Laxmipati Engineering Works Ltd Management Discussions

This Report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words anticipate, believe, estimate, expect, intend, will and other similar expressions as they relate to the Company and/or its Businesses are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates.

INDUSTRY STRUCTURE AND DEVELOPMENT

The heavy engineering, fabrication and precision manufacturing industry forms a critical pillar of industrial development, supporting sectors such as steel, oil & gas, petrochemicals, defence, renewable energy, nuclear energy, shipbuilding, infrastructure and advanced manufacturing. The industry encompasses a broad range of capabilities including heavy fabrication, pressure vessel manufacturing, precision welding, structural engineering, equipment manufacturing, mechanical systems integration, site erection and maintenance services.

Global Industry Structure

Globally, the industry is undergoing transformation driven by energy transition, industrial decarbonization, infrastructure modernization and supply-chain diversification. Investments in renewable energy, green hydrogen, nuclear power, LNG infrastructure, defence modernization and industrial automation are generating significant demand for specialized engineering and fabrication solutions. Increasing adoption of advanced manufacturing technologies, modular construction techniques and stringent quality standards is further enhancing the importance of technically capable engineering companies.

Indian Industry Structure

Indias heavy engineering and allied services sector comprises a diverse ecosystem of public and private players, regulatory bodies, core market segments, and enabling infrastructure. The mechanical engineering and fabrication services domain plays a pivotal role in national infrastructure development, defense modernization, energy expansion, and industrial growth.

India continues to emerge as one of the worlds most attractive engineering and manufacturing markets, supported by initiatives such as Make in India 2.0, Atmanirbhar Bharat, PM Gati Shakti, the National Infrastructure Pipeline, defense indigenization programs and the National Green Hydrogen Mission. These initiatives are driving substantial investments across steel, energy, transportation, defense, shipbuilding and industrial infrastructure, creating long-term opportunities for engineering and fabrication companies.

The steel sector remains one of the largest consumers of engineering and fabrication services.

Indias ambition to expand steel production capacity beyond 300 million tonnes by 2030 is expected to drive significant demand for process equipment, storage systems, structural fabrication, material handling equipment and plant modernization projects. Similarly, continued investments in oil & gas, petrochemicals, refineries and LNG infrastructure are expected to generate demand for pressure vessels, process equipment, piping systems and specialized fabrication solutions.

A significant emerging development is the Sustainable Harnessing and Advancement of Nuclear Energy for

Transforming India (SHANTI) Act, 2025, which establishes a statutory framework intended to facilitate greater participation by private enterprises and global technology providers in Indias nuclear energy sector. By addressing longstanding concerns relating to supplier liability and project risk allocation, the Act is expected to accelerate investments in nuclear power generation and strengthen domestic manufacturing capabilities for critical equipment and components. This is expected to create long-term opportunities for engineering and fabrication companies engaged in pressure vessels, heavy fabrication, specialized welding, structural assemblies and other high-integrity manufacturing applications.

Many Indian companies operate as subcontractors to PSUs and EPC contractors, delivering mission-critical services without necessarily owning large-scale manufacturing units. This asset-light model offers agility but also exposes firms to challenges such as delayed payments, execution risks, and high regulatory compliance burdens.

Despite these headwinds, the sector continues to grow on the back of sustained public infrastructure investment and increasing private sector participation, particularly in defense production, energy transition, and industrial automation.

Key Market Segments:

• Defense & Strategic Fabrication: Precision fabrication, specialized welding and engineered assemblies supporting defence platforms, naval assets, strategic infrastructure and indigenous manufacturing initiatives.

• Steel and Metal: Fabrication, plant erection, equipment installation and maintenance solutions for steel production, processing facilities, material handling systems and capacity expansion projects.

• Oil, Gas & Process Industries: Engineering, fabrication and mechanical solutions for pressure vessels, process equipment, pipelines, offshore structures, storage facilities and downstream refining and petrochemical infrastructure.

• Green hydrogen and clean energy: Fabrication and engineering solutions for hydrogen production systems, storage vessels, high-pressure piping networks, process modules and renewable energy infrastructure supporting the energy transition.

• Shipbuilding, Ship Repair & Marine Engineering: Structural fabrication, retrofit solutions, equipment integration and maintenance services for commercial vessels, naval platforms and maritime infrastructure projects.

• Nuclear energy and clean baseload power: Engineering, fabrication and manufacturing opportunities arising from the expansion of Indias nuclear power sector, including pressure vessels, specialized piping systems, structural assemblies, high-integrity welded components, reactor support equipment and associated power infrastructure.

• Raw Materials & Inputs: Steel, copper, aluminum, and alloys serve as key materials for fabrication and mechanical works across sectors.

Development Outlook

The development outlook for the mechanical engineering and fabrication services sector remains optimistic, driven by sustained investments in infrastructure, defense, and energy both conventional and renewable. In India, government initiatives like Make in India, increased capital expenditure on infrastructure, and indigenization in defense manufacturing are creating strong demand for skilled engineering service providers.

As large EPC and public sector companies continue to outsource fabrication, erection, and site-based mechanical works, opportunities for specialized service firms are expanding. Globally, the focus on energy transition, modular construction, and industrial automation further supports the growth of engineering support services. However, the outlook also depends on the industrys ability to adapt to evolving safety, quality, and compliance standards while managing cost and execution challenges. Companies that can deliver high-quality, timely, and cost-effective solutions are well-positioned for long-term growth in this evolving landscape.

The industry is poised for steady growth, the following factors have to be kept in mind:

1. Market Trends: Domestic Infrastructure Boom, Growth Trends, Growing demand for ship repairs, clean energy, storage systems.

2. Strategic Priorities: Strengthen backward integration.

3. Challenges: High R&D Costs, Volatile demand cycles.

4. Natural Gas Expansion: In terms of Oil & Gas.

5. Advantages: Service-oriented business models

However, the industry remains capital-intensive and cyclical, with challenges such as high setup costs, long project lifecycles, and dependence on skilled labour and technical expertise. A strategic focus on niche markets, allied services, technological partnerships, and phased capacity expansion is critical to steady Development and progress.

OPPORTUNITIES AND THREATS Opportunities

• Technical Expertise: Proven track record in heavy engineering, complex fabrication, and high-precision manufacturing.

• Integrated Capabilities: Design, fabrication, testing, erection, and commissioning under one roof.

• Certifications & Compliance: Adherence to various types of compliances, certifications as applicable to the company.

• Skilled Workforce: Experienced welders, engineers, and certified technicians.

• Sectoral Diversification: Exposure to multiple sectors helps to mitigate risks.

• Established Client Base: Strong Relationships with various types of entities and contractors.

Threats

• Commodity Price Volatility: Fluctuations in steel, copper, and fuel prices impact project margins.

• Environmental & Safety Compliance: Stringent norms can lead to cost overruns and delays.

• Technological Obsolescence: Global shift to automated and modular fabrication systems may outpace traditional setups.

• Geopolitical Uncertainty: Supply chain disruptions, or sanctions affect project pipeline.

• Labor Challenges: Availability and retention of skilled manpower is declining in heavy engineering and fabrication sectors.

• Intense Competition: Aggressive pricing comparison and competition from other firms in fabrication.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Projects and Performances for the financial year 2025-26 - A snapshot

The companys total Revenue from Operations stood at Rs. 7,199.37 lakhs, resulting a 43.72% increase of revenue from the operations compared to FY. 2024-25. Steel sector related projects contributed to 53% of the total revenue, defence and precision engineering - 37% and other allied sectors- 11%

During the year under review the company LEWL delivered on some key milestone projects and services as below:

1. Successfully completed specialized projects for one its major clients, AM NS Hazira. Notable among them were Laminar Tank, Top Gas Scrubber, Raw mix bin (Incl. SS Liners), Clean Air Duct, Mixing pipe line, Wind Box etc.

2. Established manufacturing facility to cater export orders for our client M/S Zeeco India Pvt. Ltd meeting stringent quality norms in oil & gas and energy sector.

3. Played vital role in critical forming of 50mm thick very high strength material for Gandhisagar Pumped Storage Project (PSP), Madhya Pradesh.

4. Became a dependable supplier in fabrication project at Mazagon Dock Shipbuilders, Mumbai for shipbuilding related work.

5. Grabbed prestigious order from JSW steel for supply of complex stainless steel equipment.

6. Completed several critical projects for L&T PES.

The companys total list of principal clients now stands at 16 and this list includes big name such as L&T Precision Engineering and System, AM/NS, JSW Steel, Nuberg Engineering Ltd, Adani Hazira, BPCL, Indian Oil Corporation Ltd, Ensavior Technologies Pvt. Ltd., L&T heavy Engineering, L&T electrolyser. L&T Hydrocarbon, ZEECO and so on. The company managed to complete 37+ projects in the FY. 2025-26.

The Palsana workshop contributes to almost 75% of the total revenue. Balance coming from site related projects at L&T Hazira and elsewhere. The company has a team of approx. 370+ employees and almost all our clients has witnessed 100% client satisfaction in the previous fiscal

OUTLOOK

Laxmipati Engineering Works Limited (LEWL) delivered strong financial performance this year, with revenue growing by 43.72%, reflecting increased order volumes across various sectors and projects. EBITDA surged by 78.73%, driven by higher operating efficiency, better capacity utilization, and improved operating margins. Most notably, PAT (Profit After Tax) surged by 315.99%, primarily supported by improved operational performance, favorable product mix, cost optimization initiatives, exceptional income recognized during the year, and one-time deferred tax adjustments. These results demonstrate LEWLs strong execution capabilities and strategic positioning in high-growth sectors like renewable energy, defense and hydrogen infrastructure.

The roadmap of the company for FY. 2025-26 is as follows:

Indias heavy engineering sector is undergoing transformation driven by policies like Make in India and Aatmanirbhar Bharat, especially in defence, oil & gas, and steel. Demand is rising for site-based erection, precision fabrication, and mechanical integration for PSUs and private players. However, challenges persist in the form of delayed project clearances, regulatory complexities, and volatile raw material prices.

Laxmipati Engineering Works Limited is well-positioned to tap into this evolving environment with capabilities across:

• High-end fabrication and erection

• Defence and marine-grade structures

• Technological components for steel and refinery and hydrogen plants

The future roadmap of the company for FY. 2026-27 and beyond remains positive driven by:

• Government capex in infrastructure and defence

• Demand from private players in energy and steel

• Increased outsourcing by EPC (Engineering, Procurement, and Construction) firms

• Increased focus on new product and service development.

Laxmipati Engineering Works Limited intends to work on the following business and development areas in the coming years:

• Manufacturing of critical and complex Reformer related assemblies for steel plants through technology tie ups.

• Expand our foot prints into critical machining intensive defence projects.

• Increase volume of Export orders in overall product portfolio

• Capacity expansion through 3 new state of the art workshops measuring a total 6000 sqmtrs.

• Invest resources in automation and R&D facilities.

RISKS AND CONCERNS

• Metal, which forms the main raw material for the company has inherently been more volatile and it impacts the gross profit margins of the company.

• Continuous labour availability is very necessary for the company to grow.

• The industry which forms the major portion of the revenue from operations is cyclical in nature; hence depend on overall economic activity.

• Moreover, slow speed of project approval delays revenue recognition.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the described policies and procedures of the Company. The Audit committee and the management have reviewed the adequacy of the internal control systems and are found satisfactory. However, suitable steps are taken to improve the same.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

In F.Y. 2025-26, revenue from operations increased to Rs. 7199.37 lakhs, increase of 43.72% from F.Y. 2024-25. EBITDA came in at around Rs. 1294.97 Lakhs and profit after Tax is Rs. 2703.59 lakhs. The company expects to be in a good wicket in FY. 2026-27. The company was able to keep its operations afloat and has managed to remain focused on network building and human resource development to sustain growth for the coming years.

To conserve resources for the Companys future growth plans, no dividend is being recommended by the Directors for the year ended 31st March, 2026.

The company generated its revenue in FY. 2025-26 from the steel, defense & precision engineering and oil and gas sectors. The company now has a pool base of more than 300+ employees which are contributing daily to the growth of the company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The company firmly believes that its human resources are the key enablers for the growth of the company and are an important asset. Hence, the success of the company is closely aligned to the goals of the human resources of the company.

The company has over 300+ employees, skilled and unskilled combined, who are proficient and carry rich experience. They form a perfect team, and are the true reason behind the improvement of the performance of the Company. Taking this into account, the Company would continue to invest in developing its human capital and establishing its brand on the market to attract and retain the best talent.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Debtors and Inventory Turnover Ratio

Debtors Turnover Ratio measures how many times a business can turn its accounts receivable into cash during a period. The Debtors turnover ratio for FY 2025-26 stood at 5.62% as compared to 7.64% in FY 2024-25. Debtors Turnover Ratio decreased on account on account of increase in debtors days in current year. There is a variation of (26.47 %) in the current year (FY 2025-26).

The inventory turnover ratio is an important measure as well which measures how well a company generates sales from its inventory. The company in FY 2025-26 has inventory turnover ratio of 4.64% as compared to 4.40% in FY 2024-25.

Interest Coverage Ratio

The companys interest coverage ratio is 4.76 in FY 2025-26 at the operational level as compared to is 2.12 in FY 2024-25 reflecting the Companys substantially enhanced ability to meet its interest obligations through improved earnings.

The Interest Coverage Ratio increased by 124% due to higher operating profitability and improved earnings during the period, resulting in enhanced debt servicing capacity.

Current Ratio

The companys current ratio stood at 1.78 in FY 2025-26 as compared to 2.32 in FY 2024-25 which it intended in order to make sure it has slight resources to meet its short-term obligations.

Debt to Equity

The Debt Equity Ratio improved significantly from 5.26 times to 0.47 times in FY 2025-26. There a variation of (91.12 %) in the current year primarily on account of reduction in borrowings and improvement in the Companys net worth.

Operating Profit Margin

The company aims to maintain a stable operating profit margin ratio. In FY 2025-26, the operating margin ratio improved and stood at 16.03% as compared to 17.61% of FY 2024-25.

Net Profit Margin

The companys net profit for FY. 2025-26 has shown a tremendous growth to Rs. 2703.59 lakhs. The company has significantly improved its profit margins in the current financial year. The net profit margin in current year (FY 2025-26) stood at 37.55% as compared to 12.97% in previous year (FY 2024-25). There is a remarkably positive variation of 189.45% due to increase in revenues and profits in the current financial year.

Return on Net Worth

The Return on Net Worth improved from 122.10% in FY 2024-25 to 122.39% in FY 2025-26, reflecting continued strong profitability and efficient utilization of shareholders funds. The stable improvement in the ratio was supported by higher profits, improved operational performance, and effective capital management during the year. The Companys consistent return on equity demonstrates its ability to generate healthy returns for shareholders through efficient deployment of capital and sustained business growth. The Company remains focused on maintaining and further enhancing shareholder value in the coming years.

	For and on behalf of the Board of Directors of
	Laxmipati Engineering Works Limited
	Sd/-
Date: June 19, 2026	Sanjaykumar Govindprasad Sarawagi
Place: Surat	Chairman & Director
	DIN:00005468