Apsis Aerocom Ltd Management Discussions

Global Economy ECONOMIC OVERVIEW

The global economy during CY 2025 and extending into CY 2026 evolved from a phase of uneven recovery into a more challenging environment characterized by geopolitical uncertainties, shifting trade policies and fluctuations in energy markets. Global GDP growth for CY 2026 is expected to remain around 3.1%, while inflationary pressures and commodity price movements continue to influence international trade, investment activity and monetary policy across major economies. Although inflation has eased compared to previous years, persistent geopolitical risks and supply chain disruptions have sustained uncertainty in global energy markets, prompting cautious policy responses and increased financial market volatility.

These evolving conditions have accelerated the transformation of global manufacturing and supply chain strategies. Businesses are increasingly focusing on diversifying production locations through regional manufacturing hubs, China Plus One strategies and supplier network optimization to strengthen resilience and improve operational flexibility. Consequently, emerging economies with robust manufacturing capabilities, expanding domestic markets and favourable policy environments are becoming increasinglysignificantin . global supply chains

India further strengthened its position as one of the worlds fastest-growing major economies, recording real GDP growth of approximately 7.4% 7.8% during FY 2025 26. Economic expansion was supported by strong domestic consumption, sustained government capital expenditure and manufacturing-led policy initiatives. Programmes such as the Production Linked Incentive (PLI)

Scheme and Atmanirbhar Bharat continued to enhance domestic manufacturing capabilities, while ongoing investments in infrastructure, logistics and industrial development reinforced Indias attractiveness as a preferred destination for long-term manufacturing investments and global supply chain diversification .

Sources: IMF World Economic Outlook (April 2026); Ministry of Statistics and Programme Implementation (MOSPI); Reserve Bank of India; Union Budget FY 2026-27; Invest India.

INDUSTRY OVERVIEW Aerospace and Defence Industry

The global aerospace and defence (A&D) industry is witnessing a sustained structural expansion cycle, driven by the simultaneous growth of commercial aviation and defence modernisation initiatives. Commercial passenger traffic has surpassed pre-pandemic levels and is projected to exceed 10 billion passengers by CY 2026. At the same time, increasing geopolitical priorities and evolving security considerations continue to support elevated defence spending and investments in next-generation capabilities, including autonomous systems, unmanned aerial platforms, hypersonic technologies and software-enabled defence ecosystems. Large OEM order backlogs extending well into the next decade continue to support demand across precision manufacturing, specialised tooling, components and aftermarket ecosystems.

The industry is also undergoing significant transformation across technology, maintenance and supply-chain models. Artificial Intelligence (AI) and emerging agentic AI applications are progressing from pilot programmes towards wider deployment across operational planning, logistics, predictive maintenance, autonomous navigation and decision-support systems. Industry estimates suggest that approximately 36% of industrial manufacturing activities could benefit from AI-enabled augmentation, highlighting the growing role of intelligent systems across aerospace operations and manufacturing environments. AI adoption is increasingly extending to maintenance diagnostics, inventory optimisation and aftermarket support, contributing to improved operational asset utilisation.

The global aftermarket ecosystem continues to remain one of the industrys most resilient growth segments. Increasing fleetutilisation and aircraft delivery delays have extended maintenance cycles and strengthened demand for Maintenance, Repair and Overhaul (MRO) services, with engine platforms expected to account for an increasing share of future maintenance activity. Aftermarket offerings are also evolving beyond traditional repair models towards integrated lifecycle support ecosystems encompassing engineering modifications, digital solutions and predictive support services.

At the same time, supply-chain resilience has emerged as a strategic priority across the A&D ecosystem. Raw material constraints, production bottlenecks and geopolitical uncertainty have highlighted vulnerabilities across supplier networks. In response, OEMs are increasingly investing in supplier development, digital visibility tools, multi-country manufacturing footprints and lower-tier ecosystem strengthening initiatives to improve reliability and mitigate concentration risks. These developments are increasing the strategic importance of trusted manufacturing ecosystems capable of delivering precision, quality and scale.

India is increasingly emerging as a strategic participant in this evolving landscape. The countrys aerospace ecosystem is moving beyond conventional buyer-supplier relationships towards deeper co-development and localised manufacturing models. Strategic initiatives such as the Airbus-Tata

C-295 programme and Safrans LEAP engine MRO and assembly ecosystem reflect a broader transition towards technology transfer and domestic capability creation. Expanding regional connectivity initiatives under UDAN, airport infrastructure development and increasing investments in MRO capabilities are further strengthening Indias integration into global aerospace value chains. At the same time, defence indigenisation programmes and offset-led technology transfer initiatives continue to strengthen domestic manufacturing capabilities and create long-term opportunities across precision engineering and aerospace component ecosystems.

Collectively, the convergence of aviation growth, defence modernisation, digital transformation, aftermarket expansion and supply-chain diversification is reshaping the global A&D landscape. As manufacturing footprints continue to evolve, India is increasingly positioning itself as a strategic and cost-competitive partner within the global aerospace and defence value chain.

Sources: Deloitte Aerospace & Defence Industry Outlook 2026; Aviation Week Forecast; International Data Corporation (IDC); Ministry of Civil Aviation; Industry Reports and Company Announcements.

Precision Engineering Industry

Global manufacturing is undergoing a rapid transformation, driven by automation, digitalisation, electrification and changing supply-chain dynamics. As products become more complex and technologically advanced, the demand for highly engineered components offering precision, reliability and consistent performance continues to increase.

Precision engineering has emerged as a key enabler across diverse sectors, including automotive, aerospace and defence, electronics, industrial machinery, healthcare and renewable energy. The industry is gradually moving beyond conventional machining towards automated and digitally integrated manufacturing ecosystems, supported by advanced process capabilities, real-time monitoring and intelligent production systems. With quality, precision and operational becoming increasingly important competitive differentiators, precision engineering capabilities are gaining greater strategic significance globally.

The global precision engineering market, valued at over USD 100 billion, is expected to maintain steady long-term growth, supported by investments in advanced manufacturing technologies and high-performance industrial applications. While developed economies continue to drive technological innovation, the Asia-Pacific region remains a leading global manufacturing hub.

India, meanwhile, is emerging as an attractive destination for precision manufacturing, supported by favourable government policies, localisation initiatives, infrastructure development and its increasing integration with global supply chains.

INDUSTRY OUTLOOK

Looking ahead, the precision engineering industry is expected to increasingly embrace hybrid manufacturing approaches, combining additive manufacturing with conventional machining processes to enhance flexibility, efficiency and product capabilities. The adoption of AI-enabled predictive maintenance, automation-driven efficiencies and digitally integrated manufacturing ecosystems is expected to further transform production environments. While high capital requirements and the availability of skilled talent continue to remain key challenges, strong structural demand drivers and increasing investments in advanced manufacturing are expected to support the industrys long-term growth prospects.

Sources: Grand View Research Precision Machining Market Report, Fortune Business Insights Precision Machining Market, Imarc Group - India Precision Engineering Market, Invest India Manufacturing & Engineering Ecosystem, Make in India Manufacturing Initiatives, https://www.dcmsme.gov.in/tcsp/tp/TCSP_P3%20TP%20TOR%20Precision%20Eng.pdf.

Company Overview

APSIS AEROCOM LIMITED (formerly known as APSIS AEROCOM PRIVATE LIMITED ) is a precision engineering and manufacturing company specializing in the production of high-precision machined components for the Aerospace, Defence, Healthcare, and other industrial sectors . The Company is recognized for delivering advanced manufacturing solutions through innovative process design, engineering expertise, and state-of-the-art technologies.

APSIS AEROCOM offers comprehensive end-to-end manufacturing solutions, beginning with customer drawing interpretation and extending through CAD/CAM programming, material selection, process planning, precision machining, surface finishing, quality inspection, assembly, and final product delivery. This integrated approach enables the Company to consistently deliver high-quality, reliable, and precision-engineered components that meet stringent industry standards.

As of 31 March 2026 , the Company operates two modern manufacturing facilities with a combined built-up area of 31,000 sq. ft. These facilities are equipped with advanced manufacturing capabilities and serve a diverse portfolio of domestic and international OEMs. With a strong commitment to quality, operational excellence, and on-time delivery, APSIS AEROCOM continues to strengthen its position as a trusted manufacturing partner for mission-critical applications across multiple industries.

Financial Performance

The Company reported total revenue of 30.75 crore in FY 2025-26, compared with 20.57 crore in FY 2024-25, representing a significant growth of 49.5% .

EBITDA increased to 11.44 crore in FY 2025-26 from 10.21 crore in the previous financial year.

Profit Before Tax (PBT) rose to 10.30 crore in FY 2025-26 from 8.94 crore in FY 2024-25, registering a growth of 15.21% .

Profit After Tax (PAT) increased from 6.60 crore in FY 2024-25 to 7.51 crore in FY 2025-26, reflectinga year-on-year growth of 13.8% . Correspondingly, the Companys Basic Earnings Per Share (EPS) for FY 2025-26 stood at 8.40 .

The Companys strong financialperformance highlights its operational resilience, efficient execution capabilities, and commitment to sustainable growth while maintaining healthy profitability.

Initial Public Offering

The Company successfully completed its Initial Public Offering (IPO) and was listed on the NSE

EMERGE platform through a fresh issue of equity shares .

Pursuant to the IPO, the Company issued 32,52,000 equity shares at an issue price of 110 per equity share , comprising a face value of 10 per share and a securities premium of 100 per share . The successful listing marks a significant milestone in the Companys growth journey and is expected to strengthen its capital base, enhance corporate visibility, and support its long-term strategic expansion plans while creating value for all stakeholders.

Key Ratios

During FY 2025 26, the Company further strengthened its financial position, supported by improved liquidity, a stronger capital structure, and enhanced working capital management.

The Current Ratio increased significantly from 1.16 in FY 2024 25 to 3.94 in FY 2025 26, primarily due to higher cash inflows from the Initial Public Offering (IPO), improved collections from customers, and stronger overall cash flows.

The Inventory Turnover Ratio improved from 4.29 to 4.59 , reflectingbetter inventory management and operational efficiency.

The Companys capital structure also strengthened during the year, with the Debt-Equity Ratio declining from 0.16 to 0.09 , mainly on account of an increase in share capital following the IPO.

Ratios	F Y 2025-26	F Y 2024-25	Variance
Trade Receivable Turnover Ratio	7.86	8.86	(9)
Inventory Turnover Ratio	4.59	4.29	7
Trade Payables Turnover Ratio	2.98	1.78	67
Current Ratio	3.94	1.16	241
Debt- Equity Ratio	0.09	0.16	(48)
Net Profit Margin	24.51	32.23	(24)

Internal Control Systems and their adequacy

The Company has established an adequate system of internal controls commensurate with the nature, size, and complexity of its business operations. These controls are designed to ensure the orderly and efficient conduct of business, safeguarding of assets, accuracy and reliability of financial reporting, compliance with applicable laws and regulations, and the prevention and detection of fraud and errors.

The Company is in the process of implementing the SAP Enterprise Resource Planning (ERP) system to integrate its key business functions, including operations, accounting, financial reporting, and other critical processes. The implementation of SAP is expected to further strengthen the Companys internal control framework by enhancing process standardization, automation, and transparency.

During the financial year 2026 27, the Company expects to transition its core business processes to the SAP-based ERP platform, replacing the existing operational processes. The new system is expected to strengthen the Companys IT infrastructure, streamline customer onboarding, improve regulatory compliance, enhance operational efficiency, and support the timely execution of business activities.

The Company remains committed to periodically reviewing and strengthening its internal control systems to ensure their continued adequacy, effectiveness, and alignment with evolving business requirements and applicable regulatory standards.

Human Resources

We firmly believe that our employees are the foundation of our success and growth. Our Human

Resources strategy is designed to attract, retain, and nurture the best talent, ensuring that every individual contributes effectively to achieving our business objectives.

As of March 31, 2026, our Company employed approximately 97 individuals, forming a skilled and versatile workforce across key functions, including Business Development, Finance & Accounts,

Production & Engineering, Purchase, and Human Resources.

During the year, the Company continued to strengthen its workforce by hiring experienced professionals to enhance organizational systems, support operational excellence, and meet the growing demands of the business. These strategic hires have further reinforced the Companys capabilities and positioned it to sustain its growth trajectory

Future Outlook

Looking ahead, we remain optimistic about the Companys growth prospects. Our immediate priorities include:

Successful commissioning and ramp-up of Unit-II.

Enhancing manufacturing productivity and capacity utilization.

Expanding our customer base across Defence, Aerospace, and Healthcare sectors.

Accelerating new product development and technology initiatives.

We expect Unit-II to play a pivotal role in driving future growth, improving economies of scale, and enhancing operating leverage.

Supported by a healthy order book, strong customer relationships, growing market opportunities, and enhanced manufacturing capacity, we anticipate strong business momentum during FY 2026-27.

We remain focused on delivering sustainable growth while continuing to create long term value for all stakeholders.

Despite short-term margin pressures arising from strategic investments, the Companys fundamentals remain strong, supported by a healthy balance sheet, positive cash flows, robust order visibility, and a clear roadmap for long-term growth.