EMA India Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Indian Economy

The Indian economy continued to demonstrate resilience during the financial year 2025-26, supported by sustained domestic demand, continued Government thrust on infrastructure and industrial capital expenditure, deepening of the manufacturing base under initiatives such as Make in India and the Production Linked Incentive (PLI) schemes, and steady progress on ease of doing business reforms. Notwithstanding global geopolitical uncertainties, volatility in commodity and input prices and tightness in international financial markets, the domestic capital goods and engineering sector continued to benefit from renewed private sector capex, Government-led infrastructure spending and the ongoing thrust towards industrial modernization and energy-efficient manufacturing processes.

India continues to be recognised as one of the fastest growing major economies globally, with the manufacturing and engineering sector playing an increasingly important role in the countrys growth trajectory, supported by a growing automotive, auto-component, capital goods and general engineering base.

Capital Goods / Induction Heating Equipment Industry

The Company is engaged in the field of Induction Heating and Induction Hardening Equipment, a specialized segment within the capital goods and machine tools industry. Induction heating technology, on account of its inherent advantages of speed, energy efficiency, minimal environmental impact, precise process control and reduced space requirements, has progressively replaced conventional heating furnaces across user industries such as automotive, auto-components, forging, bearings and general engineering. The Company has, over the years, established itself as a pioneer and market leader in this field in India, having supplied over 1,000 equipments to industry, and continues to design and manufacture Medium Frequency and High Frequency equipment for applications including induction hardening, partial heating, annealing, tempering, softening, brazing, shrink fitting and billet heating.

The industry has also witnessed a technological transition from Motor Generator sets to Solid State Generators based on Thyristors and, more recently, IGBT-based Transistorized Convertors, together with a shift from conventional relay-based controls to PLC and CNC-based equipment controls. The Company, through its erstwhile joint venture with M/s. EMA Electromaschinen Schultz GmbH & Co KG, Germany, and its subsequent joint venture with Gehring Germany and Diato GmbH, Germany for Honing Machines and Honing Stones respectively, has remained aligned with these technological developments.

OPPORTUNITIES AND THREATS

Opportunities

The Company believes that the medium to long-term outlook for the capital goods and induction heating equipment industry remains favorable, supported by:

Revival of industrial capital expenditure and continued growth in the automotive, auto-component and general engineering sectors. Increasing replacement of conventional h eating furnaces with energy-efficient, n o n -polluting induction heating equipment.

Government thrust on domestic manufacturing, energy efficiency and Make in India, which is expected to support demand for indigenously designed and manufactured capital equipment. Export potential for induction heating and hardening equipment, honing machines and related accessories, given the Companys established track record in this field. The Companys long-standing technical expertise, established brand and customer relationships built over more than five decades of operations. The Company continues to evaluate opportunities to strengthen and revive its core business, including through the proposed corporate restructuring referred to under Outlook below.

Threats

The Company operates in a competitive and cyclical industry. Key threats include:

Cyclicality in capital expenditure by user industries, particularly automotive and auto-components, which directly impacts demand for capital equipment. Volatility in prices of key raw materials and components, including steel, copper and power electronics. Competition from domestic and international manufacturers, including low-cost equipment suppliers. Rapid technological change requiring continuous investment in research and development to remain competitive. General macroeconomic and g eopolitical u n certainties that may affect industrial investment sentiment. The Company continues to monitor these risks closely as part of its overall business and restructuring strategy.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

The Company is engaged in one segment only, being Machine Tools for the automotive and other allied industries, which are governed by the same set of risks and returns, in accordance with the guiding principles enunciated under Ind AS 108 on Segment Reporting. Accordingly, no separate segment-wise or product-wise performance disclosure is applicable to the Company.

OUTLOOK

During the year under review, the Company did not generate any revenue from operations. The Company undertook a significant corporate restructuring step by divesting its entire land and building situated at Udyog Nagar, Kanpur, for a total consideration of Rs. 8.00 crore, resulting in a one-time exceptional gain of Rs. 793.27 lacs, and utilized part of the proceeds to repay its outstanding borrowings in full.

Subsequent to the year end, the Company has, on April 15, 2026, filed a Scheme of Merger with the Stock Exchange, providing for the amalgamation of EMA India Limited (Transferor Company) with Dynalog India Limited (Transferee Company), subject to the approval of the relevant regulatory authorities, shareholders, creditors, National Company Law Tribunal (NCLT) and the Securities and Exchange Board of India (SEBI). The management is of the view that, with this revival and restructuring initiatives, the Company is positioned to unlock future taxable profits and, over time, revive its core manufacturing operations. The Companys outlook for the ensuing period will accordingly be closely linked to the progress and eventual outcome of the proposed Scheme of Arrangement.

RISKS AND CONCERNS

While the Company does not, at present, have a formal Enterprise Risk Management policy in place, the management remains conscious of the various risks associated with its business and the industry in which it operates, as set out below.

Operational Risk: The Company did not carry out manufacturing operations during the year under review; resumption of operations remains contingent on the outcome of the proposed restructuring and merger.

Competition Risk: The Company operates in a competitive environment, with competition from both domestic and international manufacturers of induction heating and allied equipment.

Technology Risk: The induction heating equipment industry is subject to continuous technological evolution; the Company will need to continue to invest in research and development to remain competitive.

Regulatory and Approval Risk: The proposed Scheme of Merger with Dynalog India Limited is subject to the approval of regulatory authorities, shareholders, creditors, NCLT and SEBI, and any delay or non-receipt of such approvals may affect the Companys restructuring plans.

Financial Risk: The Companys results for the year were significantly influenced by a one-time exceptional gain on sale of land and building; the underlying operating performance, absent this gain, reflected a loss before exceptional items and tax.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls, commensurate with its size and the nature of its business, designed to ensure the safety and accurate recording of its assets and their proper and authorized utilization. The internal control systems are reviewed periodically to ensure that the Companys assets are safeguarded and that transactions are recorded, executed and reported correctly. The Board and the Audit Committee periodically review the adequacy and effectiveness of the internal control systems and suggest improvements, wherever required.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company did not earn any Revenue from Operations during the financial year 2025-26 (previous year: Nil). Total Income for the year, comprising other income, stood at Rs. 12.62 lacs as against Rs. 0.04 lacs in the previous year.

The Company incurred a loss before exceptional items and tax of Rs. 96.81 lacs during the year, as against a profit before exceptional items and tax of Rs. 63.98 lacs in the previous year. However, during the year, the Company recognized an exceptional gain of Rs. 793.27 lacs on sale of its entire land and building situated at Udyog Nagar, Kanpur, for a total consideration of Rs. 8.00 crore, against a carrying value of Rs. 6.73 lacs. This gain, being a one-time, non-recurring item not arising from the Companys ordinary course of operations, has been disclosed as an Exceptional Item in the Statement of Profit and Loss, in accordance with Ind AS 1 and the General Instructions to Schedule III (Division II) of the Companies Act, 2013.

Consequently, profit before Tax for the year stood at Rs. 696.46 lacs, as against a loss before tax of Rs. 61.77 lacs in the previous year. After providing for current tax of Rs. 78.15 lacs, the Company recorded a Profit after Tax of Rs. 618.31 lacs for the year, as against a loss of Rs. 61.77 lacs in the previous year.

Basic and Diluted Earnings Per Share for the year stood at Rs. 61.52, as against Rs. (6.15) in the previous year.

As a result of the profit for the year, the Companys net worth turned positive at Rs. 443.58 lacs as at March 31, 2026, as against a negative net worth of Rs. 174.70 lacs as at March 31, 2025. Cash and cash equivalents increased significantly to Rs. 422.17 lacs as at March 31, 2026 from Rs. 6.64 lacs in previous year, largely on account of proceeds from the aforesaid sale of land and building. During the year, the Company also repaid, in full, the unsecured short-term borrowing of Rs. 177.00 lacs availed from a director in the previous year, and the Company remained debt-free as at the year end.

Readers are cautioned that the improvement in profitability, net worth and cash position during the year was substantially driven by the one-time exceptional gain on sale of land and building, and should be read together with the Outlook section above, which discusses the Companys proposed Scheme of Merger with Dynalog India Limited.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS Industrial relations with employees remained cordial during the year, with no material disputes or disruptions affecting the Companys operations. The Company continues to encourage a professional and performance-oriented work culture across its technical and support functions.

SCHEME OF ARRANGEMENT / SUBSIDIARY COMPANY

The Company does not have any subsidiary company. As disclosed above, the Company has filed a Scheme of Merger by absorption of EMA India Limited (Transferor Company) with Dynalog India Limited (Transferee Company) with the Stock Exchange on April 15, 2026, which remains subject to the approval of the regulatory authorities, shareholders, creditors, NCLT and SEBI.

CAUTIONARY STATEMENT

This report, describing the Companys activities, projections about future estimates and assumptions with regard to global economic conditions, Government policies and other matters, may contain forward-looking statements based on the information available with the Company. Forward-looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties, and the Company cannot guarantee that such assumptions and expectations are accurate or will be realized. Actual results may differ from those expressed or implied, since the Companys operations are affected by various external and internal factors that are beyond the control of the management. The Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in the future on the basis of subsequent developments, information or events.

On behalf of the Board
For EMA INDIA LIMITED

Sd/-
Akshay Shivaji Adhalrao
Managing Director
DIN: 00314926

Place: Kanpur
Date: August 12, 2026