Garware Marine Industries Ltd Management Discussions

INDUSTRIAL STRUCTURE & DEVELOPMENT:

Your Company is in the business of Ship Repairs,

OUTLOOK:

The outlook for the ship repair industry remains cautiously optimistic, notwithstanding ongoing global economic headwinds and geopolitical uncertainties. The Company believes that the long-term fundamentals of the shipping and offshore services sector remain robust, supported by the sustained requirement for maintenance, repair, refurbishment and lifecycle management of ageing fleets

As global market conditions progressively stabilise and oil and gas support services strengthen, in view of the requirement of countries trying to ensure "energy" self-sustainability, it is hoped that the Companys principle Customer, Garware Offshore Services Limited, gradually expand its fleet This anticipated revival is likely to drive increased demand for ship repair, maintenance, retrofit and allied engineering services, thereby creating meaningful growth opportunities for the Company.

The Company is actively seeking to expand its customer base and exploring new avenues in order to strengthen its revenue position and support sustained business growth.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

Since the Companys primary activity is the repair of ships, it operates in a single business segment

SWOT ANALYSIS

STRENGTHS

? Established expertise in ship repair services: The Company possesses technical capabilities and extensive experience in the niche ship repair industry, supported by a skilled workforce and strong engineering expertise.

? Strong liquidity position: The Current Ratio improved significantly reflecting a robust short-term liquidity position driven by prudent working capital management and reduced current liabilities.

? Debt-free structure: The Company continues to maintain a debt-free balance sheet, providing financial flexibility, reducing financing costs, and minimizing refinancing risk.

? Robust corporate governance and Internal controls: A comprehensive internal control system, supported by periodic reviews conducted by the Audit Committee and Internal Auditors, enhances operational efficiency, risk management, and regulatory compliance.

? Operational capability and skilled workforce: Continuous service of "Flying Squad," has improved execution capability, service responsiveness, and customer confidence,

? Long-standing customer relationship: The Company maintains a strategic and long-term relationship with its principal customer, ensuring recurring business opportunities and enhancing industry credibility.

WEAKNESSES

? High customer concentration: Almost all of the Companys revenue continues to be generated from a single principal customer, making the Companys financial performance and financial stability vulnerable to changes in that customers operational plans and procurement strategies.

- Decline in financial performance: Revenue declined by approximately 6.54%, while profit after tax reduced from f43.14 lakhs to f 14.72 lakhs, reflecting lower repair activities and higher expenses.

? Lower profitability indicators: Return on Equity, Net Profit Ratio, and Return on Capital Employed witnessed significant declines during the year, as a result of reduced earnings.

? Limited business diversification: Operating predominantly in the ship repair segment exposes the Company to cyclical industry conditions and limits revenue diversification

OPPORTUNITIES:

As stated above, the "outlook" for ship repair industry remains cautiously optimistic despite continuing global economic and geopolitical uncertainties. The Company believes that the long-term fundamentals of the offshore shipping market remain resilient, underpinned by the ongoing need for maintenance, repair, refurbishment and lifecycle management of existing offshore fleet.

As market conditions gradually stabilize, the Companys principal customer is expected to undertake additional repairs, refurbishment and modernization programmes of its fleet This is anticipated to generate increased demand for ship repair, maintenance, retrofit and allied engineering services, thereby creating growth opportunities for the Company

In anticipation of an improving market environment, the Company continues to strengthen its operational capabilities by expanding its service portfolio and enhancing the capabilities of its specialized "Flying Squad" teams. These strategic initiatives are focused on improving service responsiveness, execution efficiency, and the delivery of high-quality repair and maintenance solutions on a 24x7 basis, thereby further improving the Companys reputation as a trusted and dependable partner to customers across the offshore and marine sectors.

Supported by a skilled workforce, strong technical expertise, the Company will continue to focus on operational excellence, prudent resource management, and strengthening customer relationships to support its long-term growth objectives

THREATS:

The Company operates in a highly competitive ship repair industry, where the intensity of competition tends to increase during periods of improved market conditions. As industry demand strengthens, new repair facilities and smaller service providers often enter the market, leading to heightened pricing pressure, increased competition for contracts, and potential margin compression

Another key business risk is the Companys significant dependence on its principal customer for a substantial portion of its revenue While the Company continues to undertake strategic initiatives to diversify its customer portfolio and reduce customer concentration risk, expanding the customer base has remained challenging due to the specialized nature of the business and intense market competition. Any adverse change in the business, operational requirements, or procurement strategy of its principal customer could have a material impact on the Companys financial performance and future growth prospects.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company has established a vigorous internal control framework designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, safeguarding of assets, the reliability of financial reporting, and compliance with applicable laws, regulations, and internal policies.

The Company has implemented appropriate policies, procedures, and control mechanisms to identify, assess and mitigate potential risks that may adversely impact its operations, financial position, or long-term sustainability Adequate measures are continuously reviewed and strengthened to address emerging risks and to ensure the protection of the interests of the Company, its Board of Directors, shareholders, and other stakeholders.

The Audit Committee reviews the reports submitted by the Internal Auditors, evaluates the adequacy and effectiveness of the internal control systems, and provides recommendations for continuous improvement. The management remains committed to enhancing the internal control environment and maintaining standards of governance, transparency and accountability across the organization

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Revenue from operations (including other income) for the year ended 31st March, 2026 stood at Rs. 112.55 Lakhs as against Rs. 120.42 Lakhs in the previous financial year, reflecting a decline of approximately 6 54% of the revenue The decrease in revenue during the year was primarily attributable to a reduction of repair "needs" of the Companys principal customer.

The Company remained profitable for the financial year ended 31st March, 2026, achieving a profit of Rs. 14.72 lakhs for the year, as against a profit of Rs. 43.14 lakhs for the previous year. As a result of lower revenues and higher expenses, profitability declined

In view of the substantial reduction in the market value of the Companys investments as on 3151 March 2026, the Company reported a comprehensive loss on investments aggregating to Rs 774.14 lakhs (as against a comprehensive gain of Rs. 647.68 lakhs recorded in the previous financial year). Accordingly, the total comprehensive loss for the year stood at Rs 759.91 lakhs, as compared to a total comprehensive profit of Rs. 690 72 lakhs in the preceding year

No material changes/commitments have occurred after the financial year ending till date of this report, which affected the financial position of the Company.

The Company does not have any debt outstanding.

FINANCIAL RATIOS AND ANALYSIS:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, following are the details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

Key Financial Ratios	F.Y. 2025- 26	F.Y. 2024- 25	Change in %	Remark
Current Ratio	19.04%	13,76%	38.34%	Due to a decrease in current liabilities in the current year as compared to the previous year, resulting in a stronger short-term liquidity position
Return on equity Ratio	0.64%	2.40%	-73.52%	Due to a decrease in Net Profit after tax in the year under review.
Net Profit Ratio	13.58%	35,90%	-62.16%	Due to a decrease in Net Profit after tax on account of reduction in total Income and increase in other expenses during the year.
Return on capital employed	1.52%	2 31%	-34.06%	Due to decrease in EBIT on account of reduction in total Income and increase in expenses during the current year.

The current ratio increased as a result of a reduction in current liabilities. However, profitability and return-based ratios, including Return on Equity, Net Profit Ratio, and Return on Capital Employed, declined compared to the previous year The decrease in these ratios indicates lower earnings generation which led to reduced returns on the Companys equity and capital employed during the year. The Management will continue to focus on improving operational efficiency cost optimization, and revenue growth to enhance profitability and overall financial performance in the coming periods .

RISKS AND CONCERNS

The Company has established appropriate policies, procedures, and internal control mechanisms to identify, assess, monitor, and mitigate potential risks that may adversely affect its operations, financial performance, or long-term sustainability. These risk management frameworks are subject to periodic review and continuous strengthening to address evolving business and industry risks while safeguarding the interests of the Company, its Board of Directors, shareholders, employees, customers, and other stakeholders.

The Companys performance continues to be influenced by prevailing market conditions and the capital expenditure plans of its principal customer. While this customer concentration remains a business consideration, the Company is actively pursuing strategies to diversify and expand its customer base, thereby reducing dependency on a single customer and enhancing business resilience.

Looking ahead, the Company remains optimistic about its medium- to long-term growth prospects, as it anticipates refurbishment and modernization programmes of the principal customers fleet of Vessels. This is expected to result in increased demand for ship repair, maintenance, retrofit and allied engineering services, creating meaningful business opportunities for the Company. Coupled with the Companys ongoing initiatives to broaden its customer base, these developments are expected to support sustainable growth in revenues and improve operating margins over the medium to long term.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Cordial and harmonious relations were maintained across all levels of the organization throughout the year. The Company wishes to place on record its appreciation of all the sacrifices made by dedicated employees.

FORWARD-LOOKING STATEMENTS:

This Management Discussion and Analysis Report contain statements describing the Companys objectives, projections estimates, expectations, and predictions that may constitute "forward-looking statements" within the meaning of applicable laws and regulations. These statements are based on certain assumptions, expectations, and assessments of future events and are subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in such statements.

Factors that could cause actual results to differ materially include, among others, changes in industry conditions, economic and market developments to publicly update, amend, modify, or revise arry forward-looking statements to reflect subsequent, regulatory and tax policies, competitive dynamics, and the occurrence of unforeseen events or circumstances, including force majeure events and other ads of God.

For and on behalf of Board

AdityaA. Garware

Chairman

DIN: 0019816