ATC Energies System Ltd Management Discussions

1. PRIMARY BUSINESS OF THE COMPANY

Our Company was incorporated as ATC Energies System Private Limited on September 2, 2020, under the Companies 3

Act, 2013, pursuant to a Certificate of Incorporation dated

September 5, 2020, issued by the Registrar of Companies (RoC), Mumbai, having CIN: U31909MH2020PTC345131.

Subsequently, the Company was converted from a private limited company to a public limited company, pursuant to a special resolution passed by the shareholders on February 21, 2024. The name of the Company was changed from ATC Energies System Private Limited to ATC Energies

System Limited vide a fresh Certificate of Incorporation dated May 1, 2024, issued by the RoC, Mumbai. The

Corporate Identification Number (CIN) of our Company is

L31909MH2020PLC345131.

Further, the Company issued shares pursuant to its Initial

Public Offer (IPO) and was listed on the Emerge Platform of

NSE Limited on April 2, 2025.

The Company is engaged in the business of manufacturing, assembling, processing, producing, supplying, repairing, purchasing, selling, importing, exporting, making, fabricating, and dealing in all types of batteries, including stationary batteries, lithium-ion battery packs, starting batteries, storage batteries, traction batteries, alkaline batteries, dry batteries, button batteries, solar power batteries, mini batteries, and batteries for emergency lights, as well as dry cells and other batteries used or required for industrial, transport, commercial, and consumer purposes. The Company also deals in their components, parts, ingredients, substances, systems, consumable accessories, and fittings, including but not limited to battery plates, cases, wires, knobs, accessories, distilled water, armatures and armature windings, electrical wires and accessories, electrical motors, generators, accumulators, battery chargers, relays, transformers, auto transformers, electrical switches, plugs, sockets, circuit breakers, actuators, connectors, measuring instruments, multimeters, power adapters, networking cables, POS and ATM machine accessories, multi-testers, electrical connectors, and automobile parts.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The lithium-ion battery industry is experiencing rapid growth, revolutionizing power sources from electric vehicles to consumer electronics. The global market for these batteries surged to an estimated USD 64.8 billion in 2023 from USD

40 billion in 2019, reflecting a compound annual growth rate (CAGR) of 13%. The market is projected to continue its exponential expansion, reaching over USD 146 billion by 2028, with a projected CAGR of 17.6%. This impressive growth trajectory highlights the critical role of lithium-ion batteries in advancing the clean energy transition and shaping the future of energy.

3. COMPETITIVE STRENGTHS

1. Diversified product portfolio catering to various industries / end use applications offering diverse range of solutions

Our diversified and comprehensive product portfolio is a critical strength of our business. While we commenced our business producing mini size batteries for the Banking Industry, we have established ourselves as a player providing all sizes of battery cells for a wide range of industry and business end use applications. We have the ability to curate and customise products which can be tailored according to the specific needs and standards of our customers. This adaptability not only enhances market resilience against economic fluctuations in any single industry but also positions us as a versatile and reliable supplier, capable of innovating and meeting the evolving technological needs of diverse customers.

Our battery-size agnostic and industry / end use application agonistic approach truly make us available for all industrial as well as domestic applications. Moreover, the ability to serve a wide range of applications underscores the companys expertise and leadership in lithium battery technology, fostering stronger customer relationships and opening up new growth opportunities across different market segments.

2. Focus on quality and performance

A strong focus on quality and performance of our product offerings is a crucial strength for our company.

Emphasizing high standards in product quality ensures reliability, safety, and superior performance, which are essential in critical applications such as electric vehicles, medical devices, and renewable energy storage. Our stringent quality control measures and protocols at each critical step in our processes has not only minimized the risk of product failures and costly recalls but also built consumer trust and loyalty.

Since inception our Company has served 250+ customers both corporate and retail. With a combination of our product quality, sales and marketing efforts as well as customer connect, we are actively creating a strong brand and product recall. We started our company producing mini battery cells with end use application for POS & ATM machines for various Banks and clocked a revenue from them of 3,339.90 lakhs during year ended March 31, 2022 which has marginally decreased to 2,962.71 lakhs for Fiscal ended March 31, 2024, and 2,651.44 lakhs for Fiscal ended March

31, 2025. This has been a result of good product quality and strong brand recall value. Such demonstrations have helped us acquire new customers and retain existing ones. We believe that this reputation for quality and reliability differentiates us from competitors enabling us to command premium pricing and maintain a strong market position.

3. Experienced Leadership and Workforce Team

Our Promoter, Sandeep Gangabishan Bajoria has 25 years of experience as an entrepreneur and has been instrumental in driving our growth since inception of our business. Experienced leadership and a skilled workforce is of paramount importance to our existence. Our promoter, is a veteran in this space and brings strategic vision, industry insights, and robust decision-making capabilities, driving the company towards sustained growth and innovation. His expertise helps in navigating market complexities, fostering partnerships, and identifying new business opportunities. Our knowledgeable and proficient workforce has ensured high-quality production, efficient operations, and continuous improvement in technology and processes. This combined expertise enhances the companys ability to develop cutting-edge products, respond adeptly to market demands, and maintain a competitive edge. The vision and foresight of our management enables us to explore and seize new opportunities and accordingly position ourselves to introduce new products to capitalize on the growth opportunities in the sector.

4. Stable financial performance

We have demonstrated stable financial performance over the years with growth in terms of revenues and profitability.

Over the last three years, we have focused our attention towards expanding our product portfolio which has resulted in an increase in our revenue from operations and profits. Our revenue from operations has grown from 3,648.30 lakhs in Fiscal 2022 to 5,131.59 lakhs in Fiscal 2025. Our profit has marginally decreased from Rs 1188.90 lakhs in

Fiscal 2022 to Rs 1138.08 lakhs in Fiscal 2025. The stable growth in revenue, profits, ROCE enable us to fund our strategic initiatives and pursue opportunities for growth.

4. GROWTH STRATEGIES

1. Expand scale of business operations and improving operational efficiencies

Our primary focus is to improve our operational efficiency at our manufacturing facilities which will lead to cost minimization and better resource utilization.

Higher operational efficiency results in greater production volumes and higher sales, and therefore allows us to spread fixed costs over the increased sales quantity, thereby increasing profit margins of the Company. This includes investing in automation, new technology, and better equipment to upgrade our products and improve quality based on what customers want. We strive to achieve economies of scale to gain increased negotiating power on procurement and to realize cost savings through centralized deployment and management of production and other support functions. Attract high-value enterprise clients through targeted marketing, enhanced service offerings, and value-driven engagement strategies. Adapt and expand services proactively to meet evolving business needs, capture new verticals, and drive sustained revenue growth.

The lithium-ion industry demand is witnessing healthy demand growth in India backed by rising usage in diversified end user industry. The countrys cumulative lithium-ion battery market in India has grown from 2.9 GWh in 2018 to 22.4 GWh in 2021 and is estimated to have grown further to 49.8 GWh in 2023. Between 2020-23, the market demand is estimated to have grown by 47% CAGR. This expansion is driven by advancements in battery technology, heightened investment in renewable energy infrastructure, and supportive government policies promoting green energy and sustainable transportation. Leading companies in the market are concentrating on increasing production capacity, improving battery efficiency, and ensuring sustainable supply chains to meet the growing demand while addressing environmental and resource-related challenges (Source: Company commissioned and paid Dun & Bradstreet Report).

We believe that growth in the emerging areas of application such as electric vehicles, robotics and automation, drones, medical devices, and Internet of Things, will lead to a growing demand for lithium-ion batteries. (Emerging areas of application have been sourced from "Industry Research Report on Lithium Ion Battery" from Dun & Bradstreet) We believe that expansion in scale of business operations and improving operational efficiencies will result in consistency in our operational margin, which was 33.74%, 30.32% and 35.61% for the Fiscals ended March 31, 2025, March 31, 2024 and March 31, 2023, respectively.

2. Expand geographical footprint

Since commencing our operations, we have primarily supplied our products in the states of Maharashtra, Haryana and Tamil Nadu. We gradually intend to expand our operations to multiple locations to enhance our market presence. We plan to continue our strategy of diversifying and expanding our presence in these regions for the growth of our business. We are selective in expanding to new locations and look at new geographies where we can deliver quality services without experiencing significant delays and interruptions due of local considerations. Through further diversification of our operations geographically, we hope to hedge against risks of operations in only specific areas and protection from fluctuations resulting from business concentration in limited geographical areas. By establishing our operations in key regions, we aim to tap into new markets and reduce transportation costs and delivery lead times.

This approach will help us leverage local resources and talent, which could resultantly drive innovation and operational improvements. We will look to build partnerships with local suppliers to ensure a reliable supply chain and robust support network.

3. New inclusions in companys product portfolio

We plan to expand and diversify our products portfolio to address the diverse needs of our customer and stay ahead in the industry. We are working on high-capacity lithium batteries to support applications requiring extended battery life and higher power output. We are also working on new eco-friendly battery options align with our sustainability goals, featuring recyclable materials and green assembling processes.

Our modular battery packs will provide customizable and scalable solutions for various applications, from consumer electronics to industrial machinery. This strategic expansion of our product portfolio will enable us to serve a broader range of industries and applications, ensuring sustained growth in the lithium battery sector.

4. Widening key customer base by focusing on marketing

We plan to widen our corporate and retail customer base that will drive our growth and market presence. We will implement targeted marketing campaigns to reach new industries and sectors that can benefit from offerings. By leveraging data analytics, we can identify potential customers and tailor our messaging to address their specific needs and pain points.

We are enhancing our digital presence through SEO optimization, social media engagement, and content marketing, ensuring that our expertise and innovative products are visible to a wider audience. Participating in industry trade shows and conferences allows us to showcase our technology and build direct relationships with potential clients. This marketing strategy will enable us to connect with new markets and fuel our expansion.

5. OPPORTUNITIES

Tracing the global growth trend, the lithium-ion battery is witnessing healthy demand growth in domestic market too. In 2022, LIB demand in India was estimated at 11GWH. The projected annual demand for Li-ion batteries (LIBs) in India expected grow to 160.3 GWh by 2030, taking the total cumulative demand to 600 GWh by 2030.

The largest demand between 2022-30 is projected to come from EV at 381.4 GWh (64%), followed by stationary storage (grid scale) at 134.2GWh (22%), BTM at 47.3GWh (8%) and consumer electronic at 36.4 GWh (6%).

The increasing demand scenario underscores the critical need for the Indian battery manufacturing industry to secure its supply chain and enhance domestic value addition to meet the projected demand. The anticipated growth in LIB demand presents substantial economic opportunities, including job creation and technological advancements, while aligning with Indias goals for a low-carbon economy. Strategic developments in the battery manufacturing sector are essential to capitalize on these opportunities and mitigate potential trade imbalances resulting from import dependencies. Overall, the substantial increase in LIB demand across various sectors, particularly in grid storage and electric mobility, highlights the transformative impact of battery technology on Indias energy future. (Source: Company commissioned and paid Dun & Bradstreet Report).

6. INDUSTRY OUTLOOK

Indias lithium-ion battery market has experienced significant growth, expanding from 2.9 GWh in 2018 to 49.8 GWh in 2023, reflecting a compound annual growth rate

(CAGR) of 47%. This growth is driven by advancements in battery technology, renewable energy adoption, and supportive government policies. The market is projected to reach 160.3 GWh annually by 2030, with a cumulative demand of 600 GWh between 2022 and 2030.

In value terms, the Indian lithium-ion battery market was estimated at approximately USD 2 billion and is expected to grow to USD 6 billion by 2026 and further to USD 15 billion by 2030.

The average price for a lithium-ion battery pack has decreased from USD 780 per kWh in 2013 to USD 139 per kWh in 2023, with projections to decline further to USD 100 per kWh by 2026 and USD 73 per kWh by 2030.

Government initiatives such as the Production Linked Incentive (PLI) scheme and the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme are expected to bolster domestic manufacturing capabilities and reduce import dependency.

ATC Energies System Limited is well-positioned to capitalize on these industry trends, offering a range of lithium-ion battery solutions tailored to various applications, including electric vehicles, renewable energy systems, and industrial automation. The companys focus on innovation, quality, and sustainability aligns with the growing demand for efficient energy storage solutions in India.

7. RISKS AND CONCERNS i. The lithium battery industry is vulnerable to supply chain disruptions caused by its reliance on a few critical raw materials like lithium, nickel, cobalt, graphite, and manganese, which, if disrupted, can lead to shortages and higher costs and adversely impact our profitability. ii. We do not have long term contracts or exclusive arrangements with any of our suppliers, and a significant increase in the cost of, or a shortfall in the availability, or deterioration in the quality, of such input materials could have an adverse effect on our business and results of operations.

iii. We are dependent on, and derive a substantial portion of our revenue from, two customers, namely M/s Agarwal Trading Company and M/s Hind Industries - both categorised as "Promoter Group entities". Reduction in orders from these customers could have a material adverse effect on our business, results of operations and financial condition. The dependency on these two customers may lead to real or potential conflicts of interest for our Company iv. We are significantly reliant on the banking industry for sale of our products. v. Heavy dependence on raw material imports from China poses a substantial risk for us, as disruptions due to political tensions or trade disputes can lead to supply chain interruptions, quality control issues, and heightened competition, which could adversely affect our business, results of operations and financial condition.

8. INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY 9.

The Company has robust and comprehensive Internal Financial Control system commensurate with the size scale and complexity of its operations. The system encompasses the major processes to ensure reliability of financial reporting, Compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources.

The policies and procedures adopted by the company to ensures the orderly and efficient conduct of its business and adherence to the companys policies, prevention and detection of frauds and errors, accuracy and completeness of the records and the timely preparation of reliable financial information.

The Internal Auditors and the Management continuously monitors the efficacy of Internal Financial Control system with the objective of providing to the Audit Committee and the Board of Directors, an effectiveness of the organizations risk management with regard to the Internal Financial Control system.

Audit Committee meets regularly to review reports submitted by the Internal Auditors. The Audit Committee also meet the Companys Statutory Auditors to ascertain their views on the financial statement, including the financial reporting system and compliance to accounting policies and procedures followed by the Company.

9. SEGMENT–WISE OR PRODUCT-WISE PERFORMANCE (SIZE–WISE PERFORMANCE)

Revenues based on Battery Size

The data given below shows our revenues from the sale of lithium-ion batteries of different sizes since inception. While we began with mini size, we have increased our product portfolio to include small, medium and large sizes as well.

Battery Size*	Fiscal 2025		Fiscal 2024		Fiscal 2023		Fiscal 2022
	in lakhs	%	in lakhs	%	in lakhs	%	in lakhs	%
Mini	3336.30	65.02	3,283.41	64%	2,345.16	71%	3,340.05	92%
Small	686.18	13.37	813.18	16%	137.18	4%	28.16	1%
Medium	480.18	9.36	973.65	19%	811.95	25%	244.88	7%
Large	219.20	4.27	50.13	1%	19.24	1%	35.21	1%
Service Chgs & Allied Product	409.73	7.98	-	-	-	-	-	-
Total	5131.59	100%	5,120.37	100%	3,313.54	100%	3,648.30	100%

*Mini – Upto 100Wh; Small- 101Wh – 750Wh; Medium- 751Wh – 2000Wh; Large- 2001Wh & above.

10. DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respect with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 2013.

The financial statements have been prepared on an accrual basis and under the historical cost convention.

11. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

We have demonstrated stable financial performance over the years with growth in terms of revenues and profitability.

Over the last three years, we have focused our attention towards expanding our product portfolio which has resulted in an increase in our revenue from operations and profits. Our revenue from operations has grown from 3,648.30 lakhs in Fiscal 2022 to 5,131.59 lakhs in Fiscal 2025. Our profit for this period has marginally decreased from 1,188.90 lakhs in the Fiscal 2022 to 1,138.08 lakhs in Fiscal 2025. The stable growth in revenue, profits, ROCE enable us to fund our strategic initiatives and pursue opportunities for growth.

12. PROFIT MARGINS -

Particulars	Sale of Product
Revenue	5,131.59
Operating Profit	1,667.84
Operating Profit Margins	32.50%

13. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

As on March 31, 2025 we had 85 employees out of which approximately 33% were women. Manpower is a mix of experienced and youth which gives us the dual advantage of stability and growth. Our workforce which includes skilled, semi-skilled, and unskilled resources, combined with our experienced management team, has enabled us to execute our growth plans effectively.

The attrition rate of our Company for the Fiscals 2025, 2024, 2023 and 2022 was 23.92%, 21.95%, 45.51% and 1.83% respectively. Our employees are not unionised into any labour or workers union and have not experiences any major work stoppage due to labour disputes or cessation of work during the Fiscals 2025, 2024, 2023, and 2022. Given the nature of our business and composition of our staff (which is a combination of skilled, semi-skilled and unskilled members), we conduct periodic on-the-job (a) training for fire and safety drills (b) technical training for our workers and c) soft skill training sessions for our workers and engineers.

14. DETAILS OF KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR

Ratios	As at 31.03.2025	As at 31.03.2024	Variance	Explanation for any change in the ratio by more than 25% as com- pared to the preceding year.
Debtors Turnover Ratio	3.36	8.92	(5.56)	Extended credit period provided to clients
Interest Coverage Ratio	0.53	1.39	(0.86)	Due to substantial increase in long term and short-term debt for purchase of property, plant & equipments and payment of liabilities
Current ratio	3.36	3.67	(0.31)	Decrease in Current Ratio is due to increase in current liabilities and term deposits as non-current assets
Debt- equity ratio	0.34	0.32	0.02	There is not much movement
Operating Profit Margin (%)	32.50%	29.47%	3.03%	NA
Net Profit Margin (%)	22.18%	20.48%	1.69%	NA
Debt service coverage ratio	5.66	17.81	(12.15)	Higher principal and interest outflow in current year
Return on equity ratio	18.67	38.13	(19.46)	Due to Equity raised by way of IPO in the last week of March, 25
Inventory turnover ratio	0.78	1.09	(0.31)	Slightly increase in inventory level during the year
Trade receivables turnover ratio	3.36	8.92	(5.56)	Due to an increase of trade receivable and higher sales in the year end
Trade payables turnover ratio	6.81	19.29	(12.48)	Increase was primarily on account of increase in acceptance
Net Capital turnover ratio	1.51	1.84	(0.33)	NA
Net profit ratio	22.18	20.48	1.70	Slightly increased due to lower cost of goods sold
Return on capital employed	0.16	0.40	(0.24)	Due to increase in Equity capital in last week of March, 25
Return on investment	12.77	32.02	(19.25)	Low equity base in earlier year

15. DISCLOSURES

During the year the Company has not entered into any transaction of material nature with its promoters, the Directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interest of the Company at large.

16. FORWARD-LOOKING STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates, and others may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make a significant difference to our operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic, and natural calamities over which we do not have any direct/ indirect control.