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 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.

During the financial year under review, the Members of the Company, at the Extra-Ordinary General Meeting held on March 16, 2026, approved the alteration of the Main Objects Clause of the Memorandum of Association of the Company by way of a Special Resolution. The amended Main Objects provide for, inter alia, undertaking joint ventures, strategic

alliances, partnerships, consortium arrangements, technical collaborations, licensing, franchising, contracts, tenders, projects, concessions and other commercial arrangements, as well as activities relating to research, development, manufacturing, engineering, technical, operational, consultancy, project management and other allied and ancillary services.

Consequent upon the alteration of the Main Objects Clause and the corresponding change in the principal business classification of the Company, the Corporate Identification Number (CIN) of the Company was changed from L31909MH2020PLC345131 to L27201MH2020PLC345131

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The lithium-ion battery sector is expanding rapidly, transforming energy storage across electric vehicles and personal gadgets. This remarkable upward trend underscores how vital these batteries are for driving the sustainable energy shift and defining tomorrows power grid.

3. COMPETITIVE STRENGTHS

Our business is anchored by a highly diversified, application-agnostic lithium battery portfolio, offering customized solutions across domestic and industrial sectors like electric vehicles and medical devices. This extensive adaptability enhances market resilience and serves over 250 corporate and retail clients, ensuring robust brand recall and premium pricing. Built on stringent quality controls, our products minimize failure risks while driving long-term customer trust. This solid fiscal health actively funds ongoing strategic expansion. Steering this growth is our veteran Promoter, Sandeep Gangabishan Bajoria, who leverages 25 years of entrepreneurial expertise to navigate market complexities and seize new segments. Backed by a skilled, proficient workforce, this experienced leadership team ensures operational excellence, continuous technological innovation, and a sustainable competitive edge.

4. GROWTH STRATEGIES

To leverage Indias rapidly expanding lithium-ion market— which surged from 2.9 GWh in 2018 to 49.8 GWh in 2023 at a 47% CAGR—the company is executing a proactive growth strategy focused on scale, operational efficiency, geographic expansion, product diversification, and targeted marketing. To optimize cost structures and enhance profit margins, the firm is investing in automation, upgraded equipment, and centralized support functions. These

efficiency-driven initiatives aim to achieve economies of scale, maximize resource utilization, and sustain robust operational margins. Recognizing the rising demand in emerging sectors like electric vehicles, robotics, drones, and medical devices, the company plans to systematically broaden its geographical footprint across India. Entering selective new markets will minimize freight costs, shorten distribution lead times, mitigate regional concentration risks, and allow the business to build resilient local supply chains. Concurrently, the product pipeline is expanding to introduce high-capacity, eco-friendly, and modular battery packs featuring recyclable materials and green assembly processes, providing scalable technical configurations that cater to distinct consumer electronics and heavy industrial applications. Finally, to rapidly secure high-value enterprise accounts and scale its corporate and retail market share, the organization is launching data-driven marketing campaigns. This includes optimizing its digital outreach through SEO, targeted content marketing, active social media engagement, and direct B2B networking at key industry trade shows. This cohesive framework positions the enterprise to satisfy modern green infrastructure policies, capture expanding cross-industry verticals, and ensure predictable, long-term revenue growth.

5. OPPORTUNITIES

Mirroring global trends, Indias lithium-ion battery (LIB) demand is set for massive growth, projected to surge from 11 GWh in 2022 to an annual demand of 160.3 GWh by 2030, driving cumulative demand to 600 GWh. According to a Dun & Bradstreet Report, the largest demand share between 2022 and 2030 will come from electric vehicles at 381.4 GWh (64%), followed by stationary grid storage at 134.2 GWh (22%), behind-the-meter (BTM) storage at 47.3 GWh (8%), and consumer electronics at 36.4 GWh (6%). This escalating demand highlights a critical requirement for Indian manufacturers to secure supply chains and boost domestic value addition. Capitalising on this growth offers substantial economic opportunities, including job creation and technological innovation, while advancing Indias low- carbon objectives. Ultimately, expanding the battery sector is essential to reduce import dependencies, prevent trade imbalances, and transform the nations energy landscape.

6. INDUSTRY OUTLOOK

Indias lithium-ion battery market is surging, growing from 2.9 GWh in 2018 to 49.8 GWh in 2023 at a 47% CAGR. Driven by technology, renewable energy adoption, and aggressive government policies like PLI and FAME, annual demand is projected to hit 160.3 GWh by 2030. Cumulatively, demand will reach 600 GWh between 2022 and 2030.

These state-backed initiatives aim to foster domestic manufacturing and curb imports. ATC Energies System Limited is strategically poised to leverage this momentum, delivering tailored lithium-ion solutions for electric vehicles, green energy grids, and industrial automation.

7. RISKS AND CONCERNS

Our company faces critical vulnerabilities across its supply chain and revenue streams. We are highly exposed to disruptions in key lithium battery raw materials like lithium, nickel, cobalt, graphite, and manganese. Because we lack long-term contracts or exclusive arrangements with suppliers, any material shortages, quality drops, or cost spikes will directly harm our profitability. This supply chain risk is further magnified by a heavy reliance on raw material imports from China, exposing us to political tensions, trade disputes, and quality control issues. On the commercial front, our revenue is deeply concentrated in just two customers, M/s Agarwal Trading Company and M/s Hind Industries. As Promoter Group entities, this relationship triggers potential conflicts of interest, and any drop in their order volumes would materially damage our financial stability. Additionally, our sales remain significantly dependent on the banking industry, creating acute market concentration risks.

8. INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The company operates a comprehensive Internal Financial Control system tailored to its operational scale. This system ensures reliable financial reporting, strict regulatory compliance, asset safeguarding, and efficient resource deployment. Its structured policies are designed to promote orderly business conduct, prevent and detect fraud or errors, and guarantee accurate accounting records for timely financial statements.

To maintain system integrity, Internal Auditors and management continuously monitor control efficacy,

reporting directly to the Board and Audit Committee. Furthermore, the Audit Committee meets regularly to review internal audit disclosures and coordinates closely with Statutory Auditors to evaluate compliance, accounting procedures, and financial system health.

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 2026		Fiscal 2025		Fiscal 2024		Fiscal 2023		Fiscal 2022
	^ in lakhs	%	^ in lakhs	%	^ in lakhs	%	^ in lakhs	%	^ in lakhs	%
Mini	1190.26	38.72	3336.30	65.02	3,283.41	64%	2,345.16	71%	3,340.05	92%
Small	140.59	4.58	686.18	13.37	813.18	16%	137.18	4%	28.16	1%
Medium	64.99	2.11	480.18	9.36	973.65	19%	811.95	25%	244.88	7%
Large	230.13	7.49	219.20	4.27	50.13	1%	19.24	1%	35.21	1%
Service Chgs & Allied Product	1448.03	47.10	409.73	7.98	-	-	-	-	-	-
Total	3074.03	100%	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 -

The Company maintains stable financial performance through portfolio expansion. Revenue declined from ^3,648.30 lakhs in FY22 to ^3,074.03 lakhs in FY26, primarily due to the installation of a new factory, which remained under progress during the year.

The Companys financial performance during the year was impacted by the ongoing installation of the new factory and the consequent decline in revenue

12. PROFIT MARGINS -

Particulars	Sale of Product
Revenue	3,074.03
Operating Profit	2045.86
Operating Profit Margins	0.67%

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

As of March 31,2026, our 94-person workforce comprised roughly 41% women, balancing veteran and youthful talent to drive stable corporate growth. This team of skilled, semiskilled, and unskilled labor, alongside seasoned executives, effectively executes our strategic roadmaps.

Our staff operates without trade union affiliation, experiencing zero labor disputes or operational shutdowns during this four-year period. To elevate this diverse team, we host regular on-site development covering safety drills, technical proficiencies, and professional soft skills for technicians and engineers.

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

Ratios	As at 31.03.2026	As at 31.03.2025	Variance	Explanation for any change in the ratio by more than 25% as compared to the preceding year.
Debtors Turnover Ratio	1.38	3.36	-1.98	Decrease is mainly due to substantial reduction in revenue during the year, resulting in lower turnover relative to average trade receivables
Interest Coverage Ratio	0.36	0.53	-0.17	Decrease is mainly due to lower operating profitability during the year, resulting in reduced earnings available to cover finance costs
Current ratio	4.99	3.36	1.63	Increase in Current Ratio is due to substantial decrease in other current liabilities and tax provisions
Debt- equity ratio	0.22	0.34	-0.12	Company has paid term loan during the year
Operating Profit Margin (%)	8.47	32.50	-24.03	Due to reduction in revenue while employee cost and fixed operating costs continued to be incurred, resulting in lower absorption FC.
Net Profit Margin (%)	-4.8	22.18	-26.98	Due to lower revenue and profitability as compared to profit in preceding year
Debt service coverage ratio	0.595	5.66	-5.064	Due to lower earning and loss incurred during the year resulting in net loss as compared with profit in preceding year
Return on equity ratio	-1.67	18.67	-20.34	Due to decrease in sales resulting in loss to the company
Inventory turnover ratio	0.59	0.78	-0.19	Due to increased inventory levels
Trade receivables turnover ratio	1.38	3.36	-1.98	Due to decrease in sale and realisation from customers
Trade payables turnover ratio	7.57	6.85	0.72	Increase was primarily on account of increase in inventory
Net Capital turnover ratio	0.46	1.51	-1.05	Decrease is primarily due to substantial reduction in revenue during the year in relation to the working capital employed in the business
Net profit ratio	-4.80	22.18	-26.98	Due to decreased sales resulting in loss during the year
Return on capital employed	0.01	0.21	-0.11	Due to loss during the year
Return on investment	NA	12.77	NA	NA

15. DISCLOSURES

Throughout the fiscal period, the company did not engage in any significant or substantial transactions with its promoter, board members, executive management, or their respective affiliates and immediate family members. Consequently, no arrangements or dealings occurred that could introduce a potential conflict with the overarching interests of the organization.

16. FORWARD-LOOKING STATEMENT

Specific assertions contained within this Management Discussion and Analysis review concerning the companys goals, forecasts, future prospects, anticipations, and projections can be classified as forward-looking disclosures under governing statutes and legal frameworks. Realised outcomes might vary materially from these stated or assumed projections. A multitude of variables possesses the capacity to substantially impact our operational performance. These drivers encompass weather-related and macroeconomic shifts influencing market supply and demand dynamics, updates to governmental policies and fiscal tax structures, widespread public health outbreaks or global contagions, and major environmental disasters that remain entirely beyond our direct or indirect influence.