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Diffusion Engineers Limited Audit Report / Information 2025

Aug 14, 2025

60511_rns_2025-08-14_a7850cff-909e-45b7-b88a-34dacdde3b13.pdf

Audit Report / Information

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Date: August 14, 2025

To, The Manager Listing Department National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex Bandra (East), Mumbai - 400 051 NSE Symbol: DIFFNKG

To, The Manager Corporate Relationship Department BSE Limited Floor 25, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001 BSE Scrip Code - 544264

Dear Sir/Madam,

Subject: Report of Monitoring Agency for the quarter ended June 30, 2025.

Pursuant to Regulation 32(6) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Regulation 41(4) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, please find enclosed herewith Monitoring Agency Report issued in respect of the utilization of the proceeds of the Initial Public Offer (“IPO”) of the Company for the quarter ended June 30, 2025 by CRISIL Ratings Limited, the Monitoring Agency.

This report will also be hosted on the Company’s website viz. https://www.diffusionengineers.com/investors-relation.

We request you to take the above on record.

Thanking You. Yours faithfully,

For Diffusion Engineers Limited

Chanchal Digitally signed by Chanchal Rajesh Jaiswal Rajesh Jaiswal Date: 2025.08.14 10:20:13 +05'30'

Chanchal Jaiswal Company Secretary and Compliance Officer Membership no. A67136

Enclosed as above

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Monitoring Agency Report

for Diffusion Engineers Limited for the quarter ended June 30, 2025

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CRL/MAR/GDS4651/2025-26/1350

August 13, 2025

To Diffusion Engineers Limited

T-5 and T-6, Nagpur Industrial Area, MIDC, Hingna, Nagpur, Maharashtra, 440016

Dear Sir,

Monitoring Agency Report for the quarter ended June 30, 2025- in relation to the Initial Public Offer (“IPO”) of Diffusion Engineers Limited (“the Company”)

Pursuant to Regulation 41(2) of SEBI (lssue of Capital and Disclosure Requirements) Regulations, 2018 (“ SEBI ICDR Regulations ”) and Monitoring Agency Agreement dated September 16, 2024, enclosed herewith the Monitoring Agency Report, issued by Crisil Ratings Limited, Monitoring Agency, as per Schedule XI of the SEBI ICDR Regulations towards utilization of proceeds of IPO for the quarter ended June 30, 2025.

Request you to kindly take the same on records.

Thanking you,

For and on behalf of Crisil Ratings Limited

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Shounak Chakravarty Director, Ratings (LCG)

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Report of the Monitoring Agency (MA)

Name of the issuer: Diffusion Engineers Limited

For quarter ended: June 30, 2025

Name of the Monitoring Agency: Crisil Ratings Limited

  • (a) Deviation from the objects: Not applicable

  • (b) Range of Deviation: Not applicable

Declaration:

We declare that this report provides an objective view of the utilization of the issue proceeds in relation to the objects of the issue based on the information provided by the Issuer and information obtained from sources believed by it to be accurate and reliable. The MA does not perform an audit and undertakes no independent verification of any information/ certifications/ statements it receives. This Report is not intended to create any legally binding obligations on the MA which accepts no responsibility, whatsoever, for loss or damage from the use of the said information. The views and opinions expressed herein do not constitute the opinion of MA to deal in any security of the Issuer in any manner whatsoever. Nothing mentioned in this report is intended to or should be construed as creating a fiduciary relationship between the MA and any issuer or between the agency and any user of this report. The MA and its affiliates also do not act as an expert as defined under Section 2(38) of the Companies Act, 2013.

The MA or its affiliates may have credit rating or other commercial transactions with the entity to which the report pertains and may receive separate compensation for its ratings and certain credit-related analyses. We confirm that we do not perceive any conflict of interest in such relationship/interest while monitoring and reporting the utilization of the issue proceeds by the issuer.

We have submitted the report herewith in line with the format prescribed by SEBI, capturing our comments, where applicable. There are certain sections of the report under the title “Comments of the Board of Directors”, that shall be captured by the Issuer’s Management / Audit Committee of the Board of Directors subsequent to the MA submitting their report to the issuer and before dissemination of the report through stock exchanges. These sections have not been reviewed by the MA, and the MA takes no responsibility for such comments of the issuer’s Management/Board.

Signature:

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Name and designation of the Authorized Signatory: Shounak Chakravarty Designation of Authorized person/Signing Authority: Director, Ratings (LCG)

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1) Issuer Details:

Name of the issuer: Diffusion Engineers Limited Names of the promoter: Mr. Prashant Garg, Ms. Chitra Garg, Mr. Nitin Garg Industry/sector to which it belongs : Other Industrial Products 2) Issue Details Issue Period: Thursday, September 26, 2024, to Monday, September 30, 2024

Type of issue (public/rights): Initial Public Offer (IPO) Type of specified securities: Equity Shares IPO Grading, if any: NA Issue size: Rs 1579.64 million

Particulars Amount(Rs. million)
Grossproceeds of the Fresh Issue 1579.64#
Less: Issue Expenses 157.69
Net Proceeds 1,421.95

#Crisil Ratings shall be monitoring the gross proceeds amount.

3) Details of the arrangement made to ensure the monitoring of issue proceeds:

Particulars Reply Source of information/
certifications
considered by
Monitoring Agency
for preparation of
report		 Comments
of the
Monitoring
Agency		 Comments
of the
Board of
Directors
Whether all utilization is as per the
disclosures in the Offer Document?		 Yes Management
undertaking, statutory
auditors certificate^,
Prospectus dated
30/09/2024 (“offer
document”), Bank
Statements		 Proceeds
were
utilized in
line with
the offer
document		 No
Comments

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Particulars Reply Source of information/
certifications
considered by
Monitoring Agency
for preparation of
report		 Comments
of the
Monitoring
Agency		 Comments
of the
Board of
Directors
Whether shareholder approval has
been obtained in case of material
deviations
from
expenditures
disclosed in the Offer Document?		 NA Management
undertaking, Statutory
Auditors Certificate^		 No
Comments		 No
Comments
Whether the means of finance for the
disclosed objects of the issue has
changed?		 No No
Comments		 No
Comments
Is there any major deviation observed
over the earlier monitoring agency
reports?		 No No
Comments		 No
Comments
Whether all Government/statutory
approvals related to the object(s) have
been obtained?		 NA No
Comments		 No
Comments
Whether all arrangements pertaining
to technical assistance/collaboration
are in operation?		 NA No
Comments		 No
Comments
Are
there
any
favorable
events
improving the viability of these
object(s)?		 No No
Comments		 No
Comments
Are there any unfavorable events
affecting the viability of the object(s)?		 No No
Comments		 No
Comments
Is there any other relevant information
that may materially affect the decision
making of the investors?		 No No
Comments		 No
Comments

NA represents Not Applicable

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^Based on Management undertaking and Certificate dated July 30, 2025, issued by M/s M/S PGS & ASSOCIATES chartered Accountants (Firm Registration Number: 122384W), Statutory Auditors of the Company.

4) Details of object(s) to be monitored:

i. Cost of the object(s):

Sr
.
N
o.		 Item
Head		 Source of
information/
certification
considered by		 Original
cost
(as per the
Offer
D		 Revised
Cost
R i		 Comment
of the
Miti		 Comments of the Board of
Directors		 Comments of the Board of
Directors		 Comments of the Board of
Directors
Reason Proposed Particulars
of firm
arrangeme
nts
made
MA for ocumen
 (s n
 onorng
 of Cost financing
preparation of
report		 t)
(Rs in
million)		 million) Agency revision option
1 Funding capital
expenditure
requirements towards
Proposed Expansion
of our existing
manufacturing facility
at Unit IV		 Management
undertaking,
Statutory
Auditors
Certificate^,
Offer
document		 713.80 NA No
revision		 No Comments
2 Setting up of a new
manufacturing facility
at Hingna, Sonegaon
District, Nagpur,
Maharashtra
(“Proposed Facility”)		 303.85 NA No
revision		 No Comments
3 Funding working
capital requirements
of the Company		 220.00 NA No
revision		 No Comments
4 General Corporate
Purposes		 184.30 NA No
revision		 No Comments
Subtotal 1,421.95
5 Expenses in relation to
the Fresh Issue		 157.69 NA No
revision		 No Comments
Total 1,579.64

^Based on Management undertaking and Certificate dated July 30, 2025, issued by M/S PGS & ASSOCIATES chartered Accountants (Firm Registration Number: 122384W), Statutory Auditors of the Company.

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#The amount utilised for general corporate purposes does not exceed 25% of the Gross Proceeds (amounting to Rs 394.91 million) from the Fresh Issue

ii. Progress in the object(s):

Sr.
No.		 Amount utilized (Rs in Amount utilized (Rs in Amount utilized (Rs in Comments of the Comments of the
Source of
 Amount
million) Board of Directors
information/ as
certifications propose
considered by

d		 As at Total Comments of
Monitoring in the beginni At the unutilize the

Reasons
Proposed

**Item Head# **		 Agency for Offer ng During
end		 d amount
Monitoring
for idle course of
preparation of
Docume
of the		 the of the (Rs in Agency

funds action
report nt quarter quarter
quarter		 million)
(Rs in
million)
1 Funding capital
expenditure requirements
towards Proposed
Expansion of our existing
manufacturing facility at
Unit IV

Management
Undertaking,
Statutory
Auditors
Certificate^,
Offer
document
713.80
49.24		 14.56 63.80 650.00 Proceeds
utilized
towards
Building
construction
and Civil
work &
Purchase of
Machinery		 No Comments
2 Setting up of a new
manufacturing facility at
Hingna, Sonegaon
District, Nagpur,
Maharashtra (“Proposed
Facility”)		 303.85 121.90 5.08 126.98 176.87 No Comments
3 Funding working capital
requirements of the
Company		 220.00 220.00 0.00 220.00 0.00 Proceeds
fully utilized
till quarter
ended Dec 31,
2024
No Comments
4 General Corporate
Purposes		 184.30 0.00 0.00 0.00 184.30 No
utilization		 No Comments
Subtotal 1,421.95 391.14 19.64 410.78 1,011.17 -
5 Expenses in relation to
the Fresh Issue		 157.69 131.55 0.00 131.55 26.14 No
utilization
during the
reported
quarter		 No Comments
Total 1,579.64 522.69 19.64 542.34 1,037.30 -

^Based on Management undertaking and Certificate dated July 30, 2025, issued by M/S PGS & ASSOCIATES chartered Accountants (Firm Registration Number: 122384W), Statutory Auditors of the Company.

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#Brief description of objects:

Object of the Issue Description of objects asper the offer document filed by the issuer
Funding capital
expenditure
requirements towards
Proposed Expansion of
our existing
manufacturing facility at
Unit IV		 The Company intends to undertake the expansion work at Khasra Nos. 36,
38/1, 38/2, 38/3 situated at Khapri (Uma), Nagpur- 441 501, Maharashtra
admeasuring in aggregate 72,029.84 sq. mtrs. Or thereabouts and where
the Company is having its existing manufacturing facilities. As part of the
Proposed Expansion, an aggregate area of approx. 15,449.87 sq. mtrs is
proposed to be constructed at the said Khasra Nos. 36, 38/1, 38/2, 38/3.
The financial investment will primarily be directed towards construction,
civil work, and the acquisition of machinery essential for the heavy
engineeringequipment and flux cored wire businesses.
Setting up of a new
manufacturing facility at
Hingna, Sonegaon
District, Nagpur,
Maharashtra (“Proposed
Facility”)		 They intend to setup a new manufacturing facility at Plot No. 33-B/1/1 &
33-B/1/1 Part, MIDC Hingna, Nagpur, Maharashtra(Proposed Facility).
This strategic step is driven by their objective of maximizing
production efficiency and reaping various economies of scale. At the
proposed facility, they plan to manufacture special purpose electrodes and
wire strips which are utilized in the production of flux core wire. The
setting up of a dedicated slitting line for wire strip manufacturing grants
them a significant backward integration advantage. This streamlined
process enhances operational efficiency and ensures a seamless supply
chain between their nearbyfacilities for flux cored wireproduction.
Funding working capital
requirements of the
Company		 Their business is working capital intensive and they fund a majority of our
working capital requirements in the ordinary course of business from
banks and through the internal accruals. The Company requires
additional working capital for funding its incremental working capital
requirements in the Financial Years ended March 31, 2025. The funding of
the incremental working capital requirements of the Company will
help in achieving the proposed targets as per the business plan. They
intend to utilize Rs 220.00 million from the Net Proceeds to fund working
capital requirements of the Company in the Financial Year ended March
31,2025
General Corporate
Purposes		 As per offer document GCP can be utilised towards part or full
prepayment / repayment of borrowings, (ii) strategic initiatives,
investments in subsidiaries of the Company, (iii) business development
initiatives (iv) meeting general corporate contingences, and (v) any other
purpose as may be approved by our Board or a duly appointed committee
from time to time, subject to compliance with the Companies Act and
applicable law. The quantum of utilization of funds towards the
aforementioned purposes will be determined by the Board based on the
amount actually available under the head “General Corporate Purposes”
and the corporate requirements of the Company. However, the Company
will not utilize the funds earmarked for general corporate purposes
towards the Objects of the Issue and vice versa.

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iii. Deployment of unutilised proceeds[^] :

S.
No.		 Type of
instrument
and name of
the entity
invested in		 Account No. Amount
invested
(Rs in
million)		 Maturity
date		 Earnings
(Rs in
million)		 Return on
Investment
(%)		 Market
value as
at the
end of
quarter
(Rs in
million)
1 Fixed Deposit
with Yes Bank		 2840600011730 120.00 16-10-2025 6.74 7.35 126.74
2 Fixed Deposit
with Kotak
Bank		 1049520047 105.00 16-10-2025 5.74 7.50 110.74
3 Fixed Deposit
with Kotak
Bank		 1049520023 55.00 16-10-2025 3.00 7.20 58.00
4 Fixed Deposit
with HDFC
Bank		 50301051730032 50.00 16-10-2025 2.66 7.50 52.66
5 Fixed Deposit
with HDFC
Bank		 50301051725302 50.00 16-10-2025 2.66 7.82 52.66
6 Fixed Deposit
with HDFC
Bank		 50301051728653 50.00 16-10-2025 2.66 7.61 52.66
7 Fixed Deposit
with HDFC
Bank		 50301051733386 50.00 16-10-2025 2.66 7.61 52.66
8 Fixed Deposit
with HDFC
Bank		 50301051727002 50.00 16-10-2025 2.66 7.40 52.66
9 Fixed Deposit
with Yes Bank		 2840600011873 100.00 04-11-2025 5.23 7.40 105.23
10 Fixed Deposit
with Yes Bank		 2840300009671 51.50 19-07-2025 0.75 7.40 52.25
11 Fixed Deposit
with Yes Bank		 2840300009681 51.50 19-07-2025 0.75 7.40 52.25
12 Fixed Deposit
with Yes Bank		 2840300009704 51.50 24-07-2025 0.70 7.40 52.20
13 Fixed Deposit
with Yes Bank		 28406000012875 53.20 17-10-2025 0.79 7.86 53.99
14 Fixed Deposit
with Yes Bank		 2840300009714 70.63 24-07-2025 0.96 7.00 71.59

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15 Fixed Deposit
with Yes Bank		 2840300009784 49.00 02-09-2025 0.27 6.60 49.27
16 Fixed Deposit
with Yes Bank		 2840300009774 41.47 02-09-2025 0.23 6.60 41.70
17 Monitoring
Account
Balance
(HDFC Bank)		 57500001584395 27.98 - - - 27.98
18 Public Issue
Account
(HDFC Bank)		 57500001585372 23.09 - - - 23.09
Total 1049.86 38.46 - 1088.33
  • Out of Rs 1,049.86 million, Rs 12.55 million pertains to interest earned on Fixed deposits

^Based on Management undertaking and Certificate dated July 30, 2025, issued by M/S PGS & ASSOCIATES chartered Accountants (Firm Registration Number: 122384W), Statutory Auditors of the Company.

iv. Delay in implementation of the object(s)^:

Comments of the Board of Comments of the Board of
Completion Date
Delay Directors
As per the (no. of Proposed
Object(s)

Offer		 days/ Reason of delay
course of

Document		 Actual
months)
action
Not Applicable^

^Based on Management undertaking and Certificate dated July 30, 2025, issued by M/S PGS & ASSOCIATES chartered Accountants (Firm Registration Number: 122384W), Statutory Auditors of the Company.

5) Details of utilization of proceeds stated as General Corporate Purpose amount in the offer document^:

^Based on Management Undertaking and Certificate dated July 30, 2025, issued by M/s M/S PGS & ASSOCIATES chartered Accountants (Firm Registration Number: 122384W), Statutory Auditors of the Company, no amount was utilised towards GCP during the reported quarter.

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Disclaimers:

  • a) This Report is prepared by Crisil Ratings Limited (hereinafter referred to as "Monitoring Agency” / “MA" / “CRL”) . The MA has taken utmost care to ensure accuracy and objectivity while developing this Report based on the information provided by the Issuer and information obtained from sources believed by it to be accurate and reliable. The views and opinions expressed herein do not constitute the opinion of MA to deal in any security of the Issuer in any manner whatsoever.

  • b) This Report has to be seen in its entirety; the selective review of portions of the Report may lead to inaccurate assessments. For the purpose of this Report, MA has relied upon the information provided by the management /officials/ consultants of the Issuer and third-party sources like Statutory Auditors (or from peer reviewed CA firms) appointed by the Issuer believed by it to be accurate and reliable.

  • c) Nothing contained in this Report is capable or intended to create any legally binding obligations on the MA which accepts no responsibility, whatsoever, for loss or damage from the use of the said information. The MA is also not responsible for any errors in transmission and specifically states that it, or its directors, employees do not have any financial liabilities whatsoever to the users of this Report.

  • d) The MA and its affiliates do not act as a fiduciary. The MA and its affiliates also do not act as an expert to the extent defined under Section 2(38) of the Companies Act, 2013. While the MA has obtained information from sources it believes to be reliable, it does not perform an audit and undertakes no independent verification of any information/ certifications/ statements it receives from auditors (or from peer reviewed CA firms), lawyers, chartered engineers or other experts, and relies on in its reports.

  • e) The MA or its affiliates may have other commercial transactions with the entity to which the report pertains. As an example, the MA may rate the issuer or any debt instruments / facilities issued or proposed to be issued by the issuer that is subject matter of this report. The MA may receive separate compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors.

  • f) The MA report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRL providing or intending to provide any services in jurisdictions outside India, where it does not have the necessary licenses and/or registration to carry out its business activities referred to above.

  • g) Access or use of this report does not create a client relationship between CRL and the user.

  • h) CRL is not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing this report, MA has not taken into consideration the objectives or particular needs of any particular user.

  • i) It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be a basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

  • j) The report comprises professional opinion of CRL as of the date they are expressed, based on the information received from the issuer and other sources considered reliable by CRL. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. The report does not constitute statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions.

  • k) Neither CRL nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents guarantee the accuracy, completeness or adequacy of the report, and shall not have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained

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from the use of any part of the report. CRL and each aforesaid party disclaims any and all express or implied warranties, including but not limited to any warranties of merchantability, suitability or fitness for a particular purpose or use or use. In no event shall CRL or any aforesaid party be liable to any user for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

  • l) CRL has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with the preparation of this report. CRL has in place a code of conduct and policies for managing conflict of interest.

  • m) Unless required under any applicable law, this report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRL.

  • n) By accepting a copy of this Report, the recipient accepts the terms of this Disclaimer, which forms an integral part of this Report.

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