Fluidomat Ltd Management Discussions

Disclaimer

The Management Discussion and Analysis (MD&A) of Fluidomat Limited has been prepared in accordance with the requirements of Regulation 34(2) (e) read with Schedule V (Part B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended. This section provides an assessment of the Companys operating environment, industry trends, business performance, financial performance, key risks, opportunities and outlook. Certain statements contained in this MD&A may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements relate to the Companys future business prospects, operational and financial performance, growth opportunities, industry y developments and other related matters. Forward-looking statements are based on managements current expectations, assumptions and estimates regarding future events and are therefore subject to various risks and uncertainties. Such statements may be identified by words such as expects, believes, anticipates, plans, intends, estimates, projects, seeks, may, will and similar expressions.

Actual results may differ materially from those expressed or implied in these statements due to a range of factors including, but not limited to, changes in macroeconomic conditions, industrial demand, infrastructure and capital expenditure cycles, regulatory developments, competitive pressures, fluctuations in raw material and energy prices, supply chain disruptions and other factors beyond the Companys control. Readers are advised to exercise due caution while relying on forward-looking statements. The Company does not undertake any obligation to publicly revise or update such statements to reflect subsequent events or circumstances, except as required under applicable laws.

Fluidomat Limited is an India-based, publicly listed engineering company with over five decades of experience in the design and manufacture of fluid couplings and hydrodynamic power transmission solutions. Established in 1971 and headquartered in Dewas, Madhya Pradesh, the Company serves a diverse set of core industries including power, cement, mining, steel, fertilisers and material handling. Its products play a critical role in ensuring smooth torque transmission, protecting equipment from mechanical stress and improving overall operational efficiency in demanding industrial environments.

Over the years, Fluidomat has developed strong in-house capabilities across design, casting, machining and testing, enabling it to deliver application-specific solutions aligned with diverse operating conditions. The Companys approach is anchored in engineering precision, product consistency and long-standing customer relationships. With a growing presence in domestic and select international markets, Fluidomat continues to strengthen its position as a focused player within the industrial power transmission segment.

A Legacy of More Than Five Decades

This years Annual Report, titled A Legacy of More Than Five Decades, reflects Fluidomat Limiteds journey of sustained presence within a specialised industrial segment built on engineering discipline, product reliability and long-standing customer relationships. The theme highlights the Companys continued relevance across industrial and economic cycles while reinforcing its focus on operational consistency, performance and long-term value creation across the sectors it serves.

O P E R AT I N G L A N D S C A P E

The Companys operating environment during the year remained influenced by evolving global economic conditions, domestic growth momentum and developments across core industrial sectors linked to infrastructure, manufacturing and industrial activity.

Global Economic and Industrial Landscape 1

The global economy entered 2026 on a relatively firmer footing, supported by continued momentum in technology-related investments, accommodative financial conditions and fiscal support across select economies. Prior to the outbreak of the geopolitical tensions in the Middle East, global growth expectations had improved modestly, reflecting stronger-than-anticipated activity in key economies and resilient global trade flows led by technology-related exports. However, the conflict has materially altered the macroeconomic landscape by disrupting commodity markets, intensifying geopolitical uncertainty and weakening confidence across financial markets. The IMF now projects global growth at 3.0% in the calendar year (CY) 2026, lower than the recent pace of around 3.4% recorded during CY 2024 and CY 2025, while global headline inflation is expected to increase to 4.7% in CY 2026.

Here is the data from the chart organized into a table format:

Year	Global GDP Growth Projection (%)
2027	3.4%
2026	3.0%
2025	3.5%

The conflict has amplified existing vulnerabilities within the global economy through multiple transmission channels. Higher energy prices have emerged as a significant negative supply shock, increasing input costs across energy-intensive sectors, disrupting supply chains and exerting upward pressure on inflation expectations. At the same time, elevated geopolitical tensions, persistent policy uncertainty and evolving trade realignments continue to contribute to a more fragmented and multipolar global environment.

Industrial and Manufacturing Environment

Global industrial and manufacturing activity remained supported by strong technology-led investments, infrastructure spending and continued expansion in digital and AI-related supply chains. Trade in semiconductors, electronics and technology-linked products remained resilient, particularly across Asian economies, even as broader manufacturing conditions continued to face pressure from higher input costs, supply-chain realignments and volatile commodity markets. However, the escalation in geopolitical tensions and disruptions in energy markets have increased cost pressures across manufacturing sectors globally, particularly in energy-intensive industries, while tighter financial conditions and rising uncertainty continue to weigh on investment sentiment and industrial activity.

Outlook

The near-term global outlook remains highly sensitive to the duration, intensity and geographic spread of geopolitical conflicts, particularly their implications for energy markets, inflation expectations and financial conditions. According to the IMFs reference forecast, disruptions are expected to gradually ease through mid-2026, supporting a modest stabilisation in global activity.

Nevertheless, downside risks continue to dominate the outlook, with the possibility of prolonged supply disruptions, persistent inflationary pressures and tighter global financial conditions posing material risks to growth. Over the medium term, productivity gains arising from artificial intelligence, continued investments in technology and supply-chain diversification are expected to remain important structural drivers supporting global industrial and economic activity.

Implications for the Indian Economy

For India, the evolving global environment presents both external risks and structural opportunities. While volatility in commodity prices, energy markets and global trade flows may continue to influence input costs, inflation trends and industrial sentiment, ongoing supply-chain diversification and the gradual reconfiguration of global manufacturing networks continue to support Indias positioning within the global industrial ecosystem. Continued investments across infrastructure, manufacturing, mining, power and logistics are also expected to sustain domestic industrial activity, particularly across sectors linked to capital goods, engineering and industrial equipment.

STATE OF THE INDIAN ECONOMY 2

India remained one of the fastest-growing major economies during the financial year (FY) 2025-26 despite heightened geopolitical tensions, volatility in energy prices and continued uncertainty across global markets.

Economic activity during the year remained supported by domestic consumption, investment activity, government capital expenditure and continued momentum across infrastructure and manufacturing sectors. As per the Second Advance Estimates based on the revised GDP series (base year 2022-23), Indias real GDP growth for FY 2025-26 is estimated at 7.7%, higher than 7.1% in FY 2024-25. Real Gross Value Added (GVA) growth is estimated at 7.7% during the year. Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) grew by 7.7% and 7.1%, respectively, highlighting continued strength in domestic demand and investment activity.

India\u2019s GDP Growth Trend (%)
FY 2026-27 (P)	6.6%
FY 2025-26	7.7%
FY 2024-25	7.1%

P - Projected I Source: MOSPI,RBI

Industrial activity during the year remained supported by infrastructure spending, manufacturing activity and investments across core sectors. Industrial growth improved to 9.5% during FY 2025-26, while services sector growth stood at 8.7%. Manufacturing activity remained resilient during the year, supported by rising capacity utilisation, improving business sentiment and healthy balance sheets across financial institutions and corporates. High-frequency indicators continued to reflect steady economic activity. GST E-way bills increased by 17.2% during Q4:FY 2025-26, while gross GST revenues rose by 7.1%. Steel consumption grew by 12.8% and cement production increased by 9.3% during February 2026, reflecting continued infrastructure and industrial activity across the economy.

Government spending on infrastructure continued to remain a key growth driver during the year.

The Central Governments capital expenditure for FY 2026-27 is budgeted to grow by 11.5%, while effective capital expenditure, including grants-in-aid for creation of capital assets, is budgeted to increase by 22.1%. Continued investments across transportation, logistics, mining, power and industrial infrastructure remained supportive of economic activity across core sectors.

Manufacturing activity strengthened during FY2025-26, supported by broad-based expansion across industry groups and steady industrial credit growth. Inflation remained well contained during the year, with headline inflation moderating to 2.1% from 4.6% in the previous year, largely driven by muted food price pressures and a favourable base effect. Inflation excluding food, fuel and precious metals also remained benign, supported by GST rationalisation, soft global commodity prices and broadly muted input-cost pressures. Indias external sector remained resilient during FY 2025-26 despite heightened global uncertainty and geopolitical tensions. While net foreign portfolio investment and external commercial borrowings moderated, net FDI inflows increased to US$7.7 billion from US$1.0 billion in the previous year. Gross FDI inflows increased to US$94.5 billion from US$80.6 billion, while net inward FDI rose to US$40.9 billion from US$29.1 billion. Foreign exchange reserves stood at US$691.1 billion at end-March 2026, providing a strong external buffer, with import cover of about 11 months and external debt cover of 90.3%.

Outlook

Indias economic outlook continues to remain supported by domestic demand, infrastructure investments, manufacturing activity and policy-led capital expenditure. The Reserve Bank of India has projected real GDP growth at 6.6% for FY 2026-27, with continued support expected from private consumption, investment activity and infrastructure spending. At the same time, geopolitical developments, volatility in energy prices, global trade conditions and supply-chain disruptions may continue to influence near-term economic conditions. Nevertheless, continued investments across infrastructure, manufacturing and industrial sectors are expected to support medium-term economic growth and industrial activity across the economy.

I N D U S T R Y S T R U C T U R E A N D D E V E L O P M E N T S

Fluidomat is engaged in manufacturing and selling of the hi-tech product, Fluid Couplings, used across sectors such as thermal power, steel, metals, cement, paper, chemicals, fertilisers, coal and ore mining, and port handling facilities. These products play an important role in ensuring smooth torque transmission, protecting equipment and supporting continuity across industrial operations.

Demand for fluid couplings remains linked to industrial activity, infrastructure spending and capital expenditure across core sectors. In addition to new projects, the industry also benefits from replacement demand and maintenance requirements across existing industrial infrastructure. Activity across sectors such as power, mining, cement, steel and material handling remained relatively stable during the year, supported by infrastructure execution, manufacturing activity and continued investments across industrial sectors.

Industry Trends
01	02	03	04	05
Focus on Operational Efficiency	Higher Emphasis on Equipment Reliability	Steady Replacement and Maintenance Demand	Increasing Process Optimisation	Continued Industrial and Infrastructure Investments
Industries are increasingly focusing on improving productivity, reducing downtime and maintaining operational continuity across manufacturing and process operations.	Industrial customers continue to prioritise dependable and application-specific transmission systems capable of operating under demanding industrial conditions.	Alongside fresh investments, maintenance requirements and replacement demand across installed industrial infrastructure continue to support industry activity.	Industrial operations are becoming more efficiency-driven, resulting in greater focus on lifecycle performance, lower maintenance requirements and operational safety.	Investments across sectors such as power, mining, metals, cement and material handling continue to support demand for industrial equipment and engineering solutions.

The industry remains specialised and engineering driven. Product reliability, technical capability and customer relationships continue to remain important differentiators. Companies with established manufacturing capabilities, application expertise and long-standing industry presence continue to maintain a competitive position within the market.

Outlook

The industry outlook remains linked to infrastructure investments, industrial production and capital expenditure across sectors such as power, steel, cement, mining and material handling. Continued focus on infrastructure creation, manufacturing activity and operational efficiency is expected to support demand for industrial transmission and engineering solutions over the medium-term. Input cost volatility and global uncertainties may continue to influence near-term industry conditions. However, long-term demand drivers across industrial and infrastructure sectors continue to remain supportive.

PERFORMANCE REVIEW

FY 2025-26 was marked by a clear difference between the first nine months and the final quarter.

Sales volumes were lower earlier in the year, while Q4 recorded a strong improvement. The Company reported its highest-ever quarterly net sales of 29.24 Crore, registering a 39.57% year-on-year growth. The improvement in Q4 supported the Companys profitability for the year and brought full-year net profitability into growth territory. Healthy operational cash flows also enabled the Company to maintain its debt-free balance sheet.

During the year, the Company entered into a Business Development Agreement with S-Ancial Technologies Private Limited (S-Ancial) to support long-term business expansion and revenue growth. The Company also signed a Strategic Distributor Agreement with Oceanwings to expand its product distribution network and market reach in Saudi Arabia. The country has a wide industrial base across petrochemical, mining and power sectors, with plans to further expand its industrial base. The market is presently catered only by European companies, providing opportunities for Fluidomats fluid couplings, particularly Scoop Control Variable Speed Couplings, which are hi-tech and value-added products. The agreement supports the Companys objective of expanding its presence across large global and emerging industrial markets. During the year, the Company executed a sale deed for the disposal of freehold unused agricultural land. This converts an unproductive asset into liquid capital, which will support the Companys strategic expansion programme.

Strengthening Manufacturing Capability

The Company has announced a modernisation and expansion programme, to be financed through internal accruals. The programme includes major process changes and modernisation of the aluminium and CI foundries; installation of modern CNC machines to enhance production, enable quick deliveries and improve quality; installation of testing beds for high-KW-rating couplings and a modern laboratory for material testing of foundries; and 86,988 sq. ft. of civil construction.

The proposed expansion is expected to enhance production capacity, improve deliveries and create a modern manufacturing facility with automation. It will also support the Companys plans to enter new geographical markets and attract foreign buyers, in line with its long-term sales growth.

Operational Performance

Despite geopolitical realignments, tariff-related changes and supply chain disruptions, the Company recorded total revenue of 7,661.17 Lakh in FY 2025-26, compared with 7,564.23 Lakh in FY 2024-25. EBITDA stood at 2,806.72 Lakh, while Net Profit was 2,222.35 Lakh. EPS stood at 40.72 for the year. Healthy operational cash flows enabled the Company to maintain its debt-free balance sheet, thereby limiting its exposure to financing costs. The Company booked orders of 7,115.01 Lakh during FY 2025-26, compared with 5,815.76 Lakh in FY 2024-25, registering a 22.34% increase. Order inflows remained healthy across key sectors, supporting the Companys business outlook.

The performance reflects the execution of planned initiatives, demand across key industrial sectors and continued alignment across design, engineering and manufacturing functions.

The Company continues to invest in upgrading its manufacturing facilities and machinery with advanced technologies. These investments are aimed at preparing the Company for anticipated demand while improving operational efficiency and lead times.

Discussion on Financial Performance

Particulars	As at March 31, 2026	As at March 31, 2025	Growth (%)
Total Income (in Lakh)	7,661.17	7,564.23	1.28
EBITDA (in Lakh)	2,806.72	3,074.22	(8.70)
Profit Before Tax (PBT) (in Lakh)	2,686.63	2,980.52	(9.86)
Profit After Tax (PAT) (in Lakh)	2,006.18	2,222.35	(9.73)
Earnings Per Share (EPS) ( )	40.72	45.10	(9.71)

Key Financial Ratios

For details on the key financial ratios and the explanations thereof, please refer to page 107 of the Financial Statements forming part of this Annual Report.

COMPANYS OUTLOOK

Fluidomat enters FY 2026-27 with a debt-free balance sheet, strong internal accruals and an ongoing manufacturing modernisation programme. The Company has a substantial market share in Indias industrial fluid coupling market and serves a wide range of industries. This provides a degree of balance in the business, as demand in one sector can help offset weaker demand in another.

The Companys constant-speed and variable-speed couplings are closely linked to Indias capital expenditure cycle. Infrastructure spending and new projects can support demand for new equipment, while replacement and refurbishment of existing industrial equipment provide a continuing source of demand. Applications across conveyors, industrial fans, crushers and material handling systems remain relevant to this opportunity.

The Company is investing its internal accruals in modernising its manufacturing capabilities. The programme includes upgrades to the aluminium and CI foundries, modern CNC machines, testing beds for high-KW-rating couplings and a modern laboratory for material testing, along with 86,988 sq. ft. of civil construction. These investments are intended to improve production capacity, quality and delivery timelines and create a modern manufacturing facility with automation. The Company also sees an opportunity to expand its geographical presence. The Strategic Distributor Agreement with Oceanwings provides access to the Saudi Arabian market, where the petrochemical, mining and power sectors have a wide industrial base and plans for further expansion. The Company sees opportunities for its hi-tech and value-added Scoop Control Variable Speed Couplings in this market. The modernisation programme is also intended to support entry into new geographical markets and attract foreign buyers.

Opportunities Broad Industrial Presence	Infrastructure and Capital Expenditure	Replacement and Refurbishment
The Company serves almost all major industrial sectors. This provides a business cushion, as a slowdown in one sector may be partly offset by improvement in another.	The Indian Government\u2019s focus on infrastructure growth can create further opportunities for the capital goods sector and support demand for industrial fluid couplings.	The installed base of industrial equipment provides continuing demand for replacement and refurbishment, alongside requirements arising from new projects.
Steel, Cement and Material Handling	International Markets
Capacity additions in steel and cement, together with investments in ports and material handling, can create opportunities for high- capacity fluid coupling applications.	The Saudi Arabia distributorship and the modernisation of the Company\u2019s manufacturing facilities provide opportunities to expand into new geographical markets and attract international industrial buyers.

Threats

The Company remains exposed to the normal factors that affect industrial businesses. Demand and supply conditions, raw material prices, competitor strategies, changes in government regulations and tax regimes, and economic developments in India and globally can influence business performance.

Raw material prices, particularly for base metals, specialised aluminium alloys and steel castings, can affect foundry costs. Delays in customer clearances or environmental approvals for downstream infrastructure projects can also postpone final deployment orders and may result in temporary inventory accumulation at the factory.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Human resources continued to support the Companys manufacturing operations, engineering capabilities and business continuity during FY 2025-26. The Company remained focused on maintaining a stable workforce aligned with its operational requirements, product quality and execution across functions. Its workforce comprises technical, operational and managerial personnel with experience across manufacturing and industrial operations.

During the year, the Company continued to focus on workplace safety, employee engagement and smooth coordination across manufacturing and business functions. The work environment remained focused on collaboration, accountability and operational efficiency, supporting the Companys long-term organisational stability.

Particulars	FY 2025-26	FY 2025-26
Total Employee Headcount	267	254
Attrition Rate*	5%	4%

*Includes retirement, death and resignation.

The Company also evaluated and adapted its personnel frameworks in line with the New Labour Codes notified in late 2025. This included making an additional gratuity liability provision of 65.56 Lakh to support employee welfare requirements and compliance.

Environment, Health and Safety

Safety remains a priority across the Companys manufacturing operations. During FY 2025-26, the Company continued to focus on maintaining zero fatal accidents or severe industrial injuries across its machine assembly and foundry operations.

The Company strengthened safety practices through regular training, emergency preparedness and controls for high-risk activities. Key initiatives during the year included:

Emergency Preparedness	Personal Protective Equipment
Quarterly safety committee meetings and emergency mock drills covering fire, chemical and oil spills and site-wide evacuation.	PPE requirements were maintained across manufacturing areas for employees and visitors.
High-risk Activities	Employee Health
A Work Permit System was followed for activities including working at heights, confined spaces and structural civil works.	Annual employee health assessments and targeted nutrition programmes were conducted for personnel working in the foundry and paint-shop areas.

The Company also engaged accredited third-party safety consultants for safety awareness and technical skill development programmes. Regular on-the-job training, safety drills and instructional film screenings were conducted for contract operators and technical personnel. Safety notices, hazardous chemical warnings and safe lifting instructions were displayed across manufacturing areas. The Company maintained 100% compliance with applicable statutory EHS requirements under the Factories Act, Pollution Control Board and OSHA frameworks.

100%

Compliance with applicable statutory EHS requirements

The manufacturing facilities operate under ISO 14001:2015 Environmental Management Systems and ISO 45001:2018 Occupational Health and Safety Management Systems. The Company uses non-polluting and low-emission casting technologies and monitors ambient air quality, industrial noise, wastewater discharge and land runoff around its manufacturing facilities.

Measures to improve wastewater reuse helped reduce freshwater consumption. Rainwater harvesting systems were also installed at three locations at the plant.

Industrial Relations

Industrial relations remained cordial and stable during the year. The Company continued to maintain constructive engagement with employees across levels, supported by transparent communication and collaborative working practices. There were no major industrial disruptions affecting the operations of the Company during the year.

RISKS AND CONCERNS

The Companys business remains linked to industrial activity and capital expenditure across sectors such as power, steel, cement, mining, metals and material handling. As a result, demand conditions may be influenced by project execution cycles, industrial investments and broader economic conditions across these sectors. In addition, movements in raw material prices, supply-chain disruptions, competitive pressures and volatility in commodity and energy markets may continue to influence the operating environment.

The Company has established processes for timely identification and assessment of risks across business and operational functions, with mitigation measures being implemented on a continuous basis. Financial risks and internal controls are overseen by the Audit Committee, while key business risks identified across functions are regularly reviewed by the management to support operational stability and business continuity. The Company is presently not required to constitute a Risk Management Committee.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal control systems and procedures to ensure effective conduct of business operations and to support the requirements of operational efficiency and business growth. These systems are designed to ensure orderly conduct of business, reliability of financial and operational reporting, safeguarding of assets and compliance with applicable policies, procedures, statutory requirements and regulations. Transactions are recorded and reported in accordance with generally accepted accounting principles and applicable accounting standards.

The Internal Audit function is carried out by an independent firm of auditors, which periodically reviews the adequacy and effectiveness of the Internal Control framework across key business processes. The observations and recommendations arising from such reviews are examined by the management and appropriate corrective actions, wherever required, are undertaken in a timely manner. The Internal Auditors report directly to the Chairman of the Audit Committee, thereby ensuring independence and objectivity in the audit process.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of Fluidomat Limited have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, together with other applicable provisions of the Act and relevant regulatory requirements.

The accounting policies adopted in the preparation of the financial statements have been applied consistently and are in line with those followed in the previous financial year, except where any revision or amendment to accounting standards required a change in accounting treatment.

To the best of the Companys knowledge, there were no instances during the year where the accounting treatment differed from that prescribed under the applicable Indian Accounting Standards. Accordingly, no explanation is required to be furnished under Regulation 34(2)(e) read with Schedule V (Part B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Segment Reporting and Finance performance of the Product

The company has only one segment i.e., manufacturing of fluid couplings and the financial performance of the product is being incorporated in the Directors Report section.