Birla Precision Technologies Ltd Management Discussions

The world economy grew at a steady, moderate pace through most of FY 2025-26, helped by strong investment in technology (particularly AI-related) and by some easing in global trade tensions and tariff rates earlier in the year. Heading into the year, this improved sentiment had led the IMF to raise its global growth forecast for calendar 2026 to 3.3%, its most optimistic reading in some time.

That improved picture shifted partway through the year, when a war broke out in the Middle East. This introduced fresh uncertainty around energy prices and global trade and led the IMF to trim its outlook: as of its most recent update (July 2026), global growth is now projected at 3.0% for 2026, picking back up to 3.4% in 2027. The impact of the conflict has not been felt equally everywhere - countries that export energy have that both import energy and have less exposure to the technology investment boom have generally seen growth slow more.

Global inflation is expected to tick up modestly in

2026 before easing again in 2027, largely because of these same energy-price effects. For a manufacturing business like BPTL, this combination - resilient underlying demand, but volatile energy and input costs, and unpredictable trade conditions - is the main external backdrop worth keeping in mind over the coming year, particularly for raw material costs and for the Companys export markets.

IMF, World Economic Outlook Update, July 2026 -https://www.imf.org/-/media/files/publications/ weo/2026/update/july/english/text.pdf IMF, World Economic Outlook Update, January 2026 - https://www.imf.org/en/publications/weo/ issues/2026/01/19/world-economic-outlook-update-january-2026

India remained one of the fastest-growing large economies in the world through FY 2025-26. Government estimates released in June 2026 put GDP growth for the year at 7.7% - faster than the 7.1% recorded in FY 2024-25, and ahead of most projections made earlier in the year. Manufacturing was the standout performer, expanding 10.7% for the year, while services also grew strongly.

This growth was broad-based rather than driven by one factor. Private consumption - essentially, how much people spent - grew 7.7% during the year, up from 5.8% in FY 2024-25, while investment in new capacity (measured as gross fixed capital formation) grew8.2%,upfrom6.4%theyearbefore.Indiasfactory activity, tracked through the monthly Manufacturing PMI survey, stayed comfortably in growth territory throughout the year, registering 56.9 in February 2026 before moderating to a still healthy 53.9 in March 2026. Looking ahead to FY 2026-27, growth is widely expected to cool somewhat: the Reserve Bank of India and several independent forecasters expect growth of roughly 6.6% 6.9%, mainly reflecting the uncertainty created by the West Asia conflict and the usual risk of a below-normal monsoon. Even so, this remains a strong growth rate by global standards, and this years exceptionally strong, manufacturing-led growth provides a favourable backdrop for BPTLs own performance, discussed in Section 6 below.

Ministry of Statistics and Programme Implementation (MoSPI), Provisional Estimates of GDP for FY 2025-

26 (June 2026) - https://www.drishtiias.com/daily-updates/daily-news-analysis/provisional-estimates-of-gdp-for-fy2025-26 IBEF, Indian Economy Overview (Manufacturing PMI data) - https://www.ibef.org/economy/indian-economy-overview India Ratings and Research / RBI growth projections for

FY 2026 27 https://www.india-briefing.com/news/ india-gdp-growth-forecast-fy-2025-26-41786.html/

BPTLs business touches five industry segments: its existing Cutting Tools, Tool Holders, and Precision Components businesses, and its newly announced interest in Aerospace, Defence, 3C (electronics), and Heavy Engineering. A brief picture of each follows.

Indias machine tools market was worth roughly US$1.7-2.2 billion in 2024 and is expected to grow to US$3.4-3.9 billion by 2030-2033. Indias cutting tools market specifically BPTLs home turf was valued at about US$2.96 billion in 2024 and is projected to reach US$5.24 billion by 2033, driven by rising demand for precision and customisation from the automotive, aerospace, and electronics industries.

Indias defence manufacturing continues to scale up quickly, backed by a roughly 15% increase in the governments overall defence budget for FY 2026-27, with capital spending up around 22% and roughly 75% ofprocurementnowreservedforIndianmanufacturers.

Private companies share of defence production has also grown to about 23%. This is the sector BPTLs FY 2025-26 strategy is most directly aimed at.

Indian Railways remains in a sustained capex cycle, with the Union Budget 2026-27 allocating around

2.93 lakh crore in capital expenditure to the Ministry of Railways, funding continued rollout of Vande Bharat, Amrit Bharat, and Namo Bharat trainsets alongside the indigenous Kavach train protection system. Indias railway equipment market was valued at roughly US$12.3 billion in 2024 and is expected to grow steadily through 2030, with precision-engineered components - used across locomotives, rolling stock, braking, and signalling systems - remaining a small but essential and still-underserved part of the supply chain, an area BPTLs precision manufacturing capability is well placed to address.

IMARC Group, India Machine Tools Market Report - https://www.imarcgroup.com/india-machine-tools-market 6Wresearch, India Cutting Tools Market - https:// www.6wresearch.com/industry-report/india-cutting-tools-market-2020-2026 ACMA, India Auto Component Sector FY26 performance release (July 2026) - https://aninews. in/news/business/indias-auto-component-sector-grows-127-in-fy26-but-imports-outpace-exports-acma202.607.07141416/ PwC,UnionBudget2026-27:DefenceSectorHighlights -https://www.pwc.in/assets/pdfs/union-budget-2026/ union-budget-on-defence.pdf PIB, Electronics manufacturing under PLI/ECMS (April 2026) - https://www.pib.gov.in/PressReleasePage. aspxRsPRID=2247771&reg=1&lang=1 Invest India, Indias Capital Goods Boom - https:// www.investindia.gov.in/team-india-blogs/indias-capital-goods-boom-powering-manufacturing-infrastructure-and-growth

A cluster of government programmes are directly relevant to BPTLs strategy this year. The most they mean for the Company, significant are set out below.

These continue to be the umbrella initiatives behind Indias domestic manufacturing push, encouraging companiestolocaliseproductionandreducerelianceon imports. For BPTL, this broad policy support underpins demand across all of its existing businesses and lends credibility to its interest in new, more strategically sensitive sectors such as defence.

This years Union Budget raised the defence capital allocation by roughly 22% and reserved close to 75% of capitalprocurementfordomesticindustry,whileprivate companies share of overall defence production has grown to about 23%. For BPTL, this materially lowers the barrier to entry for a new supplier in aerospace and defence - precisely the opening the Companys FY 2025-26 strategic pivot is designed to capture.

Continued government spending on infrastructure - public capital expenditure has risen roughly four-fold since FY 2017-18 - sustains demand for the machine toolsandprecisioncomponentsthatheavyengineering projects depend on. This supports BPTLs existing Tool Holders and Cutting Tools businesses even as the

Company diversifies into new sectors.

Established in 1937, Birla Precision Technologies

Limited ("BPTL" or "the Company") is a diversified precision engineering Company with a presence across Machine Tool Accessories, Cutting Tools, Tool Holders and Precision Components. With manufacturing facilities across Aurangabad, Nashik and Chalisgaon in Maharashtra, the Company serves a diverse customer base in India and international markets, with its products reaching more than 25 countries.

BPTL operates through three key business divisions - Industrial Tooling & Machining (ITM), Tool Holders (TH) and Precision Components (PC) - catering to a range of industrial and engineering applications. The Companyisfocusedonstrengtheningitsmanufacturing capabilities, expanding its product portfolio and increasing its presence in high-value applications and growth sectors, including electronics (3C), heavy engineering, aerospace, defence, automotive, medical and hydraulic applications.

First, Indias precision manufacturing base is visibly moving toward the sectors BPTL is looking to enter. Government procurement continues to open up for domestic industry - private companies share of defence production has grown to roughly 23%, up from a much smaller base just a few years ago - while approvals for new electronics manufacturing projects have continued at pace, with a further 22 projects worth INR 41,863 crore approved under the Electronics Components Manufacturing Scheme in January 2026 alone. Railways is following a similar trajectory, with sustained capital spending and an ongoing rolling-stock renewal programme continuing to expand Indias precision engineering base. Taken together, these point to a sustained, not one-off, expansion in the domestic precision manufacturing capacity that BPTLs businesses are aimed at.

Second, at the Company level, BPTL itself went through its most visible change in years. The February 2026 rebrand and the announcement of its strategic interest in Aerospace, Railways, Defence, 3C, and Heavy Engineering mark a deliberate shift in the Companys strategic direction after decades of operating primarily in cutting tools, tool holders, and automotive components. This shift also comes at a time of rising US trade scrutiny of Indian exports, including an ongoing US trade investigation covering auto component practices in several countries, including India. Taken together, these two developments - an industry visibly opening up in the sectors BPTL is looking to enter, and rising uncertainty in some of its traditional export markets - make the Companys move toward domestically-oriented, policy-supported sectors a timely and sensible one.

In accordance with Schedule V, Part B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the table below sets out BPTLs revenue performance by business segment/product line for FY 2025-26 as against FY 2024-25.

FY 2025 26 was a year of meaningful financial improvement for BPTL, with profit growing considerably faster than revenue. The figures below are drawn directly from the Companys FY 2025 26 audited standalone and consolidated entity-wise) financial . statements(Profit & Loss

In accordance with Regulation 34(3) read with Schedule V, Part B of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, the Company is required to disclose details of significant changes (i.e., a change of 25% or more as compared to the immediately preceding financial year) in the key financialratios below, together with detailed explanations.

Return on Net Worth (RoNW) on consolidated basis increased from 3.80% in the previous financialyear to 6.80% during the financial year under review. The improvement was primarily drivenby significantincrease in the Companys profitability, supported by higher revenue, improved operating performance, better cost management, and enhanced operational efficiencies.The increase in Profit After Tax outpaced the growth in shareholders equity, resulting in a higher Return on Net Worth compared to the previous financial year.

BPTL manages risk through a structured Enterprise Risk Management (ERM) process aligned with the COSO ERM - Integrating with Strategy and Performance (2017) framework. This helps the Board and management identify, assess, and respond to risks that could affect the Companys objectives, while protecting shareholder value.

The framework rests on five components: Governance & Culture (the Board and senior management set the tone and embed risk-aware values); Strategy & Objective-Setting (risk appetite is factored into business strategy); Performance

(risks to strategy and objectivesareidentified,assessed, and prioritised, with responses selected); Review & Revision

(performance and risk responses are periodically reviewed and updated as conditions change); and Information, Communication & Reporting (risk information is captured, shared, and reported to the Board and Audit Committee). Risks are managed through a continuous cycle: Identify, Assess (likelihood and impact rated Low/Medium/High),

Respond & Mitigate (with a named owner for each significant risk), and Monitor & Report.

The table below summarises key risks across the Companys businesses and the corresponding mitigation strategies.

These risks are reviewed periodically by management and the Board to ensure mitigation plans remain effective. The Company believes no material risk currently threatens its existence or ability to continue as a going concern.

BPTLs workforce of 655 permanent employees remains the foundation of its precision engineering capability, and its development took on added importance in a year of significant strategic change.

FY 2025-26 saw two notable HR developments: the appointment of Chief Human Resources Officer, and the adoption of greytHR, a digital HR and compliance platform supporting a growing, multi-location workforce. The Company also introduced TRACK GPS, an acronym representing its core values framework, providing a shared language for existing people practices like structured training, employee feedback, and internal communication. Foundation Day celebrations, wellness sessions, and structured safety training continued through the year, reinforcing a culture the Company sees as central to sustaining performance through its next phase of growth.

The Company maintained cordial industrial relations through the year, with no material disputes reported.

BPTL continues to run SAP as its integrated Enterprise

Resource Planning (ERP) platform, connecting finance, procurement, manufacturing, inventory, and sales on a single system. This gives the Company standardised processes, real-time visibility into the business, and stronger internal controls than would be possible with disconnected systems. Alongside SAP, the Company uses LexComply, a compliance management platform, to systematically track statutory and regulatory obligations, maintain centralised compliance records, and support timely reporting - reducing compliance risk and reinforcing accountability across the organisation. Together, these systems are overseen by the Audit Committee of the Board and supported by statutory and internal audit processes.

FY 2025-26 was a year in which BPTLs own investments and strategy lined up well with a broadly supportive environment: strong, manufacturing-led growth in India, continued government support for domestic manufacturing in defence, electronics, and capital goods, and global companies continuing to look beyond China for manufacturing partners. Against this backdrop, the Companys growing interest in Aerospace, Defence, 3C, and Heavy Engineering - while continuing to strengthen its core Cutting Tools, Tool Holders, and Precision Components businesses - isaconsideredresponsetowhereIndianmanufacturing demand is heading. The risks of entering these new sectors are real and are acknowledged above; managements near-term priority is turning this years investment into qualified customer relationships in the sectors it is looking to enter.

Statements in this Annual Report, particularly those that relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward-looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.