Gala Precision Engineering Ltd Management Discussions

Global Economic Overview

The global economy entered FY 2025-26 with a mixed operating environment marked by moderate growth, persistent geopolitical uncertainty, changing trade patterns, and continued investment in energy transition and industrial infrastructure.

According to the International Monetary Fund?s World Economic Outlook, April 2026, global growth is projected to moderate to 3.1% in 2026 and 3.2% in 2027, after a period of elevated trade barriers, policy uncertainty and renewed geopolitical risks. The IMF also noted that global headline inflation is expected to rise modestly in 2026 before resuming its decline in 2027.

The World Bank?s Global Economic Prospects, January 2026 estimated global growth at 2.7% for 2025 and 2026, indicating that the global economy is settling into a relatively low-growth phase. The World Bank highlighted risks from policy uncertainty, trade policy shifts, geopolitical tensions, persistent inflation and climate-related disruptions.

Global trade showed resilience during 2025. The World Trade Organization reported that world merchandise trade volume grew by 4.6% in 2025, supported partly by strong demand for Al-related goods and technology-linked investment. Flowever, the WTO also indicated that trade conditions remain exposed to risks from tariffs, transport disruptions, fuel costs and geopolitical tensions.

Energy transition continued to remain a major structural theme for global industry. The International Energy Agency?s World Energy Outlook 2025 stated that electricity is playing a growing role in meeting energy demand across all scenarios, with rising shares of generation from renewable sources. The IEA also projected that electricity demand could rise materially by 2035, supported by cooling demand, electrification, data centres and Al-related power needs.

For manufacturing and precision engineering companies, the global environment continues to present both opportunities and challenges. While demand from traditional industrial sectors remains linked to global growth and capital expenditure cycles, long-term opportunities are emerging from renewable energy, grid infrastructure, railways, electrification, hydrogen, data centers and supply chain diversification.

Indian Economic Overview

India continued to remain one of the stronger large economies during FY 2025-26, supported by domestic demand, manufacturing activity, infrastructure investment, services growth and policy-led focus on industrial development. The countrys macroeconomic environment remained relatively resilient despite global uncertainties around trade, geopolitics, commodity prices and financial market volatility.

As per the First Advance Estimates of National Income released by MoSPI, Indias real GDP is estimated to grow by 7.4% in FY 2025-26, compared with 6.5% in FY 2024-25. Nominal GDP is estimated to grow by 8.0% in FY 2025-26. The estimate also indicates that real GVA growth is supported by strong momentum in services, with manufacturing remaining ;; an important contributor to the economy.

Subsequent official communication on revised GDP estimates stated that Indias real annual GDP growth for FY 2025-26 is estimated at 7.6%, higher than 7.1% in FY 2024-25, while nominal GDP at current prices is projected to grow by 8.6% during FY 202526. The same release noted that manufacturing recorded double-digit growth in FY 2023-24 and FY 2025-26, reflecting its role in India?s resilient economic performance.

Industrial activity also remained in expansion mode. According to MoSPIs Index of Industrial Production release, Indias IIP grew by 4.1% year-on-year in March 2026, with manufacturing growing by 4.3% during the month. In February 2026, IIP growth was 5.2%, supported by 6.0% growth in manufacturing.

High-frequency manufacturing indicators also showed continued expansion. The HSBC India Manufacturing

PMI, compiled by S&P Global, stood at 54.7 in April 2026, compared with 53.9 in March 2026. A reading above 50 indicates expansion. The report noted that export orders remained a positive area, although input cost pressures had increased.

Indias economic momentum was also supported by continued policy emphasis on infrastructure, capital expenditure and manufacturing competitiveness. The Economic Survey 2025-26 highlighted that the Centre?s effective capital expenditure to GDP had increased from a pre-pandemic average of 2.7% to 4.0% in FY25, reflecting the government?s sustained focus on asset creation and infrastructure-led growth.

The energy transition remained an important structural theme for India. The Economic Survey 2025-26 stated that renewable energy constituted around 49.83% of India?s total power generation capacity as of November 2025, and noted Indias strong position globally in renewable energy and installed solar capacity.

Indias engineering exports also remained relevant for precision component manufacturers. EEPC India reported that engineering exports reached an all-time high of USD 116.7 billion in FY 2024-25. For April 2025, the first month of FY 2025-26, engineering exports stood at USD 9.51 billion, registering 11.28% year-on-year growth compared with April 2024.

Industry Structure and Developments

Indias precision engineering, springs and fastening solutions industry forms part of the broader engineering and capital goods ecosystem. The industry serves end-user sectors such as electrical equipment, renewable energy, railways, industrial machinery, mobility, off-highway equipment, infrastructure and exports.

The engineering and capital goods sector continues to be supported by infrastructure development, industrial expansion and rising exports. IBEF states that the electrical equipment market is expected to grow by nearly US$ 33 billion between 2021 and 2025, supported by demand from power, manufacturing and infrastructure. It also states that Indias construction equipment market was valued at Rs.69,046 crore / US$ 7.91 billion in 2025 and is projected to reach Rs.1,02,827 crore / US$ 11.78 billion by 2030.

Indias power and renewable energy sectors continue to provide long-term demand support for engineering components. As per Economic Survey 2025-26 highlights, Indias installed power capacity rose 11.6% year-on-year to 509.74 GW as ;;;;; of November 2025, while renewable energy constituted around 49.83% of total power generation capacity. During FY 2025-26 up to 31 December 2025, India added 38.61 GW of renewable energy capacity.

Railways also remain an important demand area. For FY 2025-26, capital expenditure of 72,65,200 crore was earmarked for Indian Railways, including 757,693 crore for rolling stock and 71,16,514 crore for safety-related initiatives. ngineering exports provide another important industry driver. EEPC India reported that Indian engineering exports reached an all-time high of US$ 116.7 billion in FY 2024-25 and stood at US$ 9.51 billion in April 2025, registering 11.28% year-on-year growth.

Key End-user Industry Outlook

Gala Precision Engineering Limited serves a broad set of end-user industries where precision, durability, load retention, vibration resistance and quality consistency are important. The Companys key end-user industries include renewable energy, electrical equipment, railways, mobility, off-highway equipment, hydrogen, industrial applications and exports.

4.1 Renewable Energy and Energy Transition

Indias renewable energy sector continued to expand during FY 2025-26, supported by policy focus, capacity addition and the countrys long-term energy transition goals. As per the Ministry of New and Renewable Energy, India added 55.3 GW of nonfossil capacity during FY 2025-26, and total installed non-fossil fuel capacity stood at 283.46 GW as on 31 March 2026. The Ministry also stated that in July 2025, renewables met 51.5% of India?s total electricity demand of 203 GW, which was the highest-ever renewable energy share in electricity generation. India achieved its highest-ever wind capacity addition of 6.05 GW in FY 2025-26, taking cumulative installed wind capacity beyond 56 GW. FY26 wind additions were nearly 46% higher than FY25, showing renewed momentum in the sector. The medium-term wind outlook indicates potential annual additions of around 7-10 GW, supported by Indias renewable targets, hybrid projects, C&I demand and localization. Reuters reported that Indias wind market is expected to add 57 GW by 2032, implying an average of around 8 GW per year. Relevant wind OEM / equipment ecosystem includes Suzlon, Inox Wind, Siemens Gamesa / successor Indian platform, Vestas, Envision, GE Vernova, Nordex, Senvion India, Adani Wind and Enercon / Wind World India

Earlier, MNRE had also reported that India added 44.5 GW of renewable energy capacity in 2025 up to November 2025, with solar installed capacity reaching 132.85 GW and wind reaching 54 GW.

For Gala, the renewable energy sector remains relevant because wind, solar, grid and related power infrastructure require reliable mechanical components for load-bearing, vibration- prone and safety-critical applications. The Companys disc springs, high tensile fasteners, studs, nuts, bolts and vibration-resistant fastening solutions are aligned with such application requirements.

4.2 Electrical Equipment and Power Infrastructure

Indias power and electrical equipment sector is supported by rising electricity demand, grid expansion, power transmission and distribution investment, renewable integration and industrial electrification. IBEF states that India is the third-largest producer and consumer of electricity worldwide, with installed power capacity of 505 GW as of October 2025.

The electrical equipment industry also continues to see longterm demand from power, manufacturing and infrastructure. IBEF states that the Indian electrical equipment market is expected to see incremental growth of 76,44,533 crore / US$ 76.24 billion at a 14.3% cagr from fy24 to fy28.

lEAs Electricity 2025 report stated that Indias electricity demand grew 5.8% year-on-year in 2024, following 8.3% growth in 2023, and forecast Indias electricity demand to grow at an average annual rate of 6.3% from 2025 to 2027, supported by rapid economic expansion and increasing electrification.

For Gala, this sector is important because transformers, switchgear, power distribution equipment, circuit breakers, rectifier systems and related electrical assemblies require precision components that can perform under thermal, mechanical and vibration stress. Galas disc springs, fasteners, studs, nuts, bolts, washers and precision spring products are relevant to these applications.

4.3 Railways and Metro Infrastructure

Railways continue to be a major infrastructure priority in India. For FY 2025-26, the Ministry of Railways stated that total capital expenditure of 72,65,200 crore had been earmarked for Railways. This included 757,693 crore for rolling stock and 71,16,514 crore for safety-related initiatives such as track renewal, signalling upgrades, telecom improvements, bridges and railway crossings.

The Economic Survey 2025-26 highlights stated that Indias rail network reached 69,439 route km as of March 2025, with a targeted addition of 3,500 km in FY26. It also stated that 99.1% railway electrification had been achieved by October 2025.

For Gala, railways represent an important application area because railway systems require components that can withstand vibration, fatigue, repeated loading and safety-critical service conditions. Galas springs, disc springs, fasteners, washers and engineered fastening components are relevant for applications such as track fastening systems, couplers, traction motors, braking systems, control arms and other mechanical assemblies.

4.4 Off-highway, Construction and Mining Equipment

The off-highway and construction equipment sector is linked to infrastructure creation, mining, road development and industrial activity. IBEF states that Indias construction equipment market was valued at 769,046 crore / US$ 7.91 billion in 2025 and is projected to reach 71,02,827 crore / US$ 11.78 billion by 2030.

Recent industry reporting based on ICEMA data stated that Indias construction equipment sales reached 1,36,995 units in FY26, with exports rising 32% to 17,394 units, although domestic demand was affected by slower infrastructure execution and project award delays.

For Gala, off-highway and construction equipment applications are relevant because such equipment operates in high-load, high- vibration and fatigue-prone conditions. The Companys high tensile fasteners, studs, nuts, bolts, disc springs and Gallock vibration- resistant washers are aligned with applications in excavators, loaders, mining equipment, engines, frames, hydraulic systems and heavy-duty assemblies.

4.5 Mobility, Commercial Vehicles and Electric Vehicles

Indias mobility sector is undergoing structural change, led by electrification, fuel-efficiency requirements, safety ;;;;;;;;; regulations and increased localization of components. NITI Aayogs report on electric vehicles states that EV sales, in India increased from around 50,000 units in 2016 to 2.08 million units in 2024, while India aims to reach 30% EV share in total vehicle sales by 2030.

Government data released through PIB stated that in FY 202425, 11,49,334 electric two-wheelers were sold, reflecting 21% growth over FY 2023-24, while electric three-wheeler L5 sales reached 1,59,235 units, reflecting 57% growth over the previous year.

For Gala, mobility and EV applications are relevant because vehicle systems require fastening and spring solutions for vibration, fatigue, thermal cycling and load-bearing conditions. Potential application areas include battery pack assemblies, braking systems, seating systems, chassis and frame assemblies, powertrain systems, commercial vehicles and power electronics.

4.6 Green Hydrogen and Electrolyzers

Green hydrogen is emerging as a long-term industrial opportunity in Indias energy transition strategy. The Government of India is implementing the National Green Hydrogen Mission with the objective of making India a global hub for the production, usage and export of green hydrogen and its derivatives. PIB stated that Indias green hydrogen production capacity is likely to reach 5 million metric tonnes per annum by 2030.

As of May 2025, under the mission, 19 companies had been allocated cumulative annual green hydrogen production I capacity of 862,000 tonnes, and 15 firms had been awarded 3,000 MW annual electrolyzer manufacturing capacity.

PIB also reported that India had commissioned 8,000 tonnes per annum of green hydrogen production capacity up to February 2026.

For Gala, this is an important emerging application area. Electrolyzer stacks and related assemblies require reliable compression, fastening and load-retention systems. The Companys disc springs, studs, nuts, bolts and high tensile fasteners are relevant for stack compression frames, end-plate assemblies and other mechanical fastening applications in electrolyzer systems.

Opportunities and Threats

Gala Precision Engineering Limited operates in a business environment shaped by industrial growth, infrastructure development, energy transition, export opportunities and evolving customer expectations for precision-engineered components. At the same time, the Company remains exposed to macroeconomic, raw material, currency, geopolitical, competitive and operational risks.

Opportunities

* Move from component supply to application-specific solutions

Opportunity to offer customized springs, fasteners, washers and product combinations for customer-specific applications. Opportunity to offer kitting solutions, engineered assemblies, smart bolts and other value-added fastening solutions.

* Increase wallet share from existing customers

Opportunity to cross-sell disc springs, coil springs, high tensile fasteners, studs, nuts, bolts and Gallock washers to existing OEM and Tier-1 customers.

Scale Special Fastening Solutions through Chennai facility ;;;;;;;;

The Chennai plant provides an opportunity to grow high tensile fasteners, studs, bolts, nuts and other special fastening products.

* Strengthen export market presence

Opportunity to deepen business in Europe, USA and APAC by positioning Gala as a reliable, quality-certified Indian precision engineering supplier.

* Capture emerging technology applications

Opportunity to serve growing applications in hydrogen electrolyzers, EVs, renewable energy, high-speed rail and data-centre power infrastructure.

* Use quality, certifications and ESG as key differentiators

Opportunity to compete on reliability, process capability, testing, documentation, customer audit readiness, sustainability practices, responsible manufacturing, workplace safety and ESG-aligned customer expectations.

* Strengthening structured business development

Opportunity to use exhibitions, CRM, digital marketing, LinkedIn outreach and sector-wise lead generation to improve customer acquisition.

Threats and Challenges

* Global Economic and Geopolitical Uncertainty

The IMFs World Economic Outlook, April 2026, stated that downside risks dominate the global outlook, including broader conflict, geopolitical fragmentation, renewed trade tensions, elevated debt and financial market vulnerability.

* Trade Policy and Tariff Risk

The WTO has highlighted that global trade remains exposed to trade policy uncertainty, tariffs, conflict-related disruptions and higher fuel costs.

* Raw Material Price Volatility

Galas products depend on steel, alloy steel and other engineered materials. Any sharp movement in raw material prices can affect input costs, working capital and margins.

* Currency Fluctuation

As a company serving export markets and importing certain inputs or equipment, Gala remains exposed to foreign exchange movement.

* Competition from Domestic and International Players

The springs and fasteners industry includes both domestic and global competitors. Customers may compare suppliers on cost, quality, delivery, technical capability, approvals and track record.

* Quality and Product Performance Risk

Galas products are used in applications where failure can affect safety, equipment performance and customer operations.

* Technology and Application Change

End-user industries such as hydrogen, EVs, railways, renewable energy and electrical equipment are evolving. Component requirements may change over the long term, over a 10-15-year horizon, due to new designs, materials, standards and customer expectations.

Gala?s Mitigation Approach

The Company seeks to manage these opportunities and threats through:

1. Diversified exposure across multiple industries.

2. Diversified products within springs and fasteners family.

3. Balanced focus on domestic and export markets.

4. Continued development of new products and applications.

5. New customers are being added across the globe.

6. Focus on quality, testing and customer approvals.

7. Strengthening of application engineering capability.

8. Capacity expansion through Wada and Chennai operations.

9. Cost control and productivity improvement.

10. Vendor development and diversification.

11. Customer relationship management and deeper engagement with OEMs.

12. Focus on value-added products and safety-critical applications.

Business Overview

Gala Precision Engineering Limited is engaged in the design and manufacture of precision engineering components, with a product portfolio covering high tensile fasteners, disc and strip springs, coil and spiral springs, and wedge-lock washers. The Company serves customers across key sectors such as renewable energy, industrial applications and mobility to OEMs, Tier-1 suppliers and channel partners.

The Company operates in two broad business areas: Springs Technology and Special Fastening Solutions. Springs Technology includes products such as disc springs, strip springs, coil springs, spiral springs and wedge-lock washers, while Special Fastening Solutions include high tensile fasteners such as studs, anchor bolts, cross bolts, hex bolts and nuts. We are manufacturer of precision components with an extensive portfolio of 800+ SKUs and operations spanning more than 30 years.

Our products are used in applications where reliability, precision, load management, vibration resistance and consistent performance are important. Gala has 175+ customers, exports to 25+ countries, and is certified under ISO 9001:2015, ISO 14001:2015, ISO 45001:2018 and IATF 16949 quality standards.

Product and Application Review

Gala Precision Engineering Limited operates across two principal product areas: Springs Technology and Special Fastening Solutions. The Companys disclosed product portfolio includes Disc & Strip Springs, Coil & Spiral Springs, Gallock Wedge Lock / Grip Lock Washers, and Special Fastening Solutions such as high tensile fasteners, studs, anchor bolts, cross bolts, hex bolts and nuts

During the year, the Company continued to strengthen its product relevance across established sectors such as electrical equipment, renewable energy, industrial machinery, mobility, railways and off-highway equipment, while also exploring newer application areas such as hydrogen electrolyzers, EV platforms, high-speed rail and advanced fastening solutions.

Disc and Strip Springs

Disc springs remain an important product category for Gala, especially in applications where high load capacity, controlled deflection and preload retention are required in compact spaces.

Strip springs are used in precision assemblies where flexibility, repeatability and compact design are required. These products are relevant for electrical, industrial and mechanical systems.

Business relevance:

Disc springs support Galas positioning in safety-critical and performance-driven applications where reliability under load, thermal variation and cyclic operating conditions is important.

Strip springs help the Company serve customers requiring compact, customized and application-specific spring solutions.

Coil and Spiral Springs

Coil springs are relevant in applications involving repeated load cycles, motion control, compression, return force and mechanical support.

Business relevance:

Coil springs strengthen Galas product coverage in mobility, industrial machinery and mechanical systems requiring consistent spring performance.

Special Fastening Solutions

High tensile fasteners form a key part of the Companys Special Fastening Solutions portfolio. These products are used in applications requiring strength, durability and reliable joint performance.

Business relevance:

High tensile fasteners give Gala the opportunity to address larger and more application-intensive requirements across domestic and export markets.

Financial Performance:

The Financial performance of the Company for the year under review as compared to the previous financial year are summarized below

for your consideration:

			(Rs. in Crores)
Particulars	Standalone	Consolidated
	2025-26	2024-25	2025-26	2024-25
Revenue from operations (Net)	314.30	237.84	314.30	237.84
Other income	5.63	4.37	5.63	4.37
Total revenue	319.93	242.21	319.93	242.21
Total expenses	275.63	209.00	275.41	208.82
Profit before exceptional items and tax	44.30	33.21	44.52	33.39
Add: Exceptional items	(0.82)	-	(1.13)	(0.26)
Profit before tax	43.48	33.21	43.39	33.13
Less: Tax expenses
(a) Current tax	7.45	6.68	7.45	6.68
(b) Deferred tax charge	0.49	(0.37)	0.49	(0.37)
Total tax expense	7.94	6.31	7.94	6.31
Non-controlling interest	-	-	(0.03)	(0.03)
Profit after taxes	35.54	26.90	35.48	26.85

Key Financial Ratios:

Particular	March 31 2026	March 31 2025
Current Ratio	3.42	3.95
Debt Equity Ratio	0.12	0.09
Debt Service Coverage Ratio	18.10	2.58
Return on Equity %	12.95%	14.91%
Inventory Turnover Ratio	3.88	3.66
Trade Receivable Turnover Ratio	4.12	4.04
Trade Payable Turnover Ratio	7.42	7.01
Net Capital turnover ratio	1.82	1.49
Net Profit %	11.57%	11.31%
Return on Capital employed %	15.55%	14.41%

Human Resources:

The Company acknowledges its employees as its most valuable asset and undertakes several initiatives to promote their overall well-being. GPELs human resource strategy focuses on fostering a holistic work environment by investing in comprehensive training programs, facilitating professional growth and ensuring a culture of safety and inclusiveness. GPELs ability to deliver customized engineering solutions and manage operational complexity is deeply linked to its talent pool. The Company remains focused on attracting and retaining skilled professionals across domains such as engineering, manufacturing, marketing, finance and operations. GPEL recognizes that the competitive landscape for such talent is intense and retention costs may impact profitability. The Company remains committed to maintaining a safe and compliant workplace. No industrial disputes were reported during the year, and robust safety protocols were continually enforced. GPELs HR practices aim to balance business growth with employee development, ensuring an agile, skilled and motivated workforce to meet future challenges.

Cautionary Statement

Some of the statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, strategy, business outlook and future performance may constitute "forward-looking statements" within the meaning of applicable laws and regulations.

Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors, including changes in economic conditions, market demand, raw material prices, foreign exchange rates, interest rates, government policies, regulatory developments, geopolitical conditions, supply chain disruptions, customer approval cycles, competitive environment, technology changes and other external or internal factors beyond the Companys control.

The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events, except as may be required under applicable laws and regulations.

References / Sources Used

• IMF - World Economic Outlook, April 2026

• World Bank - Global Economic Prospects, January 2026

• WTO - Global Trade Outlook and Statistics, 2026

• IEA - World Energy Outlook 2025

• MoSPI - National Income / GDP Releases

• PIB / Economic Survey 2025-26

• S&P Global / HSBC India Manufacturing PMI

• EEPC India - Engineering Export Statistics\IBEF Industry Reports