Andrew Yule & Company Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The global economy during FY 2025- 26 remained affected by geopolitical tensions, supply chain disruptions, trade uncertainties, and volatility in commodity and energy prices. Despite these challenges, global supply chain diversification strategy continued to create opportunities for India as a preferred manufacturing and investment destination. As per the First Advance Estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), Indias real GDP is estimated to grow by 7.4% 7.4% in FY 2025- 26, reinforcing its position among the fastest- growing major economies in the world. Growth was supported by strong domestic consumption, sustained investment activity, improving manufacturing performance and continued expansion of the services sector. Policy initiatives such as the Production Linked Incentive (PLI) schemes and the Make in India program and continued focus on infrastructure development, logistics, railways, and renewable energy supported industrial and economic growth. Moderating inflation, a stable financial system, and resilient domestic demand contributed positively to economic stability during the year. Indias favourable demographics, expanding digital economy, infrastructure investments and increasing integration with global supply chains continue to provide a strong foundation for long- term economic growth.

BUSINESS VERTICAL ANALYSIS

a) Electrical Division (Chennai)

The Electrical Division (Chennai) delivered a strong operational performance during FY 2025- 26, supported by sustained demand for power and distribution transformers. During the year, the Division achieved its highest production of 1,035 MVA, turnover of 106 crore, and order booking of 102 crore. The Division also received NABL accreditation for its testing laboratory, further strengthening its quality assurance capabilities.

The Division expanded its market presence across key states, including Uttar Pradesh, Punjab, Andhra Pradesh, Odisha, and West Bengal, while continuing to improve operational efficiency through process enhancements, workforce development, and capacity optimization.

With increasing investments in power infrastructure, grid modernization, and renewable energy integration, the Division is well- positioned to benefit from emerging growth opportunities. Going forward, the Division remains focused on maintaining high quality standards, timely project execution, and expanding its customer base to support sustainable long- term growth.

b) Engineering Division

The Engineering Division continued to strengthen its position as a leading manufacturer of industrial centrifugal fans and engineered air- handling solutions during FY 2025- 26.

During the year, the Division secured its highest single order valued at 4.89 crore, reflecting growing customer confidence in its engineering capabilities and execution excellence. Customer diversification remained a key focus, with the addition of several new customers across the steel, ferro- alloy, foundry, and process industries, creating new business opportunities and expanding market reach.

The Division also improved its financial position through the recovery of over 2.20 crore from long- outstanding receivables, enhancing cash flows and working capital efficiency.

0n the technology front, the Division successfully manufactured and tested its largest Induced Draft (ID) Fan, designed for an airflow of 8.6 lakh CMH and powered by a 1.8 MW motor, demonstrating its capability to serve large- scale industrial applications. Further, the Division achieved a significant milestone by becoming one of the first manufacturers in India to design and manufacture an industrial fan with a Ferralium impeller- shaft assembly for a phosphoric acid plant, highlighting its expertise in specialized and corrosion- resistant applications.

These achievements reflect the Divisions continued focus on customer acquisition, technological innovation, operational excellence, and financial discipline. The Division remains well- positioned to capitalize on opportunities across the power, steel, cement, mining, fertilizer, and chemical sectors and drive sustainable growth in the coming years.

Tea Division

The Tea Division operated under challenging conditions during FY 2025- 26, marked by adverse weather, rising labour and input costs, liquidity constraints, labour shortages, and continued pressure on tea prices. Despite these difficulties, the Division remained focused on maintaining estate operations, improving field productivity, enhancing tea quality, expanding irrigation coverage, and implementing cost- control measures.

Production declined from approximately 71.18 lakh kg in FY 2024- 25 to 61.95 lakh kg in FY 2025- 26, primarily due to prolonged financial stress, reduced agronomic investments, labour shortages, pest infestation, rising finance costs, and a high fixed manpower cost structure.

The shortage of working capital continued to constrain estate development, productivity enhancement initiatives, and operational efficiency. Management believes that adequate working capital support is critical to stabilize operations, improve productivity, ensure timely payment of wages and statutory dues, reduce reliance on high- cost borrowings, and restore sustainable growth.

The Company remains committed to strengthening the long- term competitiveness of the Tea Division through estate development, quality improvement, sustainable cultivation practices, productivity enhancement, and operational excellence. With improved financial support and continued management focus, the Division is expected to be better positioned to enhance productivity, improve realizations, and capitalize on opportunities in domestic and international markets.

SECTOR-WISE OUTLOOK

a) Electrical Industry

The electrical industry is expected to maintain steady growth, driven by ongoing investments in power generation, transmission, and distribution infrastructure. Expansion of renewable energy capacity, grid modernization, smart metering, rural electrification, and strengthening of transmission networks are likely to sustain demand for power and distribution transformers. Government initiatives focused on energy transition, power sector reforms, and infrastructure development are expected to provide significant growth opportunities for the industry in the coming years.

b) Engineering Industry

The outlook for the engineering industry remains positive, supported by continued investments in power generation, steel, cement, mining, fertilizer, and infrastructure sectors. Expansion of thermal and renewable energy projects, modernization of industrial facilities, and capacity additions across core industries are expected to drive demand for industrial fans and air- handling equipment. Growing emphasis on energy efficiency, environmental compliance, process optimization, and adoption of advanced technologies such as Variable Frequency Drive (VFD), digital monitoring, and predictive maintenance is expected to create opportunities for technologically advanced and customized engineering solutions. Government initiatives such as Make in India, the National Infrastructure Pipeline (NIP), and Production Linked Incentive (PLI) schemes are expected to further support long- term industry growth.

c) Tea Industry

The tea industry continued to face significant challenges during FY 2025- 26 due to climatic uncertainties, rising labour and input costs, subdued tea realizations, and disruptions in international trade arising from geopolitical tensions and the crisis in West Asia. These factors increased freight, logistics, insurance, and input costs and affected export demand in certain markets.

Despite these challenges, demand for premium, specialty, and value- added teas remained resilient, supported by evolving consumer preferences and growing health consciousness. The long- term outlook for the industry remains positive, driven by investments in irrigation, sustainable cultivation practices, productivity enhancement initiatives, export opportunities, and growing demand for branded and value- added teas.

SWOT ANALYSIS

Electrical Division (Chennai)

Strengths (S)	Weaknesses (W)
Established brand presence in power and distribution transformers up to 132 kV class. ISO 9001 certified operations and CPRI-approved transformer ratings enhancing product credibility. Strong customer base comprising State Utilities, EPC contractors, and industrial clients. Achieved NABL accreditation for test lab. Achieved Zero Failure rate in power transformers supplied to KPTCL	Limited market share in a highly competitive transformer industry. Product portfolio largely concentrated in the \u2264 132 kV segment. Exposure to pricing pressure from unorganized and low-cost competitors. Limited capability in higher-voltage transformer categories along with constrained manufacturing, assembly, testing, and expansion capacity, creates production bottlenecks in power transformer manufacturing, reducing throughput and affecting timely order fulfillment.
Opportunities (O)	Threats (T)
Rising investments in transmission infrastructure, renewable energy, and grid modernization. Increased demand arising from renewable energy evacuation and power sector expansion projects. Capacity expansion and modernization initiatives to improve efficiency and competitiveness. Expansion of customer base across multiple states supporting future growth.	Intense competition resulting in margin pressure. Volatility in raw material prices, particularly copper, oil and steel. Supply chain disruptions and delays in project execution. Technological advancements by larger industry players.

Future Outlook-Electrical Division (Chennai)

The outlook for the Electrical Division (Chennai) remains positive, driven by continued investments in power transmission, distribution infrastructure. Growing demand for power and distribution transformers is expected to provide sustained growth opportunities for the Division.

The Division will continue to focus on operational efficiency, quality improvement, timely execution, and market expansion to strengthen its competitive position and deliver sustainable growth in the years ahead.

Engineering Division

Strengths (S)	Weaknesses (W)
Strong legacy brand and market reputation in industrial centrifugal fans. Proven engineering expertise in design, manufacture, testing, and commissioning of large industrial fans. Capability to execute technologically complex and customized orders. Established customer base in power, steel, cement, mining, fertilizer, and process industries. Ongoing infrastructure improvements and adoption of advanced design software.	Aging machinery affecting productivity and manufacturing efficiency. Scarcity of skilled workmen and technical manpower. Limited fund-based and non-fund-based banking support. Relatively slower response and decision-making compared to competitors. Higher dependency on outsourced resources during peak workloads.
Opportunities (O)	Threats (T)
Expansion of steel, power, cement, mining, and fertilizer sectors driving demand for industrial fans. Government initiatives such as Make in India and infrastructure development programs. Growing demand for energy-efficient and environmentally compliant fan systems. Large replacement and retrofit market for aging industrial fan installations. Expansion into new business segments such as water treatment and industrial infrastructure projects.	Intense competition from private sector manufacturers with aggressive pricing. Volatility in raw material prices impacting margins. Shortage of skilled manpower across the engineering sector. Constraints in working capital and bank support may restrict business growth. Economic slowdown or reduction in industrial capex/modernization may affect order inflow.

Future Outlook-Engineering Division

The outlook for the Engineering Division remains encouraging, driven by continued investments in industrial expansion in the country. Increasing emphasis on energy efficiency, environmental compliance, and modernization of industrial facilities is expected to support demand for high- performance centrifugal fans and engineered air- handling solutions. The Division is well positioned to capitalize on opportunities arising from capacity expansion projects, equipment replacement demand, flue gas desulfurization (FGD) systems, waste heat recovery projects, and process plant modernization across various industries. Government initiatives aimed at promoting domestic manufacturing, and infrastructure development are expected to provide additional growth opportunities.

Going forward, the Division will focus on technology upgradation, operational excellence, product innovation, and market expansion. With its strong engineering capabilities, established customer relationships, and healthy order pipeline, the Division remains confident of enhancing operational performance and delivering sustainable growth and profitability.

Tea Division

Strengths (S)	Weaknesses (W)
Established legacy and strong brand recognition in the Indian tea industry. Quality tea estates located in prime tea-growing regions. Presence across domestic and export markets. Government of India enterprise under the administrative control of the Ministry of Heavy Industries, enhancing stakeholder confidence and credibility. Access to Government support and policy initiatives available to CPSEs and the plantation sector. Strategic land and estate holdings that provide long-term business sustainability and scope for diversification into allied activities.	Rising labour and input costs impacting operating margins. Working Capital shortage Dependence on climatic conditions affecting crop yield and quality. Continuous requirement for replantation and estate rejuvenation. Exposure to tea price volatility and market fluctuations.
Opportunities (O)	Threats (T)
Growing consumer preference for premium and specialty teas. Expanding export opportunities for quality Indian teas. Growth potential in branded and value-added tea products. Adoption of sustainable farming practices and productivity-enhancement initiatives.	Climate change and unpredictable weather patterns. Increasing competition from small tea growers and low-cost producers. Escalating wage and operating costs. Global economic uncertainties impacting export demand and realizations.

Future Outlook-Tea Division

The outlook for the Tea Division remains cautiously optimistic. The Division is focused on improving productivity, enhancing operational efficiency, maintaining quality standards, and optimizing costs. Supported by improved field operations and stable demand conditions, the Division expects to strengthen its performance in the coming years. However, challenges arising from climatic conditions, rising input costs, and labour- related issues may continue to influence the operating environment. The Division will continue to pursue measures aimed at ensuring sustainable growth and long- term financial viability.

SEGMENTWISEPERFORMANCE

The Company is a multi- segment Company as reported in note no. 49 in the accounts.

RISKANDCONCERN-KEYHIGHLIGHTSFORSHAREHOLDERS

The Company operates in a competitive business environment and is exposed to various business, operational, financial, and market risks. These risks are managed through a structured Risk Management Framework and periodic reviews by the Risk Management Committee and the Audit Committee.

Key risks include intense market competition, aging manufacturing infrastructure, limitations in fund- based and non- fundbased banking facilities, volatility in steel and other raw material prices, and dependence on capital expenditure trends in core sectors such as power, steel, cement, and mining. In addition, continuous technology upgradation remains essential to meet evolving customer requirements and maintain market competitiveness.

The Risk Management Committee regularly reviews key risks and recommends mitigation measures, while the Audit Committee oversees financial risks, internal controls, and the effectiveness of the risk management framework.

The Company continues to proactively address these challenges through modernization initiatives, strengthening of manpower and technical capabilities, expansion of market reach, enhancement of financial support, and continuous monitoring of operational, financial and market risks. These measures are aimed at ensuring business continuity, improving resilience, and supporting sustainable long- term growth.

FINANCIAL PERFORMANCE

The details of financial performance of the Company are appearing in the Balance Sheet and statement of Profit & Loss for the financial year 2025- 26.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

There have been no significant changes in key financial ratios during the financial year 2025- 26 as compared to the immediately previous financial year 2024- 25, except the followings:

Particulars	FY 2025-26	FY 2024-25	% Change	Remarks
Interest Coverage Ratio	(-) 0.65	(-) 0.30	116.67% decrease	Decrease due to lower Earnings Before Interest and Tax (EBIT) during the year.
Debt Equity Ratio	5.06	4.08	24.02% increase	Increase due to reduction in shareholders equity as a result of losses incurred by the Company during the year.
Operating Profit Margin (%)	(-) 2.31%	(-) 2.11%	9.48% deterioration	Marginal decline due to lower operating profitability during the year.
Net Profit Margin (%)	(-) 10.53%	(-) 8.19%	28.57% deterioration	Decline attributable to higher net loss incurred during the year.
Return on Capital employed (%)	(-) 5.12%	(-) 4.34%	17.97% deterioration	Decrease owing to higher losses and lower returns generated from capital employed during the year.

DETAILS OF CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

The Return on Net Worth for the financial year 2025- 26 stood at ( - )41.02% ( - )41.02% compared to ( - )25.22% ( - )25.22% in the previous year. The decline is primarily attributable to an increase in net loss during the year.

DISCLOSURE OF ACCOUNTING TREATMENT

The relevant disclosures relating to the accounting treatment have been duly made in Note No. 2.17 and Note No. 64 forming part of the Financial Statements for the financial year ended 31st March, 2026.

INTERNAL CONTROL SYSTEMS

The Company maintains a well- defined internal control and internal financial control framework. These controls are designed to ensure the orderly and efficient conduct of business, safeguarding of assets, and accuracy and reliability of financial reporting, as well as compliance with applicable laws, regulations, policies, and procedures.

The effectiveness of the internal control framework is periodically reviewed through internal audit and monitoring mechanisms. The findings and recommendations of the Internal Auditors are placed before the Audit Committee for review and appropriate action. The management believes that the Companys internal control systems are operating effectively.

HUMAN RESOURCES

During the year under review, industrial relations at the Company continued to remain cordial and peaceful in all the units/ divisions except in a few tea gardens. There has been occasional agitation in a few tea gardens of the Company located in West Bengal and Assam by the workers/staffs/sub- staffs due to delay in payment of wages and salary.

CAUTIONARY STATEMENT

Statements in the Boards Report and Management Discussion & Analysis describing the Companys objectives, projections, estimates, and expectations may constitute forward- looking statements within the meaning of applicable laws and regulations. Actual results may differ materially due to various factors, including changes in market conditions, demand and supply dynamics, government policies, tax laws, litigation, industrial relations, and other economic or regulatory developments. Shareholders are cautioned not to place undue reliance on such forward- looking statements.

	For and on behalf of the Board
Kolkata,
	Sd/-
24 th August, 2026
	Ananta Mohan Singh
	Chairman & Managing Director