Royal Arc Electrodes Ltd Auditor Reports

Offer of equity shares (“SME IPO”) prepared in terms of the requirements of:

(i) sub-clauses (i) and (iii) of clause (b) of sub-section (1) of section 26 of the Companies Act, 2013 (“the Act”) read with Companies (Prospectus and Allotment of Securities) Rules 2014;

(ii) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2018, as amended (“ICDR Regulations”) and related amendments / clarifications from time to time issued by the Securities and Exchange Board of India (“SEBI”)

(iii) The Guidance Note on Reports in Company Prospectus (Revised 2019) issued by the Institute of Chartered Accountants of India (“ICAI”), as amended from time to time (the “Guidance Note”)

(i) The terms of reference and terms of our engagement agreed upon with you in accordance with our letter dated March 21, 2024 in connection with the Draft Offer Document/ Offer Document being issued by the Company for its proposed Initial Public Offering of equity shares on relevant stock exchange (“IPO” or “SME IPO”); and

(ii) The Guidance Note on Reports in Company Prospectus (Revised) issued by the Institute of Chartered Accountants of India (“Guidance Note”). The Guidance Note also requires that we comply with the ethical requirements of the Code of Ethics issued by the ICAI.

(iii) Concepts of test checks and materiality to obtain reasonable assurance based on verification of evidence supporting the Restated Financial Information; and

(iv) The requirements of Section 26 of the Act and the ICDR Regulations. Our work was performed solely to assist you in meeting your responsibilities in relation to your compliance with the Act, the ICDR Regulations and the Guidance Note in connection with the IPO.

(i) The “restated statement of asset and liabilities” of the Company as at March 31, 2024, March 31, 2023, and March 31, 2022 examined by us, as set out in Annexure I to this report read with significant accounting policies in Annexure IV has been arrived at after making such adjustments and regroupings to the audited financial statements of the Company, as in our opinion were appropriate and more fully described in notes to the restated summary statements to this report.

(ii) The “restated statement of profit and loss” of the Company for the period ended on March 31, 2024, March 31, 2023 and March 31, 2022 examined by us, as set out in Annexure II to this report read with significant accounting policies in Annexure IV has been arrived at after making such adjustments and regroupings to the audited financial statements of the Company, as in our opinion were appropriate and more fully described in notes to the restated summary statements to this report.

(iii) The “restated statement of cash flows” of the Company for the period ended on March 31, 2024, March 31, 2023 and March 31, 2022 examined by us, as set out in Annexure III to this report read with significant accounting policies in Annexure IV has been arrived at after making such adjustments and regroupings to the audited financial statements of the Company, as in our opinion were appropriate and more fully described in notes to restated summary statements to this report.

a) after incorporating adjustments for the changes in accounting policies and regrouping/reclassifications retrospectively, if any in the financial year ended March 31, 2024, March 31, 2023 and March 31, 2022 to reflect the same accounting treatment as per the accounting policies and grouping/classifications; and

b) In accordance with the Act, ICDR Regulations and the Guidance Note.

Annexure V -Notes to the Restated Financial Information:

I. Share capital as restated as appearing in Note A to this report;

II. Reserves and surplus as restated as appearing in Note B to this report;

III. Long-term borrowings as restated as appearing in Note C to this report;

IV. Deferred tax asset/liability as restated as per Note D to this report;

V. Other Long-Term Liabilities as restated as per Note E to this report;

VI. Long-term provisions as restated as appearing in Note F to this report;

VII. Short-term borrowings as restated as appearing in Note G to this report;

VIII. Trade payables as restated as appearing in Note H to this report;

IX. Other current liabilities as restated as appearing in Note I to this report;

X. Short-term provisions as restated as appearing in Note J to this report;

XI. Property, Plant & Equipment as restated as appearing in Note K to this report;

XII. Non-current assets as restated as appearing in Note L to this report;

XIII. Other Non-current assets as restated as appearing in Note M to this report;

XIV. Inventories as restated as appearing in Note N to this report;

XV. Trade receivables as restated as appearing in Note O to this report;

XVI. Cash & cash equivalents as restated as appearing in Note P to this report;

XVII. Short-term loans & advances as restated as appearing in Note Q to this report;

XVIII. Other current assets as restated as appearing in Note R to this report;

XIX. Revenue from operations as restated as appearing in Note S to this report;

XX. Other income as restated as appearing in Note T to this report;

XXI. Raw material Consumed as restated as appearing in U to this report;

XXII. Change in inventories of finished goods as restated as appearing in Note V to this report;

XXIII. Employees benefit expenses as restated as appearing in Note W to this report;

XXIV. Finance cost as restated as appearing in Note X to this report;

XXV. Depreciation and Amortization as restated as appearing in Note Y to this report; XXVI. Other expenses as restated as appearing in Note Z to this report;

XXVII. Contingent liabilities as restated as appearing in Note AD to this report;

XXVIII. Information in respect of CSR expenditure required to be spent by the company in Note BJ to this report;

XXIX. Related party transactions as restated as appearing in Note AI to this report;

XXX. Tax shelter as restated as appearing in Note BK to this report;

XXXI. Capitalization statement as at 31st March, 2024 as restated as appearing in Note BL to this report;

XXXII. Statement of accounting ratios & additional Information as restated as appearing in Note AY to this report;

10. The report should not in any way be construed as a re-issuance or re-dating of any of the previous audit reports issued by any other firm of chartered accountants nor should this report be construed as a new opinion on any of the financial statements referred to therein.

11. We have no responsibility to update our report for events and circumstances occurring after the date of the report.

12. In our opinion, the above financial information contained in Annexure I to VII of this report read with the respective significant accounting policies and notes to restated summary statements as set out in Annexure IV are prepared after making adjustments and regrouping as considered appropriate and have been prepared in accordance with the Act, ICDR Regulations, Engagement Letter and Guidance Note.

13. Our report is intended solely for use of the Board of Directors for inclusion in the Draft Offer Document/ Offer Document in connection with the SME IPO. Our report should not be used, referred to or adjusted for any other purpose except with our consent in writing.