Duncan Engineering Ltd Management Discussions

1. Economic Review Global Economic Trends

The global economy in FY2026 demonstrated measured resilience, with growth projected 3.1%. While inflation has started to ease across most major economies, interest 2 rates have remained relatively elevated, impacting investment activity and overall demand.

Advanced economies such as the US and Europe have shown stable but modest growth, supported largely by consumption. In contrast, emerging markets have continued to contribute a larger share to global growth, although the pace has varied across regions. Chinas recovery has remained uneven, particularly due to ongoing challenges in its real estate sector and weaker domestic demand. At the same time, businesses across the world are navigating a more uncertain environment. Geopolitical tensions, supply chain disruptions in certain regions, and fluctuations in energy and commodity prices have kept global markets somewhat volatile.

Despite these challenges, there are clear areas of momentum. Investments in digital technologies, automation, and energy transition continue to pick up, as industries focus on improving efficiencyand building more resilient operations. The broader message from FY2026 was clear: the era of seamless globalisation is behind us. Businesses that treat supply chain resilience and not just geographic diversification operational ones are better placed for the years ahead.

Indian Economic Overview

Indias economy remained strong in FY2026, with growth estimated in the range of 6.5% to 7%, continuing to outpace most major economies. This growth has been supported by a combination of government spending, improving private investment, and steady domestic consumption.

Infrastructure development continues to be a key driver, with ongoing investments in sectors such as transportation, power, and urban development. At the same time, initiatives like the Production-Linked Incentive (PLI) scheme and the broader focus on Make in India are encouraging manufacturing growth and attracting new investments.

Domestic demand has remained resilient, particularly in urban markets, while rural demand is gradually improving.

India is also increasingly benefiting from global supply chain shifts, with more companies looking to diversify their manufacturing base. However, some challenges persist.

Food inflation remains a concern at times, and global uncertainties continue to impact exports and capital flows.

Overall, Indias economic outlook remains positive, supported by strong fundamentals, policy continuity, and a growing focus on manufacturing and infrastructure. This creates a favourable environment for industrial and engineering companies, particularly those aligned with automation, infrastructure, and energy-related sectors.

Industry Overview & Developments

Global Industry Trends

The global pneumatic components and valve automation industry continues to see steady growth, supported by increasing levels of industrial automation across sectors. Industries such as oil & gas, power, chemicals, metals, and pharmaceuticals are gradually moving towards more automated and reliable systems to improve efficiencyand reduce downtime.

A key trend has been the shift towards integrated automation solutions, where customers are looking for complete packages rather than standalone components. This includes actuators, valves, control systems, and monitoring solutions working together as a single system. While adoption is still evolving across regions, this trend is expected to strengthen over the coming years.

In parallel, energy transition projects including LNG, renewables, and emerging areas like green hydrogen are creating new demand for high-performance and reliable flow control solutions.

Overall, the industry is moving towards higher efficiency, better reliability, and more integrated offerings, with customers placing increasing importance on quality, lifecycle cost, and service support rather than just upfront pricing.

Indian Market Dynamics

In India, the pneumatic and valve automation industry is witnessing robust growth; forecasted to grow 7% CAGR till 2033, driven by a combination of industrial growth, infrastructure development, and increasing automation across sectors.

Government-led investments in infrastructure particularly in water management, power, cement, steel, and transportation continue to generate consistent demand for valves and automation systems. The push towards manufacturing and localization, supported by initiatives such as Make in India, is also benefiting domestic players. More customers are now open to sourcing from Indian manufacturers, provided quality and reliability standards are met.

Another noticeable trend is the increasing demand for customized solutions. Customers are no longer looking for off-the-shelf products alone they expect solutions tailored to specific applications, along with strong technical support and faster turnaround times.

At the same time, the market remains highly competitive and price-sensitive, especially in large project businesses. This requires companies to maintain a careful balance between cost competitiveness and product quality.

Overall, the Indian market continues to offer strong growth potential, supported by a healthy project pipeline, increasing automation, and a gradual shift towards more value-driven purchasing decisions.

3. Opportunities

Growth in Industrial Automation- Increasing adoption of automation across industries to improve efficiency, safety, and demand for valves, pneumatic and valve automation solutions. This trend is expected to support long-term growth across both project and replacement markets.

Infrastructure and Project Pipeline- Ongoing investments in infrastructure and core sectors such as power, oil & gas, water, metals, and cement are creating sustained demand for flow control and automation products, particularly in new installations and capacity expansions.

- Oil & Gas and Energy Transition- Investments in refining capacity, LNG infrastructure, and the emerging green hydrogen ecosystem are creating demand for certified, high-specification flow control and automation solutions. The sectors stringent qualification requirements make it difficult to enter, but equally difficult to displace once established; making it an attractive long-term opportunity for companies that meet the bar.

Aftermarket Services- Rising focus on maintenance, uptime, and lifecycle efficiency across industries is driving steady demand for replacement products and service-led offerings, providing stability and recurring revenue opportunities.

Defence & Nuclear Indigenisation- Indias push for self-reliance in defence & nuclear sectors offers opportunities to supply high-spec pneumatic, hydraulic and valve automation solutions. Meeting stringent quality and safety standards in these critical areas will enable deeper participation in strategic national projects.

- Export and International Markets- Indias growing reputation as a manufacturing hub, combined with cost competitiveness, is boosting export opportunities for valves, pneumatic and valve automation products. Expanding into markets in the Middle East, US, Africa, Southeast Asia, etc. offers opportunities for global revenue diversification and brand recognition.

Safety and Environmental Compliance- Increasing awareness about workplace safety and environmental regulations drives the adoption of pneumatic systems and valve automation products that offer reliability, precision, and compliance with safety and environmental standards.

Each of these opportunities is underpinned by Duncans strengths in engineering excellence, and customization, positioning the company to capture value across traditional and emerging industry segments.

4. Risks

- Intensifying Market Competition- The valves, pneumatics and valve automation sector face fierce competition from both established multinationals and domestic players. This competitive intensity continues drive pricingto drive pressures and demand continuous differentiation in products and services.

Price Sensitivity and Margin Pressure- Indian industrial customers remain highly price-conscious, especially in large-scale projects. Balancing competitive pricing with the need to maintain quality and innovation can challenge profitability, particularly as input costs fluctuate.

Regulatory and Compliance Complexity- Navigating evolving regulatory standards, certifications, and sector-specific approvals, especially in public sector, defence, and nuclear projects-can lead to delays, increased compliance costs, and potential barriers to market entry for new products.

Dependence on Investment Cycles- Demand is closely linked to capital expenditure across key sectors such as infrastructure, energy, and industrials. Any slowdown in capex sanctions, delays in EPC award timelines, or deferral of large industrial projects can impact business growth.

- Supply Chain Vulnerabilities- Global and domestic supply chains are susceptible to disruptions from geopolitical tensions, natural calamities, logistics bottlenecks, and raw material shortages. Such disruptions can affect timely production, increase costs, and impact customer delivery commitments.

Technological Changes and Customer Expectations- Customer preferences are rapidly shifting towards integrated, digitally enabled, and sustainable automation solutions. As clients increasingly seek customized products, advanced diagnostics, and energy-efficient systems, companies must remain agile and responsive to these evolving needs to retain market relevance and foster long-term partnerships.

Macroeconomic and Policy Uncertainty- Inflation, currency movements, changes in import duty structures, and shifts in government spending priorities can each affect demand patterns and cost bases.

- Talent and Capability Gaps- As the industry evolves, attracting and retaining skilled talent in applications engineering, R&D, quality assurance, project management and technical service becomes crucial. A shortage of specialized skills may limit the companys ability to innovate and execute complex projects.

Effectively addressing these risks will be essential for sustaining growth, protecting margins, and maintaining Duncan Engineering Limiteds leadership in a rapidly changing industrial landscape.

5. Outlook

Balanced Growth Across Business Segments-

The Company expects to maintain a balanced growth trajectory, supported by contributions from aftermarket, project, and emerging segments. This diversified approach growth opportunities.

Certifications and Approvals- The Company continues to strengthen its product portfolio through key certifications and approvals, securing Engineers India Limited (EIL) certification for On-Off valves with

Duncan make actuators enabling entry into regulated and high-specification sectors such as Oil & Gas.

These developments enhance the Companys ability to engage with leading EPC contractors and end users, while reinforcing its commitment to quality, compliance, and reliability.

Oil & Gas Sector Penetration- With EIL approval now in place, the Company is positioned to participate in opportunities within the oil & gas sector. The focus will be on gradually building presence across end users and EPC contractors in segments such as refineries, petrochemicals, a track record with marquee clients in this sector will be foundational to longer-term growth here.

Knife Gate Valves (KGV)- The Company sees a growing opportunity in Knife Gate Valves and bulk solid handling applications, driven by demand from sectors such as power, cement, steel, etc. With its engineering capabilities and expanding product portfolio, the Company aims to gradually strengthen its presence in this segment, leveraging both project opportunities and replacement demand over the medium term.

- International Expansion- The Company continues to strengthen its presence in international markets, particularly in the Middle East. During the year, the Company established a wholly owned subsidiary

- DEL Arabia, in the region to enhance its local presence, and improve customer engagement. This is expected to aid in expanding the Companys global footprint and diversifying revenue streams over the medium term.

Project Tracking and Market Expansion- Active monitoring of project pipelines in core sectors such as oil & gas, power, cement, steel, metals, and infrastructure enables precise alignment of solutions to industry needs. This targeted approach helps capture new business and drive consistent growth across high-potential market segments.

Aftermarket Services and Dealer Network-

Expansion of the dealer network and enhancement of aftermarket services ensure rapid access to spares, repairs, and maintenance across major industrial hubs. This robust support infrastructure minimizes downtime for customers, delivers tailored solutions, and reinforces long-term reliability and customer loyalty.

Foray into Defence and Nuclear- Duncan both stability and

Engineering is focused on expanding its footprint in high-potential sectors such as defence and nuclear, with an emphasis on fluid power systems for mission-critical national projects and supporting Indias indigenisation goals. Building on our current expertise and capabilities, the company has begun receiving its first commercial orders in this vertical.

We are committed to developing tailored solutions and entering these sectors with a dedicated, strategic approach to meet the countrys evolving needs.

- People and Leadership- Sustaining growth across multiple business verticals requires a leadership team and organisational structure that can manage both depth and breadth. Investment in people - through hiring, training, and leadership development will be crucial to FY2027 outcomes. The companys experienced board and management team provide a pipelines.Establishing strong foundation; building the next layer of capability beneath them is the operational imperative.

With a clear vision, strategic investments, and a relentless focus on product innovation and customer value, Duncan Engineering Limited is well-positioned to capture emerging opportunities and deliver consistent growth in FY2027 and beyond.

. Internal Control Systems and their adequacy

The Company has adequate internal control systems, which includes internal financial controls, the efficacy of which is continuously monitored and updated when required internally. The internal Auditors monitor the compliance of the same. The Companys internal control system ensures that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The Audit Committee reviews reports presented by the internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

7. Discussion on financial performance with respect to operational performance A. Analysis of the profit and loss statement i. Revenues: Revenues from operations registered a 4.77% decreased from 8471.35 Lakh in FY 24-25 to

8067.35 Lakh in FY 25-26. ii. Margins: EBITDA for the year was 964.76 Lakh as against 985.31 Lakh in FY 24-25. EBITDA margin of the Company increased to 11.96 % from 11.63 % in

FY 24.25. The net profit margin of the Company was 486.01 Lakh in FY 25-26 compared to 521.07 Lakh in FY 24-25. The margins for the year were decreased by 6.73%.

B. Analysis of the Balance Sheet i. Sources of funds: The capital employed by the Company increased to 6298.24 Lakh as on 31st March 2026 from 5982.07 Lakh as on 31st March 2025 owing to internal accruals.

The net worth of the Company increased 6.87% to

6075.44 Lakh as on 31st March 2026 from 5684.82 Lakh as on 31st March 2025. ii. Applications of funds: Fixed assets (gross) of the Company increased 1.00 % from 3756.59 Lakh as on 31st March 2025 to 3794.13 Lakh as on 31st March 2026. iii. Working capital management: Total Current Assets of the Company increased by 12.70% from 5645.52 Lakh as on 31st March 2025 to 6352.54 Lakh as on 31st March 2026. Current Assets included current investment and cash and bank balance of 3583.80 Lakh in FY 25-26 compared to 3573.87 Lakh in FY 24-25 due to the deployment of funds into short term Investments.

Inventories, including raw materials, work-in-progress and finished goods, among others, increased to

1433.54 Lakh on 31st March 2026 from 1409.36 Lakh on 31st March 2025 due to higher production. Trade receivables as at 31st March 2026 were

1142.32 Lakh compared to 562.52 Lakh as at 31st March 2025.

8. Human Resources and Industrial Relations

The Company employed 192 officers and workmen as on

31st March 2026. Increase in the value of human capital through the development of individual and collective competencies helped the Company stay in step with market developments and requirements. The Company has a policy to regularly run programs and projects on skill development and upgradation of employee competence. Programmes of knowledge sharing were conducted; employees are encouraged to attend external programs as required to enhance their perspective of emerging standards. Several innovative ideas received from employees were implemented, resulting in enhance quality, cost optimisation and productivity.

The Company generally enjoys cordial relationship with its staff and workers. The Company management has entered into wage revision agreement with the recognised workers union on March 28, 2024, for a period of 3 years effective from April 1, 2024, to March 31, 2027.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial ratios, along with detailed explanations therefor is given below:

	FY 2025-2026	FY 2024-2025	% Change	Explanation
1. Debtors Turnover	9.46	12.67	-25%	Due to decrease in turnover as compared to previous year
2. Inventory Turnover	2.93	3.87	-24%
3. Interest Coverage Ratio	1.70%	4.14%	-59%	Due to increase borrowings as compared to previous year
4. Current Ratio	3.46%	3.59%	-4%
5. Debt Equity Ratio	0.06	0.02	214%	Due to increase borrowings as compared to previous year
6. Operating Profit Margin (%)	8.56%	8.81%	-2.89%
7. Net Profit Margin (%)	6.02%	6.15%	-2%

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Sr. No. Particulars	FY 2025-2026	FY 2024-2025	% Change	Explanation
1. Return on Net Worth	8.00%	9.17%	-13%

10. Disclosure of Accounting Treatment:

Where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the managements explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction.

The Accounts for the year have been prepared as per Indian Accounting Standards (Ind AS). The current year and previous year figures have been re-stated accordingly

No treatment different from that prescribed in Ind AS has been followed by the Company.

11. Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectation, and estimations which may be forward looking statements 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 realised by the Company. Actual results could differ materially from . those expressed in the statements or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements based on any subsequent development, information, or events.

		For Duncan Engineering Limited
		On behalf of the Board of Directors
	Akshat Goenka	Arvind Goenka
Place: Noida	Managing Director	Non-Executive Director & Chairman
Date: May 16, 2026	DIN: 07131982	DIN: 00135653