapter on page 120 of the Red Herring Prospectus.

Our total Other income increased by 5.78 lakhs, from 37.90 lakhs for the financial year ended March 31, 2024 to 43.68 lakhs for the financial year ended March 31, 2025, representing an Increase of 15.26% due to increase in Interest income from investment, Foreign Exchange Fluctuation Gain and Other Non-Operating Income.

Our Total Expenses excluding finance cost, depreciation and tax expenses was 2021.34 lakhs for the year ended March 31, 2025 as compared to 1940.24 Lakhs for the financial year March 31, 2024, representing increase of 4.18% due to the factors described below:

Our Cost of Materials Consumed is increased by 85.61 lakhs, from 1,618.87 lakhs for the financial year ended March 31, 2024 to 1,704.49 lakhs for the financial year ended March 31, 2025 due to increase in sales during the F.Y 24-25.

Our Net Change in Inventory of Finished Goods decreased by 29.78 lakhs, from (148.38) lakhs for the financial year ended March 31, 2024 to (118.59) lakhs for the financial year ended March 31, 2024.

Our Employee Benefit Expenses increased by 51.30 lakhs, from 107.87 lakhs for the financial year ended March 31, 2024, to 159.17 lakhs for the financial year ended March 31, 2025, representing an increase of 47.56 % due to increase in labour workforce due to increase in production.

Our Other Expenses decreased by (85.59) lakhs, from 361.87 lakhs for the financial year ended March 31, 2024, to 276.27 lakhs for the financial year ended March 31, 2025, which is 12.55% and 8.33% of the total revenue of respective years, representing an decrease of -23.65%. This increase in other expenses was primarily attributed to several factors, including decreasing in commission to 74.58 lakhs in F.Y. 2024-25 as compared to 173.70 lakhs in F.Y. 2023-24, Travell and Conveyance from 31.06 lakhs to 7.84 lakhs, Legal and Professional from 24.51 lakhs to 20.06 lakhs, Office Expense from 10.96 lakhs to 6.48 lakhs and Testing Charges from 11.05 lakhs to 1.66 lakhs.

Our Finance Cost is increased by 0.70 which was 41.91 lakhs for the year ended March 31, 2025 as compared to 41.21 Lakhs for the financial year March 31, 2024, due to increase in Bank Charges.

Our Depreciation and Amortization Expenses increased by 7.51 lakhs, from 86.07 lakhs for the financial year ended March 31, 2024, to 93.58 lakhs for the financial year ended March 31, 2025, representing an increase of 8.73% due to procurement of new machineries, heavy unit processors to increase production capacity and accordingly depreciation was charged on it.

Our Exceptional Items are Nil for the financial year ended March 31, 2025.

Our Profit/(Loss) before Tax increased by 342.64 lakhs, from 815.85 lakhs for the financial year ended March 31, 2024, to 1,158.49 lakhs for the financial year ended March 31, 2025, representing a growth of 42% on account of continuation of sales to customers with high profit margin along with lower cost of production and better utilisation of production facility. For further details please refer Key Operational Performance Indicators under "Basis for Offer Price" chapter on page 120 of the Red Herring Prospectus.

Our Tax expanses increased by 96.46 lakhs, from 205.45 lakhs for the financial year ended March 31, 2024, to 301.91 lakhs for the financial year ended March 31, 2025, on account of increase in sales and considerable reduction in cost of goods sold and handling costs, resulting to aim higher profitability.

Our Profit/(Loss) for the year increased by 246.18 lakhs, from 610.40 lakhs for the financial year ended March 31, 2024 to 856.58 lakhs for the financial year ended March 31, 2025 representing a growth of 40.33%, due to the reasons listed above and expansion of business resulting increase in Profit after tax.

Total Income: Our Total Income increased by 435.35 lakhs, from 2448.01 lakhs for the financial year ended March 31, 2023 to 2883.37 lakhs for the financial year ended March 31, 2024, due to the factors described below:

Our Revenue from operations increased by 447.22 lakhs, from 2398.25 lakhs for the financial year ended March 31, 2023 to 2845.47 lakhs for the financial year ended March 31, 2024, representing a growth of 18.65% on account of addition of new customers, repetitive orders from existing customers and new geographical expansion within the domestic markets. Domestic sales of finished goods had increased to 2782.26 lakhs in F.Y. 2023-24 as compared to 2278.45 lakhs in F.Y. 2022-23 on account of business expansion and additional orders executed. For further details please refer

Key Operational Performance Indicators under "Basis for Offer Price" chapter on page 120 of the Red Herring Prospectus.

Our total Other income decreased by 11.86 lakhs, from 49.76 lakhs for the financial year ended March 31, 2023, to 37.90 lakhs for the financial year ended March 31, 2024, representing an decrease of 23.84% due to increase in Interest income from investment and decrease in Profit on Sale of Plant, Property and Equipment including Intangible Assets, Foreign Exchange Fluctuation Gain and Other Non-Operating Income.

Our Total Expenses excluding finance cost, depreciation and tax expenses was 1940.24 lakhs for the year ended March 31, 2024 as compared to 1969.32 Lakhs for the financial year March 31, 2023, representing decrease of 1.48% due to the factors described below:

Our Cost of Materials Consumed is increased by 103.84 lakhs, from 1515.04 lakhs for the financial year ended March 31, 2023, to 1618.87 lakhs for the financial year ended March 31, 2024 due to increase in sales during the F.Y 23-24.

Our Net Change in Inventory of Finished Goods increased by 202.35 lakhs, from 53.98 lakhs for the financial year ended March 31, 2023 to (148.38) lakhs for the financial year ended March 31, 2024, due to increase in closing inventory of finished goods as the closing inventory as on 31.03.2023 was squeezed because of maximum supply of ready to sale goods taken place towards the years end. Regular Closing stock was restored in the FY 2023-24.

Our Employee Benefit Expenses increased by 9.48 lakhs, from 98.39 lakhs for the financial year ended March 31, 2023, to 107.87 lakhs for the financial year ended March 31, 2024, representing an increase of 9.64% due to increase in labour workforce due to increase in production.

Our Other Expenses increased by 59.95 lakhs, from 301.91 lakhs for the financial year ended March 31, 2023, to 361.87 lakhs for the financial year ended March 31, 2024, which is 12.55% and 12.33% of the total revenue of respective years, representing an increase of 19.86%. This increase in other expenses was primarily attributed to several factors, including increment in commission to 173.70 lakhs in F.Y. 2023-24 as compared to 99.85 lakhs in F.Y. 2022-23, Legal & Professional charges from 3.11 lakhs to 24.51 lakhs, Office expenses from 0.68 lakhs to 10.96 lakhs, testing charges from 1.00 lakhs to 11.05 lakhs and freight charges from 4.02 lakhs to 13.03 lakhs.

Our Finance Cost is decreased by 12.43 which was 41.21 lakhs for the year ended March 31, 2024 as compared to 53.64 Lakhs for the financial year March 31, 2023, due to closure of loans to reduce financial burden.

Our Depreciation and Amortization Expenses increased by 13.70 lakhs, from 72.37 lakhs for the financial year ended March 31, 2023, to 86.07 lakhs for the financial year ended March 31, 2024, representing an increase of 18.92% due to procurement of new machineries, heavy unit processors to increase production capacity and accordingly depreciation was charged on it.

Our Exceptional Items are Nil for the financial year ended March 31, 2024.

Our Profit/(Loss) before Tax increased by 463.17 lakhs, from 352.68 lakhs for the financial year ended March 31, 2023, to 815.85 lakhs for the financial year ended March 31, 2024, representing a growth of 131.33% on account of continuation of sales to customers with high profit margin along with lower cost of production and better utilisation of production facility. For further details please refer Key Operational Performance Indicators under "Basis for Offer Price" chapter on page 120 of the Red Herring Prospectus.

Our Tax expanses increased by 116.58 lakhs, from 88.87 lakhs for the financial year ended March 31, 2023, to 205.45 lakhs for the financial year ended March 31, 2024, on account of increase in sales and considerable reduction in cost of goods sold and handling costs, resulting to aim higher profitability.

Our Profit/(Loss) for the year increased by 346.59 lakhs, from 263.81 lakhs for the financial year ended March 31, 2023 to 610.40 lakhs for the financial year ended March 31, 2024 representing a growth of 131.38%, due to the reasons listed above and expansion of business resulting increase in Profit after tax.

The table below summaries our cash flows from our Restated Financial Statements for the year ended March 31, 2025, 2024 and 2023:

* Cash and Cash Equivalents include cash and bank balances in current and Cash credit accounts.

Our net cash used in operating activities was 33.55 Lakhs for the financial year ended March 31, 2025. Our operating profit before working capital changes was 1,286.37 lakhs which was primarily adjusted against an increase in Inventories by 211.98 Lakhs, increase in Trade Receivable by 759.84 Lakhs, increase in Short-Term loans & Advances by 62.51 Lakhs, increase in Other Current Assets by 9.71 Lakhs, increase in Trade Payables by 67.08 Lakhs, decrease in Other Current Liabilities by 7.17 Lakhs, which was further decreased by payment of Tax Paid during the Year of 268.69 Lakhs.

Our net cash generated from operating activities was 907.05 Lakhs for the financial year ended March 31, 2024. Our operating profit before working capital changes was 947.29 lakhs which was primarily adjusted against an increase in Inventories by 128.11 Lakhs, decrease in Trade Receivable by 200.90 Lakhs, decrease in Short-Term loans & Advances by 47.94 Lakhs, increase in Other Current Assets by 5.82 Lakhs, increase in Trade Payables by 145.73 Lakhs, decrease in Other Current Liabilities by 169.73 Lakhs, which was further decreased by payment of Tax Paid during the Year of 131.15 Lakhs.

Our net cash generated from operating activities was 99.06 Lakhs for the financial year ended March 31, 2023. Our operating profit before working capital changes was 492.64 lakhs which was primarily adjusted against an increase in Inventories by 101.92 Lakhs, increase in Trade Receivable by 452.13 Lakhs, decrease in Short-Term loans & Advances by 16.17 Lakhs, decrease in Other Current Assets by 16.98 Lakhs, increase in Trade Payables by 2.48 Lakhs, increase in Other Current Liabilities by 135.78, which was further decreased by payment of Tax Paid during the Year of 10.93 Lakhs.

Our net cash used in investing activities was 736.53 Lakhs for the financial year ended March 31, 2025. This was primarily due to Interest Income of 8.17 Lakhs, Net purchases of Property, Plant & Equipment amounting to 753.01 Lakhs, Decrease in Non-Current Assets by 8.31 Lakhs.

Our net cash used in investing activities was 536.32 Lakhs for the financial year ended March 31, 2024. This was primarily due to Interest Income of 4.69 Lakhs, Net purchases of Property, Plant & Equipment amounting to 200.23 Lakhs, Increase in Non-Current Assets of 340.78 Lakhs.

Our net cash used in investing activities was 168.78 Lakhs for the financial year ended March 31, 2023. This was primarily due to Interest Income of 2.28 Lakhs, Net purchases of Property, Plant & Equipment amounting to 147.44 Lakhs, increase in Non-Current Investments of 30.58 Lakhs, Increase in Non-Current Assets of 54.29 Lakhs, Sale of Fixed assets 0.04.

Net cash generated from financing activities for the period ended March 31, 2025, was 697.41 Lakhs, which was primarily due to Finance cost paid of 41.91 Lakhs, Proceeds of Short-Term Borrowings of 165.31 Lakhs, Proceeds of Long-Term Borrowings of 153.70 Lakhs, Proceeds from Issue of Share Capital of 420.32 Lakhs.

Net cash used in financing activities for the financial year ended March 31, 2024, was 293.43 Lakhs, which was primarily due to finance cost paid of 41.21 Lakhs, Repayment of Short-Term Borrowings of 124.35 Lakhs and Repayment of Long-Term Borrowings of 127.87 Lakhs.

Net cash generated from financing activities for the financial year ended March 31, 2023, was 67.02 Lakhs, which was primarily due to finance cost paid of 53.64 Lakhs, Net Proceeds from Short-Term Borrowings of 61.97 Lakhs and Net Proceeds of Long-Term Borrowings of 58.69 Lakhs.

The table below summaries key ratios in our Restated Financial Statements for the financial year ended March 31, 2025, 2024 and 2023 :

Fixed Asset Turnover Ratio: This is defined as revenue from operations divided by total fixed assets based on Financial Statements as Restated.

Current Ratio: This is defined as current assets divided by current liabilities, based on Financial Statements as Restated.

Debt Equity Ratio: This is defined as total debt divided by total shareholder funds. Total debt is the sum of long-term borrowings, short-term borrowings and current maturities of long-term debt based on Financial Statements as Restated.

Inventory Turnover Ratio: This is defined as average inventory divided by cost of goods sold based on Financial Statements as Restated.

As on March 31, 2025, the total outstanding borrowings of our Company is as below. For further details, refer to the chapter titled "Statement of Financial Indebtedness" beginning on page 237 of this Red Herring Prospectus.

Related party transactions with our promoters, directors and their entities and relatives primarily relate to purchase and sale of products and services. For further information, please refer to the chapter titled "Financial Statements as Restated" on page 222 of this Red Herring Prospectus.

We do not have any other off-balance sheet arrangements, derivative instruments or other relationships with any entity that have been established for the purposes of facilitating off-balance sheet arrangements.

Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk. We are exposed to interest rate risk, inflation and credit risk in the normal course of our business.

Our financial results are subject to changes in interest rates, which may affect our debt service obligations and our access to funds.

We are affected by inflation as it has an impact on the raw material cost, wages, etc. In line with changing inflation rates, we rework our margins so as to absorb the inflationary impact.

We are exposed to credit risk on monies owed to us by our customers. If our customers do not pay us promptly, or at all, we may have to make provisions for or write-off such amounts.

Except as disclosed in chapter titled "Financial Statements as Restated" beginning on page 222 of this Red Herring Prospectus, there have been no reservations, qualifications and adverse remarks. Details of Default, if any, including therein the Amount Involved, Duration of Default and Present Status, in Repayment of Statutory Dues or Repayment of Deposits or Repayment of Loans from any Bank or Financial Institution. Except as disclosed in chapter titled "Financial Statements as Restated" beginning on page 222 of this Red Herring Prospectus, there have been no defaults in payment of statutory dues and interest thereon or repayment of deposits and interest thereon or repayment of loans from any bank or financial institution and interest thereon by the Company.

There are no transactions or events, which in our best judgment, would be considered unusual or infrequent that have significantly affected operations of the Company.

There are no significant economic changes that materially affected Companys operations or are likely to affect income from continuing operations. Any slowdown in the growth of Indian economy or future volatility in global commodity prices, could affect the business including the future financial performance, shareholders funds and ability to implement strategy and the price of the Equity Shares.

Other than as disclosed in the chapter titled "Risk Factors" beginning on page 36 of this Red Herring Prospectus to our knowledge, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

According to our knowledge, there are no future relationship between cost and income that would be expected to have a material adverse impact on our operations and revenues. However, increase in the cost of the goods in which the Company deals, will affect the profitability of the Company. Further, the Company may not be able to pass on the increase in prices of the services to the customers in full and this can be offset through cost reduction.

The increase in revenue is by and large linked to increase in volume of all the activities carried out by the Company. f. Total turnover of each major industry segment in which the Issuer Company operates

Our Company is primarily engaged manufacturing and suppliers of GFRP and FRP products.

Relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 129 of this Red Herring Prospectus.

Except as disclosed elsewhere in the Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments.

h. Seasonality of the Business

The business of our company is not seasonal, hence there is no impact of seasonality on our turnover and operations. However, one of the industries that we cater to, i.e., construction industry slows down its operations typically during monsoon due to unfavourable whether conditions.

i. Any significant dependence on a single or few suppliers or customers

We depend on external suppliers for all the raw materials required and typically purchase raw materials on a purchase order basis and place such orders with them in advance based on our projected requirements. As a result, the success of our business is significantly dependent on maintaining good relationships with our suppliers. The absence of long-term supply contracts subjects us to risks such as price volatility caused by various factors viz. commodity market fluctuations, currency fluctuations, climatic and environmental conditions, transportation cost, changes in domestic regulatory changes and trade sanctions. If we cannot fully offset the increase in raw material prices with an increase in the prices for our products, we will experience lower profit margins, which in turn may have a material adverse effect on our results of operations, and financial condition and ultimately lead to a liquidity crunch. In the absence of such contracts, we are also exposed to the risk of unavailability of raw materials in desired quantities and qualities, in a timely manner.

j. Competitive Conditions

We face competition from existing and potential organized and unorganized competitors, which is common for any business. We have, over a period, developed certain competitive strengths which have been discussed in section titled "Our Business" beginning on page 142 of this Red Herring Prospectus.

* The Company has also availed Non fund based limit of 75.00 Lakhs of Bank Guarantee & 150.00 Lakhs of Letter of Credit and Credit exposure limit of 4.00 lakhs against Hypothecation of stock & book debts, Equitable mortgage of two storied building with RCC & Asbestors roofing factory shed constructed on plot of land measuring 99 decimals, R.S/L.R Dag no. 170 under mouza - Mukundapur, R.S & L.R Dag no. 718 & 719 under mouza ramdevpur at premises bibirhat Mahishgoat Road, Vill - Ramdevpur within the clear ambit of khagramuri Gram Panchayat JL no. 6 & 7, Touzi no. 99 & 14, Pargana Magura, PO - Bawali, RS - 49 & 89,PS & ADSR - Bishnupur, Dist. Parganas South in the name of ARC Insulation & Insulators Ltd. and Personal Guarantee of Manish Bajoria & Neelam Bajoria.