Karbonsteel Engineering Ltd Management Discussions

OF FINANCIAL CONDITIONS AND RESULTS OF

OPERATIONS

You should read the following discussion in conjunction with our restated financial statements attached in the chapter titled Financial Information of the Company beginning on page 208. You should also read the section titled Risk Factors on page 26 and the section titled Forward Looking Statements on page 18 of this Red Herring Prospectus, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated financial Statements. Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor dated August 18, 2025 which is included in this Red Herring Prospectus under Financial Statements . The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

BUSINESS OVERVIEW

We are a structural engineering and fabrication company engaged primarily in the design, fabrication and assembly of heavy and precision steel structures, customized to meet clients requirements across various industrial and infrastructure segments. We have delivered structural engineering and fabrication solutions in diverse sectors including steel plants, railway bridges, oil & gas plants, refineries, chemical plants and other industrial units. Our fabricated structures form an integral part of the construction, expansion or modernization of industrial and infrastructure projects, including industrial plants, high rise buildings, railway bridges and other large-scale developments.

Our structural engineering and fabrication solutions can broadly be classified into four verticals: -

Heavy Steel Fabricated Structures - We manufacture various type of heavy steel fabricated structures, including structural frameworks, steel columns, beams, crane girders, rafters, purlins, pipe racks, platforms, walkways, conveyor galleries, staircases, ladders and heavy-duty support structures, which are integral for construction, expansion or modernization of industrial plants and high-rise buildings, supporting both operational and structural requirements. Depending on project requirements, our scope generally begins with the procurement of specific graded steel, followed by fabrication processes such as cutting, drilling, bending, welding, machining, fit-up and assembly of steel structures. Once fabrication is complete, we carry out surface treatment and protective coatings, including shot blasting and painting, ensuring compliance with project specifications. To maintain precision and alignment, we also conduct quality inspections, trial assembly and match marking before finalizing the structures for dispatch. Upon completion, we oversee the loading, transportation and delivery of fabricated structures to project sites. In the last three financial years, revenue from heavy steel fabricated structures contributed, 68.85% in FY 2024-25, 72.24% in FY 2023-24 & 61.95% in FY 2022-23.

Precision Fabricated Steel Structures or Technological Structures - We manufacture various type of precision fabricated steel structures, including furnace support structures, intermediate accumulator towers, galvanized tubing handrails, welded/bolted steel structures etc. which are integral to industrial processing units and manufacturing facilities. These structures are designed to meet strict dimensional tolerances and quality requirements, ensuring compliance with project specifications. Depending on project requirements, our scope generally includes procurement of raw materials, fabrication, machining, assembly, dismantling, blasting, priming, painting, match marking, inspection and trial assembly. Upon completion, we oversee packing, loading and transportation of technological structures to project sites. In the last three financial years, this vertical contributed 27.00% in FY 2024-25, 11.70% in FY 2023-24 & 18.89% in FY 2022-23 to our revenue.

Steel Bridge Structures for High-Speed Rail Projects - Over the past few years, the company has leveraged its skills, expertise, and extensive experience to expand into the manufacturing of steel bridge structures for high-speed rail projects. This includes the production of open web girders, built-up sections, and fabricated shutters for piers and pier caps, effectively implementing established technologies to meet project demands. These structures are essential for railway infrastructure, supporting the construction of high-speed rail corridors and ensuring load-bearing strength, durability and compliance with engineering standards. Our scope of work includes procurement of raw steel as per project specifications, fabrication, cutting, drilling, welding, machining, fit-up, blasting, priming, painting, trial assembly and match marking. We conduct full-scale trial assemblies to verify alignment before final dispatch. In the last three financial years, this vertical contributed 3.34% in FY 2024-25, 11.32% in FY 2023-24 & 10.36% in FY 2022-23 to our revenue.

Pre-Engineered Buildings - We manufacture and supply Pre-Engineered Buildings (PEBs), which include built-up structural members, crane beams, steel columns, rafters, purlins, pipe racks, staircases, handrails, checker plates and roof gutters, as required and specified for each project. These structures are fabricated from hot-rolled or cold-formed sections, ensuring compliance with project specifications, dimensional accuracy and quality requirements. Our scope of work generally includes procurement of raw materials, fabrication, machining, assembly, trial fit-up, surface treatment (such as sand/shot blasting, priming and painting), final inspection and delivery to project site. In the last three financial years, this vertical contributed 0.74% in FY 2024-25, 2.07% in FY 2023-24 & 1.04% in FY 2022-23 to our revenue.

Some of our esteemed customers include Arcelor Mittal Nippon Steel India Limited, Tata Projects Limited, John Cockerill India Limited, Ray Engineering Private Limited, JSW Severfield Structures Limited and Panametrics Engineering Private Limited. In the past, our company operated in both manufacturing and trading, with trading primarily involving steel products such as hot- rolled plates, mild steel plates, mild steel angles, mild steel rounds, and steel channels. However, over the years, we have strategically reduced our trading operations to focus on value-added manufacturing, resulting in trading revenue contributing only 0.06% of our total revenue in FY 2024-25, compared to 2.67% in FY 2023-24 & 7.76% in FY 2022-23,.

We have two manufacturing facilities located at (i) Umbergaon, District Valsad, Gujarat, and (ii) Khopoli, District Raigad, Maharashtra, dedicated to the manufacturing of heavy and precision steel fabricated structures, PEBs and steel bridge structures, with a combined installed capacity of 36,000 MT per annum. Our Umbergaon facility commenced operations in 2017, while our Raigad facility has been operational since 2014. Both manufacturing facilities are ISO 9001:2015 certified for Quality Management Systems and ISO 14001:2015 certified for Environmental Management Systems.

Our Umbergaon facility is located on a land parcel admeasuring approximately 8.56 lakh sq. ft (79,532 sq. meter), which includes a covered production area and open space for material storage and handling. Additionally, our manufacturing unit in Khopoli, Raigad, Maharashtra, is situated on a land area of over 56,084 sq. ft., also comprising a covered production area and open space for material storage and handling. Together, these facilities span approximately 9.12 lakh sq. ft.

A part of our manufacturing facility at Umbergaon Valsad, Gujarat, specifically Plot No. 17, Om Industrial Park, Near Coastal Road, GIDC, Umbergaon, Gujarat - 396171 is approved under RDSO (Research Designs and Standards Organization) under the Ministry of Railways, India, for the fabrication of steel bridge girders, including composite and other steel plate girders.

Our manufacturing process primarily relies on high-quality steel plates and sheets in various thicknesses and grades, including E250, E350, E450, Hardox, and Galvanized Steel, along with hot-rolled and galvanized coils, structural sections (I-beams, H- beams, RSJ, universal beams, angles, and hollow sections), and seamless and ERW pipes for structural integrity. Fabrication and assembly involve high-tensile, mild steel, and stainless-steel fasteners, including bolts, nuts, washers, and anchor bolts, while welding consumables such as SMAW electrodes, flux-cored wires, and shielding gases (Argon, CO2, specialized mixtures) ensure strong and durable joints.

The Indian steel structural market is growing quickly as the countrys economic growth and infrastructure development are rising. Structural Steel form the backbone of construction projects in India, playing a critical role in bridges, highways, railways, buildings, high-rise structures, and industrial facilities. The Indian government actively fosters growth in this sector through initiatives like the Smart Cities Mission and Make in India, which aim to boost steel demand for modern urban and industrial development. Investments in metro rail systems, highway expansions, and urban infrastructure underline this commitment. Additionally, the National Steel Policy (NSP) 2017 targets increasing domestic steel consumption to 160 kilograms per capita by 2030, further supporting the sectors expansion and its role in nation-building. (Source: D&B Report)

As of July 31, 2025, we had 381 permanent full-time employees comprising of 243 employees in fabrication and production work, 27 in quality control department and 19 in automation & controls department. For details, please refer to Our Business - Manpower on page 167 of this RHP. Additionally, we employed 105 contract laborers at our units. Our Company is led by our promoters, Shrenik Kirit Shah and Mittal Shrenik Shah. We benefit immensely from the expertise of our Managing Director, Mr. Shrenik Kirit Shah, who possess an overall experience of 19 years in the steel trading and structural steel fabrication industry.

Key performance indicators of our Company:

(Rs In Lakhs except percentages and ratios)

Key Financial Performance	FY 2024-25	FY 2023-24	FY 2022-23
Revenue from operations (1)	27,305.35	21,833.76	15,558.03
EBITDA (2)	3,660.93	2,578.80	1,622.17
EBITDA Margin (3)	13.41%	11.81%	10.43%
PAT (4)	1,415.93	942.49	510.70
PAT Margin (5)	5.19%	4.32%	3.28%
ROE(%) (6)	27.19%	25.99%	19.51%
ROCE(%) (7)	24.63%	22.93%	19.05%
Order Book	19,892.46	16,632.88	6,487.99

Notes:

(1) Revenue from operation means revenue from sale of products & services and other operating revenues

(2) EBITDA is calculated as Profit before tax + Depreciation + Finance Cost - Other Income (here finance cost include all interest expenses, loan processing charges, letter of credit charges, bill discounting charges and other borrowing costs, as these are directly attributable to financing arrangements and form part of finance costs in accordance with Schedule III of the Companies Act, 2013 and the Guidance Note issued by the ICAI.)

(3) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations

(4) PAT is calculated as Profit before tax - Tax Expenses

(5) PAT Margin is calculated as PAT for the period/year divided by revenue from operations.

(6) Return on Equity is ratio of Profit after Tax and Average Shareholder Equity

(7) Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as Shareholders Fund + Long term borrowing + Short term borrowing+ Deferred Tax Liability.

For details, please refer to the section Basis for Issue Price - Key Performance Indicators on page 108 of the RHP.

For details in respect of Statement of Significant Accounting Policies, please refer to Annexure IV - Summary Statement of Significant Accounting Policies & Notes to Restated Financial Information beginning on page 219 of this Red Herring Prospectus.

Our business is subject to various risks and uncertainties, including those discussed in the section titled Risk Factors on page 26 beginning of this Red Herring Prospectus.

Discussion on Result of Operations

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements for the financial years ended on March 31,2025, 2024 and 2023.

(Rs In Lakhs)

PARTICULARS	For the Year ended March 31,
	2025	% to Total Income	2024	% to Total Income	2023	% to Total Income
Income:
Revenue from operations	27,305.35	99.69%	21,833.76	99.80%	15,558.03	99.80%
Other Income	85.47	0.31%	43.54	0.20%	30.76	0.20%
Total Income (1+2)	27,390.81	100.00%	21,877.30	100.00%	15,588.79	100.00%
Expenses:
Cost of Material Consumed	22,472.75	82.04%	13,989.00	63.94%	13,281.53	85.20%
Purchases of Stock in Trade	-	0.00%	561.48	2.57%	1,017.25	6.53%
Changes in Inventories of work-inprogress and stock-in-trade	-3,737.59	-13.65%	1,140.95	5.22%	-3,252.39	-20.86%
Employee Benefit Expenses	1,015.98	3.71%	862.85	3.94%	594.82	3.82%
Finance Cost	1,525.89	5.57%	1,117.65	5.11%	797.10	5.11%
Depreciation and Amortization Expenses	309.41	1.13%	235.66	1.08%	174.90	1.12%
Other Expenses	3,893.27	14.21%	2,700.69	12.34%	2,294.64	14.72%
Total Expenses 4(a) to 4(g)	25,479.72	93.02%	20,608.28	94.20%	14,907.86	95.63%
Profit/(Loss) Before Exceptional, Extraordinary Items and Tax (3-5)	1,911.10	6.98%	1,269.02	5.80%	680.92	4.37%
Exceptional Items	-		-		-
Profit/(Loss) Before extraordinary items and tax (6-7)	1,911.10	6.98%	1,269.02	5.80%	680.92	4.37%
Extraordinary Items	-		-		-
Profit/(Loss) Before Tax (8-9)	1,911.10	6.98%	1,269.02	5.80%	680.92	4.37%
Tax Expense:
Current tax	476.49	1.74%	312.82	1.43%	167.14	1.07%
Deferred Tax	18.67	0.07%	13.71	0.06%	3.08	0.02%
Net Current Tax Expenses	495.16	1.81%	326.53	1.49%	170.23	1.09%
Profit/(Loss) for the Year (10-11)	1,415.93	5.17%	942.49	4.31%	510.70	3.28%

Revenue from operations:

Revenue from operations mainly consists of revenue from sale of Heavy fabricated structures, Technological / Precision Structures, Bridges and Girders, PEB (Pre-Engineered Buildings), Scrap Sales and Trading of Goods.

These diverse product categories contribute to the overall financial performance, with Heavy Fabricated Structures and Technological Structures being the dominant revenue driver. Due to the value-added potential in the manufacturing segment, the Company has strategically reduced its trading operations year on year, as reflected in the declining contribution of trading revenue to total operations

The following table sets forth the bifurcation of revenue (product-wise) for the period ended 2025, 2024 and 2023.

In Lakhs except %)

Particulars		% of revenue	F.Y. 202324	% of revenue	F.Y. 202223	% of revenue
Products
Heavy fabricated structural	18,799.76	68.85%	15,771.68	72.24%	9,637.45	61.95%
Technological / Precision Structural	7,371.17	27.00%	2,553.49	11.70%	2,938.48	18.89%
Bridges and Girders	913.22	3.34%	2,471.39	11.32%	1,611.77	10.36%
PEB (Pre-Engineered Buildings)	203.25	0.74%	451.94	2.07%	161.90	1.04%
Others (Scrap sales)	2.50	0.01%	1.30	0.01%	1.22	0.01%
Total - A	27,289.89	99.94%	21,249.81	97.33%	14,350.82	92.24%
Trading of Goods	15.45	0.06%	583.96	2.67%	1,207.21	7.76%
Total - B	15.45	0.06%	583.96	2.67%	1,207.21	7.76%
Grand Total (A+B)	27,305.35	100.00%	21,833.76	100.00%	15,558.03	100.00%

Other Income:

Other income primarily comprises of Interest Income on Fixed Deposits and other Miscellaneous income Total Expenses:

Total expenses consist of operating cost like cost of material consumed, Purchase of Stock in Trade, Change in inventories of Work in progress and Stock in Trade, Employee benefit expenses, Finance costs, Depreciation and Amortization Expenses and other expenses.

Cost of material consumed:

Cost of Material consumed expenses primarily comprise of purchase of raw material and Direct Expenses for the Purchase of Raw Material, as adjusted with opening and closing stock and Inter-branch Elimination.

Purchase of Stock in Trade:

Purchase of Stock in Trade consists of Purchase of Trading Goods, Direct Expenses related to the purchase of trading goods, as adjusted for Inter-Branch Elimination.

Change in inventories of Work in progress and Stock in trade: Changes in inventories of Work in Progress and Trading Goods between opening and closing dates of a reporting period.

Employee benefits expense:

Employee benefits expense primarily comprises of Salaries & wages, Bonus expenses, Director remuneration, Staff welfare expenses, Employers contribution to PF and ESIC, Gratuity Expenses and Incentives.

Finance Costs:

Our finance cost includes Interest on Term Loan, Unsecured Loan, Vehicle Loans, CC/OD, LC and Bill Discounting charges, Loan Processing Fees and Other charges.

Depreciation and Amortization Expenses:

Depreciation includes depreciation on Factory & Building, Plant & Machinery, Office Equipment, Furniture & Fixtures, Computer and Printer, Motor Vehicle and amortization includes amortization of Intangible Assets.

Other Expenses:

Other expenses primarily comprise manufacturing expenses such as Freight & Transport charges, Hiring charges, Packing & Forwarding charges, Detention charges, Testing charges, Labour charges, Security charges, Power & Fuel expenses, Galvanizing charges, Design & Drafting charges, Factory rent, and Factory expenses. Administration and Selling & Distribution expenses consist of expenses like Advertisement Expenses, Audit Fees, Consultancy for T axation, Certification charges, Bad Debts, Bank charges, Brokerage, Business Promotion, Car Hiring charges, Conveyance expenses, Professional Tax, Computer expenses, Donation, Document charges, CSR Expenditure, Office Maintenance, Rates & Taxes, GST Expenses, Interest on Income Tax, Interest on late payment of TDS, Interest on delay payment to suppliers, Insurance charges, Miscellaneous expenses, Legal & Professional charges, Loss on Sale of Assets, Office expenses, Rent expenses, Printing & Stationery, Rent on Machinery, Repair & Maintenance, Hospitality expenses, Vehicle expenses, ROC Filing fees, Telephone expenses, and Travelling expenses.

FINANCIAL PERFORMANCE HIGHLIGHTS FOR THE FINANCIAL YEAR 2024-25:

Total Income:

Total income for the year ended March 31, 2025 stood at Rs. 27,390.81 Lakhs. The total income consists of revenue from operations and other income.

Revenue from Operations:

During the year ended March 31, 2025 the net revenue from operation of our Company was Rs. 27,305.35 Lakhs mainly from the sale of Manufactured and Trading Goods.

*The figures of Revenue from Operations have been obtained after eliminating Inter-Branch transfer of Goods.

Other Income:

During the year ended March 31, 2025 the other income of our Company stood at Rs 85.47 Lakhs. Other income primarily comprises Interest on Fixed Deposits and Miscellaneous Income.

Total Expenses:

Total expenses consist of operating cost like cost of material consumed, Purchase of Stock in Trade, Changes in Inventories of Work in Progress and Stock in Trade, Employee benefits expense, Finance costs, Depreciation and Amortization Expenses and other expenses. During the year ended March 31,2025 the total expenses of our Company stood at Rs 25,479.72 Lakhs.

Cost Of Material Consumed:

During the year ended March 31, 2025 the Cost of Material Consumed of our Company stood at Rs. 22,472.75 Lakhs.

Change in inventories of Work in progress and Stock in Trade:

During the year ended March 31,2025 the Change in inventories of Work in progress and Stock in Trade of our Company stood at Rs. (3,737.59) Lakhs.

Employee benefits expense:

During the year ended March 31, 2025 the employee benefit expenses of our Company stood at Rs. 1,015.98 Lakhs. The main components of the employee benefit expenses are Salaries, Wages & Bonus, Director Remuneration, Gratuity Expense, PF, WF and ESIC Admin charges, Staff Welfare Expenses and Incentives.

Finance Costs:

During the year ended March 31,2025 the finance cost expenses of our Company stood at Rs. 1,525.89 Lakhs. Our finance cost includes Interest on Term Loan, Unsecured Loan, Vehicle Loans, LC and Bill Discounting charges, Loan Processing Fees and Other charges.

Depreciation and Amortization Expenses:

During the year ended March 31, 2025 the Depreciation and amortization charges of our Company stood at Rs. 309.41 Lakhs. Other Expenses:

Other expenses for the year ended March 31, 2025, were Rs. 3,893.27 Lakhs, including manufacturing expenses, administrative costs, repairs and maintenance, selling and distribution expenses, and other operational outflows.

Restated Profit before tax:

The Company reported Restated profit before tax for year ended March 31,2025 of Rs. 1,911.10 Lakhs.

Restated profit after tax:

The Company reported Restated profit after tax for year ended March 31, 2025 of Rs. 1,415.93 Lakhs.

FINANCIAL YEAR 2025 COMPARED TO FINANCIAL YEAR 2024 Total Income:

The total income for FY 2024-25 stood at Rs. 27,390.81 Lakhs, compared to Rs. 21,877.30 Lakhs in FY 2023-24, reflecting a growth of 25.20%. This increase was primarily driven by higher revenue from operations.

Revenue from Operations:

In FY 2024-25, the revenue from operations was Rs. 27,305.35 Lakhs, showing a significant increase from Rs. 21,833.76 Lakhs in FY 2023-24, reflecting an increase of 25.06%. The growth was primarily attributed to increased sales of Manufactured goods, which contributed Rs. 27,287.39 Lakhs (99.93% of revenue from operations) in FY 2024-25, compared to Rs. 21,248.51 Lakhs (97.32% of revenue from operations) in FY 2023-24. The Sales of Trading Goods was declined to Rs. 15.45 Lakhs (0.06% of revenue from operations) in FY 2024-25 from Rs. 583.96 (2.67% of revenue from operations) in FY 2023-24. Other Operating Income consisted of Scrap Sales which amounted to Rs. 2.50 Lakhs in FY 2024-25 as compared to Rs. 1.30 Lakhs in FY 202324.

*The figures of Revenue from Operations have been obtained after eliminating Inter-Branch transfer of Goods.

Other Income:

Other income for FY 2024-25 stood at Rs. 85.47 Lakhs, compared to Rs. 43.54 Lakhs in FY 2023-24, marking a growth of 96.29%. This growth was attributable to Interest on Fixed Deposits of Rs. 74.14 Lakhs in FY 2024-25 as compared to Rs. 36.12 Lakhs in FY 2023-24 and other Miscellaneous income consisting of Interest on late payments received of Rs. 11.32 Lakhs in FY 2024-25 as compare to Rs.7.42 Lakhs in FY 2023-24.

Total Expenses:

Total expenses for FY 2024-25 were Rs. 25,479.72 Lakhs, compared to Rs. 20,608.28 Lakhs in FY 2023-24, reflecting a rise of 23.64%. This increase was due to increase in business operations of the Company resulting into higher material costs, employee benefits, depreciation and other operational expenses.

Cost Of Material Consumed:

The cost of material consumed increased to Rs. 22,472.75 Lakhs in FY 2024-25 from Rs. 13,989.00 Lakhs in FY 2023-24, representing an increase of 60.65%. Such increase was due to higher material cost on account of increase in business operations of the Company.

Purchase of Stock in Trade:

The purchase of stock in trade are decreased to Nil in FY 2024-25 from Rs. 561.48 Lakhs in FY 2023-24. Such decrease is due to company has transitioned towards a greater focus on manufacturing activities, resulting in a decline in trading operations.

Change in inventories of Work in progress and Stock-In-Trade:

Our Company has incurred Rs. (3,737.59) Lakhs as Change in inventories of Work in progress and stock in trade during the financial year 2024-25 as compared to Rs. 1,140.95 Lakhs in the financial year 2023-24.

Employee benefits expense:

Our Company has incurred Rs. 1,015.98 Lakhs as Employee benefits expense during the financial year 2024-25 as compared to Rs. 862.85 Lakhs in the financial year 2023-24. The increase was due to increase in (i)Employees Salary, Bonus and Wages Expenses from Rs. 722.70 lakhs in FY 2023-24 to Rs. 808.67 lakhs in the financial year 2024-25, (ii)Director Remuneration from Rs.36 Lakhs in FY 2023-24 to Rs.60 Lakhs in FY 2024-25 (iii) PF, WF & ESIC Admin Expenses from 45.64 in FY 202324 to Rs. 61.88 Lakhs in FY 2024-25 (iv) Staff welfare expenses from Rs.26.02 Lakhs in FY 2023-24 to Rs.27.61 in FY 202425, (v) Incentives of Rs. 45.82 Lakhs in FY 2024-25 as against Rs. 28.13 Lakhs in FY 2023-24.

Finance Cost:

Our Company has incurred Rs. 1,525.89 Lakhs as finance cost during the financial year 2024-25 as compared to Rs. 1,117.65 Lakhs in the financial year 2023-24. There was an upsurge of 36.53% in the Finance Cost in this period as compared to FY 202324. The increase was primarily due to increase in (i)LC and Bill Discounting Charges of Rs. 557.08 Lakhs in FY 2024-25 as compared to Rs. 376.43 Lakhs in FY 2023-24 (ii) Interest on Unsecured Loans from Rs. 291.95 in FY 2023-24 Lakhs to Rs. 352.67 Lakhs in FY 2024-25, and (iii) Interest on CC/OD from Rs. 280.48 in FY 2023-24 Lakhs to Rs. 317.12 Lakhs in FY 2024-25, and (iv) Loan Processing and Other charges from Rs. 130.81 Lakhs to Rs.163.56 Lakhs during the FY 2024-25.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2024-25 stood at Rs. 309.41 Lakhs as against Rs. 235.66 Lakhs during the financial year 2023-24. The increase in depreciation was around 31.29 % which was due to purchase of Factory & building, Plant & machinery, furniture, vehicle, computer and printer and other office equipment.

Other Expenses:

Our Company incurred Rs. 3,893.27 Lakhs in other expenses during FY 2024-25, compared to Rs. 2,700.69 Lakhs in FY 202324, an increase of 44.16%. This rise was driven by higher costs in Hiring Charges, Labour Charges, Security charges, Factory Rent, Power & Fuel, Factory Expenses, Brokerage, CSR Expenses, Rent expenses and Repair & Maintenance. The higher expense was offset by reduced Testing charges, bad debts, Legal & Professional charges and Rates & Taxes expenses.

Restated profit before tax:

Net profit before tax for the financial year 2024-25 increased to Rs. 1,911.10 Lakhs as compared to Rs. 1,269.02 Lakhs in the financial year 2023-24, marking an increase of 50.60%. This significant growth was primarily driven by the factors mentioned above. The revenue from operations of the company increased by approximately 25.06%, mainly due to higher sales of Manufactured Goods.

Restated profit for the year:

As a result of the foregoing factors, our profit after tax increased by 50.23%, rising from Rs. 942.49 Lakhs in the financial year 2023-24 to Rs. 1,415.93 Lakhs in the financial year 2024-25.

FINANCIAL YEAR 2024 COMPARED TO FINANCIAL YEAR 2023

Total Income:

The total income for FY 2023-24 stood at Rs. 21,877.30 Lakhs, compared to Rs. 15,588.79 Lakhs in FY 2022-23, reflecting a growth of 40.34%. This increase was primarily driven by higher revenue from operations.

Revenue from Operations:

In FY 2023-24, the revenue from operations was Rs. 21,833.76 Lakhs, showing a significant increase from Rs. 15,558.03 Lakhs in FY 2022-23, reflecting an increase of 40.34%. The growth was primarily attributed to increased sales of Manufactured goods, which contributed Rs. 21,248.51 Lakhs (97.32% of revenue from operations) in FY 2023-24, compared to Rs. 14,349.60 Lakhs (92.23% of revenue from operations) in FY 2022-23. The Sales of Trading Goods was declined to Rs. 583.96 Lakhs (2.67% of revenue from operations) in FY 2023-24 from Rs. 1,207.21 (7.76% of revenue from operations) in FY 2022-23. Other Operating Income consisted of Scrap Sales which amounted to Rs. 1.30 Lakhs in FY 2023-24 as compared to Rs. 1.22 Lakhs in FY 202223.

*The figures of Revenue from Operations have been obtained after eliminating Inter-Branch transfer of Goods.

Other Income:

Other income for FY 2023-24 stood at Rs. 43.54 Lakhs, compared to Rs. 30.76 Lakhs in FY 2022-23, marking a growth of 41.56%. This growth was attributable to Interest on Fixed Deposits of Rs. 36.12 Lakhs in FY 2023-24 as compared to Rs. 30.76 Lakhs in FY 2022-23 and other Miscellaneous income consisting of Interest on late payments received of Rs. 7.42 Lakhs in FY 2023-24 as against Nil in FY 2022-23.

Total Expenses:

Total expenses for FY 2023-24 were Rs. 20,608.28 Lakhs, compared to Rs. 14,907.86 Lakhs in FY 2022-23, reflecting a rise of 38.24%. This increase was due to increase in business operations of the Company resulting into higher material costs, employee benefits, depreciation and other operational expenses.

Cost Of Material Consumed:

The cost of material consumed increased to Rs. 13,989.00 Lakhs in FY 2023-24 from Rs. 13,281.53 Lakhs in FY 2022-23, representing an increase of 5.33%. Such increase was due to higher material cost on account of increase in business operations of the Company.

Purchase of Stock in Trade:

The purchase of stock in trade decreased to Rs. 561.48 Lakhs in FY 2023-24 from Rs. 1,017.25 Lakhs in FY 2022-23, representing a reduction of 44.80%.

Change in inventories of Work in progress and Stock-In-Trade:

Our Company has incurred Rs. 1,140.95 Lakhs as Change in inventories of Work in progress and stock in trade during the financial year 2023-24 as compared to Rs. (3,252.39) Lakhs in the financial year 2022-23.

Employee benefits expense:

Our Company has incurred Rs. 862.85 Lakhs as Employee benefits expense during the financial year 2023-24 as compared to Rs. 594.82 Lakhs in the financial year 2022-23. The increase was due to increase in (i)Employees Salary, Bonus and Wages Expenses from Rs. 508.56 lakhs in FY 2022-23 to Rs. 722.70 lakhs in the financial year 2023-24, (ii) PF,& ESIC Expenses from 25.18 in FY 2022-23 to Rs. 45.64 Lakhs in FY 2023-24 (iii) Incentives of Rs. 28.13 Lakhs in FY 2023-24 as against Rs. 0.20 Lakhs in FY 2022-23.

Finance Cost:

Our Company has incurred Rs. 1117.65 Lakhs as finance cost during the financial year 2023-24 as compared to Rs. 797.10 Lakhs in the financial year 2022-23. There was an upsurge of 40.21% in the Finance Cost in this period as compared to FY 202223. The increase was primarily due to increase in (i)LC and Bill Discounting Charges of Rs. 376.43 Lakhs in FY 2023-24 as compared to Rs. 224.35 Lakhs in FY 2022-23 (ii) Interest on Unsecured Loans from Rs. 217.08 in FY 2022-23 Lakhs to Rs.

291.95 Lakhs in FY 2023-24, (iii) Interest on CC/OD from Rs. 222.47 in FY 2022-23 Lakhs to Rs. 280.48 Lakhs in FY 202324, and (iv) Processing fees and Other charges from Rs. 83.74 Lakhs to Rs.130.81 Lakhs during the FY 2023-24.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2023-24 stood at Rs. 235.66 Lakhs as against Rs. 174.90 Lakhs during the financial year 2022-23. The increase in depreciation was around 34.74 % which was due to purchase of building, Plant & machinery, furniture, vehicle and other office equipment.

Other Expenses:

Our Company incurred Rs. 2,700.69 Lakhs in other expenses during FY 2023-24, compared to Rs. 2,294.64 Lakhs in FY 2022 23, an increase of 17.70%. This rise was driven by higher costs in Hiring Charges, Detention charges, Testing Charges, Security charges, Power & Fuel, Factory Expenses, Bad Debts, Legal & Professional Charges and Repair & Maintenance. The higher expense was offset by reduced Labour Charges, Brokerage and Rates & Taxes expenses.

Restated profit before tax:

Net profit before tax for the financial year 2023-24 increased to Rs. 1,269.02 Lakhs as compared to Rs. 680.92 Lakhs in the financial year 2022-23, marking an increase of 86.37%. This significant growth was primarily driven by the factors mentioned above. The revenue from operations of the company increased by approximately 40.34%, mainly due to higher sales of Goods.

Restated profit for the year:

As a result of the foregoing factors, our profit after tax increased by 84.55%, rising from Rs. 510.70 Lakhs in the financial year 2022-23 to Rs. 942.49 Lakhs in the financial year 2023-24.

Note: Details of Cost of Material Consumed (COM) as a percentage of Revenue from Operations, along with related indicators such as Change in Inventory and Purchase of Stock-in-Trade, for a comprehensive understanding of the Companys cost structure:

Period	Revenue from Operations (Rs in lakhs)	Cost of Material Consumed (Rs in lakhs)	% of Revenue	Change in Inventory (Rs in lakhs)	Purchase of Stock-in-Trade (Rs in lakhs)
FY 2022-23	15,558.03	13,281.53	85.37%	-3,252.39	1,017.25
FY 2023-24	21,833.76	13,989.00	64.07%	1,140.95	561.48
FY 2024-25	27,305.35	22,472.75	82.30%	-3,737.59	Nil

Explanation for Fluctuations:

1. Inventory Movement and WIP:

The Company executes orders based on specific project contracts. As such, inventory primarily includes raw materials and work- in-progress (WIP) aligned with active fabrication timelines.

2. Business Model Transition:

Over the past years, the Company has transitioned towards a greater focus on manufacturing activities, resulting in a year-on- year decline in trading operations. Purchases of stock-in-trade have reduced from Rs1,017.25 lakhs in FY 2022-23 to nil in the FY 2024-25, which also contributes to shifts in cost ratios.

Therefore, when factoring in inventory movement and the business model evolution, the changes in Cost of Material Consumed as a percentage of revenue are consistent with operational and industry norms.

Information required as per Item (II)(C)(iv) of Part A of Schedule VI to the SEBI Regulations:

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions: There has not been any unusual events or transactions on account of our business activity.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations:

Other than as described in the section titled Risk Factors beginning on page 26 of this Draft Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations: Apart from the risks as disclosed under Section Risk Factors beginning on page 26 of the Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in the relationship between costs and revenues: Other than as described in the sections Risk Factors, Our Business and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 26, 152 and 289 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

5. Segment Reporting: Our company operates in a single segment i.e. Structural Engineering and Fabrication.

6. Status of any publicly announced New Products or Business Segment: Our Company has not announced any new product or service during the last three financial years.

7. Seasonality of business: Our business is not subject to seasonality. For further information, see Industry Overview and Our Business on pages 114 and 152 respectively.

8. Dependence on single or few customers: Substantial portion of our revenue has been dependent upon few customers. For details, please refer to risk factor Our business is substantially dependent on certain key customers, from whom we derive a significant portion of our revenues. The loss of any significant customer may have a material and adverse effect on our business and results of operations on page 26 of this DRHP.

9. Competitive conditions: Competitive conditions are as described under the Chapter Our Business - Competition beginning on page 165 of this Draft Red Herring Prospectus

10. Details of material developments after the date of last balance sheet i.e., March 31, 2025:

• Jankhana Vasanji Gala has resigned as Company Secretary and Compliance Officer with effect from June 30, 2025.

• Siddhi Bharatbhai Parmar has been appointed as Company Secretary and Compliance Officer with effect from July 01, 2025.

• Kajal Biswas ,Senior Manager (PPC) designated as SMP has resigned as Senior Manager (PPC) with effect from May 30, 2025.

• Jaideep Sudesh Mestry appointed as Project Manager (SMP) with effect from July 01, 2025.