Krishna Defence & Allied Industries Ltd Management Discussions

Management Discussion and Analysis Report

Global economy

Overview

After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies.

Outlook

The global economy is again disrupted, this time with the outbreak of war in the Middle East. Rising commodity prices, firmerinflation expectations, and tighter financial conditions are testing the recent resilience. Global inflation is expected to tick up in 2026 and resume its decline in 2027.

Pressures are concentrated in emerging market and developing economies, especially commodity importers with preexisting vulnerabilities. Risks are decisively on the downside. A prolonged conflict, deeper geopolitical fragmentation, disappointment over AI-driven productivity, or renewed trade tensions could weaken growth and unsettle markets.

High public debt and eroded policy buffers add vulnerability. Policies should foster adaptability, enhance credibility, and reinforce international cooperation.¹Downside risks dominate the outlook. A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial intelligence driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets. Elevated public debt and eroding institutional credibility further heighten vulnerabilities. At the same time, activity could be lifted if productivity gains from AI materialize more rapidly or trade tensions ease on a sustained basis.

World Economic Outlook Growth Projections

		PROJECTIONS
(Real GDP, annual percent change)	2025	2026	2027
World Output	3.4	3.1	3.2
Advanced Economies	1.9	1.8	1.7
United States	2.1	2.3	2.1
Euro Area	1.4	1.1	1.2
Germany	0.2	0.8	1.2
France	0.9	0.9	0.9
Italy	0.5	0.5	0.5
Spain	2.8	2.1	1.8
Japan	1.2	0.7	0.6
United Kingdom	1.3	0.8	1.3
Canada	1.7	1.5	1.9
Other Advanced Economies	3.0	2.6	2.2
Emerging Market and Developing Economies	4.4	3.9	4.2
Emerging and Developing Asia	5.5	4.9	4.8
China	5.0	4.4	4.0
India	7.6	6.5	6.5
Emerging and Developing Europe	2.0	2.0	2.1
Russia	1.0	1.1	1.1
Latin America and the Caribbean	2.4	2.3	2.7
Brazil	2.3	1.9	2.0
Mexico	0.6	1.6	2.2
Middle East and Central Asia	3.6	1.9	4.6
Saudi Arabia	4.5	3.1	4.5
Sub-Saharan Africa	4.5	4.3	4.4
Nigeria	4.0	4.1	4.3
South Africa	1.1	1.0	1.3
Memorandum
Emerging Market and Middle-Income Economies	4.4	3.8	4.1
Low-Income Developing Countries	4.8	4.8	4.9

Source: IMF-style compilation, World Economic Outlook, April 2026

Note: For India, data and projections are presented on a fiscal year (FY) basis, with FY 2025/26 (starting in April 2025) shown in the 2025 column. Indias growth projections are

Indian economy

Overview

Economic growth accelerated in fiscal year 2025 (FY2025, ended 31 March 2026) amid resilient household consumption, steady public investment, and lower-than-expected drag from net exports. GDP growth is projected to decline to 6.9% in FY2026 primarily due to external challenges, and expand to 7.3% in FY2027 as consumption and investment benefit from favorable policies and the external environment improves. Inflation is forecast to rise easing to 4.0% to4.5%inFY2026 amid conflict in FY2027 as food prices moderate. A key policy challenge is to rationalize subsidies and transfers to protect vulnerable groups while preserving fiscal space for growth-enhancing public investment.

Real GDP grew by 7.6% in FY2025, higher than the 7.1% recorded in FY2024, supported by resilient household consumption and steady public investment. Private final consumption expenditure growth increased to 7.7% in FY2025 from 5.8% in FY2024, stimulated by lower income tax and goods and services tax (GST) and falling food prices.

Government consumption grew 6.6%, helped by slower fiscal consolidation. Investment expanded a robust 7.1% as private investment responded to easing financial conditions, including falling interest rates, complementing an increase in public capital expenditure. Exports grew by 6.5% despite the impact of higher US reciprocal tariffs on several Indian goods, while imports grew at 6.4%.

Table 2.15.1 Selected Economic Indicators, %

Growth will moderate this fiscal year but rise in FY2027, while inflation will rise this fiscal year and moderate in FY2027.

	2024	2025	2026	2027
GDP growth	7.1	7.6	6.9	7.3
Inflation	4.6	2.1	4.5	4.0

GDP = gross domestic product.

Note: Years are fiscal years ending on 31 March of the next year.

Sources: Ministry of Statistics and Programme Implementation, Government of India;

Reserve Bank of India; Asian Development Bank estimates.

On the supply side, a buoyant services sector and recovery in the manufacturing sector led growth in FY2025. Services sector growth accelerated to 9.0% in FY2025 compared to 7.9% in FY2024 (Figure 2.15.2). This was helped by 9.9% growth in financial, real estate, and professional services, as the sector shifted towards high-value-added services and on continued robust real estate demand. Trade, hotel, transport, and communication services grew by 10.1%. The industrial sector grew by 8.8%, underpinned by a 11.5% expansion in manufacturing, helped by higher domestic demand and falling input prices.

With a prolonged conflict now more likely, downside risks to the outlook have increased substantially. A prolonged conflict in the Middle East could undermine Indias macroeconomic performance through multiple channels. These include higher energy prices, disruptions to trade flows, and weaker remittance inflows-dias external sector. Higher global oil prices would put upward pressure on inflation, significantly widen the current account deficit, and weigh on growth by increasing input costs. The extent of the impact would depend on the degree of pass-through to domestic fuel prices. While limited pass-through could cushion the effect on inflation and growth in the near term, it would increase fiscal pressure through higher subsidy requirements. 2

Industry overview

Global defence industry3

Global defence spending grew in 2025, reaching USD2.63 trillion, up from USD2.48 trillion in 2024. Spending also rose in real terms by 2.5%. This uplift was driven by strong spending increases in Europe and the Middle East. In Europe, defence-industrial developments were marked by a surge in venture capital investment in defence start-ups, alongside EU member states enhancing Brussels role in coordinating industrial and procurement efforts.

Key Signals and Implications for 2026

SIPRI estimates that world military expenditure reached USD 2.718 trillion in 2024, a 9.4% real-terms increase versus 2023 and the steepest year-on-year rise since at least 1988.

PwCs topline for the industrial base is that global revenue across the top 100 aerospace & defense companies reached USD 922 billion in 2024, while noting demand strength across civil and defense alongside delivery/ output constraints tied to labor and supply chain fragility.

Further, Space Foundations 2025 Q2 Space Report highlights a USD 613 billion global space economy in 2024, with the commercial sector contributing 78% of total growth and 149 launches in the first half of 2025.

This signals that demand is being pulled by commercial cadence as much as state programs.

Further, IATA reports full-year passenger traffic in 2024 rose10.4% vs 2023, landing 3.8% above 2019 levels. This demand-side indicator supports sustained production and aftermarket workloads even when OEM output lags.

Indian defence manufacturing industry4

Indias defence manufacturing sector is rapidly emerging as a cornerstone of the countrys strategic and economic ambitions. The government has prioritised this sector, reflecting its significance in national security and economic growth. DeDDefence exports surge to a record high of 38,424 crore in Financial Year 2025-26. This impressive growth demonstrates In-dias expanding role as a global defence exporter.

The governments ‘At-manirbhar Bharat (Self-Reliant India) initiative further reinforces this focus, encouraging domestic companies to develop cutting-edge defence products and reduce dependency on imports. Policies like the Defense Acquisition Procedure 2020 and the increase in FDI limit to 74% under the automatic route are designed to enhance private sector participation and drive technological advancements. With these measures, India is positioning itself as a global hub for defence manufacturing, contributing to national security, creating job opportunities, and fostering technological innovation.

Growth drivers

Defence industrial corridors: Defence Industrial Corridors (DICs) are dedicated zones that provide crucial infrastructure, land, and streamlined regulatory processes, attracting both domestic and foreign investors. This fosters collaboration, knowledge transfer, and the creation of a robust supply chain within the DICs. With easier access to resources and a supportive ecosystem, companies can manufacture equipment efficiently, leading to increased domestic production and a stronger Indian defence industry.

Promotion of indigenous design and development of defence equipment:

Promoting indigenous design and development of defence equipment is a strategic growth driver for Indias manufacturing sector. By fostering domestic innovation in areas like missiles, warships, and combat vehicles, India reduces dependence on foreign imports and strengthens its techno-4 https://www.investindia.gov.in/sector/defence-manufacturing logical prowess.

This not only boosts self-reliance but also creates high-skilled jobs, attracts investments in R&D, and fuels the growth of a robust domestic defence ecosystem, ultimately positioning India as a leading defence manufacturing nation.

Modernization and upgradation:

Indias military modernization push translates directly to growth in domestic defence manufacturing. The ageing equipment and weaponry across the armed forces necessitate large-scale procurement. By prioritizing domestic production to meet these requirements, the government fuels demand for Indian-made defence equipment.

This incentivizes manufacturers to expand capacity, invest in new technologies, and create high-skilled jobs, fostering a robust domestic industry capable of meeting future defence needs.

iDEX Challenge: The Innovations for Defence Excellence (iDEX) initiative is a flagship programme launched by the Ministry of Defence. It seeks to foster innovation and technology development in defence and aerospace by engaging startups, MSMEs, individual innovators, R&D institutes, and academia. Through the iDEX Challenge, the government identifies specific defence technology requirements and invites innovative solutions, thereby driving indigenisation and strengthening the domestic defence ecosystem.

Aatmanirbhar Bharat Abhiyan: The Aatmanirbhar Bharat Abhiyan, or Self-Reliant India Mission, is a comprehensive vision outlined by the Government of India to make the country more self-sufficient across various sectors, including defence. This mission emphasises the need for indigeni-sation and encourages the local production of defence equipment, reducing dependency on foreign imports and promoting the development of a robust domestic defence industry.

Export Ecosystem Expansion: Transitioning from a net importer to a global supplier, India has fundamentally restructured its defense diplomacy. This shift establishes strategic leverage worldwide by providing cost-effective, high-tech alternatives to traditional Western arms. In FY 2025-26, defense exports hit an unprecedented record of 38,424 crore, reflecting a mas-sive 62.66% year-on-year growth. Indian defense hardware, including Brah-Mos and Pinaka systems, is now actively being exported.

Capital Budget Indigenisation: Ring-fencing domestic capital expenditure systematically starves import dependency while injecting immense liquidity into local defense industries. This budgetary commit-ment guarantees long-term financial viability for indigenous manufacturers and severely reduces vulnerability to foreign supply chain shocks. Indias defence budget rose from 2.53 lakh crore in 2013 14 to 7.85 lakh crore in 2026-27 with 1.39 lakh crore exclusively earmarked for domestic pro-curement. This massive domestic allocation represents a staggering 75% of the total capital acquisition budget reserved entirely for Indian defense hardware.

Manufacturing Base Scaling: Indias defense industrial base has matured significantly, shifting focus from state-run monopolies to a highly collab -orative public-private manufacturing ecosystem. This synergy creates competitive economies of scale, accelerating domestic production capabil-ities while integrating agile MSMEs into global supply chains. Indigenous defense production soared to an all-time high of 1.51 lakh crore in FY 2024-25.

While Defense Public Sector Undertakings (DPSUs) anchored this output, the private sector s contribution rapidly expanded to capture a 23% overall share.

The 5th Positive Indigenisation List comprises 346 strategically vital items, including complex Line Replacement Units (LRUs) for radars and sonar sys-tems.

Fostering Startup Innovation: Bypassing traditional bureaucratic defense behemoths, India is aggressively leveraging agile startups to develop cutting-edge, next-generation military and warfare technologies. This decen-tralized R&D approach accelerates rapid prototyping and actively prevents technology denial by hostile regimes in critical domains like AI and unmanned systems. The Innovations for Defence Excellence (iDEX) framework has engaged 619 startups and MSMEs, resulting in over 430 signed contracts as of February 2025. Consequently, the government has directly procured 43 advanced items worth 2,400 crore from these young iDEX innovators.

Private Sector Aerospace Integration: Breaking the longstanding state monopoly in military aviation is fundamentally crucial for establishing a robust, globally competitive domestic aerospace sector. Empowering private conglomerates to lead complex platform integration catalyzes the immediate formation of localized, high-skill Tier-1 and Tier-2 supplier networks.

For instance, the India C295 programme marks the first major Make in India aerospace initiative in the private sector, with Tata Advanced Systems leading manufacturing, final assembly, testing, and long-term support of the aircraft. With India as the largest buyer of 56 aircraft, the project will enable over 85% indigenous production, involving thousands of parts and a growing network of domestic suppliers, boosting Indias aerospace capabilities.

Research & Development: Expanding defense research funding beyond exclusive state agencies ensures the rapid, indigenous development of proprietary, futuristic weapon systems. By bringing academia and private industries into the R&D fold, India is laying the foundation for true technological self-reliance rather than mere license-based assembly. In the FY 2026-27 budget, the financial allocation for the Defence Research and Development Organisation (DRDO) was heavily increased to 29,100.25 crore. Crucially, 25% of the total Defence R&D budget has now been structurally opened up directly to private industry, start-ups, and academic institutions. 5

Indian Navy outlook

2025 marked a turning point in naval induction. INS Tamal, commissioned in Russia, became the final warship acquired from a foreign shipyard. The focus has now shifted firmly to domestic construction. Among inducted were INS Surat, a Visakhapatnam-class destroyer; INS Nilgiri, INS Himgiri and INS Udaygiri, the first of the Nilgiri-class stealth frigates; INS Vagsheer, the last of the Kalvari-class submarines; and three shallow-water anti-submarine warfare vessels INS Arnala, INS Androth and INS Mahe. The fleet also welcomed INS Nistar, the diving support vessel, along with survey ships INS Nirdeshak and INS Ik-shak. Each induction strengthens more than combat power. Warship construction sustains domestic design skills, specialised manufacturing, and a workforce whose expertise increasingly extends beyond defence. Few key drivers of the this rapid growth are enumerated below:

Key drivers

Indigenisation and Maritime Capability: Strategic Imperatives for the Indian Navy

The development of an indigenised naval force, characterised by minimal dependence on external supply chains constitutes a central pillar of the Government of Indias Aatmanirbhar Bharat vision. This shift has become increasingly relevant as India positions itself as the Indian Ocean Regions (IOR) primary "first responder". In recent months, the Indian Navy has conducted multiple humanitarian assistance, disaster response, and maritime security operations, safeguarding lives and high-value cargo.

These interventions have enhanced global confidence in Indias maritime capabilities and reinforced its role as a stabilising actor in the region.

Indias push toward naval self-reliance, guided by the Indian Naval Indigeni-sation Plan (INIP), has gained renewed urgency. Global disruptions in supply chains, emerging technological paradigms, and intensifying maritime threats increasingly define the contours of modern naval warfare. Indigeni-sation therefore functions not only as an industrial or technological goal but as a critical strategic determinant of Indias ability to maintain a secure, credible, and resilient maritime posture in the decades ahead.

INIP 2015–2030: Objectives, Recommendations, Pursuance & Outcomes

The Indian Naval Indigenisation Plan (INIP) 2015–2030 was conceived to accelerate Indias naval self-reliance by systematically indigenising equipment across the Float, Move and Fight categories. Its core objective was to transition from partial import dependence to a structured, long-term, 15-year roadmap enabling domestic development of advanced shipborne systems, in alignment with the national Make in India vision.

It sought to identify capability gaps, particularly in high-end weapons, sensors, propulsion systems, gearboxes and underwater technologies, and provide industry with a clear forecast of future requirements to stimulate indigenous R&D and production.

Key recommendations included partnering with DRDO, DPSUs and private industry; adopting Buy Indian/Buy & Make Indian procurement; strengthening collaboration with MSMEs; and building domestic capacity in propulsion, electronics, submarine technologies, aviation systems and critical components. The plan further recommended standardisation, open architecture controls, ToT absorption and formation of joint development ecosystems.

Reflecting this push, the armed forces, including the Navy, have identified over 5,000 items that will be sourced domestically. Indigenous construc- ships tion of frigates, warships and submarines is driving defence production under Aatmanirbhar Bharat and helping transform the Navy into a Builders Navy, with its Warship Design Bureau having designed over scores of vessels since inception

Indigenisation lies at the heart of shift from a Buyers Navy to a Builders Navy

Over the past two decades, the Indian Navy has undergone a marked transformation from an import-dependent "Buyers Navy" to a predominantly indigenous "Builders Navy." This evolution is reflected in the domestic design and construction of more than one hundred warships across major shipyards, supported by the Warship Design Bureau. Recent indigenisation platforms have articulated the goal of increasing private-sector participation to 50 percent or more, while strengthening partnerships with academia to accelerate research and technology development.

Navy has been collaborating with IITs to strengthen research, innovation and capability development for future naval platforms. Indian Navys Swavlamban 3.0 Indigeniza-tion Plan, released in 2023, provides an industry- and academia-oriented roadmap that identifies platforms, systems and subsystems prioritised for indigenous development.

As per the indigenization plan, the machinery fitted onboard ships in the three categories of Float, Move and Fight has been indigenised to the extent of about 90%, 60% and 50% respectively, an indication of shortfall in the third category.

Surface Fleet and Shipbuilding

rapidly: The Indian Navys surface fleet 51 large ships are under construction in the country, valued at approximate-ly Rs. 90000 crore, demonstrating the countrys growing shipbuilding capability.

Indias naval modernisation has accelerated over the past one and half decades, marked by the induction of advanced indigenous platforms across aircraft carriers, destroyers and multi-mission frigates, underscoring the countrys growing self-reliance in maritime defence

Submarine and Underwater Systems

Indias submarine capability has witnessed a major transformation under the Aatmanirbhar Bharat vision, with a sharp focus on indigenous construction and technology development. Ongoing indigenous submarine programmes and follow-on initiatives (including design and localised subsystem development) continue under MoD/DRDO partnership and domestic yard execution.

Indian Navy Budget Growth and Percentage Share

(2020-21 to 2025-26)

Year	DSE	Navy (Revenue)	% age share	Navy (Capital)	% age share	Navy (Revenue + Capital)	% age share
2020-21	3,23,053.00	22,934.75	7.10	26,688.28	8.26	49,623.03	15.36
2021-22	3,47,088.28	23,360.68	6.73	33,253.55	9.58	56,614.23	16.31
2022-23	3,85,370.15	25,406.42	6.59	47,590.99	12.35	72,997.41	18.94
2023-24	4,32,720.14	32,284.20	7.46	52,804.75	12.20	85,088.95	19.66
2024-25	4,54,772.67	32,778.73	7.21	62,545.98	13.75	95,324.71	20.96
2025-26	4,91,732.30	38,194.80	7.77	65,352.82	13.29	1,03,547.62	21.06
Source: eparlib.sansad.in

Navy Budget Doubles to 1.03 Lakh Crore, Share Rises from 15% to 21% in five years

Indias defence budget has risen from 2.53 lakh crore in 2013 14 to 6.81 lakh crore in 2025 26, a 9.53% increase over last year. The Indian Navys budget has also grown consistently from 2020–21 to 2025–26, especially in capital spending, reflecting Indias focus on building a technologically advanced and strategically capable maritime force.6

Dairy equipment manufacturing industry

The Dairy Processing Equipment market is witnessing steady growth as dairy processors increasingly focus on improving product quality, extending shelf life, and enhancing production efficiency. processed dairy products such as milk, cheese, yogurt, butter, and dairy ingredients is driving the adoption of advanced processing equipment across global markets. Equipment such as pasteurizers, homogenizers, separators, evaporators, and dryers play a critical role in ensuring food safety, consistency, and large-scale production capabilities. The market also benefits from rising consumption of value-added dairy products, including flavored milk, protein-enriched beverages, and functional dairy offerings.

Growth is further supported by the expansion of organized dairy processing, particularly in emerging economies, along with improvements in cold chain infrastructure and supply chain efficiency.

- creasingly investing in automated and energy-efficient equipment to optimize operations, reduce costs, and meet regulatory standards. Technologies such as membrane filtration and advanced drying systems are gaining traction, particularly in applications such as milk powder, whey processing, and protein ingredient production. Additionally, increasing focus on sustainability is encouraging the adoption of solutions that reduce energy consumption, water usage, and overall environmental impact. As demand for high-quality dairy products continues to rise, the market is expected to witness continued technological advancements and increased equipment adoption across both developed and developing regions.

The dairy processing equipment market in India is expected to reach a projected revenue of US$ 2,740.0 million by 2030. A compound annual growth rate of 7.1% is expected of India dairy processing equipment market from 2025 to 2030. Some of the notable dairy processing market highlights are below:

• The India dairy processing equipment market generated a revenue of USD 1,794.7 million in 2024 and is expected to reach USD 2,740.0 million by 2030.

• The India market is expected to grow at a CAGR of 7.1% from 2025 to 2030.

• In terms of segment, pasteurizers was the largest revenue gener- ating equipment type in 2024.

• Pasteurizers is the most lucrative equipment type segment regis- tering the fastest growth during the forecast period.

• In terms of revenue, India accounted for 13.3% of the global dairy processing equipment market in 2024.

• Country-wise, India is expected to lead the global market in terms of revenue in 2030.

• In Asia Pacific,India dairy processing equipment market is projected to lead the regional market in terms of revenue in 2030.

In the light of immense opportunity in both defence and dairy manufacturing processing, the company is expected to also grow along side the industry of which it is a part.

Company overview

Krishna Defence and Allied Industries Limited (KDAIL) is a rapidly advancing defence company, providing critical components to the Indian Navy for its warships and developing special products for the Indian Army. With in-house capabilities for designing, developing, and manufacturing a wide range of equipment for both the Defence and Dairy sectors, the companys products exemplify indigenous excellence, crafted with utmost precision to cater to a promising defence market. In alignment with the national goal of achieving indigenous defence equipment manufacturing capabilities and self-sustainability, KDAIL has a rich history of innovation and growth.

Starting in 1997 with the manufacturing of dairy equipment, the company entered the defence sector in 2006 by developing shipbuilding steel sections for the Indian Navy, previously imported. In 2022, KDAIL was listed on the NSE Emerge platform and on December, 2025 the Company migrated to the Capital Segment (Mainboard) of NSE. The company operates state-of-the-art manufacturing facilities in Halol and Kalol Gujarat for defence equipment, and in Kalol, Gujarat for dairy equipment. Their defence products include shipbuilding steel sections, improved space heating devices, weld consumables, ballast bricks and profiles for T-90 tanks while their dairy equipment product spectrum feature milk cooling tanks, robotic milk collection units, and stainless-steel milk cans. With over 30 years of operations and a dedicated workforce of more than 189 employees, KDAIL continues to develop indigenous solutions to replace imported defence components, by supplying critical items to both the Navy and the Indian Army.

The Companys research and development (R&D) capabilities drive the companys product diversification across various business verticals. These capabilities encompass product design, engineering, simulation, prototyping, and testing, primarily conducted at its manufacturing facilities. Its research focuses on creating innovative products and solutions tailored to meet customer expectations and preferences while enhancing production processes and product quality. Leveraging its R&D strengths, the company is currently developing several new products, some of which have already garnered orders.

Waveoptix Defence solution Pvt LTD (Associate Company)

The Company has ventured into defence electronic which has a state-of-the-art manufacturing & testing facility in Bengaluru, where it significantly enhances its RF and optical technologies capabilities. This advanced facility includes comprehensive RF testing and measurement infrastructure, covering a range from 9KHz to 44GHz, equipped with signal generators, spectrum analysers, network analysers, and high-performance oscilloscopes. Additionally, the optical testing and measurement infrastructure boasts cutting-edge manufacturing and testing equipment, such as optical insertion and return loss testers, polishing machines, and a wide array of connectors and cables.

The new facility setup allows for rapid prototyping of complex RF and optical systems, enabling end-to-end system realisation with in-house expertise in RF, digital, and optical domains. Rigorous environmental testing ensures product durability and reliability. This strategic enhancement strengthens the Companys position in delivering high-performance, rugged systems for various applications and enhances its reputation for innovation and quality in RF and optical technologies.

Conceptia Software Technologies Private Limited

Conceptia Software Technologies Pvt. Ltd., India is an ISO 9001-2015 certified provider dedicated to mechanical engineering, shipbuilding, and oil & gas industry.

Conceptia is a leading design & associated service provider for India, Middle East & Asia Pacificregion for the marine market. Conceptias balanced & diversified experience gained over 20 years in handling naval as well as commercial projects makes Conceptia unique amongst its peers. With teams present in major Indian Shipyards and UAE, Conceptia is perhaps the largest Indian player in this market.

Conceptias core expertise is in providing design & engineering services to shipyards, ship owners and oil and gas companies. They undertake Detailed Engineering of all types of ships and offshore structures, basic design of vessels, support during construction and pre-production stage like animation of events/event depiction etc. Conceptia has undertaken and successfully completed more than 60 engineering projects from various shipyards, ship-owners from Middle East and Asia Pacific Region.

Conceptia has been a major player in the marine & offshore industry, supplying engineering services to various shipyards including Garden Reach Shipbuilders & Engineers Ltd., Drydocks World Dubai, Hindustan Shipyard Ltd., Sembawang Shipyard Pte., Jaya Holding Pte., etc. to name a few.

Apart from this, Conceptias credentials for providing skilled manpower support includes support provided for various Indian & foreign customers including Reliance Defense & Engineering Ltd, Nkom-Qatar, Drydocks World

Dubai etc. to name a few.

Krishna Vabo Defence Composites Private Limited

Krishna Vabo Defence Composites Private Limited is a joint venture between Indias Krishna Defence and Allied Industries Limited (KDAIL) and Netherlands-based VABO Composites B.V.. Established in 2026, this entity (51:49 shareholding) focuses on manufacturing, designing, and supplying advanced composite products, such as ship doors and hatches, for the In-dian Navy and global maritime sectors. The goal is to indigenize composite solutions and reduce import dependence under the Make in India initiative and the target market is Indian defence programs (navy) and export markets, including Southeast Asia and the Middle East.

Taharabadkar Solutions Private Limited

Taharabadkar Solutions Pvt Ltd (TSPL) is involved in design, development and manufacture of smart weapons & guided ammunition and ammunition systems, it was incorporated on 11th March 2025. KDAIL has acquired 46.81% stake in TSPL.

Xsub Robotics Private Limited

Xsub Robotics Private Limited (XRPL) is involved in design, developing and manufacture of manned and unmanned marine platforms such as remotely operated vehicles (ROVs), autonomous underwater vehicles (AUVs), robotic crawlers, inspection machines, and allied equipment. It was incorporated on 27th April, 206 and KDAIL has 50.01% stake in XRPL.

Strategic Growth and Expansion

Krishna Defence and Allied Industries Limited (KDAIL) is embarking on a path of sustained growth and expansion through a focused three-pronged strategy.

Capacity Expansion

KDAIL is making substantial investments to expand its production capacity for existing products. This includes acquiring advanced machinery, such as customized furnaces and heat treatment equipment etc. Additionally, the company is securing an adjacent 40,000 square foot plot to establish a new production line. These efforts are aimed at enhancing operational efficiency and meeting increasing demand

Strategic Partnerships

The company is diversifying its product offerings through strategic partnerships. KDAIL has formed a joint venture with a Vabo Composites, a Euro-pean manufacturer which is leader in composite doors and hatches. This collaboration will introduce innovative products to the Indian market and explore export opportunities, broadening the companys market reach. The Joint Venture is in the form of a subsidiary company.

The Company has also formed a strategic partnership with Conceptia Software Technologies Private Limited by acquiring 20% stake and becoming an Associate Company.

The Company has formed a strategic partnership with Taharabadkar Solutions Private Limited by acquiring 46.81% stake and becoming an Associate Company.

The Company has also formed strategic partnership with Planys Ark Private Limited and Conceptia Software Technologies Private Limited to form a joint venture named as Xsub Robotics Private Limited (XRPL). It is involved in design, developing and manufacture of manned and unmanned marine platforms such as remotely operated vehicles (ROVs), autonomous underwater vehicles (AUVs), robotic crawlers, inspection machines, and allied equipment. It was incorporated on 27^th April, 206 and KDAIL has 50.01% stake in XRPL.

Sustainable Growth

By focusing on capacity expansion and strategic product diversification,

KDAIL is poised to achieve sustainable growth and strengthen its position as an industry leader. This expansion will also generate new job opportunities and contribute to the overall strength of the Indian manufacturing sector.

Key strengths

Diversified range of products

Expanding beyond its current steel and alloy offerings, the company aims to meet the Indian militarys modernization needs by diversifying into Composite Doors and Hatches, Specialised Weld Consumables and Unmanned Vehicle for doing underwater survey of the Naval Ship, this strategic move positions it as a comprehensive solution provider for domestic procurement, enhancing its market presence and aligning with evolving armed forces requirements. The governments focus on specialization and private sector involvement presents expanded opportunities. Leveraging core competencies in product design, development, and testing, along with technology transfer for defence applications, the company is poised to benefit from Indias Make in India program and increased indigenization efforts.

Precision engineering expertise with complex product manufacturing capability

With comprehensive in-house capabilities, the company develops and manufactures defence application products, and dairy equipment. Utilising precision machining, assembly, and specialized fabrication, it produces critical assemblies and precision components for defence sectors. Sourcing raw materials from trusted vendors, its stringent quality control ensures low rejection rates and meets customer requirements. Having successfully delivered orders for the Indian Armed Forces and dairies, the company is primed to capitalize on future opportunities. its specialized operations and stringent quality control make it challenging for new players to qualify for such projects.

Strong R&D capabilities with a focus on innovation

The company prioritizes Research and Development (R&D) to enhance its product range, investing in adaptable manufacturing processes. Its experienced team of engineers drives complex product development, keeping it at the forefront of technological advancements. This focus on R&D has enabled the company to continually upgrade its manufacturing technology and processes. With a strong emphasis on R&D, the company has developed a diverse range of products for the defence and dairy sectors, including bulb bars, Space heating Device (Bukhari), Ballast bricks, Specialized

Weld Consumables and Profiles for T-90 Tanks for the Indian Armed Forces, as well as innovations like the Solar BMC and Robotic Milk Collection Unit for dairy applications. The companys dedicated R&D team remains committed to expanding its product portfolio across both sectors.

Long Standing Relationship with the customers

With stringent qualification processes in the defence sector, the companys registrations with all the shipyards, DRDO and Directorate of Quality Assurance (Naval) reinforces its credibility. Decades of experience in manufacturing engineering products have built in trust with its customers, who rely on the company for tailored solutions. Its engineering prowess enables a consistent delivery of high-quality precision components and assemblies, thus fostering strong customer relationships. The company prioritizes understanding and meeting its customers specific needs, ensuring satis -faction which in turn enables continued dependence on its products and services by its clients.

Experienced and Qualified Management and Employee base

The companys experienced management team, led by its Executive Board, brings vast knowledge and expertise to the company. With extensive experience in its served sectors, the company drives market opportunities, formulate strategies, and manage client expectations effectively. Additionally, the independent directors provide valuable advisory services, thus enhancing performance and compliance. Each business vertical is overseen by experienced segment heads, ensuring strong customer relationships and effective management. Supported by team of 30+ Engineers, experienced Metallurgist, trained personnel and skilled workers, the companys qualified management and employees enable it to expand our operational capabilities, enhance product quality, and drive industry growth.

Product portfolio

Defence	Dairy
In-house Development
Ship Building Steel Sections	Milk Cooling Tanks
Steel profile for T-90 Tanks
Special Steel Alloy Ballast Bricks	Robotic Milk Collection Unit
Special Steel Alloy Welding Wire
Welding Electrodes	Stainless Steel Milk Can
Transfer of Technology from DIPAS & DRDO

Improved Space Heating Device

Discussion on Financial performance with respect to operational performance

The Company has a robust and adequate system of internal financial controls, commensurate with its size and business operation. It ensures timely and accurate financial reporting in accordance with applicable accounting standards, safeguarding of assets against unauthorised use or disposition and compliance with all applicable regulatory laws and Company policies. Internal Auditors of the Company review the internal financial control systems on a regular basis for its effectiveness, and necessary changes and suggestions are duly incorporated into the system. Internal audit reports are also reviewed by the Audit Committee of the Board.

Financial performance

The revenue from operations during the year 2025-26 has increased to Rs. 24,478.22 Lakhs as compared to Rs. 18,961.38 Lakhs in the last financial year which shows increase of 29.10% of previous years revenue. The Profit before tax is Rs. 5,081.20 Lakhs for FY 2025-26 as compared to Rs. 2,979.57 Lakhs in the last financial year. The company has made profit after tax of Rs. 3,812.12 Lakhs for FY 25-26 as compared to Rs. 2,202.87 Lakhs in the last financial year.

Moreover, the financial ratios of the company lie in a good range, thereby indicating a stable financial position of the company in this fiscal

Particulars	FY26	FY25	YoY growth (%)
Revenue (in Mn)	2447.8	1896.1	29.1
EBITDA (in Mn)	520.3	306.2	69.9
PAT (in Mn)	381.20	220.3	73.1
ROCE (in %)	26.72%	21.87%	22

Detailsofsignificant financialratio: changes the

Particulars	F.Y. 2025-26	F.Y. 2024-25	Variation (%)	Remarks
(i) Debtors Turnover	9.13	8.43	8.30 Increase	Due to increase in sales
(ii) Inventory Turnover	5.52	3.62	53 Increase	Due to higher sales and improved inventory management
(iii) Interest Coverage Ratio	146.6	16.01	816 Increase	Due to Repayment of long term debt
(iv) Current Ratio	3.99	4.01	0	NA
(v) Debt Equity Ratio	0.01	0.07	-85 Decrease	Due to Decrease in short-term borrowings
(vi) Operating Profit Margin (%)	20.91	16.21	29.00 Increase	Due to improved operational efficiency and higher profitability
(vii) Net Profit Margin (%)	15.57	11.62	34 Increase	Due to increase in Turnover

Segment wise performance

Operating segments have been identified based on the internal regularly reviewed by the Chief Operating Decision Maker ("CODM") for the purpose of allocating resources and assessing performance, in accordance with Ind AS 108 Operating Segments.

The Defence Products Segment constitutes the Companys principal business activity. The Dairy Products Segment represents a relatively small portion of the Companys operations and does not meet the quantitative thresholds prescribed under paragraph 13 of Ind AS 108 for separate reportable segment disclosure.

Accordingly, the Company has only one reportable operating segment, being the Defence Products Segment. Segment-wise information in respect of revenue, results, assets and liabilities has therefore not been presented separately, as the information for the sole reportable segment is the same as that disclosed in the financial results.

The CODM reviews the operating performance of the Company on a consolidated basis, and the segment information presented above appropriately reflects the manner in which the Companys business is managed.

Opportunities and threats

Opportunities

Capitalize on Government Initiatives

The continued increase in Indias defence budget and strong policy focus on indigenization under programs like "Make in India" and "Atmanirbhar

Bharat" present significant opportunities. The company, with its specialization in defence components such as special steel profiles,weld consum -ables, and naval applications, is well positioned to benefitfrom domestic procurement preferences.

Precision Engineering Expertise with Complex Product Manufacturing Capability

The companys strength lies in precision manufacturing of specialized defence components rather than broad-based engineering leadership. Its ability to meet stringent defence specifications, maintain low rejection rates, and execute complex machining and fabrication processes provides a competitive edge in niche segments.

Its established track record with the Indian Armed Forces and dairy sector clients enhances credibility, though scale remains smaller compared to large defence PSUs and Tier-1 private players.

Diversified Range of Products

The company is gradually expanding beyond core steel and alloy components into adjacent defence segments such as naval systems (e.g., hatches, doors), specialized welding consumables, and select electronics-related applications.

While this diversification supports long-term growth, execution capability, certifications, and scaling in these new domains will be key to realizing these opportunities.

Export Opportunities

Indias growing focus on defence exports creates opportunities for the company to explore international markets, particularly in friendly countries seeking cost-effective defence components.

However, export growth will depend on achieving global certifications, building international partnerships, and scaling production capabilities.

Invest in Research and Development (R&D)

Continued investment in R&D supports product development, process improvements, and alignment with evolving defence requirements. The companys engineering capabilities have enabled development of specialized products for both defence and dairy sectors.

However, R&D intensity and scale remain moderate, and future competitiveness will depend on sustained investment and successful commercialization of new products.

Strengthen Supply Chain Management

Fluctuations in prices of steel, alloys, and other key inputs can significantly impact margins, especially given the companys limited pricing power in defence contracts. Managing procurement efficiently -pliers remains essential.

Threats

Fluctuations in Raw Material Prices

Relying on raw materials such as steel and various alloys, Krishna Defence is susceptible to price fluctuations in these commodities, which can mod -erately influence their production costs and profitability. To address this risk, the company has deployed efficient hedging strategies and considers diversifying their supplier base to explore alternative sources.

Political and Economic Instability

Geopolitical developments can influence defence priorities and procurement timelines. While defence spending is relatively stable, policy shifts, regulatory changes, or delays in approvals can impact order flows and execution cycles.

Government Dependency

A large portion of revenue is linked to defence orders from government entities. Delays in tendering, order finalization, or execution can impact revenue visibility and cash flows.

Risks and concerns

Risk	Description	Mitigation strategy
Market risk	The companys revenues are significantly dependent on defence procurement cycles, government spending, and execution timelines rather than general economic growth. While the dairy segment adds diversification, defence re - mains the primary growth driver and is influenced by policy decisions, indigenization push, and budget allocations.	The company is expanding its order book through increased participation in indigenization programs such as "Make in India" in defence. It is diversifying into high-margin specialized defence components while maintaining its dairy equipment segment for stability. Strategic partnerships, export opportunities, and long-term contracts with government en- tities help reduce revenue volatility.
Innovation risk	The key innovation risk lies less in "consumer preferenc- es" and more in the ability to meet evolving defence spec- ifications, requirements. Failure to upgrade capabilities in precision manufacturing and defence-grade engineering could im- pact competitiveness.	The company continues to invest in R&D focused on defence applications, precision engineering, and material capabilities. It collaborates technological standards, with global and and indigenization domestic defence players, upgrades manufacturing processes, and aligns product development with armed forces requirements and future procurement trends.
Data security and cyber risk	As a defence-linked manufacturer, the company faces heightened cybersecurity risks, including potential threats to sensitive design data, supply chain systems, and de- fence-related information. Any breach could lead to reg- ulatory, reputational, and national security implications.	The company has strengthened its cybersecurity framework with upgraded IT infrastructure, secure ERP systems, controlled data access, and compli- ance with defence-related data protection norms. Regular monitoring systems, and employee aware- ness programs are used to mitigate cyber threats.
Environmental footprints- Waste management	Improper handling of industrial waste, especially from metal processing and manufacturing activities, can lead to environmental damage and regulatory penalties. ESG compliance expectations are also increasing for defence suppliers.	The company follows structured waste manage- ment practices aligned with regulatory require- ments and continues to improve compliance systems. It is investing in sustainability initiatives such as renewable energy (including solar power targets), resource efficiency, responsible manufacturing processes.

Manufacturing

Krishna Defence & Allied Industries Limited (KDAIL) upholds stringent quality standards and continuously advances its manufacturing processes. The companys commitment is reflected in its ISO 9001:2015 certification, NABL-approved in-house testing and 2 metallurgists. Recent upgrades include significant capacity expansions with advanced machinery such as press machines, lathe machines, wire drawing machines, melting furnaces, and induction machines.

The company has integrated CNC machining, automated welding, and precision fabrication technologies to enhance product quality and efficiency. In-house capabilities extend to designing components, supported by a new heat treatment plant for shipbuilding steel sections for streamlined inventory management. The companys manufacturing plants in Kalol and Halol, Gujarat, are equipped with ISO-certified quality management systems, ensuring high standards in every product.

Quality control

In the industries served by the company, adherence to quality standards is paramount to avoid cancellation of purchase orders due to defects or non-compliance with customer specifications. To ensure quality, the quality control team conducts thorough checks at every stage of the manufacturing process, from raw material identification to final assembly. The company offers a warranty period of typically 12 months from the date of delivery, during which any manufacturing defects are repaired or replaced at their expense. Additionally, depending on the customer, the company may be required to provide performance bank guarantees to ensure timely supply of goods and avoid penalties for delays.

Human resources

The company has a diverse workforce that collaborates to maintain high service standards while adhering to industry best practices in HR policies. The company focuses on increasing the representation of female employees to meet diversity goals, recognizing that a contented workforce enhances efficiency and productivity. The company attracts top talent and encourages cross-functional collaboration to cultivate an inclusive work environment. With a commitment to growth, the company empowers employees through various training programs, leadership development modules, and engagement sessions.

These initiatives encompass product and process training, behavioural training, sales training, self-management programs, and fraud and risk management training. Utilizing HR analytics, the company ensures smooth leadership transitions through succession planning for the executive committee, emphasizing organizational fit. Engaging employees through regular meetings virtual sessions, workshops, and confluences, the company provides platforms for interaction with business leaders, talent showcasing, and family engagement. Additionally, the company offers long-term incentives, stock options, and competitive compensation to retain its top talent.

Total number of employees as on 31^st March, 2026: 189

Internal control systems and adequacy

The Company maintains robust internal control procedures tailored to its size and activities. It believes that safeguarding assets and enhancing operational efficiencyare achievable through the implementation of adequate internal controls and the standardization of operational processes.

These internal controls and risk management mechanisms adhere to the principles and criteria outlined in the corporate governance code of the organization. They are seamlessly integrated into the overall organizational structure of both the Company and the Group, involving various personnel who collaborate effectively in fulfilling their respective duties. The Board of Directors provides guidance and strategic-seeing monitoring and support committees.

Disclosure of Accounting Treatment

The financial statements for the year ended 31st March, 2026 have been prepared as per the Indian treatment of the accounting standards as earlier the Company was following Generally Accepted Accounting Principles (GAAP).

The explanation by the management for change in accounting standards is that as the Company has migrated from SME Platform of National Stock Exchange to the Capital Segment (Mainboard) of National Stock Exchange it is mandatory for the Company to follow INDAS method of accounting in line with the listing regulations applicable to the Company.

Cautionary statement

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forward-looking statements" within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied.

Important factors that could make a difference to the Companys operations include economic conditions affecting demand-supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors.

By Order of the Board of Directors

Place: Halol

Date: 17th June, 2026.