Charms Industries Ltd Management Discussions

The Indian economy continued to remain resilient during FY 2025-26 despite uncertainties in the global economic environment, geopolitical developments, fluctuations in commodity prices and evolving monetary conditions. Domestic consumption, infrastructure development, manufacturing activity, investment and the services sector continued to support economic activity.

Indias medium and long-term growth prospects remain supported by its large domestic market, favorable demographics, continued infrastructure development, digitalisation and emphasis on strengthening domestic manufacturing.

However, inflationary pressures, commodity price movements, interest-rate movements, global economic conditions and geopolitical developments continue to remain important factors affecting the overall business environment.

INDIAN AGRICULTURE SECTOR OVERVIEW

Agriculture and allied activities continue to occupy an important position in the Indian economy and remain a significant source of livelihood, particularly in rural areas. The sector includes agriculture, horticulture, livestock, fisheries and various allied activities and plays an important role in supporting food security and rural consumption.

The performance of the agricultural sector is influenced by factors such as monsoon conditions, availability of water, crop production, input costs, commodity prices, government policies and domestic and international demand.

Indias large consumer base and continuing demand for agricultural and allied products provide opportunities for entities engaged in trading and distribution of agricultural produce.

The Company continues to evaluate business opportunities in the agricultural produce segment based on prevailing market conditions and commercial viability.

SPONGE IRON / STEEL SECTOR OVERVIEW

The iron and steel industry are an important part of Indias industrial and infrastructure development. Demand for steel and related products is influenced by infrastructure development, construction activity, manufacturing, urbanisation and capital expenditure.

Sponge Iron, also known as Direct Reduced Iron ("DRI"), is an important raw material used in steel manufacturing. Accordingly, demand for Sponge Iron is linked with the overall performance of the steel industry.

The performance of the Sponge Iron sector is affected by steel demand, availability and prices of iron ore and coal, energy costs, commodity-price movements, environmental requirements and general economic conditions.

The Company commenced activities in the Sponge Iron/DRI segment in June 2024 and continues to evaluate opportunities in the sector based on market conditions and commercial viability.

I I CHARMS INDUS IKIES LIMIIEU

The performance of the Sponge Iron sector is affected by steel demand, availability and prices of iron ore and coal, energy costs, commodity-price movements, environmental requirements and general economic conditions.

The Company commenced activities in the Sponge Iron/DRI segment in June 2024 and continues to evaluate opportunities in the sector based on market conditions and commercial viability.

COMPANY BUSINESS

Earlier, the Company was engaged in the business of Full-Fledged Money Changer ("FFMC") pursuant to the license granted by the Reserve Bank of India. The outbreak of COVID-19 during FY 2020-21 and its adverse impact on international travel and tourism significantly affected the said business.

The Company did not apply for renewal of its FFMC license within the stipulated period and the license was subsequently cancelled by the Reserve Bank of India. Consequently, the Company discontinued the FFMC business and thereafter started exploring other business opportunities.

The Company commenced activities in the trading of agricultural produce in January 2023 and subsequently commenced activities in the Sponge Iron/Direct Reduced Iron (DRI) segment in June 2024.

In the agricultural produce segment, the Company deals in agricultural, horticultural and allied products. The objects of the Company also permit trading and dealing in various industrial, consumer, engineering, chemical, textile, metal and allied products, subject to applicable laws.

During FY 2025-26, however, the Company did not record any revenue from operations.

OPPORTUNITIES, STRENGTHS, WEAKNESSES AND THREATS

Strengths

• India has a large and diversified agricultural market with continuing demand for agricultural and allied products.

• The Companys objects permit it to undertake a diversified range of trading activities and accordingly provide flexibility to evaluate different business opportunities.

• The continuing development of infrastructure and manufacturing activity in India may support demand for steel and related products, including Sponge Iron/DRI.

• The Company continues to evaluate business opportunities in sectors in which it has already commenced activities.

Weaknesses

• The Company presently has a limited scale of operations and did not generate revenue from operations during FY 2025-26.

• The agricultural business is affected by seasonal conditions, fluctuations in commodity prices, logistics costs and availability of products.

• The Sponge Iron/DRI business is dependent upon the performance of the steel industry and is exposed to fluctuations in prices of iron ore, coal, energy and other inputs.

• The Company has been incurring losses and therefore needs to establish sustainable revenuegenerating operations.

Opportunities

• Indias large population and continuing demand for agricultural and allied products provide opportunities in the trading and distribution segment.

• Improvements in infrastructure, market connectivity and digital platforms may provide better access to suppliers and customers in the agricultural sector.

• Continued infrastructure and manufacturing development may support demand in the steel and allied sectors.

• The Company may evaluate other trading opportunities permitted under its existing objects depending upon market conditions and commercial feasibility.

Threats

• Volatility in commodity prices may affect trading margins and profitability.

• Unfavorable monsoon conditions, fluctuations in agricultural production and changes in government policies may affect the agricultural sector.

• Changes in steel demand and fluctuations in raw-material and energy prices may adversely affect opportunities in the Sponge Iron/DRI segment.

• Competition, counterparty risk, liquidity requirements and regulatory requirements may also affect the Companys operations.

FINANCIAL PERFORMANCE

During the financial year ended March 31, 2026, the financial and operational performance of the Company remained subdued.

The Company did not generate any revenue from operations during FY 2025-26. Total income stood at ?0.21 lakh, as compared to ?3.36 lakh in the previous financial year.

The Company incurred a loss before tax of ?19.95 lakh during FY 2025-26 as compared to a loss before tax of approximately ?14.58 lakh during FY 2024-25.

The loss after tax for FY 2025-26 was ?19.99 lakh, as compared to a loss after tax of ?14.63 lakh during FY 2024-25.

The Company continues to evaluate suitable business opportunities with a view to establishing sustainable revenue-generating operations and improving its financial performance.

The financial ratios of the Company were affected primarily due to the absence of operating revenue, losses incurred during the year and the resultant negative net worth as at March 31, 2026. Accordingly, certain ratios such as the Debt-Equity Ratio, Net Profit Margin and Return on Net Worth are either not meaningful or are not comparable with the previous financial year. The decline in the Current Ratio was mainly attributable to reduction in current assets and increase in current liabilities during the year.

CAPITAL REDUCTION

During FY 2025-26, the Honble National Company Law Tribunal, Ahmedabad Bench, vide its Order dated March 26, 2026 in CP/4(AHM)/2025, approved the reduction of the paid-up equity share capital of the Company from ?4,10,61,000 divided into 41,06,100 equity shares of ?10 each to ?41,06,100 divided into 41,06,100 equity shares of ?1 each.

The reduction was effected by reducing the paid-up value of each equity share by ?9, aggregating to ?3,69,54,900. The sanctioned accounting treatment also provided for cancellation of the Capital Reserve amounting to ?31,46,530 and therefore the total amount of adjustment in debit balance of Statement of Profit and Loss aggregate amount of ?4,01,01,430.

The Order and the approved Minute of reduction of Share capital were registered with the Registrar of Companies on April 21, 2026. Accordingly, the reduction became effective subsequent to the close of FY 2025-26.

Thereafter, the Company fixed May 20, 2026 as the Record Date for giving effect to the reduction and completed the necessary corporate action whereby the paid-up value of each existing equity share was reduced from ?10 to ?1, without any change in the total number of equity shares or the proportionate shareholding of the Members.

The capital reduction was undertaken with a view to rationalising the capital structure of the Company and adjusting the accumulated debit balance of the Statement of Profit and Loss in accordance with the terms sanctioned by the NCLT.

Further the Company has also received listing approval dated August 14, 2026 for listing of new equity shares of ?1/- each pursuant to the Scheme. The Company is in the process of carrying out the corporate action and consequently in terms of the Scheme, the shareholders will receive 1 equity share of ? 1/- each fully paid-up against the 1 equity share of ? 10/- each fully paid-up.

SEGMENT-WISE PERFORMANCE

The Companys operations belong to a single reportable segment and accordingly, separate segment-wise performance is not applicable.

During FY 2025-26, the Company did not record any revenue from operations.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES

Human resources continue to play an important role in the functioning of the Company. The Company endeavours to maintain a suitable working environment and keeps its employees informed about relevant policies and regulatory requirements.

As at March 31, 2026, the Company had 3 permanent employees. Employee relations remained cordial during the year.

For and on behalf of the Board of Directors Charms Industries Limited

Sd/-

Mr. Shivkumar Raghunandan Chauhan

Managing Director

DIN:00841729

Date: September 02, 2026

Place: Ahmedabad