Arete 22 Limited IPO

01At a glance

What the company does: casts, machines and paints aluminium alloy wheels for motorcycles and scooters, to designs supplied by the vehicle makers, at two plants with 6.00 million wheels a year of installed capacity (DRHP p.114, DRHP p.184).

Who pays it: two-wheeler makers, both petrol and electric, none of them named because the customers did not consent; the largest took 49.05% of FY26 revenue and the top five 98.77% (DRHP p.24). The company had 6 customers in FY26, 3 in FY25 and 1 in FY24 (DRHP p.24).

Why it is raising money: ₹150.0 crore of the fresh issue is for working capital in FY28 and FY29 and ₹120.0 crore to repay secured borrowings, with ₹34.8 crore for machinery and the rest, up to 25% of the gross proceeds, for general corporate purposes (DRHP p.113). No shareholder is selling (DRHP p.1).

How fast it has grown: revenue from ₹112.5 crore in FY24 to ₹537.9 crore in FY26, about 118.7% a year, and profit after tax from ₹2.9 crore to ₹45.0 crore, about 292.5% a year (our arithmetic, DRHP p.78). The company started manufacturing in 2023, so FY24 is close to its first year (DRHP p.32).

The one thing to understand: the growth has been paid for with borrowed money, not cash from operations. Operating cash flow was negative in FY25 and FY26, at −₹17.2 crore and −₹18.4 crore, while borrowings rose from ₹98.9 crore at March 2024 to ₹263.1 crore at March 2026 and ₹361.8 crore at August 31, 2026 (DRHP p.79, DRHP p.77, DRHP p.354).

02The business, in plain words

What Arete 22 does

A scooter or motorcycle wheel made from one piece of cast aluminium is lighter and stiffer than a spoked steel wheel, and it seals well enough to run a tubeless tyre. The commissioned industry report says the spread of tubeless tyres has made alloy wheels standard on most scooters and on a growing share of commuter motorcycles (DRHP p.162). Arete 22 makes these wheels and sells them only to vehicle makers, not to the replacement market (DRHP p.184).

A two-wheeler maker needs wheels for a specific model → the company develops a die to the maker's drawing, melts aluminium alloy ingots, pours them into steel moulds by gravity, heat-treats, machines, leak-tests and paints the wheel → it delivers to the maker's assembly plant against monthly schedules → it is paid per wheel, at a price that for some customers is revised monthly or quarterly with the aluminium price (DRHP p.184, DRHP p.25, DRHP p.30).

The company was incorporated in February 2021 and began manufacturing in 2023 (DRHP p.2, DRHP p.32). Its Kolar, Karnataka plant has 2.40 million wheels a year of capacity and its Bilaspur, Haryana plant, opened in FY26, 3.60 million (DRHP p.199). Each plant sits near customer assembly plants: Kolar an average of about 110 km from four, Bilaspur about 30 km from four (DRHP p.187). The industry report places alloy wheel makers that supply vehicle makers directly at the top tier of the auto components supply chain (DRHP p.159).

There are no long-term volume contracts. Customers issue letters of intent with non-binding forecast volumes and then monthly orders, and may cut, reschedule or cancel them (DRHP p.25). A new wheel programme takes about 18 to 24 months from development to commercial supply (DRHP p.184). From April 1, 2026 the company also owns Unicast Autotech Private Limited, a die-casting maker of aluminium engine and structural parts at a separate Kolar plant (DRHP p.216, DRHP p.184).

Earnings equation: Revenue = wheels sold × revenue per wheel. In FY26 the company sold 31,78,981 wheels at ₹1,671.46 a wheel, about ₹531.4 crore, which matches the ₹531.4 crore of wheel revenue (DRHP p.134, DRHP p.291, our arithmetic).

03Where the money comes from

Source: DRHP p.291, converted to ₹ crore. There are no export sales (DRHP p.291). By plant, Kolar earned all of FY24 and FY25 revenue and 50.37% of FY26, and Bilaspur 49.63% of FY26 (DRHP p.188). By state, FY26 revenue came from Karnataka 26.82%, Tamil Nadu 22.21%, Haryana 20.61%, Uttarakhand 17.03%, Andhra Pradesh 6.88% and Rajasthan 6.16%; in FY24 Tamil Nadu alone was 76.85% (DRHP p.38).

Arete 22 customers: how concentrated the revenue is

Source: DRHP p.24. Revenue depends on a very few customers: two of them took 91.78% of FY26 revenue, 49.05% and 42.73%, and the fourth and fifth together took 0.20% (DRHP p.24). In FY24 there was only one customer (DRHP p.24). Alloy wheels for two-wheelers were 98.77% of FY26 revenue (DRHP p.26). One customer, the third largest in FY26 at 6.79%, is invoiced in the name of Sahuwala Cylinders Private Limited, a promoter group company, because the company's vendor code had not been created (DRHP p.206). On the supply side, the largest supplier was 59.25% of FY26 purchases and the top ten 91.94% (DRHP p.28).

04The growth record

Arete 22 financials: revenue, profit and margins

Source: DRHP p.78, DRHP p.79, DRHP p.77, DRHP p.134, converted to ₹ crore. In rupees, revenue went from ₹112.5 crore in FY24 to ₹537.9 crore in FY26 and profit after tax from ₹2.9 crore to ₹45.0 crore (DRHP p.78).

Our arithmetic over FY24 to FY26: revenue grew about 118.7% a year (our arithmetic, DRHP p.78), operating EBITDA about 162.0% a year (our arithmetic, DRHP p.134) and profit after tax about 292.5% a year (our arithmetic, DRHP p.78). The EBITDA margin moved from 12.27% to 17.60%, up 533 basis points, and the PAT margin from 2.60% to 8.36%, up 576 basis points (DRHP p.134). Rounded to one decimal, the margins are 12.3% and 17.6% (DRHP p.134). Year by year, revenue rose 88.9% in FY25 and 153.3% in FY26, and profit after tax 323.3% and 264.0% (DRHP p.134).

Cash and debt: operating cash flow was −₹18.4 crore in FY26 (DRHP p.79), after −₹17.2 crore in FY25 and +₹11.7 crore in FY24 (DRHP p.79). Other income of ₹2.3 crore was 4.4% of FY26 profit before tax of ₹53.1 crore (our arithmetic, DRHP p.78). Net debt at March 2026 was about ₹248.9 crore, 2.6 times FY26 operating EBITDA (our arithmetic, DRHP p.77).

Return on capital employed was 23.2% in FY26 and debt to equity 3.1 times (DRHP p.134). Borrowings reached ₹361.8 crore on August 31, 2026, including the subsidiary (DRHP p.354). Of the fresh issue, ₹120.0 crore is for repaying borrowings and ₹150.0 crore for working capital (DRHP p.113). Contingent liabilities at March 31, 2026 were ₹2.7 crore (our arithmetic, DRHP p.80), and related-party transactions in FY26 added up to ₹86.5 crore (DRHP p.82).

Two accounting points sit under the table. FY24 and FY25 were first prepared under Indian GAAP and restated to Ind AS; the restatement reduced FY25 profit after tax from ₹19.0 crore to ₹12.4 crore and FY24 from ₹5.4 crore to ₹2.9 crore, mostly through higher depreciation, finance costs and other expenses (DRHP p.320, DRHP p.321). And the Karnataka investment promotion subsidy, ₹11.5 crore for FY26 and ₹8.1 crore for FY25, is booked as a reduction in the cost of fixed assets, not as income (DRHP p.271). The year end is March 31 throughout (DRHP p.23).

05What the growth is made of

Wheel revenue rose from ₹108.7 crore in FY24 to ₹531.4 crore in FY26, an increase of ₹422.7 crore (our arithmetic, DRHP p.291). Wheels sold rose from 7,45,461 to 31,78,981, about 4.3 times, while revenue per wheel rose from ₹1,457.58 to ₹1,671.46, about 14.7% (DRHP p.134, our arithmetic).

At FY24 revenue per wheel, FY26 volume would have brought in about ₹463.4 crore. Volume therefore accounts for roughly ₹354.7 crore of the increase and price and mix for the remaining ₹68.0 crore or so (our arithmetic, DRHP p.134). Over the same years the company's average aluminium purchase price rose from ₹217.67 to ₹270.75 a kilogram, about 24.4% (DRHP p.116, our arithmetic), and some customer contracts pass aluminium prices through with a lag (DRHP p.30). The document does not split revenue per wheel into metal pass-through and product mix, so the price part cannot be separated further.

The volume came from new capacity and new customers. Kolar's capacity doubled from 1.20 million to 2.40 million wheels in FY25, and Bilaspur added 1.55 million wheels of production in FY26 (DRHP p.345, DRHP p.199). Customers went from 1 to 6 and wheel designs sold from 9 to 49 (DRHP p.24, DRHP p.134).

06Earnings quality

The item that needs explaining is the cash. Profit rose to ₹45.0 crore in FY26 while operating cash flow was −₹18.4 crore (DRHP p.78, DRHP p.79). In FY26 inventories rose ₹68.2 crore and receivables and other receivables ₹51.4 crore, against ₹8.2 crore more of payables (DRHP p.79). Inventory stood at ₹111.2 crore at March 2026, of which ₹92.3 crore was work in progress (DRHP p.44). Aluminium is bought with 100% advance payment (DRHP p.115).

The company also explains that its receivable days were short earlier because, as a small enterprise, customers had to pay it quickly; it no longer qualifies and assumes 31 to 39 days from FY27 (DRHP p.116, DRHP p.120).

Two smaller points. A Karnataka subsidy receivable of ₹21.1 crore sat on the balance sheet at March 2026, against ₹8.1 crore a year earlier (DRHP p.277). And the FY26 sales returns were 0.02% of revenue, against 1.52% in FY24 (DRHP p.191).

07The balance sheet

At March 31, 2026 total assets were ₹416.4 crore: property, plant and equipment ₹153.4 crore, right-of-use assets ₹25.3 crore, inventories ₹111.2 crore, trade receivables ₹58.1 crore, other current assets ₹46.6 crore, cash ₹0.64 crore and other bank balances ₹13.5 crore (DRHP p.77). Against that: non-current borrowings ₹106.8 crore, current borrowings ₹156.2 crore, lease liabilities ₹23.1 crore, trade payables ₹29.0 crore and equity of ₹84.9 crore (DRHP p.77).

By August 31, 2026 borrowings, including the subsidiary's, were ₹361.8 crore: term loans ₹128.3 crore, working capital facilities ₹152.9 crore, vehicle loans ₹0.16 crore and ₹80.5 crore of unsecured loans (DRHP p.354). The unsecured loans are from the promoters and repayable on demand (DRHP p.50). Lenders hold personal guarantees from Abhishek Gupta, Pawan Kumar Gupta and Konica Gupta and a corporate guarantee from Sahuwala Cylinders Private Limited (DRHP p.354). The company is rated CARE BBB-; Stable for long-term facilities, first rated on January 30, 2026 (DRHP p.40). Contingent liabilities are ₹2.7 crore, almost all bank or corporate guarantees (DRHP p.80). Capital commitments were nil (DRHP p.299).

Source: DRHP p.354, DRHP p.113, our arithmetic. The after-issue figure assumes the full ₹120.0 crore is applied to the August 2026 balance and nothing else changes; the company says it may refinance or draw further meanwhile (DRHP p.121). Equity after the issue cannot be stated because the price and expenses are blank (DRHP p.353).

08What the money is for

Arete 22 IPO objects: what the money is for

Source: DRHP p.113; the percentages are our arithmetic on the ₹440.0 crore gross fresh issue. Working capital: ₹65.0 crore in FY28 and ₹85.0 crore in FY29, against a total working capital need the company estimates at ₹209.3 crore, ₹278.3 crore and ₹340.9 crore for FY27 to FY29 (DRHP p.113, DRHP p.118). Debt:

₹120.0 crore in FY28, from eight secured loans with HDFC Bank, Small Industries Development Bank of India and CSB Bank that had ₹128.3 crore outstanding at August 31, 2026, at 6.90% to 9.75% or a dollar benchmark rate, some carrying prepayment charges of up to 4% (DRHP p.121, DRHP p.122). Machinery: gravity die-casting machines, 35 machining centres, an X-ray inspection system, compressors and electrical works, 59 machines in all for Kolar and Bilaspur, from quotations;

no orders have been placed (DRHP p.123, DRHP p.124, DRHP p.192).

The objects have not been appraised by a bank (DRHP p.113). The company may place up to ₹50.0 crore of shares before the red herring prospectus, which would reduce the fresh issue (DRHP p.75).

Into the business up to ₹440.0 crore, the fresh issue, before expenses (DRHP p.1). To selling shareholders nothing; there is no offer for sale (DRHP p.1).

09Who is selling

Arete 22 IPO offer for sale: who is selling

No one. The issue is entirely new shares, up to ₹440.0 crore, and the cover page states the offer for sale as not applicable (DRHP p.1). All the money raised goes to the company.

10Promoters

The promoters are Pawan Kumar Gupta, Abhishek Gupta, Konica Gupta and Naveen Gupta (DRHP p.239). Together they hold 86.66% before the issue (DRHP p.239). The document states that Pawan Kumar Gupta is the father of Abhishek Gupta and Naveen Gupta, and that Konica Gupta is the spouse of Abhishek Gupta (DRHP p.241). Abhishek Gupta and Konica Gupta were the original promoters; Pawan Kumar Gupta and Naveen Gupta were identified as promoters by a board resolution of August 17, 2026 (DRHP p.240).

Pawan Kumar Gupta, aged 77, is Chairman and a non-executive director and started Sahuwala Cylinders Private Limited, an industrial cylinder maker, in 1973 (DRHP p.220, DRHP p.222). Abhishek Gupta, aged 47, is Managing Director with more than 23 years in business management (DRHP p.220, DRHP p.222). Konica Gupta, aged 46, is a whole-time director in charge of human resources (DRHP p.221, DRHP p.222). Naveen Gupta, aged 54, holds no board seat and has over 30 years in cylinder making and flour milling (DRHP p.240). The promoters' other businesses are in industrial cylinders and flour milling (DRHP p.244, DRHP p.222).

Pay: the two executive directors' terms from October 2024 allow ₹0.30 crore a year each, yet the company paid Abhishek Gupta and Konica Gupta nothing in FY26, and Pawan Kumar Gupta nothing as a non-executive director (DRHP p.223, DRHP p.224). The related-party tables for FY24 to FY26 show no remuneration to any promoter, so promoter remuneration was nil in each year (DRHP p.82).

Money lent to the company: the promoters lend to the company. At March 31, 2026 Pawan Kumar Gupta was owed ₹11.5 crore and Abhishek Gupta ₹12.4 crore (DRHP p.301), and by August 31, 2026 unsecured loans repayable on demand to the promoters were ₹80.5 crore (DRHP p.50). Three promoters have personally guaranteed bank loans (DRHP p.354).

Pledges and cases: none of the promoters' shares is pledged (DRHP p.99). There are no criminal, regulatory, tax or material civil cases against the promoters, and no SEBI or exchange action against them in five years (DRHP p.357, DRHP p.359, DRHP p.360).

Promoter economics: the promoters' shares came from subscriptions and rights issues at ₹10 a share between 2021 and August 2024, transfers at ₹10 in April 2023, gifts, the distribution of three dissolved HUFs in August 2025, and two bonus issues (DRHP p.100, DRHP p.101, DRHP p.102). The average cost per share, as certified, is ₹1.54 for Abhishek Gupta and Konica Gupta, ₹1.87 for Naveen Gupta and ₹0.85 for Pawan Kumar Gupta (DRHP p.60).

On October 18, 2024 Pawan Kumar Gupta MHUF transferred 60,000 shares at ₹60 each to Systemize Consultants LLP, Long Run Services LLP and Shahina Shafaque, and in May 2026 it took back 90,000 shares from the same three at ₹10 each (DRHP p.98).

11Who already owns it

Arete 22 promoter holding before and after the IPO

Source: DRHP p.105. The promoters hold 86.66% and the promoter group the other 13.34%, so the promoter family and its companies own 100% of the 6,90,97,925 shares before the issue (DRHP p.105, DRHP p.74). There is no outside shareholder, fund or employee holding (DRHP p.103, DRHP p.110). The holding after the issue is left blank because the price, and so the number of new shares, is not set (DRHP p.105). Read from the filing: a ₹440.0 crore issue will dilute the promoter group from 100% by an amount that depends wholly on the price.

Sahuwala Cylinders Private Limited came in on April 1, 2026, receiving 9,41,177 shares at ₹85 each, ₹8.0 crore, in exchange for 100% of Unicast Autotech Private Limited (DRHP p.94, DRHP p.216). Abhishek Gupta is a director of Sahuwala (DRHP p.217). The price came from a discounted cash flow valuation dated March 23, 2026, which put Arete 22's shares at ₹85 and Unicast's at ₹10 (DRHP p.217). Adjusted for the later bonus issue, that is ₹19.62 a share (DRHP p.137).

12What changed just before the IPO

• Revenue and profit: revenue went from ₹112.5 crore in FY24 to ₹537.9 crore in FY26 and profit after tax from ₹2.9 crore to ₹45.0 crore (DRHP p.78).
• Receivable days lengthened from 0 in FY24 to 23 in FY26 (DRHP p.52).
• A second plant: Bilaspur, Haryana opened in FY26 with 3.60 million wheels a year of capacity (DRHP p.199).
• Customers went from 1 to 6 and the largest customer's share fell from 96.62% to 49.05%, while the top five took 98.77% of FY26 revenue (DRHP p.24).
• Promoter pay stayed at nil: promoter remuneration was nil in FY24 and in FY26 (DRHP p.82).
• Two bonus issues: 1 share for every 2 held on August 27, 2025, 50,01,499 shares, and 10 shares for every 3 held on September 8, 2026, 5,31,52,250 shares (DRHP p.94). The September 2026 bonus is the last allotment before the IPO, at no price (DRHP p.94).
• An acquisition paid in shares: 9,41,177 shares at ₹85 to Sahuwala Cylinders Private Limited for Unicast Autotech Private Limited, effective April 1, 2026 (DRHP p.94).
• No pre-IPO placement has been made; one of up to ₹50.0 crore may be (DRHP p.75).
• The auditor changed: A A A J & Associates, appointed August 22, 2024, resigned on February 18, 2026 citing pre-occupation, and O.P Bagla and Co LLP was appointed on February 26, 2026 (DRHP p.86).
• The company became public: shareholders approved the conversion on October 23, 2024 and the fresh certificate is dated February 5, 2025 (DRHP p.2).
• Promoters added: Pawan Kumar Gupta and Naveen Gupta were named promoters on August 17, 2026 (DRHP p.240).
• The board was rebuilt: two independent directors appointed in 2025 resigned on February 19, 2026; three new independent directors joined in July and September 2026 (DRHP p.226).
• Borrowing rose from ₹98.9 crore at March 2024 to ₹263.1 crore at March 2026 and ₹361.8 crore at August 31, 2026 (DRHP p.77, DRHP p.354).
• The pollution consent caught up: Kolar's consent was raised to 2.40 million wheels on September 22, 2026; the company says earlier production exceeded the quantity then permitted (DRHP p.42).
• A non-compete with Sahuwala, signed September 24, 2026, to move customer arrangements still in Sahuwala's name to the company (DRHP p.44).

13Capacity and expansion

Source: DRHP p.199, DRHP p.200, DRHP p.113. Kolar's utilisation was 61.67% in FY24 on 1.20 million wheels of capacity and 56.25% in FY25 on 2.40 million (DRHP p.199). FY26 production was 1.64 million wheels at Kolar and 1.55 million at Bilaspur (DRHP p.199). Capacity is calculated on 300 working days of three shifts (DRHP p.199).

The ₹34.8 crore of machinery adds 32 machines at Kolar and 27 at Bilaspur, which the company says will reduce cycle times and raise throughput, with no new land or building needed (DRHP p.192, DRHP p.123). The document does not state how many wheels a year the new machinery adds, so the addition cannot be put in units. The company's own note that its facilities "are operating at optimum capacity" sits beside utilisation figures of 43% and 68% (DRHP p.200, DRHP p.199).

14Market size and industry structure

Arete 22 industry: market size and growth

The industry chapter is drawn from "Analysis of Alloy Wheel Industry in India", dated September 2026, prepared by Crisil Intelligence and commissioned and paid for by the company for the issue (DRHP p.144). Much of the chapter is about the national economy, from GDP to fuel prices; what follows keeps to the parts that bear on two-wheeler alloy wheels.

As claimed: the commissioned Crisil report estimates India's annual need for two-wheeler alloy wheels at 55 to 62 million units in FY26 (DRHP p.163). It gives no rupee value for the alloy wheel market. The wider auto components industry had a turnover of ₹6,73,000 crore in FY25, growing 14% a year from FY20 (DRHP p.158).

The part that is addressable: the company sells only to two-wheeler makers in India, with no exports and no replacement sales (DRHP p.291, DRHP p.184). Its addressable market is the factory-fitted part of that 55 to 62 million units; the report does not separate factory-fitted wheels from replacement wheels.

What the company is today: it sold 31,78,981 wheels in FY26, roughly 5.1% to 5.8% of the report's unit estimate (our arithmetic, DRHP p.134, DRHP p.163). Its FY26 revenue was ₹537.9 crore (DRHP p.78).

Size over time: the report cites an ACMA figure of about 35 million alloy wheels a year for two-wheelers in early 2019, against its own 55 to 62 million for FY26 (DRHP p.163). The report projects 77 to 95 million units by FY31, a growth rate of 7% to 9% a year, according to the commissioned Crisil report (DRHP p.163). Two-wheeler production, the base for this demand, rose from 1,83,49,941 in FY21 to 2,66,91,916 in FY26, 7.8% a year (DRHP p.155).

Segments: the report places alloy wheels in the body and chassis category, 14% of auto component industry sales in FY25, and says two-wheelers took 20% of domestic component supplies to vehicle makers (DRHP p.161). It divides motorcycles by engine size: economy models fell from 56% of motorcycle sales in FY20 to 43% in FY26 and premium models rose from 13% to 23%, with the report projecting 29% to 31% by FY31 (DRHP p.163).

It also divides makers by casting method. Gravity die casting, which the company uses, serves most of the volume in mass and mid-range wheels, where the report says competition turns on cost, delivery and nearness to the customer; low-pressure die casting is held by fewer, larger makers (DRHP p.169, DRHP p.170, DRHP p.178).

What drives demand: two-wheeler output and its mix. Two-wheeler exports reached 5.2 million units in FY26, up 23.8% (DRHP p.165). Electric two-wheeler registrations rose from 46,915 in FY21 to 14,67,644 in FY26, and the report says electric scooters are almost all fitted with alloy wheels (DRHP p.158, DRHP p.167). Electric penetration of two- and three-wheelers went from 1.1% in FY21 to 9.6% in FY25 (DRHP p.166). The report credits the PM E-DRIVE scheme, a ₹10,900 crore outlay whose two-wheeler support runs to March 31, 2028, the PLI scheme for autos, and delivery fleets (DRHP p.167, DRHP p.168).

Structure: the report says competition is among established suppliers rather than new entrants, because a maker must pass the vehicle maker's plant audit, fatigue and impact validation and part approval on production tooling, and must qualify each new plant separately (DRHP p.173, DRHP p.174). The competitors the chapter names are Enkei Wheels (India) Limited, Steel Strips Wheels Limited, Rockman Industries Limited and Wheels India Limited (DRHP p.177). Enkei has capacity for about 1.4 million two-wheeler and 1.6 million car alloy wheels, Steel Strips about 5 million alloy wheels and Wheels India more than 10 million (DRHP p.179).

Inputs and trade: aluminium is the main input; the auto sector used 19% to 21% of India's aluminium in FY26 (DRHP p.163). Aluminium averaged USD 2,630 a tonne in 2025 and USD 3,195 in January to March 2026, and the report projects USD 3,200 to 3,400 by the end of 2026 (DRHP p.165). About 40% of India's aluminium production uses recycled feedstock, about 80% of that scrap is imported, and aluminium scrap still carries a 2.5% import duty (DRHP p.172). Globally, road wheel exports were about USD 23.5 billion in 2024, 28.8% of it from China (DRHP p.161).

Rules: alloy wheels for two-wheelers are tested under AIS-073 and approved under the Central Motor Vehicle Rules through ARAI or ICAT, and separately need BIS certification under IS 16192 (Part 1) (DRHP p.172, DRHP p.173). Foundries need consent to establish and to operate from state pollution boards (DRHP p.172). An aluminium quality control order applies to some products from December 1, 2026 for large and medium firms (DRHP p.171).

What the chapter says can go wrong: for this company specifically, concentration on a few customers, raw material costs of about 76% to 83% of revenue with no assured pass-through, a top five suppliers share of about 84%, near-total dependence on two-wheelers, and seasonal demand around festivals and harvests (DRHP p.174, DRHP p.175). More broadly it notes farm family income falling 10% in FY26, by the report's estimate, and that wheel makers can lose margin when aluminium rises faster than prices are reset (DRHP p.154, DRHP p.164).

15Competitive position

Arete 22 competitors

Source: DRHP p.179, from the commissioned Crisil report; Enkei's figures are for calendar 2025 and standalone (DRHP p.179). The table gives debt to equity in place of borrowings in rupees, which it does not print for the peers. Rockman Industries Limited is named as a competitor but not included in the figures (DRHP p.177).

What the company puts forward: plants near customer assembly plants, a process done entirely in-house from melting to painting, IATF 16949 and ISO 9001 certification, and the customer approvals it has already passed (DRHP p.187, DRHP p.184, DRHP p.204). The industry report says switching a wheel supplier during a model's life needs fresh validation and approval, which it calls a material switching cost (DRHP p.174).

Against that: two customers take 91.78% of revenue, the brand name is not a registered trademark, the company holds no exclusivity with any customer, and it relies on gravity die casting, which the report calls widely available across suppliers (DRHP p.24, DRHP p.45, DRHP p.25, DRHP p.170).

16Peers the company named

Peers named in the offer document: Wheels India Limited, Steel Strips Wheels Limited and Enkei Wheels (India) Limited (DRHP p.132).

All three are listed wheel makers, and all three are larger: FY26 revenue of ₹5,464.9 crore for Wheels India and ₹5,182.8 crore for Steel Strips, about ten times the company's, and ₹971.6 crore for Enkei, about 1.8 times (DRHP p.132, our arithmetic). Wheels India and Steel Strips make mostly steel wheels for cars, trucks and tractors; Enkei is the closest, an alloy wheel maker for two-wheelers and cars (DRHP p.178).

The document prints their P/E ratios on September 9, 2026 prices: 37.58, 30.74 and 139.86, average 69.39 (DRHP p.132, DRHP p.131). The company's FY26 basic EPS is ₹6.92 after the September 2026 bonus (DRHP p.131). With no price band, no P/E for the company can be stated. The company's PAT margin of 8.36% is higher than all three, and its debt to equity of 3.10 times is more than three times theirs (DRHP p.136).

17Risks, in plain words

Arete 22 IPO risks

Customers: the largest customer was 49.05% of FY26 revenue and the top five 98.77% (DRHP p.24) → there are no firm volume commitments, and customers can reschedule or cancel without compensation (DRHP p.25) → the second customer alone was another 42.73% (DRHP p.24).

One product, one end market: two-wheeler alloy wheels were 98.77% of FY26 revenue (DRHP p.26) → a slowdown in two-wheeler production cannot be offset by other sales (DRHP p.26) → the company itself names the shift to electric two-wheelers as a source of uncertainty in model mix (DRHP p.27).

Working capital and cash: operating cash flow was −₹18.4 crore in FY26 (DRHP p.79) → the business needs inventory of 78 days and pays aluminium suppliers in advance (DRHP p.37, DRHP p.115) → the company expects receivable days to lengthen from 23 to 39 by FY29 (DRHP p.120).

Debt: borrowings of ₹361.8 crore at August 31, 2026 (DRHP p.354) → FY26 finance costs of ₹28.8 crore were 54.3% of profit before tax (our arithmetic, DRHP p.78) → even after the full ₹120.0 crore repayment about ₹241.8 crore would remain on the August balance (our arithmetic, DRHP p.354, DRHP p.113).

Promoter loans on demand: ₹80.5 crore of unsecured loans from the promoters are repayable on demand (DRHP p.50) → a demand for repayment would need refinancing (DRHP p.50) → that is 22.2% of total borrowings at August 31, 2026 (our arithmetic, DRHP p.354).

Suppliers and aluminium: one supplier was 59.25% of FY26 purchases and aluminium ingots 83.50% (DRHP p.28, DRHP p.29) → some customers designate the aluminium supplier and pass-through works with a lag (DRHP p.29, DRHP p.30) → the company's average aluminium price rose 24.4% from FY24 to FY26 (our arithmetic, DRHP p.116).

Related party in the sales chain: one customer is invoiced and one letter of intent is held in the name of Sahuwala Cylinders Private Limited (DRHP p.44) → the company depends on Sahuwala's cooperation to move them over (DRHP p.44) → sales to Sahuwala were ₹43.4 crore, 8.06% of FY26 revenue (DRHP p.81).

Regulation: Kolar's past production exceeded its pollution consent (DRHP p.42) → the state board may still act (DRHP p.42) → the consent was only raised to 2.40 million wheels on September 22, 2026 (DRHP p.42). Unicast's land lease expired in 2022 and its extension is subject to a ₹1.9 crore demand the subsidiary is contesting (DRHP p.35).

Issue-specific: the promoters' average cost is ₹0.85 to ₹1.87 a share (DRHP p.60) → shares were issued at ₹85, ₹19.62 after the bonus, in April 2026 (DRHP p.137) → general corporate purposes, expenses and the price are blank, and no machinery orders have been placed (DRHP p.113, DRHP p.34).

18Litigation and regulatory matters

Cases against Arete 22 and its promoters

Criminal: none against the company, the subsidiary or the promoters (DRHP p.358, DRHP p.359). The one criminal matter is against an independent director, Yalamati Srinivasa Chakravarti: a complaint before the Chief Judicial Magistrate, Jammu, over vehicle financing by Shri Ram Transport Finance Co., alleging cheating and criminal breach of trust; the court ordered the accused to appear on May 8, 2025 and it is pending (DRHP p.358, DRHP p.359).

Tax: one TDS demand on the company of ₹0.01 crore (DRHP p.360). Regulatory: none recorded, though the company discloses the past excess production at Kolar and delays in some statutory filings and payments, all paid with interest and penalty (DRHP p.42, DRHP p.38). Civil: none material, against a threshold of ₹1.0 crore (DRHP p.358, DRHP p.357). Group companies are in no litigation material to the company (DRHP p.366).

19Related-party transactions

Source: DRHP p.81, DRHP p.82, converted to ₹ crore. Related-party transactions totalled ₹86.5 crore in FY26, ₹62.5 crore in FY25 and ₹67.0 crore in FY24, 16.07%, 29.44% and 59.59% of revenue (DRHP p.82). The totals count loans taken and repaid alongside sales. Other items are small: rent to Konica Gupta of ₹0.09 crore a year and rent to Sahuwala of ₹0.08 crore in FY26 (DRHP p.81). The registered office is leased from Sahuwala (DRHP p.35).

What appeared or changed in the two years before filing: sales to Sahuwala of ₹43.4 crore in FY26, from nil, with ₹13.1 crore owed by Sahuwala at March 2026 (DRHP p.81, DRHP p.301); Unicast moving from a related party, with a ₹7.2 crore loan in FY25 repaid in FY26, to a wholly owned subsidiary from April 2026 (DRHP p.82, DRHP p.216); the non-compete agreement with Sahuwala of September 24, 2026 (DRHP p.44); and the transfer of Bhattula Suresh Kumar, now head of business development, from Sahuwala to the company in January 2025 (DRHP p.237).

Interest paid to Sahuwala, ₹0.87 crore in FY24 and ₹0.39 crore in FY25, stopped in FY26 (DRHP p.81).

20What the offer document does not say

No customer is named, in any year (DRHP p.24). The terms of the letters of intent, prices per wheel by customer and the share of revenue under aluminium price indexation are not given. The document gives no order book. Gross margin by wheel type is not given; there is one reportable segment (DRHP p.302).

Unicast's revenue and profit are not given at all, although it was bought for ₹8.0 crore of shares and lists a capacity of 12,000 tonnes (DRHP p.216, DRHP p.199). How many wheels a year the ₹34.8 crore of machinery adds is not stated. General corporate purposes, issue expenses and the price are blank (DRHP p.113, DRHP p.126).

The reason the promoters were paid nothing in FY26 under terms that allow pay is not given (DRHP p.224).

Some inconsistencies are recorded as document matters, not business ones: the commissioned report's table shows FY26 basic EPS of ₹34.7 and NAV of ₹56.6 a share against ₹6.92 and ₹13.06 elsewhere, apparently before and after the September 2026 bonus (DRHP p.179, DRHP p.131); the share swap agreement is dated March 21, 2026 in most places and March 31, 2026 in one (DRHP p.217, DRHP p.95);

the swap allotment is shown at ₹85 a share in the capital structure and as "NA" in a risk factor (DRHP p.94, DRHP p.57); a risk factor speaks of three manufacturing facilities where the rest of the document says two (DRHP p.46, DRHP p.114); the Bilaspur plant is described as in Haryana, Gurgaon and Gurugram (DRHP p.177, DRHP p.178); the acquisition is 100.00% in the document and 99.99% in the report (DRHP p.216, DRHP p.177);

and the Unicast share purchase agreement is described as giving the company 100.00% through a nominee holding one share (DRHP p.216).

21Five questions for management

1. What share of FY26 revenue per wheel of ₹1,671.46 is aluminium pass-through, and how much of the 14.7% rise since FY24 came from product mix?
2. Which customers account for the 49.05% and 42.73%, and what volumes have they committed for FY27 beyond the letters of intent?
3. How many wheels a year will the 59 new machines add, and at what utilisation do the two plants need to run to cover depreciation and interest?
4. What are Unicast's FY26 revenue, profit and borrowings, and how much of the ₹361.8 crore of August 2026 borrowings is Unicast's?
5. Why did unsecured promoter loans rise to ₹80.5 crore by August 2026, on what terms, and will any of the issue money reach them indirectly through the repaid bank lines?

1Sources and cited facts

This study was read from 1 document the company filed. The 170 figures it cites are listed under the document each came from, with the page and the sentence as printed.