Galaxy Bearings Ltd Management Discussions

The report has been prepared in compliance with applicable regulatory requirements and is based on information available as of the date of its preparation. The discussion covers various aspects of the Companys business, including industry structure and developments, opportunities and threats, operational and financial performance, risk management, internal control systems, and human resource development.

The statements contained herein may include certain forward-looking statements based on current expectations, estimates, projections, and assumptions regarding future events. Actual results may differ materially from those expressed or implied due to various factors, including changes in economic conditions, government policies, market demand, competitive pressures, technological developments, raw material availability and prices, and other risks and uncertainties beyond the Companys control.

The Managements perspective on the Companys performance during the year under review and its future business outlook is presented in the following sections.

ECONOMIC OVERVIEW GLOBAL ECONOMY:

During FY 2025-26, the global economy demonstrated resilient growth despite continuing geopolitical uncertainties, evolving trade policies, and fluctuations in commodity prices. While inflationary pressures moderated across several major economies, central banks maintained a cautious monetary stance to ensure price stability and sustainable economic expansion. Global manufacturing activity witnessed gradual improvement, supported by increasing industrial investments, infrastructure development, and recovery in supply chain efficiencies.

The global bearings industry continued to expand steadily, driven by growing demand from automotive, industrial machinery, railways, aerospace, renewable energy, mining, and construction sectors. The increasing adoption of electric vehicles (EVs), industrial automation, smart manufacturing technologies, and energy-efficient equipment further accelerated demand for high-performance and precision- engineered bearing solutions.

The Asia-Pacific region continued to dominate the global bearings market, supported by strong manufacturing activity, infrastructure spending, and export-oriented industrial growth. India emerged as one of the fastest-growing manufacturing destinations, benefiting from favourable government policies, rising domestic consumption, expanding industrial production, and increased participation in global supply chains. Several multinational companies continued to diversify sourcing and manufacturing operations towards India, creating new opportunities for domestic engineering and bearing manufacturers.

Developed economies in North America and Europe witnessed stable demand from replacement markets and industrial modernization initiatives, while investments in renewable energy, transportation infrastructure, and advanced manufacturing technologies supported long-term growth prospects for the engineering sector.

Although challenges such as volatility in steel prices, energy costs, logistics expenses, foreign exchange fluctuations, and geopolitical developments continued to impact global business sentiment, the long-term outlook for the bearings industry remains positive. Growing industrialization, technological advancements, infrastructure development, and increasing demand for reliable and energy-efficient mechanical components are expected to continue supporting sustainable growth in the global bearings market.

INDIAN ECONOMY AND INDUSTRY OUTLOOK-BEARING SECTOR fF.Y.2025-26):

The Indian economy continued to demonstrate resilience and growth during FY 2025-26, supported by strong domestic consumption, sustained government investment in infrastructure, expanding manufacturing activity, and a stable financial system. Continued emphasis on industrial development, logistics enhancement, digital transformation, and capital expenditure across key sectors contributed positively to economic growth and strengthened Indias position as a preferred global manufacturing destination.

Government initiatives focused on manufacturing competitiveness, infrastructure development, import substitution, and ease of doing business continued to create opportunities across the engineering and industrial sectors. Investments in transportation networks, railways, renewable energy projects, defence

manufacturing, industrial corridors, and urban infrastructure generated significant demand for engineering products and industrial components.

The Indian bearing industry remains an integral part of the countrys manufacturing and engineering ecosystem, serving diverse sectors including automobiles, industrial machinery, railways, power generation, mining, agriculture, construction equipment, and renewable energy. During FY 2025-26, the industry benefited from continued growth in industrial production, increasing infrastructure activities, rising vehicle production, and expanding demand for high-performance engineering solutions.

The industrys evolution is being driven by increasing requirements for precision, durability, energy efficiency, and reliability. Customers across sectors are increasingly seeking technologically advanced bearing solutions capable of delivering enhanced operational performance and reduced maintenance costs. Simultaneously, the growing adoption of automation, electric mobility, and advanced manufacturing technologies is encouraging product innovation and process improvements throughout the bearing value chain.

Indian manufacturers continue to strengthen their capabilities through modernization, process optimization, quality enhancement, and development of specialized products catering to diverse industrial applications. The gradual shift towards local sourcing and supply chain diversification has further enhanced opportunities for domestic bearing manufacturers to expand their market presence and strengthen customer relationships.

Galaxy Bearings Limited continues to leverage its manufacturing expertise, quality-focused approach, and long-standing industry presence to serve the evolving requirements of its customers. The Companys commitment to product quality, operational efficiency, technological improvement, and customer satisfaction enables it to remain competitive in a dynamic business environment. Through continuous focus on manufacturing excellence and value creation, the Company seeks to strengthen its position in both domestic and international markets.

Looking ahead, the long-term outlook for the Indian bearing industry remains encouraging, supported by continued industrialization, infrastructure expansion, technological advancement, increasing demand from automotive and engineering sectors, and growing opportunities arising from global supply chain diversification. With its established manufacturing capabilities, experienced workforce, and customercentric approach, Galaxy Bearings Limited remains well-positioned to capitalize on emerging opportunities and create sustainable value for all stakeholders.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

Global Bearing Industry and Developments:

During FY 2025-26, the global bearing industry continued to exhibit resilience and adaptability amid an evolving economic and industrial landscape. Growth in manufacturing activities, infrastructure development, transportation networks, renewable energy projects, and industrial automation supported sustained demand for bearing products across various end-user industries. Bearings continue to play a critical role in ensuring operational efficiency, reliability, and performance in a wide range of applications, including automotive, railways, aerospace, construction equipment, power generation, mining, and industrial machinery.

Technological advancement remained a key driver of industry development during the year. Manufacturers increasingly focused on developing high-performance bearing solutions designed to enhance equipment reliability, reduce maintenance requirements, improve energy efficiency, and support

demanding operating environments. The integration of digital technologies, predictive maintenance solutions, and advanced monitoring systems continued to influence product innovation and customer expectations across industrial sectors.

The industry also witnessed an increasing emphasis on sustainability, resource optimization, and environmentally responsible manufacturing practices. Global manufacturers continued to invest in process improvements, efficient production technologies, waste reduction initiatives, and supply chain optimization to improve competitiveness and support long-term business sustainability.

Despite challenges arising from fluctuations in raw material prices, changing trade dynamics, geopolitical uncertainties, and evolving regulatory requirements, the global bearing industry maintained stable growth momentum. Manufacturers responded by strengthening supply chain resilience, enhancing operational flexibility, and expanding their presence in strategically important markets.

India continued to strengthen its position within the global bearing ecosystem, supported by its expanding manufacturing capabilities, skilled workforce, growing domestic demand, and favourable industrial policies. The countrys increasing focus on infrastructure development, industrial expansion, automotive manufacturing, and export competitiveness has created significant opportunities for engineering and bearing manufacturers. Indian companies are increasingly participating in global supply chains by delivering quality products that meet international standards and customer requirements.

The long-term outlook for the bearing industry remains encouraging, supported by ongoing industrialization, infrastructure investments, technological innovation, automation trends, and the growing demand for precision-engineered components across global markets. These developments continue to create opportunities for capable manufacturers to enhance their market presence and drive sustainable growth.

Indian Bearing Industry and Development:

The Indian bearing industry continues to play a vital role in supporting the countrys manufacturing, automotive, infrastructure, power, railway, mining, agriculture, and engineering sectors. Driven by ongoing industrialization, increasing mechanization, and expanding infrastructure investments, the industry has demonstrated steady growth and remains an important contributor to Indias industrial value chain.

During FY 2025-26, the industry benefited from continued growth in manufacturing activities, sustained infrastructure development, and increasing demand from automotive and industrial sectors. Government initiatives aimed at strengthening domestic manufacturing capabilities, enhancing industrial competitiveness, improving logistics infrastructure, and encouraging local value addition continued to create a favourable business environment for engineering component manufacturers, including bearing producers.

The automotive sector remained one of the key demand drivers for the bearing industry, supported by stable vehicle production levels and continued technological advancements across passenger vehicles, commercial vehicles, electric mobility solutions, and automotive components. Simultaneously, investments in railways, renewable energy, industrial equipment, construction machinery, and other capital-intensive sectors contributed to sustained demand for high-quality bearing products.

The industry is witnessing a gradual shift towards technologically advanced, precision-engineered, and application-specific bearing solutions. Customers increasingly seek products that offer enhanced durability, operational efficiency, reliability, and lower maintenance requirements. In response,

manufacturers are focusing on process modernization, quality enhancement, product innovation, automation, and operational excellence to remain competitive in an evolving marketplace.

Indian bearing manufacturers continue to strengthen their position through improved manufacturing capabilities, adoption of advanced production technologies, and adherence to international quality standards. The ongoing diversification of global supply chains and increasing preference for reliable sourcing partners have also created opportunities for domestic manufacturers to expand their participation in both domestic and international markets.

Looking ahead, the Indian bearing industry is expected to benefit from continued economic growth, infrastructure expansion, industrial development, technological advancement, and increasing demand across key end-user sectors. The industrys long-term fundamentals remain favourable, supported by the countrys manufacturing ambitions and growing focus on self-reliance, innovation, and sustainable industrial growth.

India Industrial Bearings Market Trends:

The Indian industrial bearings market continued to benefit from the countrys strong manufacturing and infrastructure-led growth during FY 2025-26. Indias economy recorded robust growth during the year, supported by increased private investment, infrastructure development, manufacturing expansion, and resilient domestic demand. Manufacturing remained a key contributor to economic activity, while industrial output continued to strengthen across several sectors.

The Governments continued focus on infrastructure creation, industrial corridors, transportation networks, renewable energy projects, and manufacturing competitiveness has provided sustained momentum to engineering and industrial sectors. The Union Budget for FY 2026-27 further reinforced this commitment through increased infrastructure expenditure, which is expected to support long-term demand for industrial equipment and engineering components.

The bearing industry witnessed increasing demand from automotive, railways, construction equipment, power generation, mining, steel, cement, and general engineering sectors. The automotive industry continued to remain a major consumer of bearing products, while the growing adoption of electric mobility and technologically advanced manufacturing systems created opportunities for specialized and precision-engineered bearing solutions.

Another significant trend shaping the industry is the increasing adoption of automation, digital manufacturing practices, predictive maintenance systems, and smart factory solutions. Industrial customers are increasingly seeking bearings that offer enhanced reliability, longer operational life, improved energy efficiency, and compatibility with modern automated equipment. This evolving demand is encouraging manufacturers to focus on product innovation, quality enhancement, and process optimization.

The Indian manufacturing sector continued to demonstrate resilience during FY 2025-26. Manufacturing Gross Value Added (GVA) registered healthy growth, while manufacturing capacity utilisation levels remained stable, reflecting sustained industrial activity and investment confidence. Industry surveys also indicated strong business sentiment and continued expansion across manufacturing segments.

Looking ahead, the long-term fundamentals of the Indian industrial bearings market remain favourable. Continued industrialization, infrastructure expansion, technological advancement, increasing automation, and growing participation of Indian manufacturers in global supply chains are expected to create sustained opportunities for the bearing industry. Companies with strong manufacturing

capabilities, quality-focused operations, and customer-centric solutions are likely to benefit from these evolving market dynamics.

Market Scope and Growth Factors:

The Indian bearing industry continues to offer significant growth opportunities, supported by the countrys expanding industrial base, increasing infrastructure investments, and growing manufacturing capabilities. Government initiatives aimed at enhancing domestic manufacturing, improving logistics infrastructure, promoting industrial competitiveness, and encouraging investment in key sectors have created a favourable environment for the growth of engineering and industrial component manufacturers.

The scope of the bearing industry extends across a diverse range of sectors, including automotive, railways, industrial machinery, power generation, mining, agriculture, construction equipment, steel, cement, renewable energy, and general engineering. As these sectors continue to expand and modernize, the demand for reliable, high-performance, and precision-engineered bearing solutions is expected to remain strong.

One of the key growth drivers for the industry is the increasing emphasis on industrial automation, mechanization, and operational efficiency. Manufacturers across sectors are investing in advanced machinery and modern production systems to improve productivity and reduce operational costs. This trend is creating demand for technologically advanced bearing products capable of delivering enhanced performance, durability, and reliability under demanding operating conditions.

The continued development of transportation infrastructure, railway modernization projects, renewable energy installations, and capital goods manufacturing is expected to generate sustained demand for bearing products. Furthermore, the growing focus on electric mobility, energy-efficient equipment, and advanced engineering applications is encouraging innovation and the development of specialized bearing solutions.

Another important growth factor is the increasing preference for locally manufactured products and the gradual strengthening of domestic supply chains. Indian manufacturers are continuously enhancing their production capabilities, quality standards, and technological expertise to meet evolving customer requirements and global quality benchmarks. This has enabled domestic manufacturers to strengthen their presence in both local and international markets.

The industry is also witnessing increased focus on research and development, product innovation, process improvement, and quality enhancement. Manufacturers are investing in advanced materials, precision manufacturing technologies, automation, and sustainable production practices to improve product performance and maintain competitiveness in a dynamic market environment.

Looking ahead, the Indian bearing industry is expected to benefit from favourable economic fundamentals, rising industrial activity, infrastructure expansion, technological advancement, and increasing integration with global manufacturing supply chains. These factors are expected to create longterm growth opportunities for companies with strong manufacturing capabilities, customer focus, and commitment to operational excellence.

GOVERNMENT INITIATIVES

The bearing industry constitutes an important segment of Indias engineering and manufacturing ecosystem, serving critical industries such as automotive, railways, industrial machinery, power

generation, mining, construction equipment, renewable energy, and infrastructure development. As a key component in mechanical systems, bearings contribute significantly to operational efficiency, equipment reliability, energy conservation, and productivity enhancement across industries.

The Government of India continues to focus on strengthening the countrys manufacturing capabilities through various policy initiatives aimed at promoting industrial growth, enhancing infrastructure, encouraging domestic production, improving ease of doing business, and increasing Indias participation in global supply chains. These initiatives have created a favourable environment for the growth and development of the engineering and bearing industry.

Make in India and Atmanirbhar Bharat continue to support domestic manufacturing by encouraging local production, technology adoption, capacity enhancement, and reduction in import dependency. These initiatives have provided opportunities for Indian manufacturers to strengthen their production capabilities and improve competitiveness in both domestic and international markets.

The Production Linked Incentive (PLI) Schemes, particularly those relating to automobiles, auto components, advanced manufacturing, and allied sectors, have contributed to increased investments across manufacturing industries. The resulting expansion in industrial activity and production capacity has positively influenced demand for engineering components, including bearing products.

Government-led investments under the National Infrastructure Pipeline (NIP), PM Gati Shakti National Master Plan, railway modernization programs, road development projects, logistics infrastructure, ports, and industrial corridors continue to support demand across sectors that are significant consumers of bearing products. These initiatives are expected to contribute to long-term industrial growth and increased equipment deployment across the economy.

The continued implementation of the Automotive Mission Plan, promotion of electric mobility, and focus on sustainable transportation are encouraging technological advancements within the automotive ecosystem. These developments are creating opportunities for specialized, high-performance, and precision-engineered bearing solutions designed to meet evolving industry requirements.

The Governments emphasis on export promotion through the Foreign Trade Policy, logistics improvements, and manufacturing competitiveness initiatives has also enhanced opportunities for Indian manufacturers to expand their presence in international markets and participate more effectively in global supply chains.

Furthermore, various schemes supporting technology upgradation, digitalization, automation, innovation, and skill development continue to assist manufacturing enterprises in improving productivity, product quality, and operational efficiency. The growing emphasis on sustainable manufacturing practices and energy-efficient technologies is also encouraging the development of advanced engineering solutions that align with evolving environmental and regulatory expectations.

The introduction and enforcement of Quality Control Orders (QCOs) and mandatory quality standards have further strengthened the industry by promoting adherence to prescribed quality benchmarks, improving product reliability, and encouraging the adoption of globally competitive manufacturing practices.

The Company believes that the continued focus of the Government on manufacturing growth, infrastructure expansion, industrial modernization, quality enhancement, and export competitiveness will create a supportive environment for the long-term growth of the bearing industry and provide opportunities for sustainable business development.

Infrastructure and Sector-Specific Demand Drivers

Indias continued focus on infrastructure development remains one of the most significant growth drivers for the bearing industry. Ongoing investments in highways, railways, metro rail projects, airports, ports, logistics parks, industrial corridors, renewable energy installations, and urban infrastructure have contributed to increased demand for industrial machinery, construction equipment, material handling systems, and transportation assets, all of which require reliable and high-performance bearing solutions.

The Governments emphasis on modernizing transportation infrastructure and strengthening logistics networks through initiatives such as PM Gati Shakti and various infrastructure development programs is expected to support long-term growth across engineering and manufacturing sectors. Expansion of railway networks, freight corridors, metro rail systems, and modernization of rolling stock continue to create demand for precision-engineered bearings designed for high-load and high-reliability applications.

The construction, mining, cement, steel, power generation, and renewable energy sectors also continue to generate substantial demand for bearing products. Increased deployment of heavy machinery, material handling equipment, wind energy systems, industrial pumps, motors, and process equipment has strengthened the requirement for durable and efficient bearing solutions capable of operating under demanding conditions.

The Governments continued focus on strengthening the capital goods and manufacturing sectors through technology advancement, industrial modernization, skill development, and productivity enhancement initiatives is contributing to increased investment in industrial equipment and manufacturing facilities. This trend is expected to support sustained demand for bearings across a broad range of industrial applications.

Micro, Small and Medium Enterprises (MSMEs) continue to play an important role within Indias manufacturing ecosystem and supply chain network. Various government initiatives relating to financial support, technology upgradation, digital transformation, cluster development, and ease of access to credit have strengthened the MSME sector, thereby supporting overall industrial growth and creating opportunities across the engineering and component manufacturing value chain.

With continued investments in infrastructure, industrial expansion, renewable energy, transportation, and manufacturing development, the demand outlook for the bearing industry remains positive. These sectors are expected to remain key contributors to the long-term growth of the industry while creating opportunities for manufacturers capable of delivering quality, reliability, and technological excellence.

OUR BUSINESS STRATEGY AND OUTLOOK

Galaxy Bearings Limited remains committed to strengthening its position as a reliable manufacturer of quality bearing products through a strategy focused on operational excellence, customer satisfaction, product quality, and sustainable growth. The Company continues to emphasize continuous improvement in manufacturing processes, efficient resource utilization, cost optimization, and enhancement of product quality to meet the evolving requirements of its customers.

The Companys strategic priorities include strengthening its market presence, improving operational efficiencies, maintaining consistent product quality, and enhancing customer relationships across various industrial segments. Through a disciplined approach to manufacturing and quality management, the Company seeks to create long-term value for its customers, shareholders, employees, and other stakeholders.

In line with the Governments vision of promoting domestic manufacturing and self-reliance, the Company continues to support the objectives of initiatives such as Make in India and Atmanirbhar Bharat by contributing to the domestic engineering and manufacturing ecosystem. The Company remains focused on delivering quality products that meet customer expectations while maintaining competitiveness in a dynamic business environment.

The management continues to evaluate opportunities for process improvements, technological enhancement, operational efficiency, and product development in order to strengthen the Companys competitive position and adapt to changing market requirements. Continuous focus on quality, productivity improvement, and effective cost management remains central to the Companys business strategy.

The long-term outlook for the bearing industry remains favourable, supported by ongoing industrialization, infrastructure development, growth in automotive and engineering sectors, increasing demand for reliable industrial components, and expanding manufacturing activity. These developments are expected to create opportunities for companies with strong manufacturing capabilities and a commitment to quality and customer service.

Galaxy Bearings Limited remains focused on leveraging its manufacturing experience, operational strengths, and customer-centric approach to capitalize on emerging opportunities. The management remains confident that the Companys emphasis on quality, operational discipline, prudent financial management, and continuous improvement will support sustainable growth and value creation in the years ahead.

FUTURE OUTLOOK

The long-term outlook for the bearing industry remains positive, supported by continued industrialization, infrastructure expansion, growth in manufacturing activities, increasing automation, and rising demand from automotive, engineering, railway, renewable energy, and industrial sectors.

India continues to strengthen its position as a global manufacturing hub through sustained policy support, infrastructure investments, and initiatives aimed at enhancing manufacturing competitiveness. Increasing emphasis on domestic value addition, supply chain diversification, technological advancement, and industrial modernization is expected to create new opportunities for the engineering and bearing industry.

The growing adoption of advanced manufacturing technologies, electric mobility solutions, energy- efficient equipment, and predictive maintenance systems is expected to drive demand for high-quality and precision-engineered bearing products. At the same time, investments in transportation infrastructure, industrial equipment, renewable energy projects, and capital goods sectors are likely to support long-term demand growth.

Galaxy Bearings Limited remains focused on leveraging its manufacturing capabilities, quality-oriented approach, experienced workforce, and customer relationships to capitalize on emerging opportunities. The Company will continue to emphasize operational excellence, quality enhancement, cost optimization, prudent financial management, and customer satisfaction to strengthen its competitive position.

While challenges relating to raw material price volatility, competitive pressures, and economic uncertainties may continue to influence business conditions, the management remains confident that the Companys focus on continuous improvement, operational efficiency, and sustainable business practices will support long-term growth and value creation for all stakeholders.

OPPORTUNITIES AND THREATS OPPORTUNITIES AND THREATS

The bearing industry operates in a dynamic environment influenced by industrial growth, technological advancements, infrastructure development, global trade patterns, and evolving customer requirements. As a critical component in automotive, railways, industrial machinery, power generation, mining, construction equipment, and engineering applications, the industry continues to benefit from increasing industrialization and modernization across various sectors.

The long-term outlook for the bearing industry remains favourable, supported by growth in manufacturing activities, infrastructure investments, industrial automation, transportation development, and the increasing emphasis on energy-efficient and reliable engineering solutions. At the same time, the industry continues to face challenges arising from raw material price fluctuations, changing market conditions, global uncertainties, and competitive pressures.

Opportunities

Growing Manufacturing and Infrastructure Development

Continued investments in infrastructure, transportation networks, railways, industrial corridors, renewable energy projects, and manufacturing facilities are expected to support demand for bearings across a broad range of applications. The Governments continued focus on industrial growth and infrastructure modernization provides long-term opportunities for the engineering sector.

Automotive and Emerging Mobility Solutions

The automotive sector remains one of the largest consumers of bearing products. Growth in passenger vehicles, commercial vehicles, electric mobility solutions, and automotive component manufacturing is expected to create opportunities for technologically advanced and high- performance bearing products.

Industrial Automation and Smart Manufacturing

The increasing adoption of automation, robotics, digital manufacturing technologies, and predictive maintenance systems is creating demand for precision-engineered bearings capable of delivering enhanced reliability, efficiency, and operational performance in modern manufacturing environments.

Renewable Energy and Sustainable Technologies

Growing investments in renewable energy projects, including wind and solar power installations, are creating opportunities for specialized bearing applications that require high durability, reliability, and performance under demanding operating conditions.

Import Substitution and Supply Chain Diversification

The increasing emphasis on domestic manufacturing and the diversification of global supply chains present opportunities for Indian manufacturers to strengthen their presence in both domestic and

international markets. Companies with established manufacturing capabilities and consistent quality standards are well-positioned to benefit from these developments.

Technology and Product Development

Advancements in materials, manufacturing processes, quality control systems, and application- specific engineering continue to create opportunities for value-added products that offer improved efficiency, durability, and performance to customers across industries.

Threats

Raw Material Price Volatility

The bearing industry remains exposed to fluctuations in the prices of steel and other critical raw materials. Significant variations in input costs may impact profitability and operational planning.

Intense Market Competition

The industry faces competition from both domestic and international manufacturers. Sustained competitiveness requires continuous focus on quality, cost efficiency, customer service, and technological advancement.

Supply Chain and Logistics Risks

Global economic uncertainties, geopolitical developments, transportation disruptions, and fluctuations in logistics costs may affect the availability and cost of raw materials and other inputs required for manufacturing operations.

Technological Changes

Rapid advancements in manufacturing technologies, automation, and product design require continuous adaptation and investment. Companies that fail to keep pace with evolving customer expectations and industry requirements may face competitive challenges.

Economic and Industry Cyclicality

Demand for bearing products is closely linked to industrial production, infrastructure spending, and performance of key user industries. Any slowdown in these sectors may adversely affect demand and business performance.

Regulatory and Environmental Compliance Requirements

Increasing environmental, quality, safety, and regulatory requirements may result in higher compliance obligations and operating costs. Manufacturers are required to continuously align their operations with evolving regulatory expectations and industry standards.

Risk Mitigation and Strategic Response

Galaxy Bearings Limited continuously evaluates business risks and implements appropriate measures to mitigate their potential impact. The Company focuses on maintaining strong customer relationships, enhancing operational efficiency, improving product quality, strengthening supply chain management, and exercising prudent financial discipline.

The Company remains committed to continuous improvement in manufacturing processes, cost optimization, quality enhancement, and customer satisfaction. Through its focus on operational excellence, responsible business practices, and long-term value creation, the Company seeks to effectively navigate industry challenges while capitalizing on emerging opportunities.

The management remains confident that the Companys manufacturing expertise, quality-focused approach, and commitment to continuous improvement will support sustainable growth and strengthen its competitive position in the years ahead.

RISK AND CONCERNS RISKS AND CONCERNS

The bearing industry operates in a competitive and evolving business environment and is exposed to various risks arising from economic conditions, market dynamics, supply chain disruptions, technological changes, regulatory developments, and operational challenges. Effective identification, assessment, and management of these risks are essential for ensuring sustainable business performance and long-term value creation.

Galaxy Bearings Limited continuously monitors the business environment and adopts appropriate measures to mitigate potential risks through prudent operational practices, process improvements, quality management systems, and sound financial discipline.

Supply Chain and Economic Risks Raw Material Price Volatility

The Companys manufacturing operations are dependent on the availability and pricing of key raw materials, particularly bearing-grade steel and other engineering materials. Fluctuations in raw material prices may impact production costs and operating margins. The Company continuously monitors market conditions and undertakes appropriate procurement planning to mitigate such risks.

Supply Chain Disruptions

Global economic developments, geopolitical uncertainties, transportation constraints, and disruptions in logistics networks may affect the timely availability of raw materials and components. The Company focuses on maintaining reliable supplier relationships and effective inventory management practices to minimize the impact of such disruptions.

Economic and Industry Cyclicality

Demand for bearing products is closely linked to the performance of key end-user industries such as automotive, industrial machinery, railways, construction equipment, power generation, and infrastructure. Economic slowdowns or reduced capital expenditure in these sectors may adversely affect industry demand.

Cost Inflation

Rising costs relating to energy, transportation, labour, consumables, and other operating expenses may impact profitability. The Company continuously focuses on productivity enhancement, process optimization, and cost management initiatives to improve operational efficiency.

Operational and Technical Risks Quality and Manufacturing Risks

Bearing manufacturing involves precision engineering processes requiring stringent quality control and process discipline. Any deviation in manufacturing parameters may affect product performance and customer satisfaction. The Company maintains quality management systems, process controls, and inspection procedures to ensure product reliability and consistency.

Technological Changes

The bearing industry continues to evolve through advancements in materials, manufacturing technologies, automation, and product design. Companies must continuously adapt to changing market requirements and technological developments to remain competitive.

Product Performance and Reliability

Customers increasingly demand products that offer enhanced performance, durability, and operational efficiency. Failure to meet evolving customer expectations may impact market competitiveness. The Company remains focused on maintaining product quality and continuous improvement in manufacturing processes.

Counterfeit and Substandard Products

The presence of counterfeit and substandard products in the market may adversely affect industry reputation and customer confidence. The Company emphasizes quality assurance, customer engagement, and compliance with applicable standards to differentiate its products in the marketplace.

Regulatory and Environmental Risks Environmental and Sustainability Requirements

Increasing focus on environmental responsibility, energy efficiency, waste management, and sustainable manufacturing practices may result in additional compliance obligations and operational

investments. The Company remains committed to responsible manufacturing practices and compliance with applicable environmental regulations.

Regulatory Compliance

The Company is required to comply with various laws, regulations, industry standards, and quality requirements. Any changes in regulatory frameworks may necessitate operational adjustments and additional compliance measures.

Information Technology and Cybersecurity Risks

As manufacturing and business processes become increasingly digitalized, organizations face growing risks relating to data security, cybersecurity threats, and information system disruptions. The Company continues to strengthen its information technology controls and security practices to safeguard business operations and information assets.

Human Resource Risks

The availability of skilled manpower remains important for maintaining operational excellence and supporting future growth. The Company focuses on employee development, training, skill enhancement, and creating a positive work environment to attract and retain competent talent.

Risk Management Framework

The Company has established internal control mechanisms and risk management practices designed to identify, evaluate, and mitigate key business risks. Management regularly reviews operational, financial, strategic, and compliance-related risks and undertakes appropriate corrective and preventive actions wherever necessary.

While risks are an inherent part of business operations, Galaxy Bearings Limited believes that its focus on quality, operational excellence, prudent financial management, customer satisfaction, and continuous improvement will enable it to effectively manage risks and capitalize on growth opportunities in a dynamic business environment.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established and maintained an adequate system of internal financial controls commensurate with the size, scale, and complexity of its operations. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, prevention and detection of frauds and errors, compliance with applicable laws and regulations, and the orderly and efficient conduct of business operations.

The internal control framework encompasses well-defined policies, procedures, authority matrices, segregation of duties, budgetary controls, periodic reviews, and monitoring mechanisms across key business processes. The Company has implemented appropriate financial and operational controls to ensure the accuracy and completeness of accounting records, proper authorization of transactions, and timely preparation of reliable financial information.

The Company has an internal audit system that periodically reviews the adequacy and effectiveness of internal controls, risk management practices, operational processes, and compliance mechanisms. The scope of internal audit covers critical business functions and areas identified through a risk-based approach. The observations, recommendations, and corrective actions arising from internal audit reviews are periodically monitored by the management to ensure continuous improvement in the control environment.

The Audit Committee of the Board regularly reviews the internal audit reports, findings, recommendations, and management responses thereto. The Committee also evaluates the adequacy and effectiveness of the Companys internal financial control systems and provides guidance for strengthening governance and risk management practices wherever required.

The Company continues to focus on enhancing its internal control systems through process improvements, technology-enabled monitoring, compliance management, and adoption of best governance practices. During the year under review, no material weakness in the design or operating effectiveness of the internal financial controls was observed that could have a significant impact on the Companys financial reporting.

The management believes that the Companys internal financial control framework is adequate and operating effectively, providing a strong foundation for efficient operations, financial discipline, regulatory compliance, and sustainable business growth.

OPERATIONAL PERFORMANCE REVIEW

During the financial year ended March 31, 2026, the Company continued to focus on maintaining operational stability, product quality, manufacturing efficiency, and customer satisfaction despite challenging market conditions and moderation in demand across certain customer segments.

The Companys manufacturing operations remained focused on the production of quality bearing products catering to the requirements of various industrial applications. Continuous efforts were undertaken to improve operational efficiency through process optimization, effective production planning, resource utilization, quality control measures, and cost management initiatives. The Company continued to emphasize adherence to quality standards and timely delivery commitments in order to strengthen customer relationships and maintain its reputation as a reliable supplier.

The management remained focused on improving manufacturing productivity, minimizing process inefficiencies, reducing wastage, and enhancing overall operational effectiveness. Appropriate preventive maintenance practices and process controls were implemented to ensure smooth functioning of manufacturing facilities and consistent product quality.

The Company continued to monitor changing customer requirements and market developments while maintaining flexibility in its manufacturing operations to respond effectively to evolving business conditions. Through its continued focus on operational discipline, quality assurance, and customer-centric practices, the Company remains committed to strengthening its operational capabilities and supporting sustainable long-term growth.

SEGMENT PERFORMANCE

The Company is engaged primarily in the business of manufacturing and sale of bearings and related engineering products. Based on the nature of products, risks and returns, organizational structure, and

internal financial reporting systems, the Companys operations constitute a single reportable business segment in accordance with the applicable provisions of Indian Accounting Standard (Ind AS) 108 - Operating Segments.

FINANCIAL PERFORMANCE AND REVIEW OF OPERATIONS

During the financial year ended March 31, 2026, the Company recorded Total Income of ^6,968.18 Lakhs as compared to ^10,674.65 Lakhs in the previous financial year. The decline in revenue was primarily attributable to changes in market conditions, customer demand patterns, and business volumes during the year under review.

Total Expenses stood at ^6,505.85 Lakhs as against ^8,822.15 Lakhs in the previous year. The Company continued to focus on cost control measures, operational efficiency, and prudent resource utilization to manage the impact of changing business conditions.

Profit Before Interest and Depreciation (PBID] for the year was ^860.77 Lakhs compared to ^2,169.58 Lakhs in the previous year. Finance Costs increased to ^224.70 Lakhs from ^125.44 Lakhs in FY 2024-25, reflecting the higher cost of borrowings and working capital requirements during the year.

Profit Before Depreciation and Tax amounted to ^636.07 Lakhs as against ^2,044.14 Lakhs in the previous year. Depreciation and Amortization Expense stood at ^173.74 Lakhs compared to ^191.64 Lakhs in the preceding financial year.

Consequently, Profit Before Tax (PBT) for FY 2025-26 stood at ^462.33 Lakhs as compared to ^1,852.50 Lakhs in FY 2024-25. After providing for current tax and deferred tax adjustments, the Company reported a Net Profit After Tax (PAT] of ^330.99 Lakhs as against ^1,371.15 Lakhs in the previous financial year.

Total Comprehensive Income for the year stood at ^330.74 Lakhs compared to ^1,354.22 Lakhs in FY 2024-25.

Despite a challenging business environment and moderation in revenues during the year, the Company remained focused on maintaining operational stability, strengthening customer relationships, improving process efficiencies, and exercising financial discipline. The management continues to monitor market developments closely and remains committed to enhancing operational performance, optimizing costs, and creating long-term value for stakeholders.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The company made key advancements in human resource development through focused training programs and skill enhancement initiatives. HR policies were refined to improve employee engagement

and operational efficiency. Industrial relations remained stable and harmonious throughout the year, with no disruptions. The company continues to foster a positive work environment built on communication, safety, and performance.

As of March 31, 2026, the company had a total of 95 employees on its rolls, including factory workers. The company will continue to create opportunities and ensure that it recruits diverse candidates without compromising on merit.

CAUTIONARY STATEMENT

This report contains forward-looking statements based on current expectations and assumptions. Actual results may differ materially due to various risks and uncertainties including economic conditions, market demand, regulatory changes, and other external factors.

The Company undertakes no obligation to update such statements.