Artson Engineering Ltd Management Discussions

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements based on the currently held beliefs and assumptions of the Management of the Company, which are expressed in good faith, and in its opinion and judgment, are reasonable. For this purpose, forward looking statements mean a statements, remarks, or forecasts that address activities, events, conditions, or developments that the Company expects or anticipates which may occur in the future. Because of the inherent risks and uncertainties in the social and economic scenarios, the actual events, results, or performances may differ materially and substantially from those indicated by these statements. Artson Limited (the Company) disclaims any obligation to update these forward-looking statements to reflect future events or developments.

FY 25 OUTLOOK

India has cemented its position as the worlds fourth-largest economy and continues to be the fastest-growing major economy globally. Real GDP growth in FY 2024-25 is estimated at a strong 6.5%, with a similar trajectory anticipated for the coming years. This robust expansion is fuelled by a potent combination of domestic reforms, strong internal demand, and strategic government initiatives. Key positive trends include rising exports, a surge in digital transactions, and effective inflation containment. The governments commitment to infrastructure development and high-tech manufacturing, evident in projects like Bharatmala and the Production Linked Incentive (PLI) schemes, is further bolstering the nations economic potential. Indias vast domestic market and government support for manufacturing are attracting foreign firms, positioning the nation as a key destination for diversification.

Opportunities:

• Growing Domestic Market: Indias large and expanding domestic market provides ample opportunities.

• Government Support for Manufacturing: Production Linked Incentive (PLI) schemes and infrastructure development projects create a favourable environment for domestic and foreign manufacturing firms

• Diversification: Indias attractiveness as an alternative manufacturing hub provides opportunities for firms seeking to diversify their supply chains.

Threats:

• Global Economic Slowdown: Global trade tensions and a sluggish global economic outlook pose potential headwinds for Indias growth.

• Commodity Price Fluctuations: Vulnerability to fluctuations in global commodity prices, especially crude oil, could impact inflation and economic stability.

• Slowdown in Private Investment: Private sector investment has been cautious due to global trade uncertainties.

• Skill Gaps and Labor Market Challenges: Potential skill gaps and challenges in the labour market could hinder Indias long-term growth prospects

A. Manufacturing and Fabrication:

India is strategically positioning itself as a global manufacturing leader, driven by comprehensive policy reforms, including initiatives to empower MSMEs and promote sustainability. The expansion of Production Linked Incentive (PLI) schemes and regulatory simplification, coupled with significant growth within the sector.

In anticipation of this robust industrial expansion, particularly within large process industries such as fertilizer, steel, and power, the Company projects substantial demand for process plant equipment and heavy structural fabrication. With its established manufacturing facility in Nashik and a new multi-modal facility in Parli, the Company is well-equipped to meet the evolving requirements of this growing sector. The Nashik plant has a proven track record (PTR) demonstrated by its successful production of notable and specialized pressure vessels, opening avenues for similar opportunities.

B. Ship-Building Industry:

The Indian shipbuilding and ship repair sector is embarking on a significant leap in its global standing. Currently ranked 20^th, the government, through initiatives like Maritime India Vision 2030 and Amrit Kaal Vision 2047, plans to elevate Indias ranking to the top 10 by 2030 and further to the top 5 by 2047. This strategic drive is projected to unlock a market exceeding 20 lakh crore by 2047, primarily by focusing on domestic ship construction.

This growth is being facilitated by several key government initiatives:

• Maritime Development Fund (MDF): A corpus of 25,000 crores has been proposed to provide financial support and enhance competition within the maritime industry.

• Port Infrastructure Investment: An allocation of 1.25 lakh crores has been announced for the construction and upgrading of Indian ports.

• Shipbuilding Clusters: Plans are underway to establish shipbuilding clusters, potentially involving partnerships with leading global players, to enhance capabilities and skill sets within the sector.

• Financial Assistance and Incentives: The Shipbuilding Financial Assistance Policy (SBFAP), has been updated to encourage more participation and to include provisions for green fuels and electric / hybrid propulsion.

• Focus on Indigenous Shipbuilding: Policies are being enacted to prioritize indigenous shipbuilding, including standard tug designs for major ports to be built in Indian shipyards.

By aligning with the governments ambitious vision and leveraging its established capabilities, your Company is well-positioned to capitalize on the growth opportunities within Indias burgeoning shipbuilding and ship repair sector. This strategy supports not only your Companys expansion but also contributes to Indias journey towards becoming a global maritime powerhouse.

C. Tankage & EPC:

The growth in both the petroleum and chemical industries translates directly into increased demand for storage and related infrastructure. The liquid storage tank market is witnessing investments across various sectors, including oil and gas, chemicals, food and beverage, pharmaceuticals, and water treatment. Considering this, your Companys business vertical specializing in Tankages and EPC is well-positioned for sustained growth. Your proven experience in executing projects involving the construction of various types and sizes of hydrocarbon and chemical storage tanks, including smaller-scale EPC projects, provides a strong foundation.

By strategically aligning your expertise with the growth drivers of these key sectors and embracing technological advancements, your Company can solidify its position as a leading provider of tankage / EPC services in Indias evolving energy and chemical landscape.

D. Product Development:

Your Company is actively seeking to leverage its extensive experience and a rich legacy to pursue opportunities within Indias dynamic industrial landscape. This includes developing products related to offshore exploration, container manufacturing (standardized and refrigerated), the broader maritime industries, and oil and gas storage systems and accessories. A dedicated team is proposed to be established to proactively explore these prospects.

E. Green Hydrogen:

The Company sees a huge potential in the Green Energy Sector by providing containerised and skid equipment for BoP. Considering the expected demand and with encouragement from the GoI, the Company exploring for tie ups to seek technology in this sector In view of above encouraging scenario, the Company will focus on opportunities based on its strengths and past track records for sustainable and profitable growth towards stronger balance sheet in coming years.

RISK MANAGEMENT

The Companys success hinges on effectively navigating significant risk areas, including input cost pressures, rising wages, skilled manpower shortages, potential contract execution delays, and the cascading impact on cash flows. To proactively manage these challenges and safeguard stakeholder interests, the Company employs a robust Project Risk Management (PRM) framework. This framework ensures that potential risks are carefully evaluated and aligned with expected returns before any financial commitments are made.

The contracts & commercial cell plays a crucial role in identifying risks that could adversely affect project costs & timelines and its mitigation. Concurrently, the Operations and Business Development teams mitigate risks by exercising prudence in bidding processes. This includes meticulously assessing potential risks inherent in project execution and clearly defining business terms with clients before project commencement. Furthermore, the Boards Project Review Committee provides a vital oversight function by periodically monitoring, evaluating, and reviewing risk mitigation strategies in close coordination with relevant departments. This multi-layered approach ensures a comprehensive and proactive stance toward risk management, aiming to minimize potential disruptions and maintain financial stability.

ENVIRONMENTAL PROTECTION AND SUSTAINABILITY

As the Company operates in an increasingly resource-constrained world, being environmentally conscious and efficient are keys to its operations. The Company has a Corporate Environment, Health, Safety and Quality (EHSQ) Policy to articulate, guide, and adopt an integrated approach towards implementing EHSQ objectives and the Company remains committed towards the said policy. These established systems certified by reputed certifying agencies have helped to monitor and manage our operations systematically, safely and in an environment- friendly manner. The Company continues to abide by regulations concerning the environment by allocating adequate investment and resources on a continuous basis to adopt and implement pollution control measures. Our continuous endeavour to go beyond compliance and conserve natural resources helps to march towards attaining excellence in environmental management and efficient and sustainable operations as well. The Company has successfully achieved 4 million safe man-hours at GRSE site, Kolkata; and 1.5 million safe man hours at the P2 Project site. During the year under review, there were Zero LTIs and Fatality.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATIONAL PERFORMANCE

The financial position as on 31^st March 2025, and performance of the Company during the FY ended on that date is tabulated hereunder:

Overview of our results of operations:

		( in Lakhs)
Particulars	2024-25	2023-24
Gross Turnover (including Other Income)	13301.89	12877.55
Profit before Interest and Depreciation (EBIDTA)	1697.34	1463.98
Finance Charges	977.66	1029.87
Depreciation and Amortization	239.90	203.73
Total Expenditure	12822.11	12647.17
Net Profit/(Loss) Before Tax (PBT)	479.78	230.38
Less: Tax expense	131.35	(374.82)
Net Profit/(Loss)After Tax (PAT)	348.43	605.20
Other Comprehensive Income	-9.63	3.51
Total Comprehensive income	338.80	608.71
Balance of Profit brought forward	(277.68)	(1888.16)
Balance available for appropriation	99.16	(277.68)
Surplus/(deficit) carried to Balance Sheet	99.16	(277.68)
Total Income	13301.89	12877.55
EBITDA	1697.34	1463.98
EBITDA as % of total Income	12.76%	11.37%
PAT	348.43	605.20
PAT as % of total Income	2.62%	4.70%

In FY 2025, Company registered a total revenue from operation of Rs. 11,355.34 lakhs (FY 2024: Rs. 12812.04 lakhs), slight decrease over previous year.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Companys internal control system is commensurate with the nature of its business and the size and complexity of its operations, which provide among other things, reasonable assurance of authorization, recording and reporting of the transactions of its operations in all material aspects. The internal control system is managed through continuous internal audit by outside professionals, duly supported by respective teams. The audit is carried out through an internal audit plan, which is reviewed in consultation with the Audit Committee, which reviews the adequacy of internal control checks in the system across all significant areas of the Companys operations. The Audit Committee also meets the Companys Statutory Auditors to ascertain their views on the financial statements, financial reporting system, internal control system and compliance to accounting policies and procedures. Significant observations made in the internal audit reports on internal control process improvements and the status on implementation of recommended measures are presented to and reviewed by the Audit Committee and the Board of Directors. The Company also has a documented comprehensive internal control manual for all the major processes, viz, payroll, contract labour, human resources, procurement and purchase of material, fixed asset, inventory control, cash management and foreign exchange transactions, etc., which have been designed to provide reasonable assurance with regard to recording and providing reliable financial information, complying with the applicable statutes, safeguarding of assets from unauthorized use or losses, authorization of transactions and adherence to corporate policies.

HUMAN RESOURCES & INDUSTRIAL RELATIONS

The Human Resources (HR) strategy at the Company is focused on introducing a performance-driven atmosphere in the Company, where innovation is encouraged, performance is rewarded, and employees are motivated to realize the Companys goals. The Companys HR department co-creates all HR strategies along with the Senior Management and the Board to influence change, attract talent and build capabilities. The HR department responds to varied human resources needs of the Companys business to enable the human strategic advantage.

TALENT DEVELOPMENT AND EMPLOYEE ENGAGEMENT

At the organizational level, 4 training programs were conducted, engaging 149 employees and accounting for 256 training man-days. These programs focused on key operational and safety topics including Safe Handling of Material, Fire and Safety Training, Power BI and Hazard Identification & Risk Assessment.

In addition to technical trainings, the Company emphasized holistic employee wellbeing by organizing 4 awareness webinars on essential health topics: Cardiac Awareness, Mental Health & Emotional Wellbeing, Importance of Ergonomics in the Workplace, and Managing Emergencies Without a Clinician.

Beyond these centralized initiatives, regular location-specific training sessions were carried out by the HSE team across sites and facilities. These sessions were tailored to address local operational risks, reinforce safety protocols, and promote a culture of proactive compliance and awareness. This multi-tiered approach to training and engagement helped ensure that employees across locations remained aligned with Companys safety standards, technical proficiency expectations & wellbeing goals.

TALENT DIVERSITY

The Company aims to create healthy talent and gender diversity. The Companys human capital comprises of 155 employees (including 18 women) across its manufacturing units and at various construction sites. 50% of the Companys human resources is below 35 years. The Company can maintain an average employee tenure of 4.38 years with overall average experience of 12.55 years and the annual attrition rate has been 34% in FY25. The Companys has currently employed more than 68.3% of technically qualified workforce.

Registered Office	By Order of the Board
14th Floor, Cignus, Plot No. 71A, Kailash Nagar, Mayur Nagar	For Artson Limited
Passpoli, Powai, Mumbai - 400087, Maharashtra
Phone No: +91 40 6601 8194; Email: investors@artson.net
CIN: L27290MH1978PLC020644; Website: www.artson.net
Date: 22nd July 2025	Vinayak Pai
Place: Mumbai	Chairman
	DIN: 03637894