Notes to Accounts of Pentagon Rubber Ltd.

Mar 31, 2025

*) Provisions and Contingent Liabilities:

Provision ore recognized (tor liabilities that can be measured by using a substantial degree of estimation) when:

a) the company has a present obligation as a result of a past event:

b) it is probable that outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated

Contingent liability arc diScUssed in the notes in case there iS:

i) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly nothin the control of the enterprise: or

ii) a reliable estimate of the amount of the obligation cannot be made.

a present obligation arising from past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) a reliable estimate of the amount of the obligation cannot be made.

fju ^irkmji Cj|L|ta | Bgnnwin&s

1 As per I1DFC Bank Sanction Letter dated 26.06.2024, an Amount of Rs. 2241.69 Lakhs was sanctioned to Pentagon Rubber Limited. Out of
the said amount. Rs. 1550 Lakhs was sanctioned against Cash Credit facility lor working capital needs of the company. Amount of Rs. 37
Lakhs was sanctioned against C''.F.CL and Balance amount of Rs. 654,69 Lakhs was against Bank Guarantees, Corporate Cards and Letter of

C rnrtiK

As per HDFC Bank Sanction Letter dated 1)7.10.2024, an Amount of Rs.3W7.50 Lakhs was sanctioned to Pentagon Rubber Limited at KOI of
9,30% p.a. Said Loan is secured by way of exbmtion of charge on Primary anti Collateral Securities
Primary Security:

CC limit and GECL are secured bv wav of hypothecation of Stocks of Raw materials. Stock in process. Finished Goods. Stores and spares
Book Debts, FDR with HDFC Bank and FDR against Bank Guarantee.

Collateral Security

Equitable Mortgage of Industrial Property of the Company situated at Village Behtra, Handsera road. Village Behra, Dera Hassi, DLst.
Mohull, Punjab-140507 and Personal guarantee of the Directors of the company

2 Sanctioned CHS I unit for Rs, 300 Lakhs From Axis Hank in secured by way of equitable mortagage of Residential Property located at House
No. 515P. Scitor Panchkula in the name of Sh Siibhash Join L/o ot Sh Adiish lain (Managing l>in.''i:inrl It is secured by way of Personal
Guarantee of oil the Directors of the Company and Sh Subhash lain.

3 An Ammmt of Tfs 110.00 Lakhs was sanctioned from National Small Industries Corporation Limited for raw material assistance and secured
by wav of hypothecation of hank Guarantee of !<¦• 1.10 Crore*.

for Term Loans

4 Term I Xian against Machinery wa« sanctioned by SIDB1 on 13.12.2023 for Rs. 810 Lakhs. Out ol Rs. rt 10 Lakhs Amount of Rs. 738 78 I oklis
ha> lieen disbursed by SlDBI till 31.03.2024. Loan is Repayable in 34 installments of R>1500000 per month » 7-8"» pa starting from
10.IW.2024.

Primary Security:

first charge by way of hypothecation in tavout ol S1D1II on all the movables ol the company including Plant & Machinery, Equipment.
Miscellaneous Fixed Assets. Machinery Spares, Tool* & Accessories, elc aquixed/to be acquired under the Project.

Collateral Security

I irsr Charge by way ot pledge of FDR ot Rs. 225 I a kits lien marked to $11 >1*1

8) Defined Benefit Plans
Gratuity scheme

The amount of gratuity has been computed based on respective employee''s salary and the years of employment with the Company Gratuity has been accrued based
on actuarial valuation as at balance sheet date, earned out by ar. Independent actuary
O Compensated Absences

Compensated absences include earned leaves. Company has the polrry of adjusting earned leaves with holidays taken by employe**. II earned leaves remains after
adjusting holidays then the same is paid to employees at year end itself. At year end. all earned leaves were adjusted with holidays taken by employees and no
payable was there as leave encashment
D)Bonus

Statutory Bonus is calculated and recognised in Books or Acaunts as p?i Payment of Bonus Act 19&5 and rules made thereunder. Considering the eligibility criteria
and other statutory requirements bonus payable to employees is calculated and paid.

The following tables set out the disclosures in reaped of the post-employment benefits and long term employee benefit recognised in Statement of Profit and
loss and Balance Sheet in accordance with Accounting Standard (AS) 15 are as under.

Remarks for more than 25% change in ratios of financial year 2024-25 as compared to financial year 20IV24.

1 This ratio has decreaed as Compared to previous year, on account of decrease in profitability and increase of Short Term Bocuwings
- Fhis ratio has decreased as compared to previous year, on account of decrease in Profitability in I V 2(124-15

3 This ratio has decreased as compared to previous year, on account of decrease in Turnover in FY 2024-15.

4 This ratio has increased as compared to previous year, on account ot payment of Trade Payables as on .51.03.2025.

5 This ratio has decreased as compared to previous year, on account of decrease in Turnover and Profitability In FY 2024-25.

b This ratio has decreased as compared tn previous year, on jccount of decrease in Turnover and Profitability and increase in Short Term Borrowings in FY 2024-25.
7 Tliis ratio has decreased as compared tn previous year, on account nf decrease in Turnover and Profitability in FY 2P24-25,

43 Tin? company did nnl have any long brim contracts including derivative- contracts for which there were any material foreseeable fosses.

44 Then'' are no amounts that are due to be transferred to the Investor Protection Fund in accordance with relevant provisions of the Companies Act 2013 and rules
made thereunder.

45 l"he Code on Social Secuiit), 2020 (''Code'') relating to employee benefits during employment and post- employment benefits has been notified in the Official
Gazette an 29th September 2020. Hie draft rules have been released on November 13, 2020 and suggestions have been invited from stakeholders which arc
under consideration by the Ministry. The impact ol Ilu- change will be assessed and accounted in the period in which said rules are notified for implementation

46 IT»e company does not have any Benami property, where any proceeding have been initiated or pending against the company for holding any benami properly
under the Benami Transactions (Prohibition) Act, 1%H (45 of 1988).

47 Die company has not been declared .w wilful defaulter by any bank or financial Institution or oilier lender.

48 Hie company does not have any transactions with companies struck oft under section 24b o: the Companies Act. 2013 or section sftil of Companies Act, 1W

49 Tlie Company does noi have any such transactions whkh is not recorded in the hooks of accounts that has been surrendered or disclosed as Income during the
year in the tax assessments under the Income Tax Act. I%1 (such a«. search or survey or any other relevant provisions of the Income Tax Act, 1%I).

50 Hie company has not advanced or loaned or Invested funds leilher from borrowed funds or share premium or any other sources or kind of funds) by the
company to or in any other pcrsonls) or entity(ies), including foreign ratifies ("Intermediaries'') with the understanding (whether recorekd in writing or
Otherwise) that the Intermediary shall.

a) directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

51 The company has not received any fund from any person o; entity .including foreign entities ( Funding parties) with the understanding (whcthiT recorded in
writing or otherwise) that the company shall.

a) directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by or on behalf of the funding party (Ultimate Beneficiaries)
or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries-

Pentagon

Mi*.'' ''.i»N

52

53

54

''lh° company has not traded c: invested in Crypto currency or Virtual Currency during the financial year.

Loans to Director. There are no loans or advances in the nature of loans are granted to Promoters, Directors, KMPs and then related parties (as defined under
Company Act, 20131. either severally or lointiy with any nthw person.

Tne Company has toenwed /mm banks ot financial tnsntutjnns assets with banks which are in agreement with the books of account except the folk wing mentioned below-

(In Lakhs)

Particulars	Month	Amount as per Books	Amount as per Stock Statement	Difference
Trade Fayables	Mar''25	136.17	216.72	180.55)
Inventories	Max?.5	2,069.06	ZQ56.U9	12.97
Trade Receivables	Mar''25	1,562.32	1,678.18	(115.86)

Summary of Reconciliation of Trade Receivables
Balance of Creditors against whom cheques are paid after year end as booked as Cheques Outstanding	(8055)
Stocks for the said amount were in Transit	12.97
Baiance of Debtors against whom cheques are received after year end as booked as Cheques in Hand	(115.86)

55

Company has Capital Work In Progress but No Intangible Assets Under Development Details of CWIP are as follows
CWIP	Less than 1 year	1-2 years	2-J years	Mere than J years	lota!*
Prtieos in progress	83829	003	003	003	83829
Prefects temporarily suspended	0.00	0.00	000	003	0.00
•Total	83829	003	0.03	003	83829

Reconciliation of Books of Accounts wife Form 26AS and Annual Information Summary fAlSj and Total Information Summary (TI5) is dune til! dale of signing
of financial statements as complete information will be reflected after filing of TDS returns by deductors Effect of the S3tr.e will be taken in Income Tax Returns
liter on

56

57

58

59

60
63
62

The company does not have any charge or satisfaction which is yet to be registered with Registrar of companies beyond the statutory period

Compliance with number of layers p:*scnbe d under danse (67'' of Section 2 of the Act read with Companies (restrictiim on number of layers'' Rules. 2017 is not
applicable as there is no subsidiary.

Tne Company has used the borrowings from banks fur the specific purpose for which it was taken at the balance sheet date.

The figures of comparative period have been regrouped! reclassified to make them comparable with currcm year figures, if any.

Balances of Debtors and Creditors are subject to confirmation
Figures in brackets indicate deductions.

A.s per our report of even date attached

ForS.Jain&Co
Chartered Accountants

For h on behalf of the Board of Directors
For Pentagon Rubber Ltd.

(Sanjetv Jain)

Panne?

MNc''.O&Wfi''?

(Asbish Jain)
Managing Director
DIN 00738412

(Saurabhjain)
Whole Time Diiector
DlNCCf761460

Place: Ludhiana
Date: 17.05.2025

(Vanm Jain)

Chief Financial On cer

(Priyanka Sfurma)
Company Secretary

Annual Report 2024*25

---

Mar 31, 2024

Provisions and Contingent Liabilities:

Provision are recognized (for liabilities that can be measured by using a substantial degree of estimation) when;

a) the company has a present obligation as a result of a past event;

b) it is probable that outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated

Contingent liability are disclosed in the notes in case there is:

i) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

ii) a reliable estimate of the amount of the obligation cannot be made.

a present obligation arising from past events but is not recognized

i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) a reliable estimate of the amount of the obligation cannot be made.

c) Terms/right attached to equity Shars

The company presently has only one class of equity shares having par value of Rs.10/- per share. Each holder of equity share is entitled to one vote per share. The equity shareholders are entitled for dividend as and when approved in the annual general meeting of the company.

In the event of liquidation of the Company,the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts.The distribution will be in proportion to the number of equity shares held by the shareholders.

Detail of Shares held by holding company or its ultimate holding company including subsidiaries or associates of the holding

d) company or ultimate holding company of the company.

There is no holding or ultimate holding company of the Company.

e) Aggregate number and class of shares allotted as fully paid up by wayof bonus shares

The above borrowings are due for repayment for less than 12 months from the reporting date. Further the Company does not have any unconditional right to defer settlement of liability of atleast twelve months from the reporting date.

Note: Details of Security

For Working Capital Borrowings

1 As per HDFC Bank Sanction Letter dated 06.02.2024, an Amount of Rs. 1441.69 Lakhs was sanctioned to Pentagon Rubber Limited. Out of the said amount, Rs. 750 Lakhs was sanctioned against Cash Credit Facility for working capital needs of the company, Amount of Rs. 37 Lakhs was sanctioned against GECL and Balance amount of Rs. 654.69 Lakhs was against Bank Guarantees, Corporate Cards and Letter of Credits.

Primary Security:

CC limit and GECL are secured by way of hypothecation of Stocks of Raw materials, Stock in process, Finished Goods, Stores and spares Book Debts, FDR against Bank Guarantee.

Collateral Security

Equitable Mortgage of Industrial Property of the Company situated at Village Behtra, Handsera road, Village Behra, Dera Bassi, Dist.

Mohali, Punjab-140507 and Personal guarantee of the Directors of the company.

2 Sanctioned OD Limit for Rs. 300 Lakhs from Axis Bank is secured by way of equitable mortagage of Residential Property located at House No. 515P, Sector-6, Panchkula in the name of Sh. Subhash JainF/o of Sh. Ashish Jain (Managing Director). It is secured by way of Personal Guarantee of all the Directors of the Company and Sh. Subhash Jain.

3 An Amount of Rs. 110.00 Lakhs was sanctioned from National Small Industries Corporation Limited for raw material assistance and secured by way of hypothecation of Bank Guarantee ofRs. 1.10 Crores.

For Term Loans

4 Term Loan against Machinery was sanctioned by SIDBI on 13.12.2023 forRs. 810 Lakhs. Out ofRs. 810 Lakhs, Amount of Rs. 758.78 Lakhs has been disbursed by SIDBI till 31.03.2024. Loan is Repayable in 54 installments ofRs 1500000 per month @ 7.8% pa. starting from 10.09.2024.

31 SEGMENT INFORMATION:

The company is primarily engaged in manufacturing & exporting of Conveyor & Transmission Rubber Belting. Segment Reporting is not applicable on the company as it has no multiple Business or Geographical Segments.

33 In accordance with the Accounting Standard (AS)-28 on “Impairment of Assets” the Company has assessed as on the Balance Sheet date whether there are any indications (listed in paragraphs 8 to 10 of the standard) with regards to Impairment of any assets. Based on such assessment it has been ascertained that no potential loss is present and therefore, formal estimate of recoverable amount has not been made. Accordingly no impairment loss has been provided in the books of account.

34 Title deeds of all immovable Property are held in name of the Company and No revaluation of Property, Plant & Equipment and Intangible assets has been carried out during the year.

35 Disclousure as per section 135 of Companies Act, 2013 on Expenditure on Corporate Social Responsibility is not applicable to the Company.

37 Balance of Debtor Maharashtra State Power was receivable for Rs.19.54 Lakhs. Considering various prevalent factors, it was decided by the management of the company that the same was doubtful to be recovered and the same is being written off over 5 years from FY 2022-23 and onwards. For FY 2022-23 and FY 2023-24, amount of Rs. 7.81 Lakhs has written and remaining amount will be written off in next three years.

Along with this, two other debtors namely, India Tyre & Rubber Co (India) Ltd are receivable for Rs. 57.68 Lakhs and Indian Oil Corporation Ltd (Haryana) are receivable for Rs. 0.33 Lakhs. Both debtors are considered doubful to be recovered by managemnent. Provision of Rs. 2.09 is being created in FY 2023-24 against doubtful debtors.

38 IPO Expenses are being booked as expense over 5 years from FY 2023-24 and onwards as IPO was came in July 2023.

B) Defined Benefit Plans Gratuity scheme

The amount of gratuity has been computed based on respective employee’s salary and the years of employment with the Company. Gratuity has been accrued based on actuarial valuation as at balance sheet date, carried out by an independent actuary.

C) Compensated Absences

Compensated absences include earned leaves. Company has the policy of adjusting earned leaves with holidays taken by employees. If earned leaves remains after adjusting holidays then the same is paid to employees at year end itself. At year end, all earned leaves were adjusted with holidays taken by employees and no payable was there as leave encashment.

The following tables set out the disclosures in respect of the post-employment benefits and long term employee benefit recognized in Statement of Profit and loss and Balance Sheet in accordance with Accounting Standard (AS) 15 are as under:

43 The company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

There are no amounts that are due to be transferred to the Investor Protection Fund in accordance with relevant provisions of the Companies Act 2013 and rules made thereunder.

The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post- employment benefits has been notified in the Official Gazette on 29th September 2020. The draft rules have been released on November 13, 2020 and suggestions have been invited from stakeholders which are 45 under consideration by the Ministry. The impact of the change will be assessed and accounted in the period in which said rules are notified for implementation.

The company does not have any Benami property, where any proceeding have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988).

47 The company has not been declared as wilful defaulter by any bank or financial Institution or other lender.

The company does not have any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

The company does not have any such transactions which is not recorded in the books of accounts that has been surrendered or disclosed as income during the

49 year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

The company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any other sources or kind of funds) by the

50 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.

a) directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

The company has not received any fund from any person or entity,including foreign entities ( Funding parties ) with the understanding (whether recorded in ³ writing or otherwise) that the company shall.

a) directly or indirectly lend or invest in other person or entities identified in any manner whatsoever by or on behalf of the funding party (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

52 The company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

Loans to Director: There are no loans or advances in the nature of loans are granted to Promoters, Directors, KMPs and their related parties (as defined under ^ Companies Act, 2013), either severally or jointly with any other person.

The Company has borrowed from banks or financial institutions on the basis of security of current assets and filed monthly returns or statements of current 54 assets with banks which are in agreement with the books of account except the following mentioned below:

Reconciliation of Books of Accounts with Form 26AS and Annual Information Summary (AIS) and Total Information Summary (TIS) is done till date of signing

55 of financial statements as complete information will be reflected after filing of TDS returns by deductors. Effect of the same will be taken in Income Tax Returns later on.

56 The company does not have any charge or satisfaction which is yet to be registered with Registrar of companies beyond the statutory period .

Compliance with number of layers prescribed under clause (87) of Section 2 of the Act read with Companies (restriction on number of layers) Rules, 2017 is not ^ applicable as there is no subsidiary.

58 The Company has used the borrowings from banks for the specific purpose for which it was taken at the balance sheet date.

59 The figures of comparative period have been regrouped / reclassified to make them comparable with current year figures, if any.

6Q Balances of Debtors and Creditors are subject to confirmation.

61 Figures in brackets indicate deductions.

As per our report of even date attached

For S. Jain & Co. For & on behalf of the Board of Directors

Chartered Accountants For Pentagon Rubber Ltd.

Sd/- Sd/- Sd/-

(Sanjeev Jain) (Ashish Jain) (Saurabh Jain)

Partner Managing Director Whole Time Director

M.No.088469 DIN:00738412 DIN:00761460

Sd/- Sd/-

Pl^{ace: Derabass}i

Date: 21.05.2024 Chief Financial Officer Company Secretary

---

Mar 31, 2023

13. Provision,ContingentLiabilitiesandContingentAssets

Provisions are recognized for liabilty that can be measured by using a substantial degree of estimation if -

a) there is a present obligation arising as a result of past event.

b) it is probable that an outflow of resources embodying economic benefits is expected to settle the obligation; and

c) c) a reliable estimate can be made of the amount of the obligation.

Contingent liability is disclosed in the case of :

a) a present obligation that arises from past-events

when it is not probable that an outflow of resources embodying economics benefits will be required to settle the obligation, or

a reliable estimate of the amount of the obligation cannot be made.

b) a possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprises.

B. NOTESONACCOUNTS

1 Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

2 In the opinion of the Board of Directors and to the best of their knowledge and belief, the value on realization of current assets, loans & advances in ordinary course of business will not be less than the amount at which they are stated in the Balance Sheet.

3. SegmentReporting

The company is primarily engaged in manufacturing & exporting of Conveyor & Transmission Rubber Belting. Segment Reporting is not applicable on the company as it has no multiple Business or Geographical Segments.

6. Provisions,ContingentLiabilitiesandContingentAssets (AS29)

Contingent liabilities as March 31st 2023 were Rs.226.12 Lacks against Bank Guarantee.

7. Previous to FY 2022-23, Gratuity was booked in Books of accounts on adhoc basis. However from FY 2022-23, actuarial valuation of gratuity is done and Provision of Rs.2.23 Lakhs is reversed on the basis of report of actuary.

8. Previous to FY 2022-23, DTA/DTL was not created on Gratuity. However from FY 2022-23, Gratuity is being considered for DTA/DTL creation.

9. Other adjustments in Reserves have amount of Rs.10.17 Lakhs which is adjustment against Plant & Machinery for FY 2021-22.

d. IPO Expenses are Booked as Prepaid & will be booked as expense over 5 years from FY 2023-24 onwards as IPO was came in July 2023.

n Balance of Maharashtra State Power was for Rs.19.54 Lakhs will be written off over 5 years from FY 2022-23 and onwards.

e. No Capital Work In Progress and No Intangible Assets Under Development.

b. No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

4. The company has not any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

5. No charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.

6. Title deeds of all immovable Property are held in name of the Company and No Revaluation of Plant, Property & Equipment is done by Company in FY 2022-23.

T7. No Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person.

8 The company has borrowings from banks or financial institutions on the basis of security of current assets and quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts. Borrowing From Banks and Financial Institutions areutilised for the purpose for which it was taken.

9. Company has not been declared wilful defaulter by any Bank, Financial Institution or any Lender.

20. The company has no such income which is not recorded in Books of Accounts but that has been surrendered or disclosed under Income Tax Act,1961.

21 No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 (Corporate Restructuring) of the Companies Act, 2013.

22. The Company has raised its Equity Share Capital from 400,00,00 Equity Shares to 540,00,00 by way of Bonus issue in the ratio of 7:20 of 14,00,000 Equity shares of Face Value of Rs. 10 Each on November 24,2022. Therefore, in Financial statements, EPS For FY 2021-22 has been calculated considering 54,00,000 shares.

23. CIF value of Import for the FY 2022-23 amounts to 1135.80 Lakhs.

24. Earnings in Foreign Currency for FY 2022-23 amounts to Rs. 100.79 Lakhs.

25. Figures for the previous year have been recast/regrouped wherever necessary.

26. Balances whether debit or credit are subject to verification/confirmation.

27. Rounding off of Figures are in Lacks thereof.

For S. Jain & Co Chartered Accountants FRN:009593N

Sd/-

Sanjeev Jain

Partner

M.No.088469

UDIN:23088469BGRUWR6164

Place:Ludhiana

Date: 01.09.2023