CFF Fluid Control Ltd Management Discussions

FORWARD LOOKING STATEMENT

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements have been prepared in accordance with the Accounting Standards (AS) notified under Section 133 of the Companies Act. 2013. read with the Companies (Accounts) Rules. 2014. as amended. The management of CFF Fluid Control Limited has exercised prudent and reasonable judgment and made estimates in the preparation of these financial statements so as to ensure that they present a true and fair view of the Companys state of affairs and profit for the year

The following discussions on our financial condition and result of operations should be read together with our audited financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to "we". “us”, “our, “the Company". “CFF" are to CFF Fluid Control Ltd.

The information in this section includes extracts from publicly available information, data and statistics and has been derived from various government publications, publicly available documents and industry sources. Neither we nor any other person connected with the Issue have verified this information. The data may have been re-classified by us for the purposes of presentation. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and. accordingly, investment decisions should not be based on such information.

\Who We Are

India did not miss its maritime moment. It was interrupted.

Centuries of deliberate de-industrialisation dismantled what India had built over millennia. The Lothal dockyard on the Gujarat coast ? the worlds earliest recorded maritime facility ? dates to 2500 BCE. The Chola naval arm was the largest battle fleet in pre-modern Asia. Kanhoji Angre denied the Konkan coast to every European power that contested it. The capability was always here.

CPF Fluid Control Limited is among those reinstating it.

Indigineering

Absorbing world-class technology and manufacturing it in India to the same standard as the country that invented it ? so that each successive programme needs less from abroad.

This is a precise statement, not a slogan. It contains four obligations that CFF takes seriously:

• Absorb: not procuring, not assembling, not just holding a licence. Understanding the engineering, mastering the process. owning the manufacture and quality system.

• Manufacture: not a cost-reduced variant, not an India-adapted substitute. The same acceptance criteria as the component leaving technology partner country.

• Indigenize: Each successive programme needs less from abroad: the indigenisation deepens with every contract cycle. P75I goes further than P75 Scorpene. P76 goes further still.

• Originate: Building on absorbed technology, to design next generation of systems in India

Under Promise. 0\/er Deliver.

Fourteen years. Every Naval Dockyard in India. No interruptions.

The Indian Navy does not grant second chances. A supplier who misses a Factory Acceptance Trial deadline on a submarine refit does not receive a second opportunity. The operational schedule of the fleet is not negotiable. CFFs entire positioning is built on the understanding that reliability is not a feature ? it is the qualification.

Manufacturing

CFF absorbs its partners technology fully ? owning the engineering, mastering the process, and holding the quality system to the same standard as the country that invented it. Products and systems are built to Indian Navy specifications, with the same acceptance criteria applied at Khopoli and Pune as at any qualified facility anywhere in the world.

The evidence of that commitment is not a declaration. It is a qualification process. When technology partners conduct a full technical audit of CFFs facilities ? inspecting processes, quality systems, material certifications, and traceability ? before agreeing to transfer critical sensor and weapon systems manufacturing to India, they are conducting the same audit they would apply to any facility seeking to manufacture to their standard. CFF passed. The twelve LFVDS units currently in production for the Indian Navys ASW programme are manufactured to specification. That outcome is the credential.

That is our strength.

The Technology Governance Position

CFF manufactures under licence within a defined manufacturing scope. We hold IP in partner-origin technology under licence and ensure that we work within the terms of our Transfer of Technology agreements. Our standing as a Qualified Manufacturer derives entirely from demonstrated trustworthiness ? built over fourteen years.

Our objective is not to become independent of our technology partners. It is to become indispensable to them.

Our Place in Indias Naval Supply Chain

CFF holds Authorised Equipment Manufacturer status across all major DPSU shipyards and Naval Dockyards of the Indian Navy. Platform qualifications span all three operational submarine classes and the principal surface combatant programmes.

SUBMARINE PLATFORMS

PLATFORM	CLASS / DESIGNATION	STATUS
Kilo Class	Type 877 EKM - Sindhughosh class - 9 boats in service	DELIVERED
HDW SSK	Type 1500 - Shishumar class - 4 boats in service	ACTIVE REFIT
P75 Scorpene	Kalvari class - 6 boats commissioned - MDL	DELIVERED - ACTIVE REFIT
P75I	Advanced SSK - 6 hulls Contract to be awarded FY 2027	PIPELINE
P75(AS)	AIP SSK - Naval Group -	PIPELINE
P76	Indigenous SSK - First fully Indian design	PIPELINE

SURFACE COMBATANTS ? QUALIFIED & ACTIVE

1 Programme	Class / Shipyard	Status
P17	Shivalik class - MDL - 3 guided missile frigates	DELIVERED
P15A	Kolkata class - MDL - 3 destroyers in service	DELIVERED
P15B	Visakhapatnam class - MDL - 4 destroyers in build/service	DELIVERED
P17A	Nilgiri class - MDL - 7 frigates in build	ACTIVE
P28	Kamorta class ASW Corvette - GRSE - 4 in service	DELIVERED
ASW	Shallow Water Craft 8 each at GRSE and CSL	ACTIVE
SVL	Survey Vessel large 4 at GRSE	ACTIVE
P17B	Next Generation Frigate MDL + GRSE - 8 ships	PIPELINE
NGC	Next Generation Corvette - GRSE - 8 ships	PIPELINE
NGMV	Next Generation Missile Vessel - CSL - 6 ships	PIPELINE
P18/NGD	Next Generation Destroyer - 5 ships	PIPELINE
MCMV	Mine Countermeasure Vessel - 12 ships	PIPELINE

The engineers being trained at Khopoli and Chakan today are the engineers who will work on P76. That is not incidental. It is intentional.

Order Book & Programme

Pipeline

The consolidated order book as at 03 July 2026 stands at ^5551 crore. representing approximately three times FY2026 revenue. This provides strong near-term revenue visibility and reflects the acceleration in programme award activity driven by the P75I contract and continuing Dry dock Refit cycles.

The order book of ^551 Cr as at 03 July 2026 comprises orders across submarine refit and systems programmes (HDW SSK, Kalvari class P75 Scorpene,), surface combatant programmes (P17A Nilgiri, P15B Visakhapatnam, A5W Corvette), and sonar systems production for various Ships.

PIPELINE PROGRAMMES ? NOT YET IN ORDER BOOK

The order book figure does not include pipeline programmes at pre-contract stage. The Submarine and Surface Ship programmes for which CFF is positioned represents the largest naval programme in independent Indias history.. These are not revenue projections. They are the environment in which CFFs qualified manufacturer status operates.

1 PROGRAMME	LEAD OEM / STATUS	CFF POSITION
P75I	TKMS - To be Contracted FY 2027	AEM-qualified through P7S Scorpene
P75(AS)	Naval Group - Pipeline programme	Engaged from the design phase
P76	Indigenous submarine programme - Pipeline	Engineering depth currently being built
P17B	Next Generation Frigate - MDL + GRSE - 8 ships	Engineering depth currently being built
NGC	Next Generation Corvette - GRSE - 8 ships	Engineering depth currently being built
NGMV	Next Generation Missile Vessel - CSL - 6 ships	Engineering depth currently being built
P18/NGD	Next Generation Destroyer - 5 ships	Engineering depth currently being built
MCMV	Mine Countermeasure Vessel - 12 ships	Under Teaming Agreement

P75I ? TO BE CONTRACTED FY2027

Six latest submarines with TKMS as Technology collaborator equipped with latest AIP technology. The single largest defence procurement contract in Indias history by programme value. CFFs P75I participation follows directly from P75 Scorpene qualification. Every hour of refit support at ND Mumbai and ND Karwar. every FAT and SAT conducted on Kalvari-class boats, every hi PAS and HPP system delivered to specification ? all of it was the technical auditable record on which P75I qualification is based.

P75(AS)? PIPELINE

Air-independent propulsion submarines, led by Naval Group. This is the most technically demanding programme in the current Indian submarine pipeline. AIP technology requires integration across disciplines that have not previously been combined in an Indian submarine: cryogenics, advanced electro-mechanical systems, next-generation sensor suites, electronics at a level of sophistication beyond the current SSK fleet.

CFFs relationship with Naval Group ? the programmes lead OEM ? began with P75 Scorpene and has deepened through every successive refit cycle. We are engaged from the programmes construction phase. That is not an aspiration. It reflects the accumulated technical credibility that fourteen years of Naval Group-certified manufacturing has produced.

The scope of CFFs P75(AS) participation will be commensurate with the engineering depth we demonstrate in the period leading to contract.

P76 INDIGENOUS SSK? PIPELINE

Indias first fully indigenous submarine. The P76 will be the definitive test of INDIGINEERING as a national capability. The hull design, propulsion, combat management, weapons systems, and platform services will all be conceived, designed, and integrated in India. CFFs ambition is to be one of the companies that makes that possible ? not as a supplier to a foreign prime, but as a qualified Indian manufacturer whose engineering depth is indistinguishable from the international standard.

P17B ? FOLLOW ON TO THE P17A

Eight next-generation stealth frigates. The follow-on to P17A. where CFF is already active. The RFP has not yet been released but the programme is defined. P17B carries forward the indigemsation architecture of P17A and takes it further ? higher VLS cell count, integrated propulsion, more demanding fluid management across weapons, damage control, and platform systems. CFFs P17A qualification is the entry condition for P17B. The work being done at MDL and GRSE today on the Nilgiri class is the demonstration of capability that P17B will be evaluated against.

P18 / NGD ? NEXT GENERATION DESTROYERS

Indias next generation destroyer. At 11.000 tonnes, this is a different class of platform ? larger, more complex, and more demanding in its fluid systems architecture than anything the Indian Navy has previously built indigenously. The design phase begins in the second half of 2026. Contract signing is expected within two years. The first deliveries will be in the early 2030s. CFFs positioning on P18 begins now. at the design stage, because that is when sub-system selection decisions are made and locked. We are engaged.

NGC ? NEXT GENERATION CORVETTES

Eight next-generation corvettes. GRSE has been selected as LI for five vessels; contract finalisation is expected in FY2026-27. CFF is a qualified vendor across GRSEs active programmes. NGCs fluid control and damage control requirements follow the same architecture as P28 Kamorta ? a platform on which CFF holds a long track record.

NGMV ? NEXT GENERATION MISSILE CORVETTES

Six fast missile corvettes being built at Cochin Shipyard. Steel was cut in December 2024. Induction begins from 2027. The NGMV is a smaller hull but a high-intensity platform ? speed of 35 knots. BrahMos integration, and a demanding thermal and hydraulic environment. Our CSL relationship. established through the ASW SWC programme, is the foundation.

MCMV ? MINE COUNTER MEASURE VESSEL

Twelve mine countermeasure vessels. Acceptance of Necessity was granted in July 2025. The first vessel is expected by 2028. GSL leads the build with an advanced unmanned MCM suite.

Facilities & Engineering Depth

CFF operates two manufacturing facilities with a combined footprint of 7.950 sq. m. Both facilities are ISO 9001:2015 certified and operate under quality management systems that satisfy our technology partners acceptance criteria.

KHOPOLI, MAHARASHTRA

The primary manufacturing facility for platform and fluid systems, steering gear, and infra red suppression systems. Weapon Handling Systems etc. Capabilities include high-pressure air system assembly and testing (to 300 bar), hydraulic power pack manufacture and functional testing, atmosphere management and HVAC system assembly, infra red suppression fabrication and control systems, exhaust systems steering gear systems etc. Full FAT capability is available on-site. Khopoli is the facility against which French partners conducted their technical audit and ToT qualification.

PUNE (CHAKAN), MAHARASHTRA

Commissioned FY2025. Purpose-built for electronic manufacture and assembly alongside mechanical manufacture. The Chakan facility handles weapons systems, sonar systems, signal processing and special sensor production, and Buoyant Wire Antenna assembly. Its commissioning reflected the growth in electronic content across CFFs programme scope? a trend that will accelerate with P75(AS) and P75I. both of which carry substantially more electronic and sensor integration than the current fleet.

DESIGN AND TRANSLATION CAPABILITY

CFF is not a production-only facility. The engineering team translates partner technology ? reading OEM specifications, manufacturing to those exacting standards, adapting to Indian platform interfaces, resolving integration challenges that emerge in Naval Dockyard environments? and works with technology partners to further develop and indigenise successive generations of each system.

This design-and-translation function is what distinguishes a manufacturer from an assembler, and what makes the Transfer of Technology real rather than documentary. When a field evaluation trial (FET) challenge emerges, the solution is developed by CFF engineers in collaboration with OEM ? not deferred to the OEM. That engineering ownership is the asset. It is not visible on the balance sheet, but it is the reason fourteen years of Indian Naval qualification has produced no interruptions.

The P75(AS) programme ? which introduces cryogenics, advanced electro-mechanical systems, and next-generation electronics into the submarine supply chain ? will require this design capability to operate at a level of technical depth not previously demanded of CFF. Our R&D investment and engineering team development are directed, in part, at building that depth ahead of the programmes manufacturing phase.

QUALITY MANAGEMENT

ISO 9001:2015 certified. All Technology Partners certified QMS. FAT and SAT support capability maintained at both facilities and at Naval Dockyard locations as required.

Investing Ahead of Demand

CFF has initiated a set of R&D programmes directed at capability areas adjacent to its existing naval systems work. These programmes are at varying stages of maturity. Some may progress to qualified products and contracted programmes. Others may be modified in scope or may not advance to commercialisation at all. That is the nature of early-stage development. and shareholders should read this section accordingly ? as a description of where the company is investing intellectual and financial capital, not as a forecast of future revenue.

A manufacturer who only responds to tenders ? not to problems ? will eventually be displaced by one who does both.

The common thread across CFFs R&D initiatives is the attempt to move from responding to requirements that the Indian Navy has formally articulated. to presenting solutions to problems it has not yet tendered. Fourteen years of dockyard-floor and sea-trial experience gives CFF a view of operational constraints, maintenance challenges, and system-performance gaps that no organisation without that experience can replicate. Our R&D programmes are the attempt to translate that institutional knowledge into products.

No specific programme names, commercial partners, or commercialisation timelines are identified at this stage for other R&D initiatives. Results will be disclosed when and to the extent that contractual, regulatory, and competitive considerations permit. The Board will provide updates as programmes advance to stages where disclosure is appropriate.

One development programme has progressed to the point of capitalisation in CFFs audited accounts. The Sonar System prototype, being developed jointly with Atlas Elektronik GmbH. As at 31 March 2026, expenditure on design, development, testing, and commissioning of this system is carried as Intangible Assets under Development (Rs.3.23 Cr) and Capital Work-in-Progress (Rs.7.55 Cr) in the Balance Sheet, totalling Rs.10.78 Cr. This expenditure will be capitalised when the system is ready for commercial production. This programme represents the deepest expression of the INDIGINEERING principle in CFFs current portfolio ? not manufacturing to a partners specification, but jointly developing a system meeting Indian Navy specification, in India, with a world-class OEM.

What we can say with confidence is that the direction of investment is consistent with CFFs core competencies ? naval systems, pressure and fluid management, sensors and electronics integration, and the through- life support of platforms operating in demanding maritime environments.

Convincing the Worlds Best to

Make in India/

All three OEM partners conducted full technical audits of CFFs facilities. processes, and quality management systems before certifying. The Transfer of Technology is real because the accountability is real. CFF manufactures to the same standard as the country that invented the technology ? that is not a marketing claim. It is the condition on which every partnership agreement is based.

Naval Group

France - Designer and Licensor of the Scorpene-class SSK

Framework agreement as industrial partner for various critical equipment programmes. Naval Group designed and licenses the Scorpene-class submarine ? commissioned with the navies of France. Brazil. Chile. Malaysia. India, and Australia. CFF holds Naval Group quality certification for platform systems installed in Kalvari-class boats at build.

The relationship began with P75 Scorpene 14 years ago and has deepened through every successive refit cycle. CFF is active at every Refit at ND Mumbai and ND Karwar in which Naval Group platform systems are involved. The institutional knowledge of these boats that CFF has accumulated ? hull by hull, refit by refit at the submarine integration stage? is not replicable by a new entrant on any time-scale relevant to the Indian Navys operational schedule.

The P75(AS) programme, led by Naval Group, extends this relationship into a new generation of submarine design. P75(AS) introduces AIP propulsion technology alongside a substantially expanded scope of indig- enisation.

TKMS Atlas Elektronik

Germany - TKMS Group - Established 1902. Bremen

Teaming agreement for the indigenous manufacture of sonar systems for the Indian Navy. Atlas Elektronik a part of TKMS Group is one of the worlds principal suppliers of sonar and underwater systems technology ? a supplier to the German Navy, the Royal Navy, and NATO fleets. TKMS Group is the technical collaborator of Mazagon Dockyard where the P75 submarine is going to be built. CFF is Atlass designated Indian manufacturing partner, the outcome of a formal technical audit and Transfer of Technology agreement.

The partnership exists because Atlas conducted a full audit of CFFs facility? inspecting processes, material certifications, quality systems, and traceability ? and concluded that CFF could manufacture to Atlas standard. All products are manufactured under this partnership as per the provisions of the teaming agreement.

Programme scope: Variable Depth Sonar (VDS). ACTAS system. MCMV systems, handling systems, and signal processing units. Twelve ASW programme units are in current production.

Nereides

France - Submarine Communications Systems Specialist

Nereides is a French specialist in submarine communications systems. The partnership with CFF delivers Buoyant Wire Antenna (BWA) and VLF communications technology to Indias submarine fleet. Import substitution was achieved in FY2025 ? India doesnt have to procure submarine VLF communications systems from foreign sources.

The significance of the Nereides partnership extends well beyond the current production cycle. Nereides-origin VLF submarine communications technology is positioned as Buyer Recommended Equipment across Indias future submarine pipeline: P75I. P75(AS). and P76. Every future Indian submarine hull ? from the six P75I boats to be contracted, through the P75(AS) AIP programme, to the P76 indigenous design ? carries this system. The supply relationship compounds with each new programme and each new hull over the next three decades.

Programme scope: VLF submarine communications systems. Buoyant Wire Antenna, and submarine communications indigenisation across the fleet.

AEM Status & Quality Management

The Authorised Equipment Manufacturer credential is issued by the Ministry of Defence and the Indian Navy to manufacturers who have demonstrated the technical capability, quality management systems, and track record required to supply equipment to naval platforms. AEM status is platform-specific and facility-specific. It cannot be claimed ? it must be earned through audit, qualification trials, and sustained delivery.

CFE holds AEM status across the full complement of DPSU shipyards and Indian Navy Dockyards. This is the widest authorisation footprint held by any private-sector defence manufacturer in the naval fluid and sonar systems segment, to the best of the Companys knowledge.

DPSU SHIPYARD AUTHORISATIONS

• Mazagon Dock Shipbuilders Limited (MDL) Primary submarine and destroyer builder; P75 Scorpene, P15B, P17A

• Garden Reach Shipbuilders & Engineers (GRSE) P28 Ka- morta-class ASW Corvettes and frigate programmes

• Goa Shipyard Limited (GSL) ? Patrol vessels, offshore patrol vessels, and support programmes

• Cochin Shipyard Limited (CSL) ? Aircraft carrier IAC-1 Vikrant and surface combatant programmes

• Hindustan Shipyard Limited (HSL). Visakhapatnam ? Submarine refit and surface ship repair

• Shipbuilding Centre (SBC). Visakhapatnam ? Nuclear submarine programme facility

NAVAL DOCKYARD AUTHORISATIONS

• Naval Dockyard Mumbai ? Primary dockyard for Scorpene Refit and Western Fleet maintenance

• Naval Dockyard Karwar (INS Kadamba) ? Scorpene Refit and Western deployment support

• Naval Dockyard Visakhapatnam ? Eastern Naval Command; submarine and surface combatant refit

QUALITY CERTIFICATIONS

• ISO 9001:2015 ? Quality Management System, both Khopoli and Chakan facilities

• Technology Partners certified QMS.

• FAT/SAT Capability ? Factory Acceptance Trial and Sea Acceptance Trial support across all qualified platforms

The Business

REVIEW OF OPERATIONS:

During the year under review, the operating revenue of your company increased to Rs. 20.873.63 lakhs over the previous years Rs. 14.556.05 lakhs a significant growth of 43.40%. Your company earned a net profit of Rs. 3.919.66 Lakhs for Financial Year 2025-26. compared to Rs. 2.385.03 Lakhs for Financial Year 2024-25.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The company has an Internal Control System commensurate with its requirement and size of business to ensure that the assets and interest of the company assets are safeguarded. The adequacy and effectiveness of the internal control across various activities, as well as compliance with laid down system and policies are comprehensively and frequently monitored by your companys management at all the levels of the organization. The company has established well defined policies and processes across the organization covering all major activities including authority for approvals. In all cases where monetary decisions are involved, various limits and authorities are in place.

The Companys internal controls are structured in a manner that ensure reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies, laws and accounting standards.

With a strong monitoring system in place, the Company has an Audit Committee, the details of which have been provided in the Boards Report. The Audit Committee of the Board of Directors review the existing audit procedures and internal systems of control on an ongoing basis keeping in mind the organizations requirements, growth prospects and ever evolving business environment. They also review the internal audit findings and recommendations and ensure that corrective measures are implemented. Suggestions for improvement are considered and the Audit Committee follows up on the implementation of corrective actions.

KEY RATIOS

PARTICULARS	2025-26	2024-25	CHANGE IN RATIOS IN %
Current ratio	5.78	3.49	65.56%
Debt- Equity Ratio	0.07	0.14	-47.87%
Debt Service Coverage Ratio	17.94	9.25	93.90%
Inventory turnover Ratio	3.68	2.59	42.13%
Trade receivables turnover ratio	2.54	4.25	-40.22%
Return on Equity Ratio	18.93	17.42	8.66%
Trade Payable Turnover Ratio	5.30	6.73	-21.28%
Net Capital Turnover Ratio	0.92	1.27	-27.56%
Net Profit Ratio	18.78	16.39	14.60%
Return on Capital Employed	18.67	20.82	-10.34%

REASONS FOR MORE THAN 25% VARIANCE

RATIOS WITH VARIANCE MORE THAN 25%	REASONS FOR VARIANCE
	Primarily due to higher trade receivables at the year end. Given the nature of the Companys business, the timing of order execution, deliveries, invoicing and customer collections may result in normal fluctuations in receivables and working capital balances across reporting periods.
Current ratio:
Debt equity ratio:	Due to reduction in borrowings during the current year.
Debt service coverage ratio:	Due to higher profitability coupled with reduction in borrowings during the current year.
Inventory Turnover Ratio:	Due to higher revenue during the year while maintaining comparable inventory levels.
Trade receivable turnover ratio:	Primarily due to higher trade receivables at the year end. Given the nature of the Companys business, the timing of order execution, deliveries, invoicing and customer collections may result in normal fluctuations in receivables across reporting periods.
Net capital turnover ratio:	Primarily due to higher working capital on account of year- end trade receivables. Given the nature of the Companys business, the timing of order execution, deliveries, invoicing and customer collections may result in normal fluctuations in working capital balances across reporting periods.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

As at 31 March 2026. the Company employs 263 permanent employees across its Khopoli and Chakan facilities, with the majority engaged in engineering, manufacturing, and quality roles. CFF Fluid Control Limited is part of a dynamic and progressive group that actively fosters a challenging work environment and encourages Entrepreneurship. With trust being the critical part of our business belief, we lay a strong emphasis on integrity. teamwork, innovation, performance and partnership. Our professional staff with diverse backgrounds brings varied talent, knowledge and experience to the Group, helping our businesses to remain competitive, achieve greater success and newer milestones. Our management team and board of directors are resolved to do what, we believe, is best for our shareholders, clients and associates.

At CFF Fluid Control Limited, we recruit for skill, experience, right attitude, commitment and diversity. However, the one common trait that runs through the DNA of every employee is entrepreneurship. We encourage our employees to act as owners, partners and managers of their individual functions while providing a conducive environment for them to be creative and productive.

Principal Risks and Mitigation

CFF operates in a single, specialised sector ? the supply of critical systems to the Indian Navy ? and its risk profile reflects that concentration. The following principal risks have been identified by the Board, bach is accompanied by a description of existing mitigants and the residual risk assessment.

RISK	DESCRIPTION	TREND	PRINCIPAL MITIGANTS f
Programme Concentration	Revenue is concentrated in Indian Navy submarine and surface combatant programmes. A pause in programme award activity or a change in procurement policy could materially affect near-term revenue.	Reducing	P7SI contract expected FY27. P76 pipeline structural. Multi- programme AEM authorisation reduces single-programme dependency.
Defence Procurement Cycle	Indian defence procurement timelines are extended and subject to policy, budget, and administrative factors outside CFFs control. Order-to-revenue conversion periods are long.	Stable	Order book of ^SSl Cr ( 3x revenue) provides buffer. Through-life refit revenue is recurring and less subject to procurement delays than new- build.
Technology Partner Risk	CFFs sonar and communications programmes depend on maintained ToT relationships with Naval Group. Atlas Elektronik and Nereides. A change in partner strategy or geopolitical context could affect technology access.	Stable	Long-term programme commitments on both sides. Naval Group relationship is 14 years active: Nereides BFE position across P75I/ P75(AS)/P76 creates mutual dependency. MoD oversight provides structural protection.
Execution and Delivery Risk	The Indian Navy operates to precise schedules. Any failure to deliver on FAT/SAT commitments could affect contract renewal and AEM standing.	Low. Managed	Fourteen-year delivery record with no programme interruptions. ISO 9001:2015 QMS. Dual-facility manufacturing provides redundancy. Technology Partners certified QMS
Talent and Engineering Depth	Growth into P75I and P7S(AS) engineering scope requires qualified engineers who do not yet exist in sufficient numbers in Indias defence manufacturing base.	Increasing	Apprenticeship and graduate engineering programmes at Khopoli. Collaboration with technology partners for knowledge transfer. R&D investment creates advanced engineering exposure.