Indo Farm Equipment Ltd Management Discussions

Financial Year 2025-26

Global Economic Overview

The global economy carried notable resilience into 2025, sustaining a pace of about 3.4%, before momentum was interrupted early in 2026 by the outbreak of conflict in West Asia. Prior to the conflict, activity had been supported by an easing of financial conditions, selective fiscal support, private-sector adaptability, and a sustained wave of technology-led investment, even in the face of elevated trade-policy uncertainty. The war has since altered the trajectory, lifting energy prices and reintroducing volatility into the global outlook.

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Global growth is now projected at 3.0% in 2026, recovering to 3.4% in 2027, against an average of about 3.5% across 2024 and 2025 and a historical 2000-2019 average of 3.7%. The near-term slowdown reflects the effects of the war, partly offset by accelerating demand in the global technology cycle as artificial-intelligence adoption broadens. Outcomes are markedly uneven: growth in the United States is projected at 2.3% in 2026 and 2.2% in 2027, supported by fiscal policy, accommodative financial conditions and technology-related business investment, while the euro area is projected at 0.9% and 1.2% respectively, reflecting weaker industrial output and greater sensitivity to energy prices. Net energy importers and economies with limited exposure to the technology value chain bear the sharpest impact.

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Global headline inflation has been revised upward to around 4.7% in 2026 as higher energy costs feed through, and the disinflation trend in place since early 2024 has stalled, before inflation is expected to resume its decline in 2027. The shift has prompted central banks to balance the competing pressures of renewed inflation against the risk of premature tightening that could deepen the slowdown, leaving financial conditions tighter and investment more cautious, particularly across emerging markets.

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Global growth is projected at 3.0% in 2026, recovering to 3.4% in 2027.

Source: . CY 2025 outturn per .

Global Outlook

Global growth is projected at 3.0% in 2026 and 3.4% in 2027, with the strength of the 2027 recovery contingent on the conflict remaining contained and energy supplies normalising. The dispersion of outcomes across countries is stark, with the Middle East and North Africa region facing a cumulative growth revision of nearly three percentage points for 2026, while advanced economies experience comparatively modest effects and those integrated into the global technology value chain are being lifted by artificial-intelligence-driven demand.

Source: ; regional revision per

Risks are firmly tilted to the downside and include a further escalation of the war, renewed trade tensions, and a reassessment of the returns on artificial-intelligence investment, any of which could weaken growth and unsettle financial markets. Conversely, a swift resolution of the conflict, faster productivity gains from AI adoption, or an easing of trade tensions could lift the global economy above the reference path.

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Indian Economic Overview

India was among the fastest-growing major economies in FY 2025-26. Real GDP grew 7.7% to Rs323.12 lakh crore, ahead of the 7.6% Second Advance Estimate released in February 2026 and above the 7.1% recorded in FY 2024-25. Nominal GDP reached Rs346.36 lakh crore, a growth of 8.9%, and real Gross Value Added rose 7.9%. Momentum held through the year rather than fading, with the January- March quarter expanding 7.8% year-on-year, marking a third consecutive year of growth above 7% and underscoring the resilience of domestic demand amid global uncertainty.

Growth in FY 2025-26 was broad-based across production and demand. On the supply side, the secondary and tertiary sectors expanded 8.8% and 9.3% respectively at constant prices, with manufacturing up 10.7% and the trade, hotels, transport and communication segment up 11.0%, while the primary sector grew 3.2% and agriculture and allied activities moderated to 3.0%. On the demand side, private final consumption expenditure grew 7.7%, against 5.8% in each of the two preceding years, and gross fixed capital formation rose 8.2%, against 6.4%, taking the investment rate to 32.3% of GDP and pointing to a strengthening investment cycle and improving quality of growth.

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FY26 provisional estimate of 7.7% against a 7.6% Second Advance Estimate; Q4 FY26 at 7.8%; FY27 projected at 6.7%.

Sources: ;

Inflation and Monetary Policy

Inflation moderated markedly during FY 2025-26. Headline Consumer Price Index inflation eased to multi-year lows, touching 1.54% in September 2025, the lowest reading since June 2017 and below the lower bound of the Reserve Banks 2 to 6% tolerance band, before settling at 3.40% in March 2026. Food inflation was similarly subdued for much of the year, supported by favourable output, before normalising towards the year-end. The trajectory has since reversed: inflation rose for eight consecutive months to 4.38% in June 2026, the highest reading since December 2024, as the energy shock from the West Asia conflict began transmitting to consumer prices and food inflation climbed to 5.32%.

Sources: Ministry of Statistics and Programme Implementation, and . CPI is on the revised series with base year 2024=100.

Against this backdrop, the policy repo rate was reduced to 5.25% in December 2025, completing a cumulative 125 basis points of easing during the calendar year and taking the rate to its lowest level since July 2022. The rate-setting committee then shifted to a more cautious, data-dependent stance, moving to a neutral position in February 2026 and holding at 5.25% at each subsequent meeting, including on 5 August 2026. Amid the West Asia conflict and elevated energy prices, higher input costs across commercial LPG, base metals, rubber and plastics have been flagged as potential upward pressures, and inflation is now expected to peak at around 5.9% in the third quarter of FY 2026-27. Softer interest rates for most of FY 2025-26 were nonetheless broadly supportive of rural credit and equipment financing.

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Fiscal Position and Policy Support

The fiscal position remained stable, supported by strong Goods and Services Tax collections and a continued emphasis on capital expenditure across roads, railways, logistics and rural connectivity. A significant policy measure with direct relevance to the Company was the rationalisation of GST on tractors and a range of agricultural equipment from 12% to 5%, effective 22 September 2025 under the 56th GST Council, improving affordability and supporting mechanisation demand.

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This was reinforced by sustained rural and farm support, including the PM-KISAN income-transfer scheme, the Sub-Mission on Agricultural Mechanisation, which provides subsidies of 40 to 50%

on farm equipment, an expanding network of Custom Hiring Centres, and an enlarged allocation to infrastructure under the Union Budget, the last being a key demand driver for the Companys construction-equipment and crane operations.

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Indian Outlook

Indias macroeconomic outlook remains resilient, underpinned by domestic consumption, sustained public capital expenditure and a gradual recovery in private investment. Real GDP growth for FY 2026-27 is projected at 6.7%, revised marginally upward, representing a normalisation from the 7.7% recorded in FY 2025-26 rather than a deterioration in underlying conditions. Consumer Price Index inflation for the year is projected at 5.0%, trimmed from an earlier 5.1%, and is expected to peak at around 5.9% in the third quarter before easing. The Monetary Policy Committee held the repo rate at 5.25% in August 2026 and retained a neutral stance, indicating that it sought greater clarity on the inflation outlook before acting.

The most significant near-term risk stems from crude-oil price volatility arising from geopolitical tension, which is regarded as the biggest single risk to both growth and inflation, alongside rupee depreciation feeding imported inflation and the evolution of monsoon conditions, each of which bears directly on rural cash flows and equipment demand. High-frequency indicators nonetheless suggest that domestic demand and overall economic activity have remained relatively resilient.

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Industry Overview

Indo Farm operates across two large and structurally growing equipment markets, namely agricultural tractors and construction-equipment cranes, both of which are underpinned by rising mechanisation, infrastructure investment and sustained government support. This section reviews the global and Indian landscape for each, followed by the key growth drivers common to the sector.

Global Tractor Industry

Tractors represent the single largest category of agricultural machinery worldwide, serving as essential equipment across land preparation, sowing, harvesting and transport. The global agricultural-tractor market was valued at approximately USD 68.87 billion in 2024 and is projected to reach approximately USD 111.22 billion by 2033, growing at a compound annual growth rate (CAGR) of about 5.47% over the period. Growth is being driven by rising farm mechanisation, increasing global food demand, government subsidies, and the accelerating adoption of precision-agriculture technologies such as GPS guidance, telematics and automation.

India, China and the United States are the largest tractor markets by unit sales and revenue, with the Asia-Pacific region the dominant and fastest-growing geography, supported by modernisation and government subsidy programmes. By horsepower, the utility and mid-range segment (broadly 40 to 100 HP) accounts for the largest share of global demand, reflecting its versatility across farming applications, a segment in which Indo Farm is well positioned through its 16 to 100 HP portfolio.

Global agricultural tractor market (USD billion)

CAGR of approximately 5.47% over 2025 to 2033. Utility and mid-range (40 to 100 HP) tractors dominate; Asia-Pacific leads global demand.

OUTLOOK

Global Tractor Industry

The global tractor market is expected to sustain mid-single-digit growth over the medium term, driven by farm mechanisation, rising food demand, labour shortages, and the diffusion of precision-agriculture and automation technologies across both developed and emerging markets.

High initial acquisition costs, fluctuating raw-material prices and the gradual emergence of electric and autonomous platforms are the principal factors shaping the competitive landscape.

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Indian Tractor Industry

India is the worlds largest tractor market by volume, accounting for approximately one-third of global production. FY 2025-26 was a landmark year for the industry, with total industry sales (domestic plus exports) reaching a record of approximately 12.66 lakh units, comprising domestic wholesale dispatches of 11,60,231 units and exports of 1,05,593 units. Domestic dispatches rose 23.47% year- on-year, crossing the one-million-unit mark for the first time, while exports grew approximately 7% and also crossed the one-lakh-unit mark. This compares with total industry volumes of approximately 10.39 lakh units in FY 2024-25.

This performance was driven by a combination of factors: a healthy and well-distributed monsoon that supported both Kharif and Rabi prospects, improved rural liquidity, easier access to financing, and two significant policy catalysts, namely the reduction in GST on tractors from 12% to 5% and pre-buying ahead of the then-expected transition to TREM Stage-V emission norms from 1 April 2026. That timeline has since been revised. Under a draft notification issued by the Ministry of Road Transport and Highways in February 2026, TREM Stage-V is proposed to apply from 1 October 2026 to engines above 75 HP and below 25 HP, while the 25 to 50 HP band would move to TREM IIIAA from April 2028 and to full TREM V from April 2032, and the 50 to 75 HP band would move directly to TREM V in 2032. As the 25 to 75 HP range accounts for the bulk of domestic volumes, the deferral removes a significant near-term cost step-up for the industry, while also removing the pre-buying support that

aided FY26 volumes. Demand during the year was otherwise broad-based across regions, supported by stronger farm cash flows, replacement-cycle purchases, and the rising deployment of tractors in non-agricultural applications such as haulage and rural infrastructure. Structurally, the industry continues to benefit from a gradual shift toward higher-horsepower tractors and from mechanisation penetration that remains low relative to global benchmarks.

OUTLOOK

Indian Tractor Industry

Following a record FY26, the industry is expected to enter a phase of moderated, more normalised growth in FY 2026-27, with structural fundamentals such as rising mechanisation, improving rural incomes, financing access and government support remaining favourable. The proposed deferral of TREM Stage-V for the core horsepower bands removes a near-term cost increase for buyers, but also removes the pre-buying support that lifted FY26 volumes.

Evolving weather patterns and emerging El Nino conditions are the principal monitorables, alongside the demand digestion that typically follows a pre-buying-driven peak and the final form of the emission-norm notification.

Sources: , The Million-Unit Milestone: FY26 Redefines Indias Tractor Market (10 April 2026), citing Tractor and Mechanization Association data Ministry of Road Transport and Highways, draft notification on TREM emission standards (February 2026)

Global Crane Industry

Cranes are essential capital equipment across construction, infrastructure, energy, industrial and maritime material-handling applications, and the industry serves as a structural proxy for global fixed- capital formation. The global crane market was valued at approximately USD 55.62 billion in 2025 and is projected to reach approximately USD 78.17 billion by 2034, growing at a CAGR of about 3.85%. Growth is being driven by an expanding pipeline of megaprojects (those exceeding USD 1 billion, which surpassed USD 3 trillion in aggregate in 2025), offshore-wind installation, critical-mineral mining, port-capacity expansion, and the electrification and replacement of ageing diesel crane fleets.

Mobile cranes, the category to which Indo Farms Pick-N-Carry cranes belong, dominate the global market with a share of approximately 78.6%, reflecting their versatility across applications and capacity ranges. The Asia-Pacific region commands the largest share of global demand at approximately 45%, led by China and India, supported by sustained infrastructure development and rapid urbanisation.

Global crane market (USD billion)

CAGR of approximately 3.85% over 2026 to 2034. Mobile cranes account for about 78.6% of the market; Asia-Pacific leads at about 45%.

OUTLOOK

Global Crane Industry

The global crane market is expected to sustain steady growth, underpinned by a large megaproject pipeline, renewable-energy build-out, port automation, and the replacement of diesel fleets with hybrid and zero-emission platforms as emission regulations tighten.

Commodity-price volatility, the cyclicality of construction capital expenditure, and the pace of emission-driven fleet renewal are the principal factors shaping the market.

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Indian Crane Industry

The Indian crane market, encompassing mobile, crawler, tower and fixed cranes, was valued at approximately USD 1.48 billion in 2025 and is projected to reach approximately USD 2.18 billion by 2031, growing at a CAGR of about 6.70%. Mobile cranes accounted for approximately 62.6% of the market in 2025, while fixed and tower cranes, expanding at a faster CAGR of around 8.2%, are gaining share on the back of high-rise residential and commercial construction. Demand is anchored by the USD 1.4 trillion National Infrastructure Pipeline, Bharatmala and Sagarmala corridors, the Smart Cities Mission, and rising renewable-energy installations, alongside a structural shift from labour-intensive methods to mechanised lifting.

India crane market size (USD billion)

CAGR of approximately 6.70% over 2026 to 2031. Construction accounts for 57% of demand; fixed and tower cranes are the fastest-growing sub-segment.

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Pick-N-Carry Crane Industry Pick-and-carry cranes constitute a mobile-crane category that

is largely distinctive to India, comprising rigid-superstructure, self-propelled machines used for short- distance lifting and material movement across construction, infrastructure, industrial and mining applications. Based on available industry data and the Companys internal assessment, the domestic pick-and-carry market is estimated at approximately 12,000 to 14,000 units per annum, with no formal industry association tracking the segment. The application base is broadening beyond construction into diverse material-handling uses, and the long-term potential is illustrated by comparison with the backhoe-loader market, currently around 55,000 units per annum, which was a fraction of that size a decade or two earlier.

FY 2025-26 was a relatively subdued year for the category as the market absorbed the transition to CEV Stage-V emission norms, which increased engine cost, raised average selling prices by approximately 10%, and temporarily moderated demand, compounded by some moderation in government capital expenditure. This was an industry-wide, cyclical effect rather than a company-specific one.

OUTLOOK

Pick-N-Carry Crane Industry

With the emission transition substantially absorbed and infrastructure spending re-accelerating on a larger budgetary allocation, demand momentum is expected to recover, and the widening application base supports a multi-year structural growth trajectory.

Commodity-price volatility in steel and base metals, the pace of government project execution, and competitive intensity among a limited number of established players remain the principal swing factors.

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Tower Crane Industry

Tower cranes are fixed cranes essential to vertical construction, used to lift heavy materials to significant heights on high-rise residential, commercial and infrastructure projects. The Indian tower crane market was valued at approximately USD 897.8 million in 2025 and is projected to reach approximately USD 1,395.0 million by 2035, growing at a CAGR of around 4.5%. The market is segmented by type into flat-top, hammerhead, luffing-jib and self-erecting cranes, and by lifting capacity into sub-5-tonne, 6-to-10-tonne and above-10-tonne classes, with flat-top and luffing-jib variants gaining share owing to their suitability for congested urban airspace. North India, led by the Delhi-NCR corridor, accounts for a substantial share of national demand.

India tower crane market size (USD million)

CAGR of approximately 4.5% over 2025 to 2035. Flat-top and luffing-jib cranes lead demand; the rental model is expanding access for smaller contractors.

Market Opportunity

The segment has historically relied heavily on imports, creating a substantial domestic manufacturing and import-substitution opportunity that is being reinforced by the Make in India initiative and the localisation of construction equipment. Competition in the segment is concentrated among a small number of companies, comprising a few international manufacturers and a limited set of domestic players, leaving room for a cost-competitive Indian entrant. The rising adoption of a rental-based model is also broadening access to high-capacity equipment for regional developers and smaller contractors, expanding the addressable base.

Growth Drivers

- High-rise and vertical urbanisation: rising urban land prices and dense city development are driving multi-storey residential and commercial construction, the core application for tower cranes.

- Government infrastructure programmes: the USD 1.4 trillion National Infrastructure Pipeline, the Smart Cities Mission (over 8,000 active projects), more than 100 ongoing metro-rail projects, and airport development under the UDAN scheme all require vertical-lifting equipment.

- Real-estate and commercial expansion: sustained growth in residential, commercial and warehousing construction, supported by rising foreign direct investment, underpins durable demand.

- Import substitution and Make in India: localisation of manufacturing reduces cost and lead times, favouring competitively priced domestic offerings over imports.

- Technology and rental models: the adoption of flat-top and luffing-jib designs for confined sites, IoT-enabled smart cranes, and the growing rental market are enhancing accessibility, safety and productivity.

OUTLOOK

Tower Crane Industry

Vertical urbanisation, government-backed infrastructure and smart-city programmes, and the import-substitution opportunity position domestic tower-crane manufacturing for structural growth. With competition concentrated among a small number of companies and a meaningful share of demand still met through imports, competitively priced domestic manufacturing has scope to gain acceptance.

As a relatively new domestic category, near-term adoption depends on field validation, dealer development, and the pace of metropolitan and tier-II construction activity.

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Construction Equipment Industry

The construction-equipment industry, which forms the broader context for the Companys crane operations, is a key beneficiary of Indias infrastructure investment cycle. According to ICEMA, the industry sold 1,36,995 units in FY 2025-26, a decline of approximately 2% from 1,40,191 units in FY 2024-25, with domestic sales easing around 7% to 1,13,229 units even as exports surged 32% to record levels across all major equipment categories. In value terms, ICEMA estimates the sector at approximately USD 10 billion in FY 2024-25, making India the worlds third-largest construction- equipment market, and projects it to reach approximately USD 14.76 billion by 2030 at a CAGR of about 8.3%. Earthmoving equipment remained the dominant category at approximately 71% of volumes (97,236 units), while road-construction equipment grew 6.3%. The modest FY26 dip was execution-driven rather than structural, reflecting slower infrastructure roll-out and the CEV Stage-V emission transition.

ICEMA targets 2,50,000 units per annum by 2030, positioning India as the worlds second-largest construction-equipment market.

Tailwinds

- Infrastructure-led public capital expenditure: the Union Budget FY 2026-27 allocated a record Rs12.2 lakh crore to public capex, 4.2 times the FY 2017-18 level, supporting highways, railways, metro networks, waterways and urban infrastructure and creating sustained equipment demand.

- Strong export momentum: exports grew 32% in FY 2025-26, with Indian-manufactured equipment reaching more than 125 countries; CEV Stage-V adoption has improved global acceptance and opened regulated markets such as Europe.

- Long-term market expansion: the market is projected to reach approximately USD 14.76 billion by 2030, with industry bodies targeting annual sales of 2,50,000 units and India becoming the worlds second-largest construction-equipment market.

- Policy support for domestic manufacturing : the new Construction and Infrastructure Equipment (CIE) incentive scheme is expected to accelerate localisation of critical components such as hydraulics, engines and transmissions, reducing import dependence and strengthening competitiveness.

Headwinds

- Infrastructure execution pace: domestic demand moderated in FY 2025-26 as national-highway construction and the pace of project awards eased from prior-year levels.

- Reduced spending in select programmes: a slowdown in the Jal Jeevan Mission and moderated fund disbursements weighed on demand for earthmoving and pipeline-related equipment.

- Contractor liquidity: extended payment cycles among contractors influenced working capital and the timing of equipment purchases and replacement, particularly among financing-dependent customers, a cyclical rather than structural factor.

- CEV Stage-V transition and cost inflation: the emission-norm transition raised equipment costs and temporarily affected purchasing, while crude-oil and commodity-price volatility pressured project economics in the latter part of the year.

OUTLOOK

Construction Equipment Industry

Industry forecasts point to a return to growth in FY 2026-27, with domestic sales expected to rise approximately 7% and exports by more than 20%, supported by the record public-capex allocation, accelerating project execution and continued export momentum.

Project-execution speed, land-acquisition timelines and contractor payment cycles remain the primary near-term risks, partly mitigated by the new Infrastructure Risk Guarantee Fund.

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Key Growth Drivers

Across both the tractor and construction-equipment markets, a common set of structural and policy

drivers underpins demand:

- Government support and subsidies: Policy measures continue to improve affordability and accelerate mechanisation. In FY 2025-26, the reduction in GST on tractors from 12% to 5%, the Sub-Mission on Agricultural Mechanisation (subsidies of 40 to 50% on farm equipment), PM-KISAN income transfers of approximately Rs78,000 crore, and an agriculture-ministry allocation of Rs1,40,561 crore under the Union Budget directly supported farm-equipment demand.

- Rising need for agricultural productivity and mechanisation: With declining arable land per capita, labour shortages and rising rural wages, mechanisation has become essential to enhance yield efficiency, and Indias low mechanisation penetration relative to global benchmarks provides a long structural runway.

- Infrastructure and construction push: Sustained public capital expenditure under the National Infrastructure Pipeline, PM Gati Shakti, Bharatmala, Sagarmala, metro and rapid-transit corridors, and the Smart Cities Mission drives demand for cranes and material-handling equipment. By January 2026, the Agriculture Infrastructure Fund had sanctioned approximately Rs80,224 crore for over 1.5 lakh projects.

- Technology integration: The adoption of GPS guidance, telematics, loT-based monitoring and precision-farming tools is reshaping equipment functionality, improving efficiency, reducing input costs and enhancing after-market value capture.

- Financing access and rural credit: Expanding formal credit, softer interest rates for much of FY 2025-26, and the growing role of captive financing arms improve retail conversion and affordability, particularly for first-time and small and marginal buyers.

Sources: Press Information Bureau, Union Budget FY 2026-27 and Ministry of Agriculture and Farmers Welfare

Retail Financing

Retail financing is a critical enabler of tractor sales, a substantial share of which is credit-funded; access to timely and competitively priced finance directly influences demand and retail conversion. The tractor-financing ecosystem is served largely by private banks, non-banking financial companies (NBFCs) and the captive financing arms of tractor manufacturers. For a manufacturer, a captive NBFC dedicated to tractor financing supports retail conversion, particularly in periods when mainstream financiers are selective, and improves dealer working-capital cycles through inventory and exchange financing. Softer interest rates through much of FY 2025-26 were broadly supportive, although NBFCs also navigated evolving asset-classification and provisioning norms during the year.

OUTLOOK

Retail Financing

Stable rural incomes, a large and under-penetrated customer base, and the growing role of captive tractor-financing arms support a structurally positive outlook, with captive NBFCs increasingly central to manufacturers retail strategies.

Evolving regulatory norms on asset classification and provisioning, and the sensitivity of the credit cycle to rural cash flows, remain key considerations.

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Company Overview

Indo Farm Equipment Limited is an ISO 9001:2015-certified, vertically integrated manufacturer of agricultural tractors and construction equipment, headquartered at Chandigarh. Incorporated in 1994, the Company commenced commercial tractor production in 2000 through a technical collaboration with Ursus of Poland, and subsequently diversified into hydraulic Pick-N-Carry cranes in 2008. It manufactures tractors in the 16 to 100 HP range under the Indo Farm brand and Pick-N-Carry cranes of 9 to 30 tonnes under the Indo Power brand. The Company operates through six regional offices and a dealer network of 225-plus tractor dealers and 25-plus crane dealers, and exports to over 30 countries.

A defining characteristic of the Company is its deep backward integration. Indo Farm operates its own foundry, commissioned in 2006, together with an extensive machine shop, foundary division, gear shop, press shop assembly line, testing & pre delivery testing , manufacturing a substantial share of critical components in-house, comprising approximately 65% of crane components and 40% of tractor components by value, including engine blocks, transmission housings, gears, hydraulic cylinders and winches. The tractor unit also supplies the back-end transmission assemblies for the crane division, which creates a structural cost advantage and supports capacity utilisation across both businesses.

The Company operates three reportable segments, namely Tractors, Cranes (construction equipment), and a tractor-financing business conducted through its wholly owned NBFC subsidiary, Barota Finance Ltd. The financing subsidiary, which is consolidated at the group level, is a deliberate strategic asset dedicated mainly to supporting tractor retail financing.

Business Segment Review

The Companys operations are organised across three reportable segments, namely Tractors, Cranes, and tractor financing through Barota Finance Ltd. In FY 2025-26, consolidated revenue from operations stood at Rs44,002.05 lakhs, of which the Crane segment contributed Rs21,809.19 lakhs (49.6%), the Tractor segment Rs20,144.65 lakhs (45.8%), and the tractor-financing segment Rs2,048.21 lakhs (4.6%). The year was characterised by a strong recovery in the tractor business, which more

than offset a cyclical, emission-transition-driven softness in cranes.

Tractor Business

The Tractor Division was the principal growth driver in FY 2025-26. Segment revenue grew 42.14% to Rs20,144.65 lakhs and the segment result improved 18.1% to Rs1,685.03 lakhs. Segment-result growth of 18.1% lagged revenue growth of 42.14%, indicating margin compression as the Company priced competitively and invested in new markets. Growth was supported by dealer-network expansion, entry into new geographies such as Karnataka and Maharashtra, improved retail-financing support including from the captive NBFC, and the GST reduction. Capacity utilisation remained modest at approximately 35 to 45%, leaving headroom for volume-led operating leverage but also reflecting the low base from which the division is rebuilding.

Tractor Business	FY 2025-26	FY 2024-25	Change
Segment revenue (f lakhs)	20,144.65	14,171.69	+42.14%
Segment result (f lakhs)	1,685.03	1,434.27	+18.1%
Installed capacity (units p.a.)	12,000	12,000	n.a.

OUTLOOK
Tractor Business
Management targets tractor revenue growth of approximately 25 to 30% in FY 2026-27, supported by continued dealer expansion (a network roadmap toward 500 dealers), deeper geographic coverage, captive-finance support through Barota Finance, and a nascent export initiative including a trial order received from a German customer.
Steady-state tractor margins are guided at approximately 10% at the EBIT level, with scope for improvement as capacity utilisation rises. Monsoon dependence, financing availability and competitive intensity remain the key risks.

Crane Business

The Crane Division manufactures hydraulic Pick-N-Carry cranes under the Indo Power brand and remains the larger product business by revenue. FY 2025-26 was a difficult year for the segment: revenue declined 3.1% to Rs21,809.19 lakhs and the segment result dropped 19.8% to Rs1,925.80 lakhs. The decline reflected the industry-wide CEV Stage-V emission transition, which raised engine costs and slowed demand as the market adjusted, compounded by some moderation in government capital expenditure. Part of the engine-upgrade cost was initially absorbed rather than passed on, deepening the margin impact, with pricing progressively passed through as the year progressed. The existing plant operated at approximately 80% utilisation, indicating that capacity, not demand, has been the binding constraint.

Crane Business	FY 2025-26	FY 2024-25	Change
Segment revenue (f lakhs)	21,809.19	22,505.31	-3.1%
Segment result (f lakhs)	1,925.80	2,402.64	-19.8%
Crane Business	FY 2025-26	FY 2024-25	Change
Installed capacity (units p.a.)	1280	1280	n.a.

OUTLOOK

Crane Business

From the existing facility, management guides to crane revenue growth of approximately 15 to 20% in FY 2026-27 as the emission transition normalises and infrastructure spending re-accelerates, while the Company expands from the approximately 25 to 30% of the country it currently covers toward national reach through new dealers and selective direct sales. The new dedicated crane facility at the Bhud site, Baddi adds approximately 3,600 pick-and-carry units of annual capacity, with management targeting a medium-term path to 70 to 80% utilisation by FY 2029-30.

Retail Financing, Barota Finance Ltd

Barota Finance Ltd is a wholly owned, RBI-registered, non-deposit-taking NBFC focused on financing agriculture and construction equipment, and operating primarily in tractor financing. It finance: tractors sold by Indo Farm and as well as pre-owned tractors of all other brands. It carries a loa book of approximately Rs13,500 lakhs with over 5,000 active customers, and finances approximately 20%-plus of Indo Farm tractor sales, together with dealers used-tractor exchange inventory. At the consolidated level, the segment contributed revenue of Rs2,048.21 lakhs and a segment result o Rs971.62 lakhs in FY 2025-26, up 6.9%; reported profitability reflected additional provisioning following a change in non-performing-asset classification norms.

Barota Finance (Tractor Financing NBFC)	Detail
Status	Wholly owned, RBI-registered (non-deposit-taking)
Focus	Agriculture and construction equipment financing; primarily tractors (Indo Farm and other brands, and pre-owned tractors)
Loan book / AUM	Rs13,500 lakhs
Active customers	5,000+
FY26 segment revenue (consolidated)	Rs2,048.21 lakhs
FY26 segment result (consolidated)	Rs971.62 lakhs

OUTLOOK

Retail Financing

Barota Finance is expected to deepen its role in supporting tractor retail conversion and dealer financing. Continued investment in the captive tractor-financing book is integral to the Companys tractor growth strategy.

Evolving non-performing-asset and provisioning norms will continue to influence reported NBFC profitability from period to period.

Exports

Exports contributed approximately Rs2,100 lakhs in FY 2025-26 and represent an emerging area of focus. Following participation in international exhibitions, including Agritechnica in Germany, the Company received a trial order from a German customer together with smaller trial orders in other markets. The Company continues to open newer geographies, including in Europe, to broaden its revenue base over time.

Growth Enablers and Capacity Expansion

The centrepiece of the Companys growth strategy is a new, dedicated construction-equipment facility at the Bhud site in Baddi, developed on a 30-acre land parcel adjacent to the existing plant. The project is funded substantially from IPO proceeds rather than fresh borrowing, with total capital expenditure of approximately Rs7,000 to 7,500 lakhs, of which approximately Rs2,500 lakhs had been incurred by the close of FY 2025-26. Civil construction and the pre-engineered building shed were in advanced stages and machinery orders had been placed, with commercial production expected to commence during FY 2026-27.

The new plant adds approximately 3,600 units of annual crane capacity, taking total crane manufacturing capacity to approximately 4,800 units per annum. The expansion carries a strong strategic fit: the existing tractor plant has spare capacity to supply additional crane back-end transmission assemblies and in-house hydraulic components, so crane growth also improves tractor-plant utilisation.

New Bhud Facility, Key Parameters	Detail
Location	Bhud site, Baddi, Himachal Pradesh (30 acres)
Products	Pick-N-Carry cranes and Tower cranes
Added crane capacity	3,600 units p.a.
Total crane capacity (post-ramp)	4,800 units p.a.
Total capital expenditure	Rs7,000 to 7,500 lakhs (IPO-funded)
Capex incurred (to FY26-end)	Rs1,900 lakhs
Commercial production	Expected to commence in FY 2026-27
Target utilisation	70 to 80% by FY 2029-30

Alongside physical capacity, the Company is investing in distribution and brand development. The tractor dealer network expanded to 225-plus dealers, with a roadmap toward 500, while crane dealers stand at 25-plus against a target of 50-plus for national coverage. The Company is pursuing a combination of dealer-led and selective direct-sales models to seed the eastern and southern markets.

The Bhud facility also houses the Companys new tower-crane vertical. During the year the Company acquired manufacturing technology from China and developed, built and tested its first tower-crane prototype in-house, clearing evaluations across structural integrity, operational efficiency, reliability and safety. Commercial production is expected to commence during FY 2026-27, addressing a segment that is largely met through imports and is tied to vertical urbanisation in metropolitan and tier-II cities.

SCOT Analysis

The following summarises the Companys competitive position across its tractor, crane and retail

financing businesses.

Strengths

- Deep backward integration: An in-house chain spanning foundry and casting, press shop, machining, gear shop, assembly and final testing, producing approximately 65% of crane components and 40% of tractor components in value terms.

- Integrated and complementary manufacturing: The tractor unit supplies crane transmissions and hydraulic components, so crane growth also improves tractor-plant utilisation.

- Diversified portfolio: Tractors of 16 to 100 HP, pick-and-carry cranes, a new tower-crane line and a captive financing NBFC, spreading revenue across cycles.

- Captive retail financing: Barota Finance supports retail conversion and dealer working capital.

- Strong balance sheet: A debt-equity ratio of 0.27 times, expansion funded from IPO proceeds, and a net-worth base of ^55,648.17 lakhs.

Challenges

- Margin management: EBITDA margin compression at 14.69%, reflecting the emission-transition cost step-up, input inflation and investment in new markets.

- Emission transition in cranes: The CEV Stage-V changeover raised equipment costs across the industry during the year, with pricing progressively passed through.

- Geographic coverage in cranes: The crane business currently reaches approximately 25 to 30% of the country, with national expansion underway.

- Scale and capacity ramp: Returns on equity and capital employed reflect an enlarged post-IPO equity base and new capacity yet to reach full utilisation.

Opportunities

- Crane capacity unlock: The new Bhud plant addresses the production constraint, with demand rather than capacity having been the limiting factor.

- Tower-crane import substitution: An under-penetrated, import-reliant segment tied to vertical urbanisation.

- National and export expansion: Untapped market potential across eastern and southern India, alongside an early export initiative.

- Policy tailwinds: The GST reduction to 5% on tractors, mechanisation subsidies, PM-KISAN and an enlarged infrastructure budget.

Threats

- Input-cost volatility: Steel and base-metal prices influence margins.

- Geopolitical and supply-chain factors: The West Asia conflict affects crude-oil prices and the rupee.

- Monsoon and climate: Rainfall patterns and El Nino conditions influence rural cash flows and tractor demand.

- Competitive intensity: Established participants across pick-and-carry cranes, tower cranes and tractors.

Financial Performance Review (FY 2025-26)

Indo Farm recorded double-digit revenue growth in FY 2025-26, led by a recovery in the tractor business that offset a cyclical, emission-transition-driven decline in cranes, while profitability came under pressure, particularly in the fourth quarter. All figures are on a consolidated basis; the complete audited Statement of Profit and Loss, Balance Sheet and Segment Note are presented in the Financial Statements section of this Annual Report.

Details of Significant Changes in Key Financial Ratios

The following key financial ratios are reproduced, on a consolidated basis, exactly as disclosed under the Analytical Ratios note to the audited Consolidated Financial Statements for FY 2025-26, together with the numerator and denominator used for each ratio and the year-on-year variance, in accordance with Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Ratio	Numerator	Denominator	FY26	FY25	Variance
Current Ratio	Current Assets	Current Liabilities	2.93	2.79	+4.94%
Debt-Equity Ratio	Long-Term & ShortTerm Borrowings	Equity	0.27	0.32	(17.67%)
Debt Service Coverage Ratio	Earnings before Interest & Tax	Interest & Principal due during the Year	1.33	0.90	+48.43%
Return on Equity	Net Profit After Tax	Average Equity Shareholders Fund	4.54%	5.81%	(21.83%)
Inventory Turnover Ratio	Consumption during the Year & Change in Inventory	Average Inventory Holdings	2.50	2.29	+9.04%
Trade Receivables Turnover Ratio	Revenue from Operations	Average Trade Receivables	3.87	3.65	+5.97%
Trade Payables Turnover Ratio	Net Purchases during the Year	Average Trade Payables	8.31	6.94	+19.76%
Net Capital Turnover Ratio	Revenue from Operations	Average Net Working Capital	1.50	1.87	(20.00%)
Net Profit Ratio	Net Profit After Tax	Revenue from Operations	5.61%	6.08%	(7.72%)
Return on Capital Employed (%	Earnings before Interest & Tax	Average of Total Equity & Total Debt	7.52%	7.19%	+4.66%

Human Resources

The Company regards its people as central to its manufacturing capability and long-term competitiveness. As at 31 March 2026 it employed 907 people across its business segments. The workforce spans engineering, production, quality, sales and service functions across the manufacturing operations and the financing business.

During the year, the Company strengthened its sales and marketing organisation to support entry into new geographies and the expansion of its dealer network, an investment that contributed to higher employee costs in the near term. Management has indicated that incremental headcount requirements are concentrated in marketing and distribution rather than production, and expects employee cost to decline as a proportion of revenue as the revenue base expands. The Company maintains a continued focus on workplace safety, skill development and employee engagement across its manufacturing facilities at Baddi, Himachal Pradesh.

The Company places strong emphasis on employee motivation, engagement and a sense of community across its workforce. During the year, it organised a range of employee-engagement and cultural activities, including an inter-departmental cricket tournament and a tug-of-war contest that fostered teamwork and camaraderie, and celebrated festivals and occasions such as Makar Sankranti, Lohri and International Womens Day. In addition, a customer-connect visit was organised for customers from Madhya Pradesh, strengthening the bond between the Companys employees, channel partners and end-customers. These initiatives reflect the Companys belief that a motivated, engaged and well-connected workforce is central to sustaining productivity and long-term performance.

Internal Control Systems

The Company maintains an internal control framework commensurate with the size, scale and complexity of its tractor, crane and financing operations. The framework monitors operations, safeguards assets, supports the accuracy and reliability of accounting records and promotes compliance with applicable laws. Internal audits are carried out by an independent internal audit function and, together with management reviews, are overseen by the Audit Committee of the Board.

Risk Management

The Company has established a risk-management framework to identify, assess, monitor and mitigate risks that could affect its operations, financial position and strategic objectives. Given the cyclical nature of the tractor and construction-equipment industries and the ongoing capacity expansion, risk management is treated as an integral part of business planning rather than a standalone compliance exercise.

Principal risks include demand cyclicality and monsoon dependence in tractors, the infrastructure cycle in cranes, input-price movements, regulatory and emission-compliance requirements, and credit quality in the financing business. These are managed through diversification across tractors, cranes and financing, backward integration, a low-leverage balance sheet, disciplined working-capital management and prudent credit-appraisal practices, supported by regular Board and management oversight.

Investor Relations

The Company is committed to transparent and timely communication with shareholders and the investment community. Financial results, investor presentations, earnings-call transcripts, regulatory filings, shareholding patterns, press releases and investor interaction details are made available through the stock exchanges and the Companys website. Quarterly earnings calls provide an opportunity for investors and analysts to engage with senior management.

The Company ensures prompt disclosure of material developments to the stock exchanges in compliance with applicable regulations, enabling equal and timely access to information. Its equity shares are listed on NSE and BSE. Investor queries and grievances are addressed by the Company Secretary and Compliance Officer, with the Company continuously strengthening its investor communication practices in line with evolving governance standards.

Consolidated Outlook

Indo Farm enters FY 2026-27 with three growth levers: a tractor business rebuilding scale on a wider dealer and financing footprint; a Pick-and-Carry crane business expanding capacity through the new Bhud facility, while adding Tower Cranes as a new growth vertical; and a new tower-crane vertical addressing a largely import-served market. The balance sheet is supportive, with expansion funded from IPO proceeds, term debt being wound down and backward integration aiding cost control. The near-term priorities are commissioning the new capacity, scaling crane distribution toward national coverage and translating higher tractor volumes into improved operating leverage. Performance through the year will be shaped by the monsoon, the infrastructure cycle, input prices and the pace of the capacity ramp.