ARCL Organics Ltd Directors Report

TO THE MEMBERS,

Your directors have the pleasure of presenting the thirty-fourth annual report of your Company together with the audited financial statements for the financial year ended 31^st March 2026.

FINANCIAL SUMMARY OR HIGHLIGHTS OR THE PERFORMANCE OF THE COMPANY ( in Lacs)

	Standalone		Consolidated
Particulars	2025-26	2024-25	2025-26
Total Income	27625.30	25294.60	27625.30
Profit before Deprecation,
Finance Cost, Tax and	2856.53	2611.03	2857.91
Exceptional items
Depreciation and amortization expenses	602.16	520.92	602.16
Finance cost	560.70	486.96	496.21
Exceptional Items	54.80	NIL	54.80
Profit before Tax	1638.87	1603.14	1759.54
Less: Tax expenses	1170.57	428.04	1185.75
Profit for the year	468.30	1175.10	518.99
Other comprehensive income for the year	(43.41)	(38.38)	(43.41)
Total comprehensive income for the year	424.89	1136.71	475.58

DIVIDEND

Your directors do not recommend payment of dividend on equity shares.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION

FUND

The provisions of Section 125(2) of The Companies Act, 2013 do not apply as there was no dividend declared and paid in the last seven years.

MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL

POSITION OF THE COMPANY OCCURRED BETWEEN THE ENDS OF THE FINANCIAL

YEAR TO WHICH THIS FINANCIAL STATEMENT RELATE AND THE DATE OF THE REPORT

No such material changes occurred, which affected the financial position of the company.

SHARE CAPITAL

The paid-up capital of the company as on 31st March 2026 was INR 8 Crore. During the year under review the Company has not altered its share capital, consequently there has been no change in the capital structure since previous year.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As per the rule of the Companies Act, 2013 CSR is applicable on our company, and the Company has made an annual CSR contribution of Rs. 34 Lakhs to Rukmani Devi Shivchand Ram Foundation.

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis of financial condition and of operations of the Company for the year under review as required under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges is given in the part on Corporate Governance elsewhere in the Annual Report marked as "Annexure A".

FINANCE

1.1. PUBLIC DEPOSIT

The Company has not accepted any deposit falling within the ambit of Section 73 of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOAN AND INVESTMENT AND GUARANTEE SECURITY

The company has not given any loan under this section except making investments in, giving loans and guarantees to and providing securities in connection with loans to its wholly owned subsidiaries from time to time, in compliance with the applicable provisions of the Act.

INTERNAL FINANCIAL CONTROL

The Company has formulated and implemented comprehensive guidelines to establish and maintain robust internal financial controls. These controls are embedded across various levels of operations and encompass both manual processes and automated systems, including Enterprise Resource Planning (ERP) applications. The ERP systems are configured to ensure that all financial transactions are appropriately authorized, accurately recorded, and systematically reported. These controls are tailored to suit the specific nature of operations conducted at different business locations and across various functional domains, thereby ensuring relevance and effectiveness in internal governance. The framework is designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of financial statements. To ensure the adequacy and operational effectiveness of these internal financial controls, periodic evaluations are conducted. The Internal Auditors carry out detailed assessments as part of their audit plan, and their findings are regularly reviewed by the management and the Audit Committee. In addition, the Statutory Auditors independently evaluate the internal financial controls over financial reporting as part of their audit procedures.

SUBSIDIARY COMPANY, JOINT VENTURE & ASSOCIATE COMPANY

As on 31^st March 2026 your Company has 7 Wholly owned Subsidiary Companies: -

a) Yocnex Chemicals Private Limited

b) Suksess Chemicals Private Limited

c) Nocnex Chemicals Private Limited

d) Ocilim Advisory Services Private Limited

e) Wide Range Merchants Private Limited

f) Allied Maritime & Infra Engineering Private Limited

g) ARCL Petrochemicals Limited

In Compliance with IND AS-110, your Company has prepared its consolidated financial statements which forms part of its Annual Report. Pursuant to the provisions of Section 129(3) of Companies Act, 2013, the salient features of the subsidiary Company in the prescribed form AOC-1 is a part of the consolidated financial statements.

Your Company does not have any associates, holding or joint ventures as on 31st March, 2026.

YEAR IN RETROSPECT AND FUTURE OUTLOOK:

The specialty chemicals and broader chemicals industry continued to play a vital role in supporting key sectors such as agriculture, construction, automotive, electronics, pharmaceuticals, textiles and consumer goods during FY 2025 26. The industry operated in a dynamic environment characterised by geopolitical developments, supply-chain realignments, raw-material price volatility, evolving environmental regulations and changing global trade conditions. Despite these challenges, the sector demonstrated resilience, supported by steady demand from key end-user industries, increasing focus on value-added specialty chemicals, technological advancement and growing emphasis on sustainability.

Market Overview

The global specialty chemicals industry continued to benefit from demand for application-specific and high-performance chemical products. According to the latest sector analysis published by NITI Aayog, based on CRISIL Intelligence and company reports, the international specialty chemicals market was estimated at approximately 52,277 billion, with growth expected at a CAGR of around 4 6%. The domestic specialty chemicals market was estimated at approximately 3,064 billion, with a projected CAGR of 6 8% through FY 2030.

Regional Overview

Asia-Pacific continued to remain a key region for the specialty chemicals industry, supported by manufacturing expansion, infrastructure development and growing demand from end-user industries. Europe continued to focus on sustainable manufacturing, green chemistry, energy efficiency and regulatory compliance. North America remained an important market, supported by manufacturing investments, supply-chain diversification and demand for high-value specialty chemical products. Globally, chemical manufacturers continued to focus on higher-value, innovation-driven products, process efficiency, sustainability and application-specific solutions.

Outlook for FY 2026 27

The outlook for the specialty chemicals industry remains positive, although global uncertainties, raw-material price volatility, geopolitical developments and competitive pressures may continue to influence margins and demand. Indias specialty chemicals sector is expected to benefit from increasing domestic consumption, manufacturing investments, export opportunities, supply-chain diversification and the continued "China Plus One" strategy.

Indias relatively strong domestic demand, expanding manufacturing capabilities and policy support are expected to provide opportunities for Indian specialty chemical manufacturers to increase their global presence and move towards higher-value products. Accordingly, the Company remains focused on strengthening its manufacturing capabilities, improving operational efficiency, expanding its product portfolio and serving the evolving requirements of its customers across domestic and international markets.

LISTING OF THE SECURITIES OF THE COMPANY

Equity shares of the Company got listed on 29^th September 2023 on BSE and the listing Fees for the Financial year 2025 2026 have been paid on 30.04.2026 and 72.74% of the Equity Share Capital of the Company is in Dematerialization form.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 134(3)(c) of the Companies Act, 2013 with respect to Directors Responsibility Statement, it is hereby confirmed that:

(a) In the preparation of the Annual Accounts the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) The directors have selected such accounting policies and applied them consistently and made judgment 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 the profit and loss of the company for that period.

(c) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of this act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

(d) The directors have prepared the annual accounts on a going concern basis.

(e) The directors, have laid down internal financial control to be followed by the company and that such internal financial control are adequate and were operating effectively, and

(f) The directors have devised proper systems to ensure compliance with the provision of all applicable laws and that such system were adequate and operating effectively.

RELATED PARTY TRANSACTIONS

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are foreseen and are of repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are of audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a yearly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website www.arclorganics.com.

VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

The Company has a Vigil Mechanism to deal with instance of fraud and mismanagement, if any. The details of the Vigil Mechanism is explained in the Corporate Governance Report and also posted on the website of the Company www.arclorganics.com.

CORPORATE GOVERNANCE

ARCL Organics Ltd is committed to upholding the highest standards of corporate governance. The principles of good governance are deeply embedded in the Companys culture and extend to all stakeholders, influencing every business decision. The Company places paramount importance on accuracy in financial reporting, integrity, transparency, legal compliance in both letter and spirit, and the empowerment of individuals at all levels. The Corporate Governance Report, along with a Certificate from the Secretarial Auditors affirming compliance with the prescribed corporate governance norms, is annexed and forms an integral part of the Directors Report.

The Company makes a conscious and continuous effort to ensure that the core values articulated in the Codes of Conduct for Directors, Senior Management Personnel, and Employees are upheld across the organization. These values are not only documented but are also practiced in spirit, fostering a culture of accountability, ethical conduct, and responsible leadership at all levels.

ANNUAL RETURN

Pursuant to section 92(3) read with section 134(3)(a) of the Act, the Annual Return as on 31^st March 2025 may be accessed on the Companys website at the www.arclorganics.com.

DISCLOSURE OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,

PROHIBITION, REDRESSAL) ACT, 2013

In accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to provide for the effective enforcement of the basic human right of gender equality and guarantee against sexual harassment and abuse, more particularly against sexual harassment at work place, your Company has a Policy on Prevention of Sexual Harassment at the

Workplace duly approved by the Board of Directors and posted on the website of the Company www.arclorganics.com. During the year, no complaint was reported under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

DIRECTORS

Composition of the Board of Directors of your Company fulfills the criteria fixed by Regulation 17 (1) (a) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with fifty per cent of the Directors being Non-Executive Director with at least one-women independent director. Your Board comprises of (Six) directors out of which 3 (Three) are independent directors and it includes one-woman independent director. Mr. Mukesh Mundhra is Executive Director, retires by rotation in accordance with the requirements of Companies Act, 2013 and Articles of Association of the Company. He being eligible offers himself for reappointment. Brief resume of Mr. Mukesh Mundhra, nature of his expertise in specific functional areas, names of companies in which he holds directorships and/or memberships/chairmanships of committees of Board, his shareholdings are furnished in section on "Corporate Governance" elsewhere in the Annual Report. Further, as declared by them, none of the Directors of the Company is disqualified from being appointed as a Director, as specified in section 164(2) of the Companies Act, 2013 and rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules 2014 or is debarred or disqualified from being appointed or continuing as Director of companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

ANNUAL PERFORMANCE EVALUATION OF THE BOARD

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually, Key Managerial Personnel (KMP), Senior Management as well as the evaluation of the working of its Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Pursuant to the provisions of Section 134(3)(n) of the Companies Act, 2013, the Company has developed and implemented a Risk Management Policy for identifying, assessing, monitoring and mitigating key business and operational risks. The Board periodically reviews the risk management framework and the measures taken to mitigate such risks. In the opinion of the Board, there are no risks which may threaten the existence of the Company.

NOMINATION & REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration the contents of which are placed on the website of the Company at www.arclorganics.com.

MEETINGS

During the year four (04) Board Meetings and Four (04) Audit Committee Meetings were convened and held, the details of which are given in the "Corporate Governance Report". The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

AUDITORS

17.1. STATUTORY AUDITORS

The Member had appointed M/s L. B. Jha & Co, Chartered Accountants (Firm Registration No 301088E) as the statutory auditor of the Company at the 31^st Annual General Meeting, to hold office as such, for a term of 5 years till the conclusion of 36^th Annual General Meeting. M/s L.B. Jha & Co. continues to be the auditor of the Company for the financial year 2025 2026. The observations made in the Auditors Report are self-explanatory and therefore, do not call for any further comments under Section 134(3)(f) of the Act.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. KSN & Co, Practicing Company Secretaries, to conduct Secretarial Audit of the Company for the Financial year 2025 - 2026. The Secretarial Audit Report is annexed herewith as "Annexure B".

The Report does not contain any qualification, reservation or adverse remark.

AUDITORS QUALIFICATION

(i) STATUTORY AUDITORS QUALIFICATIONS

There are no qualifications. Qualifications contained in the Auditors Report if any have been dealt with in the Notes to financial statements and are self-explanatory.

SECRETARIAL AUDITORS QUALIFICATIONS

There are no qualifications. Qualifications contained in the Secretarial Auditors Report if any have been dealt with in the Notes to Form MR-3 and are self-explanatory.

FRAUD REPORTING

During the year under the review the Statutory Auditor, Secretarial Auditor, Cost Auditor and Internal Auditor has not reported any instances of fraud committed in the company by its directors or officers or employees to the Audit Committee under section 143(12) of the Companies Act, 2013, therefore no detail is required to be disclosed under Section 134 (3) (ca) of the Act.

COST AUDITORS

Pursuant to section 148 of the Act, the Board has appointed M/s. Amit Khetan & Co (Firm Registration No. - 102559), to conduct the audit of cost records of the Company for the Financial Year 2026 2027.

SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the Financial Year ended March 31, 2026, for all applicable compliances as per the Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report issued by M/s KSN & Co., Practicing Company Secretaries, has been submitted to the Stock Exchanges on 29.05.2026 which is within 60 days from the end of the Financial Year.

INTERNAL AUDITOR

The Board of Directors of the Company has appointed M/s. MIB & Co. as Internal Auditors to carry out extensive Internal Audit of the Company for the Financial Year ended March 31, 2026.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is given in "Annexure C".

TAXES AND DUTIES

Your Company has contributed Rs.38,43,16,229/-to the Central and State Exchequer by way of Taxes and duties.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE

EARNING AND OUTGO

Information as required under section 134(3)(m) of the companies act 2013 read with Rule 8(3) of Companies (Accounts) rules, 2014):

Conservation of Energy

Energy Conservation Measures Taken:

Improvisation and continuous monitoring of Power Factor and replacement of weak capacitors by conducting periodical checking of capacitors.

Installation of isolating valve in main airline for preventing air loss.

The Company has relentlessly aimed at optimising the use of energy resources and taken adequate measures to avoid wastage and use latest technology and equipments.

Impact of the above Measures:

Opportunity to compete in International Markets

Technology up-gradation

Development of new designs in products

Attaining accreditation of our products from Internationally recognized Organizations

Total Energy Consumption and Energy Consumption per Unit of Production:

Power & Fuel Consumption

I. Electricity	Values
Purchased Units (KWH in lacs)	85.29
Total Amount (in Lacs)	731.50
Monthly average (Rs. In Lacs)	60.95
Rate (Rs/KWH)	8.57
II Fuel Consumption
LDO/Fuel Consumption (in KL)	765.56
Total Amount (Rs. In Lacs)	258.44
Monthly average (Rs. Lacs)	21.53
Rate (Rs/Lacs)	56.36

Technology Absorption:

Research and Development (R & D):

The current success, and our future success, is largely dependent on our ability to develop new products and processes and to improve the features of existing products. The research activity includes-

a) Low emission formaldehyde E0/E1 in plywood application.

b) Slow-Release Nitrogen crude protein in cattle field application, M PRO.

c) Import Substitution cross linker HMMM.

Expenditure on R & D:

No. Particulars	2025-26 (Rs.)
I. Capital Expenses	1949361
II. Revenue Expenses	1,04,63,750
III. Total	1,24,13,111

Government recognition of our R & D

Its a matter of great pride that company got recognition by Government of India approving our in-house laboratory as DSIR certified. There are many funds received from all over the world with Government of India for R&D works. They gave these funds to DSIR recognized laboratory only. This will give us an opportunity to get such funds and do real great R&D, helping world and society with innovations. We are pretty sure under the leadership of our talented R&D chief, ARCL will achieve lot of recognition & do real innovative research benefiting the industry & society.

Foreign Exchange Earnings and Outgo:

a) Expenditure in Foreign Currency - Rs. 58,11,431/-

b) Earnings in Foreign Currency- Rs. 103,48,73,939/-

INDEBTEDNESS OF THE COMPANY INCLUDING INTEREST OUTSTANDING / ACCRUED BUT NOT DUE FOR PAYMENT

(Rs. In lakhs)

Particulars	Secured Loan Excluding Deposits	Unsecured Loans	Deposits	Total Indebtedness
Indebtedness at the beginning of the financial year
i) Principal Amount	1080.41	2429.21		3509.62
ii) Interest due but not paid	-	-		- -
iii) Interest accrued but not due	-	-		- -
Total (i+ii+iii)	1080.41	2429.21	.00	3509.62
Change in Indebtedness during the financial year
Additions	5382.88	1798.33		7181.21
Reduction	-968.06	-1760.16		-2728.22
Net Change	4414.82	38.17	.00	4452.99
Indebtedness at the end of the financial year	5495.22	2467.38	.00	7962.61
i) Principal Amount	-	-	-	-
ii) Interest due but not paid	-	-	-	-
iii) Interest accrued but not due	-	-	-	-
Total (i+ii+iii)	5495.22	2467.38	.00	7962.61

MATERNITY BENEFIT

The Company continues to comply with the provisions of the Maternity Benefit Act, 1961. Eligible female employees are provided maternity leave and benefits as per statutory norms. Maternity leave of up to 26 weeks is granted for the first two children and 12 weeks for subsequent childbirths, along with full pay during the leave period. The Company remains committed to supporting the health and well-being of its employees and fostering a conducive work environment for working mothers.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by any Regulator, Court or Tribunal impacting the going concern status or future operations of the Company. Further, pursuant to Rule 8(5)(xi) and (xii) of the Companies (Accounts) Rules, 2014, no one-time settlement with any Bank or Financial Institution was entered into and no application was made or proceeding was pending against the Company under the Insolvency and Bankruptcy Code, 2016 during the year. Accordingly, no valuation difference disclosure arises.

ACKNOWLEDGEMENTS

Your directors express their sincere appreciation of the co-operation and assistance received from the shareholders, bankers, regulatory bodies and other business constituents during the year under review.

Regd. Office:

Rampur Budge Budge Trunk Road, Kolkata 700 141 12^th Day of August 2026

For and on behalf of the Board of Directors

Suraj Ratan Mundhra

Chairman and Managing Director

(DIN No. 00681223)