Aaron Industries Ltd Management Discussions

Pursuant to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by

Companys competitive position) are given below:

A. Industry Structure and Developments:

Global Economic Overview:

The global economy continued to demonstrate resilience during 2025 despite persistent geopolitical uncertainties, trade disruptions, inflationary pressures in certain regions, and evolving monetary policies across major economies. Global growth remained moderate, supported by easing inflation, improving supply chains, and stable labour markets in several advanced economies.

While inflationary pressures have generally moderated compared to previous years, central banks across major economies continue to balance growth objectives with price stability. Geopolitical tensions, trade policy uncertainties, and fluctuations in commodity prices remain key factors influencing global economic performance. Nevertheless, continued investments in infrastructure, manufacturing, urban development, and technological advancement are expected to support long-term economic growth across both developed and emerging markets.

Global trade activity has shown gradual improvement, although businesses continue to monitor developments relating to tariffs, supply chain diversification, and regional economic policies. The long-term outlook remains positive, supported by increasing urbanization, digital transformation, and infrastructure investments across various economies.

Indian Economic Review

India continues to remain one of the fastest-growing major economies globally, supported by strong domestic consumption, government-led infrastructure spending, increasing private sector investments, and a favourable demographic profile. The countrys economic growth has been driven by sustained demand across manufacturing, construction, real estate, infrastructure, and services sectors.

Government initiatives such as infrastructure development programs, smart cities, housing projects, industrial corridors, and manufacturing promotion schemes continue to create growth opportunities across multiple industries. The real estate sector has remained resilient, with increasing demand for residential, commercial, and mixed-use developments supporting allied industries such as elevators and construction materials.

The Reserve Bank of India continues to focus on maintaining macroeconomic stability while supporting economic growth. Moderating inflation, stable financial markets, and continued capital expenditure by both public and private sectors are expected to support Indias long-term growth prospects.

Elevator Market:

The elevator and escalator industry continues to benefit from rapid urbanization, increasing construction of high-rise residential and commercial buildings, infrastructure expansion, and modernization of existing buildings. Demand for elevators is being driven by growth in housing, commercial complexes, hospitals, hotels, educational institutions, metro projects, airports, and industrial facilities.

The industry is witnessing increasing adoption of technologically advanced, energy-efficient, and safety-compliant elevator solutions. Customers are increasingly seeking products that offer enhanced safety features, reliability, aesthetics, and operational efficiency. Growing awareness regarding fire safety standards and regulatory compliance is also contributing to demand for certified elevator products.

The Indian elevator market remains highly fragmented, with the presence of multinational companies, organized domestic manufacturers, and regional players. In this competitive environment, product quality, customization capabilities, delivery timelines, and after-sales support continue to be important differentiators.

Aaron Industries Limited, through its manufacturing of elevator cabins, automatic door systems, elevator components, and cabin safety frames, continues to strengthen its position in the elevator value chain. The Companys expanding manufacturing capabilities, firerated door certifications, and growing branch network support its efforts to cater to a wider customer base across India.

Steel Polishing and Finishing Market:

The stainless-steel processing, polishing, and finishing industry continues to witness growth driven by increasing demand from construction, architecture, elevators, hospitality, transportation, healthcare, and industrial sectors. Customers increasingly prefer premium surface finishes, customized designs, and value-added stainless-steel products that offer durability, aesthetics, and corrosion resistance.

The industry remains sensitive to fluctuations in stainless steel prices, raw material availability, import regulations, and global market conditions. However, increasing demand for value-added stainless-steel products and infrastructure-led growth continue to provide long-term opportunities for the sector.

The Companys stainless steel polishing division plays a strategic role in supporting its backward integration initiatives by ensuring quality consistency, reducing dependence on external processors, improving operational efficiencies, and strengthening supply chain reliability. The division also provides opportunities to serve external customers seeking premium stainless steel finishing solutions.

B. Opportunity:

Expanding Real Estate and Infrastructure Sector: Continued growth in residential housing, commercial complexes, hospitals, educational institutions, hotels, shopping centres, and industrial developments is expected to generate sustained demand for elevator systems and related components.

Urbanization and High-Rise Construction: Rapid urban migration and scarcity of urban land are encouraging vertical development, resulting in increased installation of elevators across residential and commercial projects.

Replacement and Modernization Market: A large installed base of aging elevators across India presents significant opportunities for modernization, replacement, and upgradation of elevator systems and components.

Export Opportunities: Increasing acceptance of Indian-manufactured engineering products in international markets presents growth opportunities. The Company continues to explore new export destinations and strengthen its international presence.

Fire-Rated and Safety-Compliant Products:

Growing regulatory focus on safety standards and fire protection requirements is expected to increase demand for certified elevator products. The Companys achievement of fire door certification strengthens its competitive position in this segment.

Backward Integration Benefits: The stainless-steel polishing division continues to provide strategic advantages through quality assurance, supply chain control, reduced lead times, and improved cost efficiencies.

Expansion of Distribution Network: The

Companys new branch offices in Mumbai,

Ahmedabad, and Kolkata will enhance customer outreach and service delivery.

C. Segment-Wise or Products-Wise Performance:

The Company operates in two primary business segments:

i. Elevator Division:

The elevator division continued to contribute significantly to the Companys revenue through the manufacturing and supply of elevator cabins, automatic door systems, traction machines, and various elevator components. The Company remained focused on product quality, timely delivery, customer satisfaction, and strengthening its distribution network.

The Company also obtained fire door certification in accordance with IS 17518: Part 2: 2021, ISO 3008-2:2017, and EN 81-58:2018, enabling entry into specialized elevator installations, including hospitals and fire-compliant buildings.

ii. Steel Polishing Division:

The stainless-steel polishing division serves both external customers and the Companys internal requirements, supporting its backward integration strategy. The division undertakes polishing, finishing, and processing of stainless-steel sheets used in elevator products as well as for third-party customers.

This integration helps improve quality control, reduce dependence on external suppliers, and ensure availability of processed raw materials.

( in Lakhs)

Segment	FY 2025-26	FY 2024-25
Elevator Division	6899.01	6200.27
Steel Polishing Division	2301.49	1592.78
Total	9200.50	7793.05

D. Outlook:

The outlook for the Company remains positive, supported by the continued growth of the Indian elevator industry, increasing urbanization, infrastructure development, and rising demand for quality elevator products and components. The Company believes that its integrated manufacturing capabilities, diversified product portfolio, strategic expansion initiatives, and customer-centric approach position it favourably to capitalize on emerging opportunities in both domestic and international markets.

Having successfully operationalized and stabilized Unit-3, the Company is now focused on maximizing capacity utilization, improving operational efficiencies, and strengthening its market presence across key geographies. The Company continues to invest in technology, process improvements, and product development to enhance competitiveness and create long-term value for stakeholders.

In the coming years, the key strategic priorities of the Company include:

Enhancing Capacity Utilization: Optimizing the utilization of existing manufacturing facilities, including Unit-3, to achieve economies of scale, improve productivity, and support increasing customer demand.

Strengthening Market Presence: Expanding the Companys footprint across India through its branch network and dealer relationships while further strengthening its presence in key regional markets.

Growth in Elevator Products Business: Increasing market share in elevator cabins, automatic door systems, cabin safety frame, and other elevator components by focusing on quality, innovation, and customer satisfaction.

Expansion of Export Business: Exploring new international markets and strengthening existing export relationships to diversify revenue streams and enhance global reach.

Operational Excellence and Cost Optimization: Continuously improving manufacturing efficiencies, supply chain management, inventory controls, and resource utilization to maintain healthy profitability and operational resilience.

Technology and Product Innovation: Focusing on product development, automation, safety-enhanced solutions, and technologically advanced elevator products to meet evolving industry requirements and customer expectations.

Leveraging Backward Integration: Maximizing the benefits of the stainless-steel polishing division through improved quality control, supply chain reliability, cost efficiencies, and enhanced value addition.

Strengthening Financial Position: Maintaining a disciplined approach towards working capital management, cash flow optimization, and prudent financial management to support sustainable growth.

Focus on Quality and Compliance: Continuing to strengthen quality standards and leverage certifications, including fire-rated elevator door certifications, to address the requirements of high-specification projects across residential, commercial, industrial, healthcare, and infrastructure sectors.

The Company remains committed to delivering innovative, reliable, and high-quality products while maintaining strong customer relationships and operational excellence. Supported by its expanded manufacturing infrastructure, experienced management team, and growing market opportunities, Aaron Industries Limited is confident of achieving sustainable growth and creating long-term value for its shareholders.

E. Risks, Concerns, and Threats:

The Company operates in a dynamic business environment and is exposed to various risks and challenges that may affect its operational and financial performance. The management continuously monitors these risks and implements appropriate mitigation measures to minimize their potential impact:

Raw Material Price Volatility: Stainless steel, steel, electrical components, and other inputs constitute a significant portion of production costs. Fluctuations in commodity prices may impact profitability if cost increases cannot be passed on to customers.

Intense Industry Competition: The elevator industry remains highly competitive with the presence of multinational corporations, unorganized domestic players, and regional manufacturers competing on price, technology, quality, and service.

Economic Slowdown: Any slowdown in construction activity, real estate investments, industrial growth, or infrastructure spending may adversely affect demand for elevator products.

Supply Chain and Operational Risks: The Company is exposed to risks arising from supply chain disruptions, logistics challenges, geopolitical developments, transportation constraints, and fluctuations in freight costs. These factors may affect procurement schedules, production planning, inventory management, and timely deliveries to customers.

Technology and Innovation Risks: Rapid technological advancements and evolving customer expectations require continuous investment in product development, manufacturing processes, automation, and quality enhancement initiatives. Failure to adapt to changing market requirements may impact the Companys competitive position and long-term growth prospects.

Regulatory and Compliance Risks: The Company is subject to various laws, regulations, industry standards, and compliance requirements. Changes in taxation policies, environmental regulations, labour laws, safety standards, and other statutory requirements may increase compliance obligations and operational costs.

Financial Risks: The Company remains exposed to financial risks including fluctuations in interest rates, foreign exchange rates, credit risks associated with customer receivables, and working capital management challenges. The management continuously monitors these risks and adopts appropriate measures to maintain financial stability and liquidity.

Human Resource Risks: The Companys continued growth depends on its ability to attract, develop, and retain skilled and qualified personnel. Increasing competition for talent and the availability of trained manpower may pose challenges to business operations and future expansion plans.

Some of the risks that may arise in the normal course of its business and impact its ability for future developments include inter-alia, Credit Risk, Liquidity Risk, Counterparty Risk, Regulatory Risk, Commodity Inflation Risk, Currency Fluctuation Risk, and Market Risk.

F. Internal Control System and their adequacy:

The Company maintains adequate and effective internal control systems commensurate with its size and complexity. It also ensures that they are recorded in all material respects to permit the preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss.

In the opinion of the Management, the Company has adequate internal audit and control systems to ensure that all transactions are authorized, recorded, and reported correctly. An independent internal audit function is an important element of the Companys internal control systems. This is supplemented through an extensive internal audit programme and periodic review by the management and the Audit Committee. The internal control systems comprise extensive internal and statutory audits. The Corporate Governance practices instituted by the Company are discussed in detail in the chapter on Corporate Governance which forms part of the Annual Report.

G. Discussion on Financial Performance with respect to Operational Performance:

During the Financial Year 2025-26, the Company continued to focus on operational efficiency, capacity utilization, and market expansion. As a result, the Companys Total Income increased by 18.06% to Rs. 9,220.21 Lakhs as compared to Rs. 7,815.03 Lakhs in the previous financial year.

The Companys EBITDA Margin improved to 19.22% during the year from 19.01% in the previous year, reflecting improved operational efficiencies, cost optimization measures, and the benefits of integrated manufacturing operations.

The Profit Before Tax (PBT) stood at Rs. 1,142.12 Lakhs as against Rs. 1,186.36 Lakhs in the previous year, while the Net Profit After Tax (PAT) was Rs. 679.74 Lakhs compared to Rs. 824.33 Lakhs in the previous year. The decline in profitability was primarily attributable to higher depreciation, finance costs, and other expenses associated with capacity expansion and business growth initiatives undertaken by the Company.

The management remains focused on improving capacity utilization, strengthening operational efficiencies, and enhancing profitability to create sustainable long-term value for all stakeholders.

H. Material developments in Human Resources /

Industrial Relations front, including the number of people employed:

The Company recognizes its human resources as one of its most valuable assets and continues to focus on developing a skilled, motivated, and high-performing workforce. During the year under review, the Company emphasized employee training, skill enhancement, workplace safety, and continuous learning initiatives to support its operational and business objectives.

Various training and development programs were conducted to strengthen technical competencies, improve productivity, and enhance employee effectiveness across functions. The Company also continued its efforts to foster a positive work environment through employee engagement initiatives, transparent communication, and welfare measures.

Industrial relations remained cordial and harmonious throughout the year. The Company maintained constructive relationships with its employees and workmen, ensuring a collaborative and productive work culture.

As on March 31, 2026, the Company had 204 permanent employees and workmen on its rolls.

The Company remains committed to nurturing talent, promoting professional growth, and building a future-ready workforce to support its long-term growth and sustainability objectives.

I. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations, therefore, including:

Financial Ratio	FY 2025-26	FY 2024-25	% Change	Reason for Change
Debtor Turnover Ratio	15.03	17.80	(15.54%)	NA
Inventory Turnover Ratio	2.89	3.12	(7.35%)	NA
Interest Coverage Ratio	1.91	1.96	(2.17%)	NA
Current Ratio	1.37	1.28	7.32%	NA
Debt to Equity Ratio	0.88	0.92	(4.82%)	NA
Operating Profit Margin %	19.22%	19.01%	1.14%	NA
Net Profit Margin %	7.43%	10.58%	(29.67%)	Primarily due to higher depreciation, finance costs, and operating expenses incurred during the year.

J. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with detailed explanations thereof:

Particular	FY 2025-26	FY 2024-25	% Change	Reason for Change
Return on Net Worth	14.07%	19.14%	(26.48%)	The decrease is attributable to the increase in shareholders equity during the year.

K. Cautionary Statement:

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates, and others may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make a significant difference to the Companys Operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic, and natural calamities over which the Company may not have any direct / indirect control.