Aarvi Encon Limited (NSE: AARVI) declared a final dividend of ₹2 per equity share for the fiscal year ended March 31, 2026, during its 38th Annual General Meeting. The meeting, held on August 14, 2026, via video conferencing, also saw shareholders approve the adoption of the company’s audited standalone and consolidated financial statements for FY26.

The proceedings were chaired by Managing Director Virendra D. Sanghavi. Executive Director and CFO Jaydev Sanghavi presented the business and financial highlights to members, covering revenue, EBITDA, profit before tax, and profit after tax metrics. While specific numerical figures for these financial parameters were not detailed in the gist of proceedings, the statutory auditor’s report contained no qualifications, reservations, adverse remarks, or disclaimers.

Key Resolutions Passed

Shareholders voted on several ordinary business items through remote e-voting. The key outcomes included:

• Adoption of the audited standalone financial statements for FY26.
• Adoption of the audited consolidated financial statements for FY26.
• Declaration of a final dividend of ₹2 per equity share.
• Reappointment of Jaydev Sanghavi as a director, replacing his term which expired by rotation.

Governance and Compliance

The Company Secretary and Compliance Officer, Leela Bisht, informed members that ADCN & Company served as the scrutinizer for the e-voting process. She noted that while the statutory auditor’s report was clean, the secretarial auditor’s report contained an observation addressed in the Board Report included in the Annual Report.

Dividends declared at the meeting will be credited to shareholder accounts within 30 days from the date of the AGM. The results of the e-voting process are scheduled to be disseminated to the National Stock Exchange and Bombay Stock Exchange within two working days of the meeting’s conclusion.

Aarvi Encon Limited delivered a strong start to FY27, with standalone net profit surging 114% year-on-year to ₹5.87 crore for the quarter ended June 30, 2026. The Mumbai-based technical manpower outsourcing firm saw its consolidated net profit rise 43% to ₹60 crore, underpinned by robust top-line growth despite a contraction in operating margins.

Consolidated operational revenue increased 14% to ₹1,727 crore (₹1,727 million), up from ₹1,513 crore in Q1FY26. Standalone revenue also expanded 15% to ₹154.30 crore. The Board of Directors approved the unaudited financial results at a meeting held on August 12, 2026.

Financial Performance

The company’s profitability improved significantly across both standalone and consolidated structures. Consolidated basic EPS stood at ₹4.04, up from ₹2.84 in the corresponding quarter of the previous fiscal year. Standalone EPS rose to ₹3.95, compared to ₹1.85 in Q1FY26.

*Note: Consolidated total revenue derived from presentation data (Operational Income + Other Income).

Employee benefit expenses, the largest cost component, grew 19% to ₹130.40 crore on a consolidated basis, reflecting the manpower-intensive nature of the business. Total expenses rose 14.9% to ₹1,682 crore. Consequently, consolidated EBITDA fell 8.2% to ₹45 crore, with margins contracting 63 basis points to 2.61% from 3.24% in Q1FY26.

What the Numbers Show

A notable divergence exists between revenue growth and operating profitability. While consolidated operational income rose 14.1% to ₹1,727 crore, EBITDA declined to ₹45 crore from ₹49 crore in Q1FY26. This indicates that cost inflation, particularly in employee benefits, outpaced revenue growth, pressuring margins. However, the bottom line benefited significantly from other income, which surged to ₹30 crore from ₹7 crore in Q1FY26, largely driven by subsidies under the Pradhan Mantri Viksit Bharat Rojgar Yojana (PM-VBRY). This non-operating contribution accounted for approximately 50% of the profit before tax (₹62 crore), highlighting a temporary dependency on government incentives to bolster net profit figures.

Operational Updates

During Q1FY27, Aarvi Encon secured 33 new orders, strengthening revenue visibility. The company’s step-down subsidiary in Indonesia, PT Aarvi Encon Services, won two manpower supply contracts worth approximately INR 159 million and INR 385 million from a leading multinational EPC company.

The firm maintained a high client retention rate of 98%, adding more than 13 new clients during the quarter. Its technical workforce strength stood at approximately 8,500 personnel, with total manpower deputation reaching 8,288 professionals in Q1FY27, compared to 8,272 in FY26.

Business Mix and Clientele

Manpower outsourcing remained the core business, contributing 88% of revenue, followed by Operation & Maintenance (O&M) at 11% and other services at 1%. Industry-wise, Engineering accounted for 31% of revenue, followed by Oil & Gas (30%) and Renewable energy (20%). Geographically, India contributed 89% of sales, while international operations accounted for 11%. Non-PSU clients dominated the revenue mix at 88%, with PSU clients contributing 12%.

Regulatory and Operational Notes

The financial statements were prepared in accordance with Indian Accounting Standards (Ind AS) and subjected to a limited review by statutory auditors Jay Shah & Associates. The company continues to monitor the implementation of the New Labour Codes, which were consolidated effective November 21, 2025. Management noted that costs related to billable employees are contractually recoverable from customers, mitigating incremental impact on the statement of profit and loss.

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