Aequs Ltd Management Discussions

Economic Performance

Global Economic Review¹

Global GDP growth remained stable at 3.5% in CY 2025. Global inflation moderated to 4.1% in CY 2025 from 5.8% in CY 2024. Growth across Emerging Market and Developing Economies (EMDEs) remained resilient. Stronger net exports and higher investment activity supported this performance. However, global trade policies continued to reflect geopolitical and security priorities. These considerations outweighed efficiency and multilateral cooperation. After absorbing the impact of higher trade barriers and uncertainty, the global economy confronted fresh challenges. The conflict in the Middle East has added pressures to the global economic outlook. Despite these developments, global economic conditions are expected to remain broadly stable. Global GDP is projected at 3.0% in CY 2026 and 3.4% in CY 2027. However, geopolitical tensions and potential trade disruptions remain key risks. In this environment, coordinated policy actions will remain important. Such measures can help address evolving macroeconomic challenges in the years ahead.

Global GDP

Indian Economic review

The Indian economy continued to demonstrate strong resilience during FY 2026. Real GDP growth accelerated to 7.7% despite heightened global uncertainty.² India remained one of the fastest-growing major economies globally for the fourth consecutive year. This growth in the economy was supported by strong domestic demand. Private Final Consumption Expenditure (PFCE) remained healthy, while investment activity gained momentum. Household consumption remained a major demand driver across both urban and rural markets. The Government of India supported economic expansion through timely policy measures. These included GST rationalization and regulatory reforms to improve the ease of doing business. Amid global uncertainties, policy efforts focused on strengthening domestic growth drivers. The Government also prioritized resilience against external shocks and export diversification.

Industrial activity grew by 9.5% in FY 2025–26, compared to 8.7% in the previous year.³ Manufacturing led this growth, supported by easing input costs and stronger profitability. Robust domestic demand further supported manufacturing activity. The Index of Industrial Production (IIP) also expanded during the FY 2026. India remained among the fastest-growing industrial economies, despite uneven global industrial performance. Manufacturing contributed to export growth, while the services sector remained buoyant. Both sectors continued to support overall economic expansion.

On the external financing front, gross foreign direct investment (FDI) recorded strong growth. Both gross and net FDI inflows increased over the previous year. India continued to attract significant greenfield investment projects. Evolving global power dynamics and supply chain realignment expanded India–European Union (EU) engagement. The relationship has progressed beyond traditional trade and investment ties. The conclusion of the India–EU FTA at the 16^th India–EU Summit marked a significant milestone. It positions both sides as trusted partners committed to open markets, predictability and inclusive growth. The EU remains one of Indias largest trading partners with bilateral trade in goods and services expanding steadily over time. The agreement offers preferential access for over 99% of Indian exports and this is expected to create substantial growth opportunities in the EU market. Additionally, under the India–US interim agreement, both countries agreed to eliminate tariffs on certain aircraft parts and machinery trade. The agreement also provides zero-duty access for aerospace components exported from India to the United States. Looking ahead, India is expected to maintain its growth momentum. GDP growth for FY 2026–27 is projected at 6.6%.⁴ This outlook is supported by strong domestic demand, stable inflation and prudent macroeconomic policies. The Union Budget 2026–27 introduced the ‘Kartavyas framework. The framework focuses on accelerating growth through higher productivity, improved competitiveness and greater resilience to global volatility. The Budget also proposed a six-point plan to expand domestic manufacturing. The plan targets strategic and frontier sectors while revitalising legacy industries. Building on the three defined Kartavyas, the manufacturing sector is expected to play an important role in sustaining growth. It will support employment generation, export competitiveness and long-term economic transformation. Policy reforms and capital allocation measures continue to strengthen the sector.

These initiatives are expected to support production, investment and business sentiment. FY 2027 is likely to be a period of adjustment. Businesses and households will adapt to evolving economic conditions. Domestic demand and investment activity are expected to remain supportive of growth.

Net FDI Remained Positive in March

Industry Performance

Aerospace Industry

Global Aerospace Industry

The aerospace industry remains one of the most technologically advanced and capital-intensive sectors. It encompasses the design, development and manufacturing of aircraft, spacecraft, missiles and related systems. These systems include propulsion engines, avionics and other critical components. The global aerospace industry maintained steady growth and is expected to grow from $340.04 Billion in CY 2025 to $356.93 Billion in 2026 at a compound annual growth rate (CAGR) of 5%.⁵ Growth was driven by rising global air travel and increased demand for commercial aircraft. Expansion of maintenance, repair and overhaul (MRO) services for ageing fleets also supported industry growth. Demand has further benefited from the development of advanced aircraft components that improve efficiency and safety. The increasing adoption of drones and ultralight aircraft for commercial applications contributed to market expansion. Higher aircraft modification and overhaul activity, linked to fleet modernization, also supported growth. Global air travel and air cargo volumes increased during the year, reflecting stronger demand and economic activity.

The aerospace supply chain continued to evolve. Outsourcing of component manufacturing has increased as the industry seek cost efficiencies and access to specialized expertise. Original Equipment Manufacturers (OEMs) increasingly focused on design and final assembly activities. At the same time, Tier-1 and Tier-2 suppliers assumed a large role in component manufacturing. Artificial Intelligence (AI), big data and the Internet of Things (IoT) improved manufacturing efficiency, enabled predictive maintenance and enhanced supply chain optimization. Industry participants also invested in technology hubs, to strengthen their competitive position. North America remained the largest aerospace market in CY 2025 and is expected to remain the fastest-growing market globally. Looking ahead, the global aerospace market is projected to witness strong growth and reach $445.64 Billion by CY 2030, reflecting a Compound Annual Growth Rate (CAGR) of 5.70%.⁶ This growth is expected to be supported by increasing demand for next-generation fuel-efficient aircraft. Rising investments in advanced manufacturing technologies for aircraft components and the expanding use of commercial drones are also expected to drive market growth. Key industry trends include greater adoption of composite materials, expansion of MRO capabilities across emerging markets, growth in commercial aircraft deliveries and higher investments in aerospace support equipment. These trends are expected to support the industrys long-term growth trajectory.

Indian aerospace Industry review

India is steadily emerging as an important hub for aircraft manufacturing, assembly and maintenance. Its strategic location and strong economic growth continue to support this transition. Indias aviation sector has expanded significantly, driving growth in aircraft manufacturing activities. Rising demand for air travel and the rapid expansion of e-commerce activities have further accelerated market growth. Demand for air travel remained robust across both developed and developing regions, increasing the requirement for new aircraft. The domestic aircraft manufacturing sector has also benefited from advancements in material technologies and sustainability initiatives. Additionally, Government-backed programs such as Make in India have further created a conducive environment for innovation and investment across the aerospace sector. The initiative has contributed significantly to the growth of Indias commercial aerospace manufacturing industry by enhancing global competitiveness, promoting innovation, attracting investments and fostering a self-reliant manufacturing ecosystem. India is also regarded as an attractive sourcing destination due to its cost competitiveness and availability of a highly skilled workforce. Combined with a growing domestic aviation market, expanding defense requirements and a greater focus on indigenization, India is increasingly recognized as an important participant in global aerospace supply chains. Indias strong engineering and manufacturing capabilities have encouraged leading aerospace players to expand their aircraft parts and component manufacturing operations in India. India has made significant progress in developing aerospace engineering and manufacturing capabilities. The Government of India has also set up a National Center of Excellence (NCoE) for Skilling in Aeronautics and Defense in partnership with the Government of the French Republic under the Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs program. The center will provide advanced training in aeronautics, Maintenance, Repair and Overhaul (MRO), airport operations, defense manufacturing and related areas. This initiative is expected to strengthen Indias skilled workforce and support the growth of the aerospace and defense sector. India continues to offer a significant cost advantage through competitive labor costs and lower overhead expenses compared with established aerospace manufacturing hubs such as the

United States and Europe. This cost efficiency enhances the countrys attractiveness as a manufacturing destination for global aerospace companies. The domestic aerospace manufacturing market is projected to reach H257.09 Bn ($3.06 Bn) by 2030. Looking ahead, Indias aviation strategy is expected to gradually reduce dependence on external supply chains and support the development of a more diversified and self-reliant aviation ecosystem. This transition is expected to create substantial opportunities across domestic manufacturing, component production, maintenance services and technology partnerships. India is also progressing toward its long-term objective of becoming a major global aviation hub by 2047.⁵

Precision Manufacturing

Global Precision Manufacturing Industry Review

The global precision manufacturing industry involves the production of highly accurate and complex components using advanced machining technologies, additive manufacturing and robotics. These products, commonly referred to as Precision Engineered Components (PEC), are critical for high-performance applications across a wide range of industries. Sectors such as aerospace, defense, medical devices, semiconductors, energy and power rely extensively on precision-engineered components to maintain operational reliability and efficiency. Industry participants are increasingly focused on enhancing product quality while meeting growing customization requirements. Consistent quality standards and the ability to scale production efficiently remain key industry priorities, supporting a favorable long-term outlook. The global precision machining market was valued at $126.99 Billion in CY 2025.⁹ Industry growth is being driven by rising demand for high-precision components across the aerospace and automotive sectors among others. This demand is supported by the need for improved fuel efficiency and continued components miniaturization. From a regional perspective, Asia Pacific retained its leadership position in CY 2025 and is expected to remain the largest market over the coming years. The region benefits from a strong manufacturing base across China, Japan, South Korea and India. North America is projected to reach $27.76 Billion in CY 2026, driven by sustained demand from aerospace and defense manufacturing, medical device production and electric vehicle manufacturing. Europe is expected to reach $32.69 Billion in CY 2026, supported by its established automotive industry in Germany and Italy, strong industrial machinery exports and continued aerospace production.

Indian Precision Manufacturing Industry Review

The Indian precision manufacturing sector has witnessed significant expansion, supported by technological advancements and growing demand across industries such as automotive, aerospace and electronics. Growth in the sector has also been driven by increasing demand for high-precision components from the aerospace and automotive industries. Government initiatives have played an important role in supporting industry development. Programs such as Make in India and the Production-Linked Incentive (PLI) schemes. These initiatives to strengthen domestic manufacturing capabilities and encourage investments across the precision engineering ecosystem. During the year, Indias aerospace and defense precision engineering components market, semiconductor, precision engineering components and energy and power precision engineering components market recorded growth.

Going forward, the Indian Precision Engineered Components (PEC) market is expected to attain a market size of $996.10 Million by 2034.¹⁰ Demand for precision engineering products continues to be driven by industries where accuracy and reliability are critical, including automotive systems, aerospace, electronics and medical devices. The sector is also witnessing emerging opportunities from the medical and electronics industries, where demand for miniaturized and highly precise components continues to increase.

Consumer Industry

Global Consumer Industry Review

The consumer durables sector is undergoing a structural transformation, with consumer preferences shifting from disposable products towards durable goods. This trend is driven by evolving consumption patterns and a growing focus on sustainability. Consumers are increasingly seeking products that enhance convenience and comfort in everyday life, particularly across appliances, electronics and furniture. The adoption of smart and connected devices enabled by Internet of Things (IoT) and Artificial Intelligence (AI) technologies is also emerging as a significant trend.

The global Electronic Manufacturing Services (EMS) market was valued at $648.11 Billion in CY 2025. Consumer electronics represented the largest segment during the year, supported by continued large-scale production of smartphones, laptops, wearables and smart home devices. Asia Pacific accounted for 44.81% of the global EMS market in CY 2025. The industry serves multiple end-use industries, including consumer electronics, automotive, heavy industrial manufacturing, aerospace and defense, healthcare, IT and telecom, energy and utility and others. The global EMS market is projected to grow from $689.86 Billion in CY 2026 to $1,192.68 Billion by CY 2034, reflecting a CAGR of 7.10% during the forecast period. China is expected to remain one of the largest markets globally, with revenues estimated at approximately $85.69 Billion in CY 2026, representing nearly 12.40% of global sales. Europe is forecasted to grow at a CAGR of 5.80%, making it the third-largest regional market, reaching $125.90 Billion by CY 2026. Growth in the region is expected to be driven by rising demand for high-precision and high-value electronics across industries such as automotive, industrial automation, aerospace and medical devices.¹¹

Global Toy Industry Review

The global toy industry has experienced significant transformation in recent years, driven by the growing influence of social media and digital marketing channels. These developments have reshaped how consumers discover, evaluate and purchase toys. The global toys market is expected to grow from $117.83 Billion in CY 2025 to $223.74 Billion by 2035¹². North America continued to account for the largest share of the global market at approximately 34%, while the United States remains the largest individual market worldwide. Traditional toys represent the largest product category, accounting for around 30% of the global market. The industry is projected to reach $223.74 Billion by CY 2035, registering a CAGR of 6.62% between CY 2025 to CY 2035. ⁸ Educational toys are also gaining prominence, as products that combine learning and play are increasingly viewed as contributors to child development rather than discretionary purchases.

Global Cookware Industry Review

The global cookware industry continued to be influenced by changing cooking habits, evolving urban lifestyles and increasing consumer awareness of food safety and material quality. The global cookware market was valued at $35.70 Billion in CY 2025. Consumer preferences are increasingly shifting toward sustainable and health-conscious cooking solutions. As a result, materials such as stainless steel, ceramic and cast iron are witnessing stronger demand amid growing concerns regarding chemical coatings. Premiumization is another notable trend, with consumers increasingly opting for durable and long-lasting cookware products over lower-quality alternatives. This trend continues to support growth in premium product categories. The expansion of e-commerce has also transformed distribution channels by strengthening direct-to-consumer engagement. Another critical growth driver remains the increasing prevalence of home cooking across both developed and emerging economies. The global cookware market is projected to grow from $38.34 Billion in 2026 to $67.87 Billion by CY 2034, registering a CAGR of 7.40% during the forecast period. The pressure cooker segment is expected to grow at a CAGR of 4.90% between CY 2026 and CY 2033, driven by its time-saving benefits, efficiency and suitability for evolving consumer lifestyles. Demand is also expected to be driven by rapid urbanization and the growing number of nuclear households across China, India, Southeast Asia and South Korea.¹³

Indian Consumer Industry Review

The consumer electronics and appliances sector remains a major contributor to Indias economic growth. The industry continues to benefit from rising domestic demand, rapid urbanization and an expanding middle-class population. Improving product quality and affordability are driving higher consumer adoption. Rising disposable incomes and broader economic growth continues to support demand for consumer electronics across the country. Indias consumer durables, electricals and Electronic Manufacturing Services (EMS) sector is expected to witness gradual recovery in the coming years. Sustained demand for high-quality electronic products is likely to support this growth. Increasing internet access and adoption of emerging technologies are expected to accelerate market expansion. These technologies include Artificial Intelligence (AI), Internet of Things (IoT), Augmented Reality (AR), Virtual Reality (VR), remote access systems, advancements in microcontrollers and advanced personalization solutions. Adoption is expected to remain strong among younger consumers and working professionals.

Indian Toy Industry Review

The Indian toys and games market benefits from rising disposable incomes, rapid urbanization and growing demand for educational and learning-based toys. The expanding middle-class population continues to drive spending on entertainment and learning-focused products. Convenience, competitive pricing and wider product availability continue to support online sales. Expanding e-commerce penetration in Tier II and Tier III cities has further strengthened this channel. The industry exhibits moderate competitive intensity, with multinational corporations and regional manufacturers operating across different price categories. While domestic players focus on localized content and manufacturing strengths, international brands leverage global expertise and licensing arrangements to expand their market presence. North India accounted for the largest market share at 33% in 2025.¹⁴ This leadership position is supported by a strong manufacturing base in the Delhi-NCR region, higher consumer purchasing power, greater exposure to global toy trends and supportive government policies. Growing awareness of child development is supporting demand for educational and skill-building toys. Products such as science kits, puzzles and building blocks are witnessing increased adoption. These products support early learning, creativity and problem-solving skills. The trend aligns with the increasing emphasis on STEM education and technology-enabled learning. Rising smartphone usage, expanding internet access and growing online retail penetration are expected to support industry growth. E-commerce is likely to remain a preferred platform for toy purchases.

Indian Cookware Industry Review

The Indian cookware industry is witnessing a period of transformation. Consumers are placing greater emphasis on convenience, health safety and product quality. Rising urbanization, increasing per capita income and growing preference for environmentally friendly, non-stick and premium cookware products continue to support market growth. Manufacturers are expanding their offerings to meet evolving consumer needs. Product categories include non-stick cookware, cast iron cookware, tri-ply stainless steel cookware and induction-compatible solutions. Growing awareness of health and environmental concerns is encouraging a shift towards safer and eco-friendly alternatives. Demand for premium and multi-functional cookware products is also increasing. Consumers are seeking durable, versatile and high-performance kitchen solutions. Rising disposable incomes among middle and upper-middle-income households are driving upgrades from conventional aluminum cookware. Demand is increasing for hard-anodized, tri-ply stainless steel and induction-compatible products. The Indian cookware industry is expected to continue to grow and by 2034, it is expected to attain a market size of $5.70 Billion¹⁵ Growth is expected to be driven by continued urbanization, technological advancements and evolving consumer preferences. Demand for modern, efficient and high-quality kitchenware products is expected to remain strong.

About the Company

Aequs Limited

Aequs has built its business around its Ecosystems of Efficiency model, combining engineering expertise with precision manufacturing capabilities. The Company designs and delivers innovative products and solutions for OEM customers. It specializes in providing zero-error manufacturing solutions across the Aerospace and Consumer industries. Within the Aerospace Segment, Aequs is the only precision component manufacturer in India operating from a single special economic zone with fully vertically integrated manufacturing capabilities. Its integrated manufacturing model and end-to-end capabilities differentiate it from other contract manufacturers. The Company operates through three engineering-led manufacturing ecosystems in India. These ecosystems support the large-scale production of precision engineered products while ensuring timely delivery and compliance with stringent quality and safety standards. Aequs manufactures high-quality, components for leading global brands, including aerospace OEMs, Tier 1 suppliers and consumer companies. Its ability to combine scale with vertically integrated manufacturing ecosystems and qualified engineering talent enables efficient production scaling. These capabilities help maintain delivery commitments while meeting rigorous quality and safety standards. They have also enabled the Company to achieve 100% in-country value addition for selected products. To strengthen quality control, Aequs conducts regular supplier quality assessments to ensure compliance with customer specifications and internal quality standards. While Aerospace remains the principal operating segment, the Company has expanded its presence across consumer electronics, consumer durables and toys. Its product portfolio includes cookware, toy vehicles, figurines and components used in smart devices and portable computers. The Company has also established joint venturestostrengthenitsproductdevelopmentandengineering capabilities. These leverage complementary expertise in the aerospace domain and support the manufacturing of complex and niche products for customers. A deep understanding of OEM customer requirements enables the Company to enhance its capabilities, promote innovation and deliver complex products within short timelines. In line with its long-term objective of building a resilient and scalable institution, Aequs continues to strengthen its integrated manufacturing capabilities across precision manufacturing segments.

*Includes full-time employees, fixed term employees, apprentices and trainees as of March 2026

Aequs is the only Precision Component Manufacturer operating within a Single Special Economic Zone in India to offer fully vertically integrated manufacturing capabilities in the Aerospace segment

Operational Performance in FY 2026

Aerospace Segment

The Aerospace Segment remained profitable during FY 2026, backed by a strong order book of $889 Million. The Company also enhances its capabilities through strategic partnerships. These include collaboration with Magellan Aerospace for surface treatment operations and Aubert & Duval for forging activities. In addition, Aequs partnered with Accel India and Vagus Defense to enter the Unmanned Aerial Vehicles (UAV) market. The initiative is primarily focused on addressing Indias defense requirements. Aequs maintains a diversified aerospace product portfolio comprising more than 5,654 products. These products span aero engine systems, landing systems, aero-structures, assemblies, cargo and interiors and turning solutions for aerospace customers. The portfolio also includes products for clients across consumer electronics, toys and consumer durables. The Company continues to focus on high-value-added products, particularly engine and landing system components.

*as of June 2026

Revenue Growth - Aerospace Segment

Consumer Segment

Although the Aerospace Segment has historically accounted for the majority of the Companys revenues, Aequs has progressively increased the contribution of its Consumer Segment. The Company maintains a diversified portfolio of products and continues to strengthen its presence across fundamental consumer categories. As part of this strategy, Aequs partnered with Tramontina, a Brazilian multinational company, to expand its presence in the global cookware market. Several of these relationships have extended for more than a decade, reflecting customer confidence in the Companys scale, expertise and execution capabilities. During the year, the Company commenced product deliveries to a leading toy brand marking an important milestone in the growth of the Consumer Segment. In addition, consumer electronics programs awarded in previous years were fully industrialized. Revenues from these programs commenced during the year, contributing to segment growth.

Revenue Growth - Consumer Segment

Manufacturing Excellence- Aerospace

Only company within a single SEZ with end-to-end manufacturing capabilities for the Aerospace Segment in India

Ability to manufacture components from nose-to-tail

Manufacturing Excellence- Consumer

Integrated manufacturing capabilities across plastics, metals and consumer electronics for leading global OEMs

Abilitytodevelopandmanufactureprecisioncomponentsandfinishedproductsacrossconsumerelectronics,toys,cookwareandhomeware.

Financial Performance

Financial Overview

Particulars	FY 2026	FY 2025
Revenue from Operation	12,304	9,246
EBITDA	1,545	1,080
Profit before tax	(715)	(941)
Profit for the year	(1,133)	(1,024)
Net Worth	14,855	7,160
Return on net worth	(7.60%)	(14.30%)
EBITDA Margin (%)	13%	12%
Net profit margin (%)	(9%)	(11%)

Key Financial Ratios

Sr. No Ratio	Numerator	Denominator	Unit	As of March 31, 2026	As of March 31, 2025	Change	Explanation for the change in the ratio by more than 25% as compared to the previous year
1 Current Ratio	Current Assets	Current Liabilities	Times	1.58	1.10	44%	Increased due to IPO proceeds.
2 Debt-Equity Ratio	Total Debt	Total Equity	Times	0.23	0.99	76%	Reduced due to increase in equity and debt repayment.
3 Debt Service Coverage Ratio	Profit before tax + Finance cost + ESOP exp. + Non- cash Item	Finance cost + Lease payment + Principal repayment of long- term debt	Times	0.34	0.07	>100%	Improved on account of increased revenue and better operating leverage.
4 Return on Equity	Profit After Tax	Shareholders Equity	%	(7.63%)	(14.30%)	47%	Changed due to increase in equity base.
5 Inventory turnover	Cost of Goods Sold	Average Inventories	Times	1.01	1.03	(1%)	Not a major variance
6 Trade receivables turnover	Revenue from Operations	Average Trade Receivables	Times	5.84	6.3	(7%)	Not a major variance
7 Trade payables turnover	Cost of Goods Sold	Average Trade Payables	Times	1.79	1.81	(1%)	Not a major variance
8 Net profit ratio	Net profit after tax	Revenue from Operations	%	(9.21%)	(11.08%)	17%	Not a major variance
9 Return on capital employed	Earnings Before Interest and Taxes (EBIT)	Total Equity + Current / Non current borrowings and lease liability less Cash and Bank balance	%	1.56%	0.92%	69%	Improved due to higher EBIT.
10 Return on investment	EBIT	Average Total Asset	%	1.25%	0.71%	76%	Improved due to higher earnings.

Manufacturing, Technology and Intellectual Property

The Company operates from a three clusters (Special Economic Zone/ DTA) in India and provides end-to-end manufacturing capabilities for the aerospace and consumer segments. These capabilities include machining, forging, surface treatment and assembly operations.

Aerospace

Its extensive machining infrastructure supports the timely and large-scale production of critical and complex components, including engine systems, aero structures and landing systems.

TheCompanyalsooperatesintheprecisionmanufacturingvertical for electronic components and offers advanced manufacturing solutions across the precision manufacturing value chain. The core capabilities include 3/4/5 axis milling and turned machining of various grades of material such as aluminium, steel, inconel and titanium. Along with this, it also includes forging, metal forming, advanced surface treatments and secondary processes, such as precision surface finishing and post-processing and aero structures assembly. These capabilities enable the Company to manufacture some of the most critical and technically complex products within the Aerospace Segment.

Consumer segment

Within the Consumer Segment, the Company leverages similar capabilities to manufacture high-precision products. These include components for portable computers and smart wearable devices, as well cookware and toys such as toy vehicles, figurines and outdoor toys. In FY 2026, the Company signed an MoU with the Government of Tamil Nadu for a 1,900 crore investment in Hosur to establish an integrated aerospace ecosystem. Additionally, the Company confirmed a proposed investment of 2,856 crore in Karnataka to support the expansion of its aerospace and consumer electronics manufacturing operations across Belagavi and Hubballi.

The Companys information technology (IT) function has implemented process and technology controls across its infrastructure, systems, networks and applications. Data security remains a key focus area. The Company provides 24/7 IT support, which includes on-demand services and technical assistance. To strengthen network security and system performance, the IT team conducts periodic internal network vulnerability assessments, monitors network performance and enables restricted internet access through proxy-based controls. The Company has implemented SAP S/4HANA as its enterprise resource planning platform across all business operations. The platform supports critical business functions, including finance and controlling, warehouse management, production planning, plant maintenance, quality management and business objective planning.

The Company holds a worldwide, exclusive, perpetual and non-transferable license to use the trade name and trademark ‘Aequs, together with its related trademarks. Further the Company owns two registered trademarks relating to the logo and trade name ‘ECOSPHERE. Both trademarks are registered under Class 41 in accordance with the provisions of the Trade Marks Act.

Core IT infrastructure is built and operated aligned to the business and continuity requirements through classical solutions and services management. The Company has implemented state-of-the-art IT infrastructure on systems, networking and standard business software. Solutions are designed to achieve scalability, reliability and performance, built with adequate capacities to address changing business conditions. The IT architecture is built on virtualization technologies, segmentation, differentiated services, fault tolerant models to keep up the uptime of critical components and services. The team adopts centralized and de-centralized structures to meet with timely technical support requirements of the local environments. The team has implemented enterprise class IT solutions to achieve its intended objectives. Cybersecurity and compliances to legal, regulatory and contractual requirements is an integral part of infrastructure development and management processes. The team has implemented cyber resilience measures to address current and emerging threats to the IT environment and continues to strengthen these measures in line with the evolving threat landscape.

The IT operations team leverages infrastructure and service level monitoring to meet uptime requirements and provide timely technical support. The IT infrastructure is sustained through life-cycle management of systems, periodic technology refreshes and the phased replacement of obsolete systems and technologies. The IT team also performs internal and external audits to improve its systems and processes in line with industry best practices and benchmarks.

Information Systems

As part of its digital transformation journey, the Company hascommenced the deployment of MES and APS solutions across the organization. The initiative will enhance shop-floor visibility, enable data-driven production planning, improve operational control, and support scalable manufacturing through real-time monitoring, traceability, and process optimization.

The APS platform enhances planning accuracy by considering factors such as machine capacity, material availability, tooling constraints and delivery commitments. This will support improved resource utilization, reduced lead times and enhanced on-time delivery performance. Moreover, the MES and APS initiative forms a key digital transformation program for the organization and will establish a foundation for Industry 4.0 capabilities, including data-driven decision-making, predictive analytics, continuous process improvement and enhanced operational excellence across manufacturing operations.

Applications and Products (SAP) and Enterprise Resource Planning (ERP)

The Company has implemented ERP solution and modules to support manufacturing operations across business units, customized work flows ie, Procure to Pay, Order to Cash, Sourcing, warehousing and associated financial processes. The SAP environment is managed by a dedicated team comprising functional experts, qualified administrators of SAP environment to manage routine and emerging requirements across businesses of the enterprise. The ERP system has adopted segmented architecture so that it helps in achieving scalability and fault tolerance.

Environment

The Company undertakes several environmental initiatives aimed at promoting sustainable business practices, conserving natural resources and ensuring responsible resource utilization. It has implemented measures to ensure Zero discharge of effluents and hazardous substances from its manufacturing facilities into the air and water bodies. Electricity and water consumption are monitored at both the entity level and by the Environment, Health and Safety (EHS) department. As part of its efforts to improve energy sustainability, Aequs has adopted several measures, including the procurement of green energy, which accounts for ~90% of its total electricity consumption. To support water sustainability, the Company recycles wastewater through its Effluent Treatment Plants (ETP) and Sewage Treatment Plants (STP). In addition, the Company has implemented a decarbonization strategy that outlines its pathway to achieving net-zero greenhouse gas emissions, aligned with globally recognized frameworks such as the Paris Agreement and the GHG Protocol. Additionally, the Company conducts regular environmental monitoring, including monthly, quarterly and half-yearly testing of ambient air quality, drinking water, food, soil and storm water. It also performs annual testing of 12 air emission parameters in accordance with the National Ambient Air Quality Standards (NAAQS).

Green Energy

Around 90% of energy at BAC is sourced from renewable energy 2 MW rooftop solar plant installed at BAC, with plans for further expansion 6% reduction in greenhouse gas emissions (FY25–FY26) driven by structured Scope 2 tracking

Water Recycling and Reuse

70–80% reduction in water consumption through advanced Zero Liquid Discharge (ZLD) systems Over 30 Million litres of water reused annually through recycling and closed-loop processes

Circularity & Resource Efficiency

BAC campus is ISO 14064-1 certified

~200 kg of biogas generated per month from organic waste, delivering up to 14% LPG savings

Recycled aluminum dust reused in cement and concrete, enabling ~5% reduction in cement consumption High adoption of company-provided buses reduces reliance on personal vehicles and lowers the overall carbon footprint

Biodiversity & Ecosystem

36,000+ trees planted across BAC, Hubballi Durables Cluster (HDC) and Koppal Toy Cluster (KTC); 7.09% improvement in carbon absorption (Y-o-Y) ~9,700 trees geotagged across ~60 species within the BAC campus These initiatives reflect a consistent, system-led approach where sustainability is integrated into our design, operations and continuous improvement. Each of us continues to contribute to this progress.

Human Resource

The Human Resources function plays a key role in supporting the Companys long-term growth objectives by attracting, developing and retaining talent. Its people strategy is built around four interconnected pillars including Attract, Develop, Culture and Impact which strengthen capabilities, leadership and organizational culture, thereby supporting Aequss growth. Access to a skilled workforce with diverse expertise and backgrounds enhances innovation and strengthens manufacturing capabilities across operations. The Company also continued to strengthen employee engagement through structured feedback, recognition and participation initiatives that encourage collaboration and shared ownership. Building future leaders remains a key priority and is supported through structured leadership programs, performance alignment and focused onboarding initiatives. In FY 2026, Aequs also implemented the HerSpace and LeadHERShip initiatives to support womens participation in the workforce.

Community Development

The community development initiatives of the Company are focused on creating lasting social impact through associate company, Aequs Foundation. By delivering continuous interventions in early learning, hands on science learning, career development and health, the Aequs Foundation helps children studying in Government schools in communities around Belagavi Aerospace Cluster (BAC), Hubballi Durable Goods Cluster (HDC) and Koppal Manufacturing Cluste (KMC) to learn, grow and achieve their full potential. Through its various programs and projects, the Company has positively impacted 34,000+ students across 150+ schools during the reporting year.

Strategy

The Company has established a strong foundation for its business and believes that these strengths will support long-term value creation. This foundation is expected to drive sustained growth and strengthen its strategic position.

The Companys strategy is centerd on building a differentiated precision manufacturing enterprise through technological excellence, integrated manufacturing and enduring strategic partnerships. By continuously enhancing its core capabilities and scaling its strategic growth platforms, Aequs has developed a resilient business model that is well-positioned to capture long-term opportunities. The Company believes that global supply chain diversification, increasing outsourcing of complex manufacturing programs and Indias growing competitiveness as a manufacturing destination continue to reinforce the relevance of its business model. Against this backdrop, the Companys strategy is anchored around four mutually reinforcing priorities.

Strengthen Strategic Partnerships

Aequs aims to deepen engagement with existing customers by expanding participation across manufacturing programs and the value chain, while selectively broadening its global customer base. It will also pursue collaborations that enhance technology, capabilities and market access, reinforcing its position as a trusted long-term manufacturing partner.

Scale Strategic Growth Platforms

The Company remains focused on scaling both its Aerospace and Consumer businesses as complementary growth platforms.

Aerospace will deepen participation across higher-value manufacturing programs, while the Consumer business will expand across consumer electronics and other consumer-focused categories. Each platform leverages deep precision manufacturing expertise and disciplined operational practices, enabling growth and margin expansion through improved capacity utilization, productivity and scale.

Extend Core Manufacturing Capabilities

The Company will leverage its integrated manufacturing model to pursue complementary opportunities that build on its precision engineering strengths. This approach supports growth while preserving strategic focus, operational efficiency and execution excellence.

Drive Technology Leadership and Operational Excellence

Investment in advanced manufacturing technologies, automation, digital capabilities and workforce development will enhance productivity, quality and competitiveness. Continuous improvement, resilient supply chains and responsible manufacturing practices will further strengthen the Companys ability to deliver differentiated value across its businesses. Together, these strategic priorities are designed to strengthen the Companys competitive position, create multiple avenues for sustainable growth and consolidate Aequs standing as a globally trusted precision manufacturing partner, delivering long-term value for all stakeholders.

Risk Management

Risk Description

Foreign Exchange Risk

Adverse movements in exchange rates between the Indian Rupee

and foreign currencies may affect the value of the Companys

equity shares, irrespective of its operating performance and

financial results.

Industry Demand Risk

Any slowdown or decline in demand within the Aerospace

segment may adversely affect the Companys business

operations, financial condition, results of operations and cash

flows.

Mitigation Strategy

The Company mitigates foreign exchange risk through

a combination of natural hedging and prudent treasury

management

Over the years, the Company has expanded its product

portfolio to serve customers across consumer durables.

Building on its existing expertise in precision machining and

special processes, the Company intends to establish similar

long-term engagements with other OEMs to enhance its market

share and expand its Consumer segment portfolio, thereby

reducing its reliance on the Aerospace Segment. Additionally,

it has developed advanced engineering, machining and special

process capabilities within its Aerospace Segment, which can be

replicated across other precision-driven sectors. The Company

aims to leverage these capabilities to further increase its market

share with global OEMs.

Risk Description

Customer Concentration Risk

The Company derives a significant portion of its revenue from

its ten largest customer groups. Any deterioration in these

customer relationships adversely affect business operations,

financial condition, operating performance and cash flows.

Capital Investment Risk

The Companys operations require substantial capital

expenditure for the maintenance, replacement and upgradation

of equipment and machinery. Any constraints in accessing

adequate capital may adversely affect its business operations,

financial condition, results of operations and cash flows.

Geographic Concentration Risk

All manufacturing cluster units are located in Karnataka, India.

Consequently, the Company remains exposed to region-specific

risks that may adversely affect its business operations, financial

condition, results of operations and cash flows.

Regulatory and Compliance Risk

Non-compliance with applicable corporate, environmental, labor

and safety regulations, or changes in such laws and regulatory

requirements, may adversely affect the Companys business,

financial condition, results of operations and cash flows.

Supply Chain Risks

Risks may arise from global and domestic disruptions,

including geopolitical developments, trade restrictions, logistics

bottlenecks, material shortages, dependence on single-source

suppliers, and vendor financial instability. These factors could

affect the availability, cost, and timely delivery of critical inputs.

Key Concern in FY 2026

A significant portion of the Companys revenue is generated

from customers located outside India, while its operations

also involve sourcing raw materials, components and

equipment from global suppliers. This exposes the Company

to risks arising from changes in global economic conditions,

political developments and regulatory environments. Current

geopolitical developments and regional conflicts impacting

global shipping, energy and logistics networks may adversely

affect the Companys operations. Such developments may lead

to delays in the receipt of raw materials and components, higher

Mitigation Strategy

The Companys expertise in the Aerospace Segment strengthens

its ability to explore opportunities in adjacent precision-driven

business segments. Its large-scale, advanced manufacturing

ecosystems have enabled the Company to build a platform to

identify and leverage opportunities for future expansion of its

product lines.

The Company also benefits from strong client stickiness and

high retention levels, supported by the collaborative nature of

its manufacturing engagements with OEM customers. Further,

its in-depth understanding of OEM customers requirements

enables continuous innovation and enhancement of capabilities

to develop complex products with shorter turnaround times.

The Company maintains a prudent capital structure,

monitors key financial ratios and ensures compliance with

lender covenants. Regular capital planning, strong cash flow

management and access to diversified funding sources support

long-term investment requirements.

As part of its mitigation strategy, Aequs Limited plans to establish

a manufacturing facility at the upcoming greenfield Aerospace

& Defence manufacturing cluster near Hosur, Tamil Nadu, to

complement and expand its existing aerospace capabilities in

North Karnataka. The facility will focus on aero-engine and gear

box systems requiring complex, ultra-precision manufacturing

capabilities. The proposed initiative is aimed at deepening Aequs

Limiteds participation in the global aerospace engine supply chain

by progressively expanding capabilities across forging, precision

machining, and specialized surface treatment for engine-grade

alloys, thereby addressing a critical industry requirement.

The Company maintains a robust compliance framework

supported by periodic audits, internal controls, employee

training and continuous monitoring of regulatory changes.

Periodic governance by the management ensures timely

compliance with applicable laws and standards.

The Company mitigates supply chain risk by qualifying

multiple vendors, with key suppliers approved by large OEM

customers. Alternate sourcing strategies, periodic vendor

audits, comprehensive due diligence and long-term contractual

agreements help ensure supply continuity and reliability.

input, freight, or insurance costs and other factors that could

adversely impact manufacturing schedules, cost structure and

results of operations.

Internal Control and its adequacy

The Company has an adequate internal control system

commensurate with the nature, size and complexity of its

operations. The framework is designed to safeguard assets,

ensure reliability of financial and operational information,

improve operational efficiency and ensure compliance with

applicable laws, regulations and internal policies.

The internal control system is supported by a defined organizational structure with clear roles, responsibilities and authority levels. The Company periodically reviews its control environment to ensure its continued effectiveness and alignment with business requirements. The Audit Committee oversees the internal audit function and reviews the annual internal audit plan to ensure appropriate coverage of key risk areas. Internal audits are conducted on a risk-based approach across various functions and processes to evaluate the adequacy and effectiveness of internal controls, risk management practices and compliance mechanisms. The findings of internal audits, along with management responses and corrective actions, are periodically reviewed by the Audit Committee. The Company continuously undertakes measures to strengthen its internal control framework and believes that the controls are adequate and operating effectively.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable laws and regulations. Several factors could make significant difference to the Companys operations and actual results may differ materially from those expressed or implied in such statements due to factors such as but not limited to economic conditions affecting demand and supply, government regulations and taxation, natural calamities, etc. over which the Company does not have any direct control The Company makes no commitment to publicly amend, change, or revise any forward-looking statements based on subsequent developments.

Glossary

EMDEs	Emerging Market and Developing Economies
PFCE	Private Final Consumption Expenditure
EU	European Union
CAGR	Compound Annual Growth Rate
MRO	Maintenance, Repair, and overhaul
OEMs	Original Equipment Manufacturers
AI	Artificial Intelligence
IoT	Internet of Things
NCoE	National Center of Excellence
PEC	Precision Engineered Components
EMS	Electronic Manufacturing Services
AR	Augmented Reality
IoT	Internet of Things
VR	Virtual Reality
BAC	Belagavi aerospace Cluster
HDC	Hubballi Durables Cluster
KTC	Koppal Toy Cluster