Directors Report of Sattva Engineering Construction Ltd.

Mar 31, 2025

Your Directors have pleasure in presenting the 20^th Annual Report on the business and operations of the Company and the Financial Statements for the Year ended March 31 2025.

SUMMARISED FINANCIAL HIGHLIGHTS

Particulars	Current Year For the year ended 31st March, 2025 (Rs. in lakhs)	Previous Year For the year Ended 31st March, 2024 (Rs. in lakhs)
Gross Revenue and other income	9484.97	7743.63
Profit / (Loss) before Interest, Depreciation and Tax	1976.20	1222.70
Less: Interest	679.31	566.82
Profit/ (Loss) before Depreciation _	1296.89	655.88
Less: Depreciation	35.54	27.64
Profit / (Loss) before Tax	1261.35	628.24
Less: Provision for Taxation	348.08	182.78
Deferred Tax	(0.64)	(10.90)
Profit / (Loss) after Tax	913.91	456.37

DIVIDEND

The Directors have decided not to recommend any Dividend for the Financial Year 2024-25 in order to conserve liquid funds. The Company’s Dividend Distribution Policy is available on the website of the Company at: https://sattvaengg.in/disclosure-under-regulation/

RESERVES

The entire Profit after tax has been added to the Surplus in the Profit and Loss Account and carried to the Balance Sheet.

STATEMENT OF THE AFFAIRS OF THE COMPANY

During the year under review, the Gross Revenue of the Company amounting to Rs.94.85 Crores (Previous Year - Rs. 77.43 Crores) recorded a significant increase. Corresponding to this increase and on account of the continued optimization of Direct Contract Expenses, the Profit aftertax recorded a significant increase and amounted to Rs.913.91 lakhs (Previous year - Rs. 456.37 lakhs). Your Directors are confident that the Revenue and the profitability of the Company would continue to record a progressive increase in the coming years. ^===7=

MATERIAL CHANGES/COMMITMENTS DURING THE FINANCIAL YEAR Initial Public Offer of the Equity Shares of the Company

As indicated in the last year''s Report, towards meeting the Company''s long temr— requirements of working capital for expansion of its operations, , the Company, at the

Board Meeting held on the 28^th August, 2024, took a decision to list its Equity Shares on the SME Exchange and to engage the services of a Merchant Banker and other professionals. The proposal was approved by the shareholders at the Extraordinary General Meeting held on the 26^th February, 2025. The Company took the following steps as a prelude to the proposed Initial Public Offer.

Conversion as a Public Company

The Company converted itself into a Public Company with effect from the 23^rd December, 2024 and the Memorandum and Articles of Association were amended accordingly.

Share Capital

To facilitate further issue of shares, the Authorised Capital was increased to Rs. 18,00,00,000 (Rupees Eighteen Crores Only), from Rs. 1,50,00,000 (Rupees One Crore Fifty Lakhs Only).

Private Placement

For meeting its immediate requirements, the Board of Directors, approved the raising of funds in the form of equity by way of making a private placement offer, subject to the approval of the shareholders of the Company in a General Meeting. The proposal involved the issuance of up to 1,61,000 (Rupees One Lakh Sixty One Thousand Only) fully paid up equity shares having the face value of ?10 (Rupees Ten Only) each for cash at an issue price of ?702 (Rupees Seven Hundred and Two Only) per Subscription Share including a premium of ? 692 (Rupees Six Hundred and Ninety Two Only) per Subscription Share (based on the Valuation Report obtained by the Company), amounting to ?11,30,22,000 (Rupees Eleven Crores Thirty Lakhs Twenty Two Thousand Only) to certain selected subscribers belonging to the Non-Promoter Category. At the Extraordinary General Meeting held on the 2^nd September, 2024, the consent of the shareholders for the private placement offer was obtained. Following the issue of the letter of offer, subscriptions were received for the issue and allotment of 1,60,256 Equity Shares (One Lakh Sixty Thousand Two Hundred and Fifty Six Equity Shares Only) of Rs.10 each, at a premium of Rs. 692/- each and the shares were allotted on the 10^th September, 2024.

Dematerialisation of the Shares of the Company

Towards dematerialising its Equity Shares, the Company, during the month of August, 2024, executed the Tripartite Agreements with the National Securities Depository Limited (NSDL), the Central Depository Services Limited (CDSL) and MUFG Intime India Private Limited, the RTA appointed for the purpose. The Equity Shares of the Company have been admitted to the Depositories and the ISIN - INE14DW01018- allotted to the Company had been activated to enable the shareholders of the Company to avail of the depository services. Bonus Issue

Immediately after the private placement of shares, the Company, after obtaining the approval of the shareholders, effected a bonus issue, in the ratio of 10 (ten) Bonus Equity Shares for every 1 (one) Equity Share of the Company held as on the 17^th December, 2024, being the record date fixed for the purpose, by capitalising a sum of Rs.11,59,25,600 (Rupees Eleven Crores Fifty Nine Lakhs Twenty Five Thousand and Six Hundred Only) out of the Company''s free reserves, as per the audited accounts of the Company for the financial year ended March 31, 2024. The Bonus Shares, comprising 1,15,92,560 Equity Shares (One Crore Fifteen Lakh Ninety-Two Thousand Five Hundred Sixty Equity Sharpy

Only) of the face value Rs.10 (Rupees Ten Only) each were allotted on the 20^th December,

2024.

Following the private placement of the Equity Shares and the Bonus Issue, the Issued, Subscribed and Paid-up Equity Share Capital as on the 31^st March, 2025, stood at Rs. Rs.12,75,18,160 (Rupees Twelve Crores Seventy Five Lakhs Eighteen Thousand One Hundred and Sixty Only), consisting of 1,27,51,816 Equity Shares (One Crore Twenty Seven Lakhs Eight Hundred and Sixteen Equity Shares Only) of Rs.10 (Rupees Ten Only) each.

MATERIAL EVENTS SUBSEQUENT TO THE CLOSURE OF THE FINANCIAL YEAR

At the Board meeting held on the 9th April, 2025, the Draft Red Herring Prospectus was approved and adopted by the Board and it was filed with the National Stock Exchange (NSE) on the 11^th April, 2025. After responding to all the queries raised by the NSE, the In-Principle approval was received by the Company vide NSE’s letter dated 29^th July, 2025.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

During the year under review, there has been no change in the nature of business of the Company.

DEPOSIT

The Company has not accepted any deposits from the public, except for certain short term unsecured loans for the purpose of meeting its urgent requirement of funds and ail such loans have been repaid. No amount is outstanding as on date

CONSERVATION OF ENERGY

The Company continues to conserve energy to the extent possible across all areas of its operation. However, the Company is yet to initiate steps towards utilization of alternative sources of energy.

RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION ETC

In the opinion of the Directors, the matters relating to Research and Development, Technology Absorption, etc. are not applicable to the Company.

STATUTORY AUDITORS

During the year, M/s.Nathan and Company, Chartered Accountants, the Statutory Auditors of the Company, submitted their resignation owing to personal reasons. In the casual vacancy created by this resignation, upon the recommendation of the Board of Directors, M/s. Ramanujam and Boovarahan, Chartered Accountants, were appointed as the Statutory Auditors of the Company at the Extraordinary General Meeting held on the 25^th November, 2024 to hold office until the conclusion of Annual General Meeting to be held during the year

2025. __-

REPORTS OF THE STATUTORY AND SECRETARIAL AUDITORS

It was noted that there were no qualifications in the Auditors’ Reports, except for an observation regarding non-compliance with Section 73 of the Companies Act, 2013, in respect of certain unsecured loans taken by the Company. However, the entire loan amount, along with the applicable interest, has been repaid as on the date of this Report.

SECRETARIAL AUDIT

Though Secretarial Audit is not applicable to the Company for the year under review under the provisions of Section 204 of the Companies Act, 2013, in the context of the proposed listing of the Equity Shares of the Company in the Stock Exchanges, the Board had appointed Mr.K.Rajagopalan, Practicing Company Secretary, as the Secretarial Auditor of the Company for the financial year 2024-25.

The Secretarial Audit Report for the financial year 2024-25 is annexed to this Report.

COST AUDIT

Not applicable

MAINATENANCE OF COST RECORDS

The maintenance of cost records as specified by the Central Govt under sub-section (1) of Section 148 of the Companies Act, 2013 is not applicable to the Company.

INTERNAL AUDIT

M/s.Vikas Mishra & Company, Chartered Accountants, Chennai, were appointed as the Internal Auditors of the Company, for the period commencing from the 1^st January, 2025 and ending on the 31^st March, 2026.

EXTRACT OF THE ANNUAL RETURN

The Annual Return of the Company will be placed on its website, www.sattvaengg.in

FOREIGN EXCHANGE EARNINGS AND OUTGO:

Inflow: Nil Outflow: Nil

ADEQUACY OF INTERNAL FINANCIAL CONTROL

The Company has in place adequate internal financial controls with reference to financial statements.

EMPLOYEE STOCK OPTION SCHEME - 2025

During the year under review, the Company formulated an Employee Stock Option Scheme towards rewarding the employees of the Company. The Scheme was approved by the Shareholders of the Company at the Extra Ordinary General Meeting held on the February, 2025. —

The provisions of Section 135 of the Act became applicable to the Company, since the Net Profits before tax for the year 2023-24, had exceeded Rs.5 Crores. Accordingly, a Corporate Social Responsibility Committee (CSR) was constituted and a Corporate Social Responsibility Policy was adopted by the Company, as recommended by the CSR Committee. Upon the recommendations of the CSR Committee, an amount of Rs.6,03,913/-(Rupees Six Lakhs Three Thousand Nine Hundred and Thirteen Only), being 2% of the Average Net Profits of the immediately preceding three Financial Years, was donated to Rajalakshmi Educational Trust. The CSR Annual Report is annexed to this Report.

As on the date of this Report, the following Directors are the members of the Corporate Social Responsibility Committee constituted by the Board of Directors.

1. Mr.Venkatraman Sankar - Chairman

2. Mr.RajagopalSekar

3. Mr.Santhanam Sesahdri

CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors

During the year under review, considering the proposed initial public offer of the Equity Shares of the Company, three (3) Independent Directors and a woman Director were appointed on the Board. The existing Wholetime Directors, Mr.S.Seshadri and Mr.R.Sekar were reappointed under the provisions of Section 196 and 197 of the Companies Act, 2013, read with the Schedule V to the Act, for a period of 3 years, with effect from the 10^th February, 2025, following the conversion of the Company into a Public Company.

In accordance with the Articles of Association, Mr.Santhanm Seshadri would retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Key Managerial Personnel

Mr.Balaji Srinivasan was appointed as the Company Secretary cum Compliance Officer with effect from the 16^th December, 2024. However, in response to his request to be relieved from his office owing to certain personal reasons, his resignation was accepted with effect from the 11^th July, 2025 and on the same date, Mr.Laxmikanth Tangudu was appointed as the Company Secretary cum Compliance Officer of the Company.

Ms.Sujatha, the General Manager (Commercial) of the Company, was appointed as the Chief Financial Officer (CFO) of the Company with effect from the 20^th December, 2024. Subsequently, she was elevated to the Board and became a Wholetime Director cum CFO, with effect from the 10^th February, 2025.

Report is as under:

1. Mr.SanthanamSeshadri - Wholetime Director

2. Mr.RajagopalSekar - Wholetime Director

3. Ms.Govindarajan Sujatha - Wholetime Director

The constitution of the Board of Directors and Key Managerial Personnel as on the date of this

4. Mr.Venkatraman Sankar - Independent Director (with effect from the 2 Novembers 2024)

5. Mr.Krishnamachari Doraiswamy -Independent Director (with effect from the 14^th February, 2025)

6. Mr. Venkatachalam Sesha Ayyar -Independent Director (with effect from the 20^th February, 2025)

7. Mr.Laxmikanth Tangudu - Company Secretary cum compliance Officer

8. Ms.G.Sujatha - Chief Financial Officer

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met twenty-one (21) times during the Financial Year 2024-25 on -

20.04.2024, 02.05.2024, 21.05.2024, 08.07.2024, 05.08.2024, 07.08.2024, 16.08.2024,

29.08.2024, 02.09.2024, 04.09.2024, 10.09.2024, 02.11.2024, 16.12.2024, 20.12.2024,

10.02.2025, 14.02.2025, 20.02.2025, 26.02.2025, 04.03.2025, 15.03.2025 and 28.03.2025.

COMMITTEES OF THE DIRECTORS

During the year under review in the context of the proposed listing of the Equity Shares of the Company, the following Committees were constituted:

1. Audit Committee

2. Nomination and Remuneration Committee

3. IPO Committee

4. Shareholders’ Grievance Committee

The Audit Committee comprises the following Members:

1. Mr. VenkatramanSankar-Chairman.

2. Mr. Venkatachala Sesha Ayyar - Member.

3. Mr. Krishnamchari Doraiswamy-Member.

The Nomination and Remuneration Committee comprises the following Members:

1. Mr. Venkatachalam Sesha Ayyar - Chairman

2. Mr. Venkatraman Sankar- Member

3. Mr. Krishanamachari Doraiswamy - Member

The IPO Committee comprises the following Members:

1. Mr. Santhanam Seshadri - Chairperson.

2. Mr. Rajagopal Sekar- Member.

3. Ms. Govindarajan Sujatha - Member.

The Shareholders Grievances Redressal Committee comprises the following Members :

1. Mr. Venkatraman Sankar - Chairman

2. Mr. Santhanam Seshadri - Member

3. Mr. Rajagopal Sekar - Member

Corporate Governance Policies

In the context of the proposed initial public offer of Equity Shares, the Board of Directors approved and adopted the following Corporate Governance Policies at their meeting held on the 9^th April, 2025.

1. Code of Conduct for Directors and Senior Management

2. Code of Fair Disclosure

3. Dividend Distribution Policy

4. Familiarization Program for Independent Directors

5. Health Safety and Environment Policy

6. Internal Procedures and Conduct for Prevention of Insider Trading

7. Materiality Policy for Identification of Group Companies

8. Nomination and Remuneration Policy

9. Policy for Archival of Documents

10. Policy for Determination of Material Events and Disclosure 11 - Policy for Determination of Material Subsidiaries

12. Policy for Determination of Material Creditors and Litigation

13. Policy on Evaluation of Board and Independent Directors

14. Policy on Prevention of Sexual Harassment at Workplace

15. Policy on Related Party Transactions

16. Policy on Terms of Appointment of Independent Directors

17. Vigil Mechanism Whistle Blower Policy for Directors and Employees

18. Policy on diversity on Board

19. Policy on Succession Planning for Board and Senior Management.

SUBSIDIARIES / ASSOCIATES / JOINT VENTURES

As on 31.03.2025, the Company had no subsidiaries, joint ventures and Associate Companies.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURT / TRIBUNALS

None.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not given any Loan or Guarantee. During the year under review, the Company, in response to a Rights Offer from Sattva CFS and Logistics Private Limited, subscribed for 27,600 Rights Shares of Rs.10 each at a premium of Rs.75 each.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of the related party transactions have been provided in the attached AOC 2. PARTICULARS OF EMPLOYEES

The Company has no employees, receiving remuneration that would attract the disclosure requirements under the provisions of Section 197 of the Companies Act, 2013 read with-: Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

SEXUAL HARASSMENT

Your Directors state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013.

RISK MANAGEMENT POLICY

The Company is operating in a very competitive market. Responding to the tenders floated by various clients, who mainly comprise, Government and quasi Government authorities and obtaining Orders on the basis of the lowest price is a big challenge. The Company is doing everything possible to overcome the risk involved in this process. The Company is in the process of developing and implementation Risk Management Policy.

DIRECTORS’ RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) in the preparation of the annual accounts, , the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the Profit of the Company for that year;

(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors had prepared the annual accounts on a going concern basis; and

(e) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

Your Directors would like to place on record their sincere appreciation to Customers, Suppliers, Shareholders, bankers and Employees for their co-operation and support.