Notes to Accounts of Arabian Petroleum Ltd.

Mar 31, 2025

In Financial Year 2023-24, the Company successfully completed its Initial Public Offering (IPO) and listed its Equity Shares on the SME Board of NSE Emerge. The Issue comprised of a Fresh Initio/ Public Issue of 28,92,000 equity shares of face value of Rs. lO/- each for cash at a price of Rs. 70/- per Equity Shares (including a premium of Rs. 60/- per Equity Share) aggregating to Rs.2024.40 lakhs. The proceeds of the issue have been utilized to meet working capital requirements, general corporate purposes and issue expenses.

Terms/Rights Attached to Equity Shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share and ranks pari passu.

During the year, the Company incorporated a wholly-owned subsidiary in the Jebel AH Free Zone (JAFZA) of the United Arab Emirates under the name Arzol Petroleum Trading FZE. The Company has subscribed to 5,000 equity shares, amounting to an investment of A ED 50,000, thereby holding 100% ownership in the subsidiary.

As the bank account of the subsidiary was in the process of being opened as on 31st March 2025, the disbursement of the subscribed capital shall be done in FY 2025-26 and the same has been shown as other current liability in FY 24-25.

The company had paid Rs. 37.24 lakhs EMD for acquisition of land for expansion purposes. However,, the same was forfeited by MIDC due to non payment of balance amount within the prescribed time limit as per the order issued by MIDC. The company is in the process to resolve the matter with MIDC and is reasonably assured to complete the land acquisition at the agreed consideration. During the year, the company has received refund of Rs. 7.52 lakhs which was paid as a deposit to MIDC for resloving the said matter.

1. Having regard to the nature and incidence of IPO Expenses, the management is of the opinion that it is to be disclosed separately to explain the performance of the company for the period.

2. During FY 2024-25, a fire incident occurred on 5th October, 2024 at the Company’s godown located in Bhiwandi, resulting in the loss of inventory valued at Rs. 232.30 lakhs. The inventory was adequately insured, and the Company lodged a claim with the insurance provider. The insurance claim was approved on 2nd May, 2025 for an amount of Rs. 199.72 lakhs,which was subsequently received on 8th May, 2025.

Further, in compliance with the provisions of Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017, the Company has reversed the Input Tax Credit (ITC) pertaining to the destroyed inventory. The ITC reversal amounts to Rs. 41.81 lakhs.

Having regard to the nature and incidence of such loss by fire, the management is of the opinion that the net loss arising from the incident, amounting to Rs. 74.39 lakhs is to be disclosed separately to explain the performance of the company for the period.

*(i) As per the requirements of ''AS 20 - Earnings per share’ the weighted average number of equity shares at the end of March 31, 2025 for the purpose of calculation of EPS is 1,08,92,000 equity shares [1,08,92,000*12/12]

**(li)Pursuant to the fresh issue of shares issue vide initial public issue dated October 9, 2023, the company issued 28,92,000 equity shares of face value of Rs.10/- each, increasing the number of equity shares to 1,08,92,000 equity shares from 80,00,000 equity shares .

(HI) /4s per the requirements of ''AS 20 - Earnings per share¹ the weighted average number of equity shares at the end of March 31, 2024 for the purpose of calculation of EPS is 94,46,000 equity shares [80,00,000 (28,92,000*6/12)].

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the operating segments of the Company.

The Company has integrated its organization structure with respect to its automotive and non-automotive business considering that the synergies, risks and returns associated with business operations are not predominantly distinct. The Company has aligned its internal financial reporting system in line with the new organization structure. As a result the Company''s reportable business segment consists of a single segment of "Lubricants" in terms of AS 17. The Managing Director (Chief Operating Decision Maker) is accountable for leading the growth agenda for an integrated Automotive and Industrial business.

All non-current assets of the Company excluding Deferred Tax Assets (Net) and Financial Assets are located in India. No customer individually accounted for more than 10% of the revenues from external customers during the years ended 31st March, 2025 and 31st March, 2024.

2.29.1	Restated Contingent Liabilities & Commitments		(Rs. in lakhs)
	Particulars	As at 31st March, 2025	As at 31st March, 2024
(a)	Contingent liabilities in respect of: Claims against the company not acknowledged as debts (Indirect Tax Matters)
(b)	Bank Guarantees given bythe Company	204.08	121.84
(c)	Export obligation under EPCG Scheme	-	192.14
	Total (a b)	204.08	313.98

2.29.5 Title deeds of Immovable Property not held in name of the Company:

The company has no such immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favor of the lessee) which is not held in the name of the company.

2.29.6 Details of Benami Property held:

No proceedings have been Initialed on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988(45 of 1988) and Rules made thereunder.

2.29.7 Relationships with struck off companies:

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

2.29.S Compliance with number of layers of companies:

The Company has compiled with the number or layers prescribed under the Companies Act, 2013.

2.29.9 Willful defaulter:

The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

2.29.10 Compliance with approved scheme(s) of arrangements

p The Company has not entered into any scheme of arrangement which has an accounting impact on current or

previous financial year.

2.29.11 Valuation of Property, plant and equipment, Intangible asset and Investment property

The Company has not revalued its property, plant and equipment or Intangible assets during the current or previous year.

2.29.12 Details of crypto currency or Virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

2.29.13 Undisclosed Income

There is no Income surrendered or disclosed as Income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

Accounting Standard IS on ''Employee Benefits'' as prescribed under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.

(a) Defined Contribution Plans:

The Company makes Provident Fund and Superannuation Fund , contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes. The company has recognized the following amounts in the Statement of Profit and Loss for the year.

(a) Debt-Equity Ratio has improved due to increase in Shareholder''s Equity.

(b) Debt Service Coverage Ratio has increased primarily due to decrease in short term and long term debt and increase in EBITDA.

(c) Net capital turnover ratio has decreased because Average Working Capital has increased.

2.33 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

2.34 During the financial year ended 31st March 2025, the Company has implemented an audit trail feature in its accounting software, in compliance with the requirements set forth by the Ministry of Corporate Affairs (MCA) under the Companies (Accounts) Amendment Rules, 2021. This feature was activated on 01st April 2023 and is fully operational.

Purpose and Functionality

The audit trail feature is designed to enhance transparency and accountability in financial reporting. It ensures that all changes made to the books of account are automatically recorded with the following details:

a. Date and Time: The exact timestamp when the modification was made.

b. User Identification: The identity of the user who made the modification.

c. Description of Change: A brief description of the modification made, capturing the nature of the change.

Impact on Internal Controls

The introduction of the audit trail feature significantly strengthens the Company''s internal controls over financial reporting. It provides a secure and traceable record of all transactions and adjustments, thereby reducing the risk of errors or unauthorized changes in the financial records. The Company has put in place appropriate policies to review and monitor the audit trail regularly.

Compliance and Future Reporting

The implementation of the audit trail feature aligns with the Company''s commitment to maintaining robust financial controls and ensuring compliance with all applicable regulations. The Company will continue to evaluate and enhance its accounting systems and controls as needed to meet regulatory requirements and best practices.

---

Mar 31, 2024

j Provisions and Contingencies;

A provision is recognized when the company has legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate the amount of the obligation. A contingent liability is disclosed when the company has possible or present obligation where it is not certain that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

k Impairment of Assets

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been as change in the estimate of recoverable amount.

I Employee Benefits

i. Short-term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss in the year in which the related service is rendered.

ii. Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss.

m Foreign Currency Transactions

i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

ii. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

iii. Non monetary foreign currency items are carried at cost.

iv. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the statement of Profit and Loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

n Investments

Long-term Investments are stated at cost after deducting provision, if any, for other than temporary diminution in the value of investments. Current Investments are stated at lower of cost and market / fair value.

2.37 Details of Benami Property held:

No proceedings have been Initialed on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988(45 of 1988) and Rules made thereunder.

2.3S Relationships with struck off companies:

The Company has no transactions with the companies struck off under Companies Act, 2013 or Companies Act, 1956.

2.39 Compliance with number of layers of companies:

The Company has compiled with the number or layers prescribed under the Companies Act, 2013.

2.40 Willful defaulter:

The Company has not been declared willful defaulter by any bank or financial institution or government or any government authority.

2.41 Compliance with approved scheme(s) of arrangements

The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

2.42 Valuation of Property, plant and equipment, Intangible asset and Investment property

The Company has not revalued its property, plant and equipment or Intangible assets during the current or previous year.

2.43 Details of crypto currency or Virtual currency

The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

2.44 Undisclosed Income

There is no Income surrendered or disclosed as Income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

Notes:

(a) Current Ratio has increased due to increase in Current Assets and decrease in Current Liabilities.

(b) Debt-Equity Ratio has improved due to increase in Shareholder''s Equity.

(c) Debt Service Coverage Ratio has increased primarily due to decrease in short term and long term debt and increase in EBITDA.

(d) Return on Equity Ratio has decreased due to increase in Shareholder''s Equity.

(e) Trade payables turnover ratio has increased due to decrease in Average Tirade Payables and Increase in Net Credit Purchases.

(f) Net capital turnover ratio has decreased because Average Working Capital has increased.

(g) Net profit ratio has increased because Net Profit (After Tax) has increased.

(h) Return on Capital employed has decreased because of increase in Capital Employed.

2.50 Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

For MNT And Associates LLP For & On Behalf Of Board Of Director;

Chartered Accountants

Firm Registration Number: W100115

Flemant Dalsukhrai Mehta Manan Hemant Mehta

Chairman & Whole Time Director

Managing Director

CANishitTanna DIN: 02507616 DIN: 05124747

Partner

Membership No. : 153147

Dharman Manoj Mehta Rekha Rani Narniwal

UDIN: 24153147BKETVE5083 Whole Time Director Company Secretary

Place : Thane & Chief Financial Officer

Date :29th May 2024_DIN: 07S21311_M No. : A33803_