KSB Ltd Management Discussions

ANNEXURE II TO BOARDS REPORT

Economic Overview

Global Economy 1

The global economy demonstrated notable resilience in FY 2025, maintaining a steady growth rate of 3.3% despite persistent trade frictions and geopolitical uncertainties. This performance was supported by strong trade activity in the early part of the year, sustained investments in Artificial Intelligence (AI), semiconductors and digital infrastructure, along with continued fiscal support across major economies. For the industrial sector, the stabilization of global manufacturing PMI (Purchasing Managers Index) in the latter half of the year provided a conducive environment for capital goods demand.

Growth in advanced economies remained moderate at 1.7%, with the United States leading at 2.1%. Europe registered a comparatively slower expansion of 1.4%, reflecting the impact of trade-related challenges and subdued industrial activity. Emerging and developing economies continued to outperform, registering growth of 4.4%, driven in part by China s expansion of 5.0%. However, several smaller economies remained vulnerable to elevated debt levels and currency volatility.

While policy support and technological advancements contributed to economic stability, rising geopolitical tensions in West Asia and the Red Sea corridor present potential risks to global energy supply chains and maritime logistics. These developments have the potential to fluctuate crude oil prices, which is a key driver for the Oil & Gas segment that will directly increase freight costs and extend lead times for critical imported components.

Outlook

Global economic growth is projected to remain stable at 3.3% in FY 2026, before easing marginally to 3.2% in FY 2027. This trend reflects the normalisation of inventory cycles, the impact of tariffs, persistent geopolitical risks and moderating consumption in primary markets such as China.

Inflation is projected to ease gradually, supported by stabilising commodity prices, cooling labour market conditions and lower cost pressures. Fiscal and monetary policies are likely to remain supportive of economic activity. Additionally, expansion in bilateral trade agreements and a global focus on the Energy Transition including Green Hydrogen and Nuclear power are anticipated to create new avenues for high-end engineering applications.

Going forward, sustained global growth will depend on stability of supply chains, enhanced trade integration and stronger investment momentum, particularly within emerging markets.

Indian Economy 2

India continues to distinguish itself as one of the fastest-growing major economies globally, with real GDP estimated to expand by 7.3% in FY 2025, compared with 6.5% in FY 2024. This momentum is supported by resilient rural demand, stable agricultural and industrial output and strong performance in the services sector.

Policy support remains a key enabler, with initiatives such as the Production Linked Incentive (PLI) schemes, which have now crossed C2.16 lakh crore in committed investments and continued public investment in infrastructure, reinforcing economic activity and boosting overall growth prospects. Inflation has remained well contained, with CPI at 2.75%3 on the revised 2024 base, supporting real incomes and consumption across both urban and rural segments. At the same time, India is strengthening its integration into global value chains through trade engagements with the United States and the European Union, while also diversifying crude oil sourcing to enhance energy security amid evolving geopolitical dynamics.

Outlook

India is expected to retain its position as the fastest-growing major economy in the near term, with GDP projected to grow by 6.4% in FY 2026 and 6.4% in FY 2027. The Union Budget 2026-27 has further bolstered this by increasing public capital expenditure to C12.2 lakh crore, with a strategic focus on improving logistics efficiency and building dedicated economic corridors.

Growth is likely to be supported by sustained public capital expenditure and a gradual recovery in private consumption, with private consumption expenditure expected to expand by approximately 7.0% over the reported period. The restructuring of the Jal Jeevan Mission into JJM 2.0 with an enhanced outlay of C8.69 lakh crore signals a long-term commitment to water infrastructure, which is expected to sustain demand for pumping solutions.

Ongoing structural reforms, including rationalisation of the Goods and Services Tax, new trade agreements and continued improvements in ease of doing business, are anticipated to provide a strong foundation for long-term growth. Furthermore, Indias push toward Atmanirbhar in strategic sectors like Nuclear Power and Green Hydrogen presents opportunities for domestic manufacturers. With inflation projected to remain moderate, the Reserve Bank of India (RBI) is likely to retain a supportive monetary policy stance, enabling investment and credit expansion despite global uncertainties.

Industry Overview

Indian Pumps Industry 4

The Indian pumps industry is witnessing steady growth, driven by sustained demand across agriculture, infrastructure, industrial and municipal applications. The market was valued at approximately USD 2.9 billion in FY 2024 and is projected to reach USD 4.14 billion by FY 2030, growing at a CAGR of around 6.11%.

The industry remains highly fragmented, comprising established organised players alongside a large base of regional manufacturers catering to diverse end-use sectors such as irrigation, water supply, wastewater treatment and industrial processes. Growth is supported by increased infrastructure spending, a sharper policy focus on water resource management and the adoption of energy-efficient and digitally enabled pumping solutions. However, the sector faces headwinds from elevated raw material costs, intermittent supply chain constraints and competitive pricing pressures.

Key Growth Drivers

Infrastructure and water management investments

Government initiatives such as Jal Jeevan Mission, AMRUT and Smart Cities are generating significant demand for pumps in water distribution, sanitation and sewage treatment projects.

Nuclear Energy

The enactment of the SHANTI Act has revolutionized the sector by permitting private participation This legislative de-risking, combined with the Nuclear Energy Mission and the push for Bharat Small Reactors (BSRs), creates an exclusive, high-entry-barrier frontier for specialized pumping and safety-critical valve solutions.

Thermal Expansion

To meet soaring peak demand, the Government has mandated an additional minimum 80 GW of coal-based capacity by 2031-32. This expansion, focused on Supercritical and Ultra-supercritical units, alongside the large- scale Renovation & Modernization (R&M) of the existing fleet, ensures a robust and recurring market for pumps and fluid-handling systems.

Agricultural demand and irrigation expansion

Greater emphasis on irrigation coverage, rural electrification and farm productivity is supporting demand for agricultural pumps, including borewell and solar-powered variants.

Industrial and construction activity

Growth in manufacturing, construction and industrial sectors is boosting demand for pumps across applications such as HVAC systems, utilities and material handling.

Shift towards energy-efficient and smart pumps

Adoption of IoT-enabled, automated and energy-efficient pumps is increasing, driven by the need to optimise operative costs, enable predictive maintenance and improve system reliability.

Rising adoption of solar-powered pumps

Government support for renewable energy, coupled with rising grid power costs, is accelerating the deployment of solar pump solutions, particularly in rural and agricultural applications.

Export opportunities under China+1 strategy

Global supply chain diversification is opening avenues for Indian manufacturers to expand exports to regions such as GCC, ASEAN and Africa.

Outlook

The outlook for the Indian pumps industry remains favourable, supported by sustained infrastructure spending, increasing emphasis on efficient water management, nations ambitious energy transition goals, and continued industrial development. The transition towards smart, energy-efficient and solar-powered pumping systems is expected to enhance operational efficiency and support long-term demand.

Near term margin pressures may persist due to raw material cost volatility and supply chain constraints. However, ongoing localisation efforts and diversification of sourcing are likely to provide resilience. Additionally, expanding export opportunities arising from global supply chain realignment, along with continued policy support, are anticipated to reinforce medium term growth prospects and support steady, sustainable expansion.

Indian Valves Industry 5

The Indian industrial valves market is witnessing healthy growth, supported by rising investments across oil and gas, water infrastructure, power generation and process industries. The market is estimated at around USD 1.56 billion in FY 2025 and is projected to reach USD 2.34 billion by FY 2031, reflecting a CAGR of nearly 7.00%. Demand is being driven by increasing industrial activity, expansion in pipeline and utility networks and the growing need for flow control systems across critical applications. The industry is progressing towards higher-value, automated and digitally integrated valve solutions. However, pricing pressures and raw material cost volatility continue to pose challenges to margin stability.

Key Growth Drivers

Oil and gas demand

Expansion of pipeline networks, refining capacity and city gas distribution is driving sustained requirement for valves in hydrocarbon applications

Industrial capex

Increasing investments across chemicals, petrochemicals, power generation and manufacturing are contributing to higher demand for process control equipment

Automation adoption –

Growing deployment of smart, actuator-based and IIoT-enabled valve systems is improving process efficiency, monitoring and operational control

Energy transition

Emerging opportunities in renewable energy, LNG infrastructure and related segments are expanding the application scope for advanced valve solutions

Product upgrades

The shift towards higher-specification, corrosion-resistant and performance-oriented valves is supporting value realisation and product differentiation

Outlook

The Indian valves market is expected to maintain a positive growth trajectory, supported by sustained infrastructure development, industrial investment and growing demand for reliable flow control solutions. The gradual transition towards automation, enhanced process efficiency measures and digital monitoring is likely to accelerate adoption of technologically advanced valve systems. In the near-term, material pressures may arise from raw material price volatility, import competition and cost inflation. Over the longer term, strong domestic demand, expanding application areas and rising preference for quality-compliant and energy-efficient solutions are expected to support steady growth.

Company Overview

KSB Limited is an established manufacturer of pumps, valves and related systems in India, with a well-entrenched presence across core industrial and infrastructure segments. Incorporated in 1960 and headquartered in Pune, the Company operates as part of the global KSB Group and serves a broad spectrum of industries, including energy, water and wastewater, building services, petrochemicals, mining and general industry.

The Company operates an integrated operating model, supported by six manufacturing facilities and an extensive service and distribution network across the country.

KSB India has established a strong competitive position in the domestic market, supported by a diversified product portfolio, advanced technological capabilities and a growing presence in high-potential segments such as energy and water infrastructure. The Company continues to prioritise localisation, product innovation and service-led offerings to drive sustainable growth.

Business Segment

KSB Limited operates across a diversified portfolio of products and services, catering to a broad spectrum of industrial and infrastructure applications. The Company s offerings are categorised into pumps (standard and engineered), valves and aftermarket services, enabling it to address both project-driven and recurring demand streams.

The standard pumps segment constitutes a significant share of the business, driven by demand from building services, water management and general industrial applications. The engineered pumps segment addresses complex and large-scale applications across energy, nuclear and process industries, typically characterised by longer execution cycles and significant value addition.

The valves segment, encompassing isolation, caters to critical industries such as oil and gas, power and chemicals. The aftermarket and service business (SupremeServ) delivers end-to-end lifecycle solutions, including maintenance, spares and retrofits, ensuring stable and recurring revenue streams.

KSB Limited is strategically focused on increasing high-growth segments including water and wastewater, energy and industrial applications, while expanding its service portfolio to enhance margins, improve retention and strengthen long-term customer relationships.

Financial Overview

Distribution Of Income (Standalone)

(INR Million)

Particulars	Year Ended 31 st	December, 2025	Year Ended 31 st	December, 2024
	INR	%	INR	%
Raw Materials / Bought-out Components Consumed	14,563	52.73	14,221	55.24
Excise Duty (till 30 th June, 2017)	0	-	0	-
Employee benefits expense	3,898	14.12	3,136	12.18
Other Expenses	5,016	18.15	4,599	17.87
Finance cost	30	0.11	27	0.10
Depreciation	583	2.11	543	2.11
Taxation
\u2013 Current	1,007	3.65	815	3.17
Tax settlement relating to previous years	-	-	-	-
\u2013 Deferred	(125)	(0.45)	(4)	(0.02)
Other Comprehensive (Income)/Expense	71	0.26	27	0.10
Dividend (including tax thereon)	696	2.52	609	2.37
Retained Earnings	1,877	6.80	1,772	6.88
TOTAL	27,616	100.00	25,745	100.00

Financial Position at a Glance (Standalone)

(INR Million)

Particulars	2025	2024
Year Ended	31 st December, 2025	31 st December, 2024
ASSETS OWNED
Non-Current Assets
Property, Plant and Equipment (including CWIP & RoU assets)	5,313	4,720
Intangible Assets	221	211
Investments	74	63
Other Non-Current Assets/(Liabilities) (net)	(325)	41
Deferred Tax Assets (net)	342	191
Current Assets (Net) excluding borrowings	10,503	9,025
TOTAL ASSETS	16,128	14,251
FINANCED BY
Borrowings	-	-
Net Worth	16,128	14,251
TOTAL FINANCING	16,128	14,251
Represented by
Equity Share Capital	348	348
Other Equity	15,780	13,903
TOTAL NET WORTH	16,128	14,251
INCOME EARNED
Revenue from operations	26,957	25,331
Other Income	659	415
TOTAL INCOME	27,616	25,746
INCOME DISTRIBUTED
Materials consumed	14,563	14,221
Excise Duty (till 30 th June, 2017)	0	-
Employee benefits expense	3,898	3,136
Other expenses	5,016	4,599

Particulars	2025	2024
Year Ended	31 st December, 2025	31 st December, 2024
Finance cost	30	27
Depreciation	583	543
Taxation Current	1,007	815
Taxation Deferred	(125)	(4)
Other Comprehensive Income/(Expense)	71	27
Dividend (including tax thereon)	696	609
Retained Income	1,877	1,772
TOTAL DISTRIBUTION	27,616	25,745

Financial Summary (Standalone)

(INR Million)

Particulars	2025	2024	2023	2022	2021
CAPITAL ACCOUNTS
Liabilities
Equity Share Capital	348	348	348	348	348
Other Equity	15,780	13,903	12,130	10,583	9,293
Non-Current Liabilities	893	591	458	453	537
Assets
Non-Current Assets
Gross Block	11,485	10,418	9,547	8,467	7,805
Net Block	5,535	4,931	4,514	3,752	3,498
Investments	74	63	63	63	63
Other Non-Current Assets	567	632	685	1,015	643
Deferred Tax Assets (net)	342	191	178	167	220
Current Assets (Net)	10,503	9,025	7,496	6,386	5,754
REVENUE ACCOUNTS
Revenue from operations and Other Income	27,616	25,746	22,835	18,674	15,337
Gross Profit before finance cost and depreciation	4,139	3,790	3,299	2,921	2,459
Finance cost	30	27	53	61	50
Depreciation	583	543	497	453	436
Profit before tax	3,526	3,220	2,749	2,407	1,973
Profit after tax	2,645	2,409	2,046	1,793	1,466
Dividend amount (including tax thereon)	696	609	522	435	296
Retained earnings	1,877	1,772	1,548	1,290	1,176
SELECTED INDICATORS
Return on Capital Employed (%)	22.85	23.45	23.17	22.58	20.98
Current Ratio	2.02	2.13	2.05	2.01	2.06
Earnings per share	15.2	13.84	58.78	51.5	42.12
Debt Equity Ratio	0	0	0	0	0
Book value per share	92.67	81.88	358.5	314.05	276.99
Dividend (%)	200	175	150	125	85
Fixed Assets Turnover	4.99	5.22	5.06	4.98	4.38

Key Financial Ratios

Ratios (Standalone)	Year Ended 31 st December, 2025	Year Ended 31 st December, 2024
1. Debtors Turnover (Days)	103.00	83.00
2. Inventory Turnover (Days)	179.00	165.00
3. Operating Pro t Margin (%)	12.28	11.75
4. Net Pro t Margin (%)	9.84	9.54
5. Return on Net Worth (%)	17.41	18.03
6. Interest Coverage Ratio (Times)	118.53	120.26

Material Developments in Human Resources, Industrial Relations

At KSB India, the Human Resources function continued to drive strategic value creation, enabling sustainable growth, operational excellence and long-term organisational strength. As the Company expanded its manufacturing and operational footprint, HR focused on talent development, workforce adaptability, leadership continuity and building a high-performance culture.

The people strategy is anchored on four key pillars-

1. Capability Building

2. Inclusive Growth

3. Employee Experience

4. Industrial Harmony

Ensuring strong alignment between business priorities and workforce readiness, the Company continues to reinforce a values-driven and governance-led organisational culture.

During the year, KSB India implemented structured learning and development initiatives aimed at enhancing technical, functional and leadership capabilities across all employee levels. These interventions contributed to improved shop-floor productivity, strengthened managerial effectiveness, robust succession planning and enhanced organisational resilience.

The Company further strengthen employee engagement through transparent communication leadership connect forums and structured engagement programmes. As part of its focus on organisational health and employee experience, KSB India participated in the Great Place to WorkR (GPTW) assessment and achieved a Trust Index score of 89%. The Company was also recognised among the Top 50 India s Best Workplaces in Large Manufacturing Companies for 2026, reflecting the effectiveness of its people practices. During the year, HR policies were comprehensively reviewed and strengthened, with a clear focus on compliance, governance and employee well-being. The introduction of the Higher Education Policy and the Extended Maternity Leave Policy further reinforced the Company s progressive and employee-centric approach. The Company continued to maintain rigorous compliance with applicable labour laws, certified standing orders and internal governance frameworks, while advancing employee well-being through targeted and structured wellness initiatives. In parallel, the Reward and Recognition framework was further institutionalised to systematically recognise and incentivise performance excellence across the organisation.

Industrial relations across all manufacturing locations remained stable and constructive, supported by proactive stakeholder engagement, transparent communication and sustained dialogue with employee representatives.

Going forward, the Company will continue to sharpen its focus on leadership development, diversity and inclusion, digital enablement, employee well-being and compliance excellence, while building a resilient future-ready and engaged workforce.

Risk Management

While the business outlook remains positive, the Company continues to operate in a dynamic environment influenced by both global and domestic factors. Volatility in raw material prices, particularly metals and castings, continues to exert pressure on margins, especially under fixed-price contracts. In addition, evolving geopolitical developments and supply chain disruptions, including logistics constraints and freight volatility, may impact input availability and cost structures. Currency fluctuations also remain a key consideration, affecting import costs and export competitiveness.

On the domestic front, while strong government-led investments in infrastructure, water management and energy transition are creating growth opportunities, delays in project execution, elongated tendering cycles and working capital intensity in project-driven businesses may impact revenue visibility. Further, increasing competitive intensity and pricing pressures across the pumps and valves industry remain areas of focus.

To mitigate these risks, the Company continues to adopt a balanced business approach, with increased emphasis on standard products and aftermarket services to enhance revenue stability and margin resilience. Strategic sourcing, supplier diversification and localisation initiatives are being strengthened to improve supply chain reliability. The Company also maintains disciplined project execution through robust governance frameworks and milestone-based delivery, alongside focused receivables management to optimise working capital. Continued investments in technology, operational efficiency and emerging segments such as energy transition are expected to enhance competitiveness and support sustainable growth over the medium term.

Outlook

KSB Limited is well-positioned to capitalise on the sustained growth momentum in India s infrastructure and industrial sectors. The Company expects continued demand traction across its core segments, driven by increasing investments in energy, water and wastewater infrastructure and domestic manufacturing. The expansion of thermal and nuclear power capacity, alongside the ongoing transition towards renewable energy, is expected to support long-term demand for engineered pumps and associated systems. In addition, the water and wastewater segment is anticipated to remain a key growth driver, endorsed by government initiatives such as Jal Jeevan Mission, AMRUT, as well as large-scale river linking infrastructure projects. Rapid urbanisation and infrastructure development are expected to further stimulate demand in building services, including commercial real estate, metros, airports and data centres, thereby supporting growth in the standard pumps segment.

The Company is also intensifying its focus on expanding its presence in emerging segments such as solar pumps, firefighting systems and green hydrogen, while continuing to scale its aftermarket and service business to enhance margin profiles and ensure stable revenue streams. Continued investments in localisation, technology and supply chain resilience are expected to strengthen competitiveness and drive operational efficiency.

Notwithstanding these growth drivers, the outlook remains subject to certain risks, including volatility in raw material prices, execution delays in large-scale projects- particularly within the nuclear projects and potential supply chain disruptions arising from geopolitical developments.

However, supported by a strong order book, a diversified portfolio and demonstrated execution capabilities, KSB Limited remains well-positioned to sustain growth momentum and deliver long-term value.

Internal Control Systems and Their Adequacy

The Company has in place an adequate internal control system designed to safeguard assets, ensure operational efficiency, maintain financial accuracy and support compliance with applicable laws and regulations. These controls are periodically reviewed and strengthened in line with changes in the business environment, regulatory requirements and industry practices.

Protection of Assets and Optimisation of Controls

The Company remains committed to maintaining effective internal controls to protect its assets, optimise costs and support reliable financial and operational reporting.

Monitoring of Core Control Areas

The Company has established controls across key operational areas to ensure effective oversight and risk mitigation. Asset Safeguarding: Appropriate physical and electronic security measures, including inventory verification, access controls and data protection protocols, are in place to prevent loss or misuse of assets.

Cost Management: Expenditure is monitored through budgetary controls, variance analysis, approval mechanisms and procurement checks to ensure efficient utilisation of resources.

Financial Integrity and Reporting

The Company follows sound financial control practices to ensure the accuracy, completeness and reliability of its financial reporting. These include segregation of duties, system-based reconciliations, approval hierarchies and regular monitoring of financial transactions.

Continuous Review and Improvement

The Company s in-house Internal Audit function periodically reviews the effectiveness of internal controls, identifies gaps and recommends corrective actions. Management takes necessary steps to address observations and strengthen the control environment on an ongoing basis.

Cautionary Statement

This report is based on the experience and information available to the Company in the pumps and valves business and assumptions on domestic and global economic conditions, government and regulation policies and others. The performance of the Company is dependent on these factors. However, the performance may be materially influenced by the changes therein beyond the Companys control, affecting the views expressed in or perceived from this report.