Royal Arc Electrodes Ltd Auditor Reports

To,

THE MEMBERS,

ROYAL ARC ELECTRODES LIMITED

Opinion

We have audited the accompanying financial statements of ROYAL ARC ELECTRODES LIMITED, (hereinafter referred to as the Company), (CIN: L31100MH1996PLC096296) which comprises of the Balance Sheet as at March 31, 2026, the Statement of Profit and Loss and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Financial Statements gives the information required by the Companies Act, 2013 ("the Act") in the manner so required and gives a true and fair view in conformity with the Accounting Standards prescribed under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2021, as amended, ("AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2026, the statement of Profit and loss and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the said financial statements.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Based on the examination of the books of accounts and explanations provided to us, we have determined that there are no key audit matters to report for the current period that requires disclosure in our report.

Information other than the Financial Statement and Auditors Report thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis and Board of Directors report including Annexure to the Boards Report, but does not include the financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

The Board of Directors Report including Annexure thereto, are expected to be made available to us. Any material misstatement thereon pertaining to it, will be reported thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained during the course of audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Managements Responsibility for the preparation of Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under Section 133 of the Act, read with the Companies (Accounting Standards) Rules, 2021, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error;

In preparing the Financial Statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

- Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management;

- Conclude on the appropriateness of management and Board of Directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern;

- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance of the company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit;

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards;

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of section 143(11) of the Act, we give in the "Annexure A", a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report, to the extent applicable, that:

A. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid Financial Statements;

B. In our opinion, proper books of account as required by law relating to preparation of the aforesaid Financial Statements have been kept so far as it appears from our examination of those books;

C. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the Financial Statements;

D. In our opinion, the aforesaid Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with of the Companies (Accounting Standards) Rules, 2021;

E. On the basis of the written representations received from the directors of the Company as on 31st March, 2026 taken on record by the Management and Board of Directors, none of the directors of the Company is disqualified as on 31st March, 2026 from being appointed as a director in terms of Section 164(2) of the Act;

F. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B"; Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the companys internal controls over the financial reporting.

G. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act; and

H. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i) The company does not have any pending litigation cases which would impact its financial statements as of March 31, 2026; ii) The company does not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii) There is no amount which is required to be transferred to the Investors Education and Protection Fund by the Company.

iv) a) The Management has represented that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The Management has represented, that, to the best of its knowledge and belief, other than as disclosed in the notes to the accounts, no funds (which are material either individually or in the aggregate) have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the presentation under sub clause(i)and(ii) of Rule 11(e), as provided under a) and b) above, contain any material misstatement.

v) The Company has declared and paid dividend during the year in compliance with the provisions of Section 123 of the Companies Act, 2013. Based on our examination of the relevant records and information provided to us, we report that the dividend declared and paid by the Company is in accordance with the applicable provisions of the Act.

vi) Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2026 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software.

Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with. Additionally, as proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31, 2026.

Annexure A to the Independent Auditors Report

(Refer to paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report of even date to the members of Royal Arc Electrodes Limited for the year ended March 31, 2026.)

As required by the Companies (Auditors Report) Order 2020 (the Order), issued by the Central Government of India, in terms of section 143(11) of The Companies Act, 2013, we further report on the matters specified in paragraph 3 and 4 of the said Order, that: -

Para 3 (i) According to the information and explanation given to us and on the basis of our examination of the records of the company, in respect of its property, plant & equipment and intangible assets:

(a) (A) The company is maintaining proper records showing full particulars, including quantitative details and situation of Property, Plant & Equipment. (B) The company is maintaining proper records showing full particulars of intangible assets.

(b) The Property, Plant & Equipment have been physically verified during the year by the management at reasonable intervals.

(c) The company has a program of verification to cover all the items of Property, Plant and Equipment (PPE) in a phased manner which in our opinion, is reasonable having regard to the size of the company and the nature of the assets. Pursuant to the program, certain PPE were physically verified by management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(d) According to information and explanations given to us, original title deeds of following immovable properties have been lodged with bank for obtaining secured loans as per details given below:

Details of Immovable Assets	Name of Bank	Available documents for verification
Land & Building	HSBC Bank Limited	Certified list and photocopies of documents
Exclusive charge on Industrial property located at Plot No. 6, Survey No. 91/Paiki -4 of Village Zaroli, Bhilad Road, Valsad, Gujarat - 396105

(e) The company has not revalued its Property, Plant & Equipment or Intangible assets during the year and hence reporting under clause 3(i)(d) of the Order is not applicable.

(f) According to the information and explanations given to us, no proceedings have been initiated against the company for holding benami property under The Benami Transactions (Prohibition) Act, 1988 and rules made thereunder and hence reporting under clause 3(i)(e) of the Order is not applicable.

Para 3 (ii)

(a) The inventory has been physically verified by the Management at regular intervals during the year. In our opinion the frequency of verification, coverage and procedure of such verification by the management is appropriate. No discrepancies of 10% or more in aggregate for each class of inventories were noticed on such physical verification of inventories performed as applicable, when compared with books of account.

(b) The Company has been sanctioned working capital limits in excess of Rs 5 crore, in aggregate, from banks during the year on the basis of security of current assets. Based on our examination of the books of account and the monthly statements of current assets submitted by the Company to the bank, we report that such statements are in agreement with the books of account.

Para 3 (iii)

In our opinion and according to the information and explanations given to us and the records produced, the company has not made investments in, provided any guarantee or security, granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, LLPs, or any other parties during the year, hence reporting under paragraph 3(ii)(a) to (f) of the Order are not applicable to the company.

Para 3 (iv)

In our opinion, according the information and explanations given to us, and as per the records examined by us, the company has not given any loans, not made any investments and has not provided any guarantees and securities within the meaning of Sections 185 and 186 of the Companies Act, 2013.

Para 3 (v)

According to the information and explanations given to us and based on examination of records, the company has not accepted any deposits from the public within the meaning of Section 73 to 76 or any other relevant provisions of the Companies Act,2013 and the rules made thereunder. Hence reporting under clause 3(v) of the Order is not applicable.

Para 3 (vi)

We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Act, related to the manufacturing activities, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

Para 3 (vii) According to the information and explanation given to us, in respect of statutory dues:

(a) The company is regular in depositing undisputed statutory dues including Goods and Service Tax, Provident Fund, Employees State Insurance, Income Tax, Cess and other statutory dues applicable to it with the appropriate authorities during the year. According to information and explanations given to us and based on audit procedures performed by us, no undisputed amounts payable in respect of the statutory dues were outstanding, at the end of the period ended 31, March 2026, for a period of more than six months from the date they become payable.

(b) According to records of the company, there are no statutory dues which have not been deposited on account of any dispute as on 31 March, 2026.

Para 3 (viii)

The company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessment under the Income Tax Act, 1961, as income during the year. Accordingly, reporting under Clause 3(vii) of the Order is not applicable to the company.

Para 3 (ix)

According to the information and explanations given to us and the records verified, in our opinion:

(a) The Company has not defaulted in any repayment of dues to any financial institution or bank or debenture holders. Hence reporting under clause (ix)(a) is not applicable.

(b) The Company has not been declared as a wilful defaulter by any bank or financial institution or any government authority. Hence reporting under clause (ix)(b) is not applicable.

(c) The Company does not have and has not obtained any term loans during the year. Accordingly, reporting under clause 3(ix)(c) of the Order is not applicable.

(d) There are no funds raised on short term basis which have been utilised for long term purposes by the company.

(e) The Company does not have any subsidiary, associates, or joint ventures. Accordingly, reporting under clause (ix)(e) is not applicable.

(f) The Company does not hold any securities in subsidiaries, joint ventures, or associate companies. Hence reporting under clause (ix)(f) of the Order is not applicable.

Para 3 (x)

(a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, reporting under clause 3(x)(a) of the Order is not applicable.

(b) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly or optionally convertible debentures. Accordingly, reporting under clause 3(x)(b) of the Order is not applicable.

Para 3 (xi)

(a) Based upon the audit procedures performed and information and explanations given to us by the management, we report that no fraud by the company or on the company by its officers/employees have been noticed or reported during the course of our audit.

(b) To the best of our knowledge and information available with us, a report under section 143(12) of the Act, in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014 was not required to be filed with the Central Government. Accordingly, the reporting under clause 3(xi)(b) of the Order is not applicable to the company.

(c) As per explanation given by the management, there were no whistle blower complaints received by the Company during the year and up to the date of this report.

Para 3 (xii)

The company is not a Nidhi Company as per the provisions of the Companies Act, 2013. Therefore, the requirement to report of clause 3(xii) of the Order are not applicable to the company and hence not reported on.

Para 3 (xiii)

In our opinion and according to the information and explanation given to us, based on our examination of the records of the company, transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable and details of such transaction have been disclosed in the financial statements as required by the applicable accounting standards.

Para 3 (xiv)

(a) In our opinion, the company has an adequate internal audit system commensurate with the size and nature of its business.

(b) We have considered the reports issued by the Internal Auditors of the Company, for the period under audit.

Para 3 (xv)

The company has not entered into any non-cash transactions with directors or persons connected with directors, during the year. Accordingly, reporting under clause 3(xv) of the Order is not applicable.

Para 3 (xvi)

The company is not required to be registered under section 45-IA of The Reserve Bank of India Act, 1934. Hence, reporting under clause 3(xvi)(a), (b) and (c) of the Order are not applicable.

Further, in our opinion and based on the information and explanations provided by the management, the Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, reporting under clause 3(xvi)(d) of the Order is not applicable to the Company.

Para 3 (xvii)

Based on our examination of the records and according to the information and explanation given to us, the Company has not incurred cash losses during the financial year and in the immediately preceding the financial year. Hence reporting under paragraph 3(xvii) of the Order is not applicable to the company.

Para 3 (xviii)

There has been no resignation of the statutory auditors during the year. Accordingly, reporting under clause 3(xviii) of the Order is not applicable.

Para 3 (xix)

On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, the auditors knowledge of the Board of Directors and management plans, and based on our examination of the evidence supporting the assumptions, nothing has come to our attention which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that the Company is not capable of meeting its liabilities existing at the balance sheet date as and when they fall due within a period of one year.

Para 3 (xx)

The Company has fully spent the required amount towards Corporate Social Responsibility (CSR) and there is no unspent CSR amount for the year requiring a transfer to a fund specified in Schedule VII to the Companies Act or special account in compliance with the provision of sub section (6) of Section 135 of the said Act.

Para 3 (xxi)

The reporting under para 3(xxi) of the Order is not applicable in respect of audit of standalone financial statements of the Company, accordingly no comment has been included in respect of clause (xxi) of the Order under this report.

Annexure B to the Independent Auditors Report

of even date to the members of Royal Arc Electrodes Limited

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013).

We have audited the internal financial controls over financial reporting of Royal Arc Electrodes Limited ("the Company") as on 31st March, 2026 in conjunction with our audit of the financial statements of the company for the Year ended on that date.

Management responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our Responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (The Guidance Note) and the Standards on Auditing specified under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial Controls over financial reporting were established and maintained and if such controls operated effectively in all material aspects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the financial controls system over financial reporting period and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of the internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of the material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for audit opinion on the companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorization of the management and directors of the company;

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material aspects, an adequate internal financial control system over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 2026, based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI).

For, J.H. Gandhi & Co.

Chartered Accountants

FRN: 0116513W

CA Jasmit H Gandhi

Proprietor

Membership Number: 044844

UDIN: 26044844AECDAX9740

Place: Mumbai

Date: 19-05-2026