LMW Ltd Management Discussions

THE ECONOMY

Shifting landscape, resilient growth

World Economy

Global growth remained resilient in 2025 at 3.30%, underpinned by robust tech investment and steady private-sector activity. However, the economic landscape was marked by significant divergence. The United States continued to serve as the primary engine of growth, though its pace began to moderate toward the year-end. China maintained its momentum despite persistent headwinds in its property sector, while Europe as a whole faced prolonged stagnation. Japan grappled with contraction due to sluggish domestic demand and a decline in housing investment.

EMERGING MARKETS AND THE INDIA FACTOR

Emerging and developing economies outperformed the global average with a growth rate of 4.40%. India emerged as a standout performer, with its GDP growth projected at upwards of 7.00% for the fiscal year, further solidifying its position as a major global economic force. While emerging Asia remained a growth hub, emerging Europe saw a sharp deceleration, and Russia experienced marginal growth amidst high inflation and fiscal strain.

TRADE DYNAMICS AND THE SHIFT IN POLICY

The global trade environment is increasingly defined by a shift away from decades of globalisation toward more rigid protectionist policies. High tariffs and trade barriers have introduced significant friction into the world economy, distorting supply chains and increasing costs for manufacturers and consumers alike. This transition has fundamentally altered sectoral trade; for instance, textile trade now faces complex "rules of origin" and regional duties, while engineering goods are increasingly subject to "near-shoring" trends as companies seek to maintain competitiveness within restricted markets.

Furthermore, the potential for future trade restrictions on semiconductors and rare earth minerals threatens to distort global supply chains and compromise

product availability across high-tech industries. These structural pressures continue to underscore a volatile landscape for international commerce, as nations prioritise domestic industrial security over integrated global trade.

GEOPOLITICAL SHOCKS AND INFLATIONARY HEADWINDS

While global inflation moderated to 4.20% in 2025, the landscape shifted dramatically in early 2026 amid the escalating crisis in West Asia.

• Energy Shock: A sharp rise in global energy prices threatens to reverse the disinflationary trend. For energy-dependent nations, sustained high per-barrel prices are expected to increase import bills and strain fiscal math.

• Supply Chain Disruption: Fresh volatility in the Strait of Hormuz

has impacted LNG and oil shipments, particularly affecting nations like China, India, Japan and South Korea.

• Financial Volatility: The crisis has triggered capital outflows from emerging markets and put downward pressure on currencies, with the Indian Rupee touching record lows against the US Dollar.

Ultimately, while the global economy appeared stable through 2025, the concentration of growth in specific regions—compounded by ongoing geopolitical tensions in Eastern Europe and renewed shocks from West Asia—underscores a fragile equilibrium. The persistence of conflicts around the world continues to weigh on global commodity markets and fiscal stability, adding a layer of long-term uncertainty to the global recovery.

Indian Economy

MACROECONOMIC OVERVIEW: SUSTAINED GROWTH AMID EVOLVING GLOBAL DYNAMICS

India continues to demonstrate strong economic resilience, supported by robust domestic demand, structural reforms, and a steadily improving investment climate. In a global environment marked by shifting trade dynamics and uneven recovery across major economies, India has reinforced its position as the fastest-growing major economy while maintaining relative macroeconomic stability.

GDP GROWTH AND DOMESTIC DEMAND

Indias real GDP is estimated to expand by 7.60% in FY 2025-26, reflecting an upward revision from the earlier estimate of 7.40% following the release of the Second Advance Estimates and the transition to a new base year (FY 2022-23). This performance is underpinned by resilient domestic demand, with Private Final Consumption Expenditure (PFCE) continuing to be the primary growth driver, while investment activity maintains strong momentum.

REVISIONS AND METHODOLOGICAL UPDATES

• Base Year Transition: The Ministry of Statistics and Programme Implementation (MoSPI) has revised the GDP base year from 2011-12 to 2022-23, enabling a more accurate reflection of Indias evolving economic structure, particularly in digital and service-oriented sectors.

• Economic Size Adjustment: Under the revised series, nominal GDP is estimated at C345.47 lakh crore. While growth rates have been revised upwards, the overall size of the economy is currently estimated to be approximately 3.30% smaller than earlier estimates, leading to a marginal recalibration of key fiscal ratios, such as debt-to-GDP and fiscal deficit-to-GDP.

SECTORAL PERFORMANCE

• Manufacturing: The sector remains a key growth engine, recording strong double-digit growth of 12.50%, supported by industrial recovery and improved capacity utilisation.

• Services: Growth remains robust at 8.90%, led by strong performance in Trade, Hotels and Transport, which expanded by 10.30%, reflecting sustained urban demand and digital adoption.

• Agriculture: Growth is estimated at 2.50%, moderated by uneven weather conditions and a high base effect from the previous year.

INFLATION AND MONETARY STABILITY

Inflation in the Indian economy remained broadly within the central banks tolerance band during FY 2025-26, supported by stable food prices and proactive monetary policy measures. Headline inflation trends moderated compared to previous periods, contributing to improved macroeconomic stability and supporting consumption demand. The Reserve Bank of Indias calibrated approach to managing liquidity and interest rates has helped balance growth and inflation, ensuring a stable economic environment.

GLOBAL TRADE DYNAMICS AND COMPETITIVE POSITIONING

Recent shifts in global trade have created favourable tailwinds for India. The reduction in U.S. tariffs on select Indian textile and manufacturing exports has improved export competitiveness, encouraging capacity expansion and investment within domestic industries. This development aligns with the broader "China Plus One" strategy adopted by global supply chains, positioning India as a preferred alternative manufacturing base.

At the same time, China experienced a relatively slower and uneven recovery during FY 2025-26, marked by subdued domestic consumption, stress in the real estate sector, and weakening export momentum. This moderation has prompted global manufacturers to diversify sourcing and production bases, further strengthening Indias relative position in global trade and manufacturing.

FISCAL AND EXTERNAL POSITION

• Fiscal Prudence: The government continues on its fiscal consolidation path, with the deficit estimated at 4.50% of GDP, adjusted marginally due to the revised GDP base.

• External Buffer: Foreign exchange reserves reached a record US$728.49 billion in February 2026, while a manageable Current Account Deficit (CAD) of 1.30% of GDP strengthens resilience against global capital volatility.

• Remittance Risks: Rising geopolitical instability in West Asia poses risks to inward remittances, which play a critical role in offsetting the trade deficit. Any disruption could widen the CAD, put pressure on the Indian Rupee, and impact rural consumption, particularly since nearly 20% of rural households depend on such inflows.

OUTLOOK AND RISK FACTORS

The outlook for FY 2026-27 remains positive, with GDP growth projected at 7.00% to 7.40% under the revised series. However, the economy faces several external risks:

• Geopolitical Instability: Ongoing tensions in Eastern Europe and West Asia could impact energy prices and fiscal stability.

• Trade and Logistics Disruptions: Increasing protectionism and maritime disruptions along critical routes, such as the Red Sea and the Strait of Hormuz, may increase import costs and disrupt global supply chains.

BUSINESS DIVISION 1

Foundry Division

Diverse Applications. Integrated Support.

The Foundry Division (FDY) continues to serve as a vital pillar of the Companys precision engineering capabilities. Specialising in high-quality Grey Iron and Ductile Iron machined castings, the division supports internal captive requirements while catering to an expanding base of global clients in the locomotive, power and energy, compressor, valves, transportation, and marine sectors.

Backbone of Heavy Engineering

Casting offers distinct advantages over machining by utilising liquid metal to fill a mould, enabling unmatched geometric complexity and intricate internal cavities.

This process facilitates singlepiece consolidation by producing large components as monolithic units, effectively eliminating the failure points. It also ensures high efficiency by producing parts extremely close to their final dimensions, thereby minimising waste and maximising repeatability.

Consequently, metal casting serves as the fundamental backbone of heavy engineering, providing the structural essence for a wide spectrum of industrial sectors. Transforming molten metal into precise, high-strength components enables the creation of the massive and complex machinery that powers the modern world.

Performance in FY26

The Foundry Division of LMW operated under challenging conditions during the year, reflecting the broader slowdown in the textile sector, resulting in reduced capacity utilisation.

Despite these headwinds, the Division demonstrated resilience, with both units showing steady improvement. This progress was driven by targeted cost- optimisation measures, including inventory rationalisation, improved energy efficiency, manpower optimisation, and reduced dependence on external vendors.

Additionally, the Division increased internal sourcing by converting previously outsourced casting procurement into in-house production, thereby enhancing capacity utilisation.

Export performance was mixed. Furthermore, a significant increase in input costs necessitated the Divisions withdrawal from nonviable business opportunities.

Overall, the Division effectively balanced cost control with operational stability, positioning itself to capitalise on a potential recovery in demand.

Sectoral Overview

The metal casting industry in 2025 has transitioned from a period of recovery to one of structural evolution. Globally, the market is valued at approximately US$199.80 billion in 2025 and is projected to increase to US$222.18 billion in 2026 and to approximately US$400.74 billion by 2034, with a projected CAGR of 8.04% through 2034. In India, the metal casting market size was valued at ~US$14 billion in 2025 and is projected to reach ~US$22 billion by 2034, growing at a CAGR of 5.29% from 2026 to 2034.

Advances such as AI-driven manufacturing, 3D sand printing and digital twins are transforming foundry operations into more precise, data-driven processes, supporting the growing demand for advanced components in sectors such as electric vehicles and aerospace.

CHALLENGES

Muted Demand: Slowdown across key end-user industries in 2025 affected casting volumes. Given the sectors high fixed-cost structure, lower tonnage directly pressures margins and operational efficiency.

Energy Volatility: Foundry operations are energy-intensive. Rising electricity tariffs in India and fluctuating global LNG prices continue to impact profitability.

ESG Compliance: Stricter environmental regulations are compelling foundries to invest in cleaner technologies, such as Electric Arc Furnaces (EAFs), to meet carbon-reduction targets.

Shifting Material Demand: While grey iron remains dominant in infrastructure applications, higher- margin growth is increasingly concentrated in aluminium and magnesium die-casting, driven by lightweighting requirements in EVs and aerospace.

OPPORTUNITIES

Automotive Ecosystem Expansion: India has solidified its position as a global automotive hub, serving both domestic and export markets. Growth spans passenger, commercial, and two-wheeler segments, all requiring high volumes of cast components.

Infrastructure & Industrial Acceleration: Massive public works projects are creating sustained demand for heavy-duty castings. The Ministry of Railways is in the midst of massive infrastructure upgrade across the country.

Energy & Utilities: Casting demand is surging due to renewable energy installations (turbines/generators) and large-scale water management projects involving industrial pumps and valves.

Self-reliant India: Government initiatives such as Make in India and the National Infrastructure Pipeline support steady demand.

Overview of the End- User Industries

ENGINEERING INDUSTRY

The Capital Goods Industry, encompassing machinery and equipment essential for manufacturing and infrastructure, is a strategic pillar of Indias economy. Growth is driven by robust public capital expenditure, and successful PLI schemes that boost domestic demand in the electronics and automotive sectors. Looking ahead, the industry will be propelled by Industry 4.0 adoption, green manufacturing initiatives, and Indias expanding role as a resilient alternative in the global supply chain.

LOCOMOTIVE INDUSTRY

Indias Locomotive Industry, a vital segment of the rolling stock sector, designs, manufactures, and maintains high-power electric and diesel locomotives. It supports the worlds fourth-largest rail network, facilitating the transport of over 1.5 billion tonnes of freight annually and driving industrial logistics and mass transit. Bolstered by the Make in India initiative and 100% electrification mandate, future growth hinges on high-horsepower indigenous electric locos, Vande Bharat Sleeper trains, and dedicated Freight Corridor expansion.

PUMPS AND VALVES INDUSTRY

The Pumps and Valves Industry is a critical engineering subsector, providing essential fluid management solutions for key industries. In India, it has evolved from basic agricultural equipment to high-precision components for the oil and gas, power, and chemicals sectors. Growth is driven by the Jal Jeevan Mission, rising domestic oil and gas capex, and the infrastructure budget for 2026. Despite global high-interest challenges, Indias domestic demand remains robust, supported by theMake in Indiainitiative and the increased global pivot from single-source to multi-source manufacturing.The industrys focus on smart, loT-enabled systems delivers energy savings, positioning

India as a global export hub for specialised corrosion-resistant and solar-powered pumps, targeting GCC and ASEAN markets.

POWER AND ENERGY INDUSTRY

India, one of the fastest-growing economies, ranks as the third- largest crude oil consumer, reflecting petroleums vital role in mobility, logistics, and industry. Energy demand is projected to outpace most major economies through 2035, accounting for over 23% of global incremental demand by 2050. In FY25-26, the power sector transitioned to a Resource Adequacy Model, achieving 50% non-fossil capacity five years ahead of the 2030 Paris target, with installed capacity surpassing 513 GW, making India power-sufficient. Key reforms include private investment in nuclear SMRs (Small Modular Reactors), a 5 lakh-circuit- km grid, expanded gas pipeline coverage, smart meter deployment and the 2025 launch of CCTS (Carbon Credit Trading System).

BUSINESS DIVISION 2

Textile Machinery

Division (TMD)

The Core Business

The Textile Machinery Division (TMD) remains the cornerstone of LMWs operations, embodying the "original DNA" that drives the companys success. Even as LMW continues to diversify, it maintains a prominent presence in the Indian textile industry, where it stands as the primary preference within the spinning machinery segment. This influence extends well beyond domestic borders; LMW also holds a considerable presence globally, reinforcing its reputation as a true global player.

End-to-End Solutions

LMWs TMD is among the few entities globally capable of engineering the entire yarn production value chain under one roof. Its role extends beyond selling individual machines to providing complete integrated systems.

The division manufactures the entire range of spinning machinery—from blowroom to winder—catering to diverse applications and raw materials.

Recognised for high operational efficiency and delivering superior customer returns, LMW has installed over 50 million spindles worldwide. This extensive footprint reinforces its leadership in spinning technology and its commitment to providing comprehensive solutions to the textile industry.

Performance in FY26

The Textile Machinery Division (TMD) operated through a challenging phase marked by weak export demand and delayed customer decisions. This dullness was primarily owing to tariffs and the non-availability of cotton, which compelled the textile sector to postpone capital investments.

In response, the Division focused on cost rationalisation across every line item in its divisional cost sheet and focused on operational streamlining.

Moreover, the Division continued investments in product development and digitalisation as part of its preparedness strategy for a sectoral rebound.

As tariffs mellowed, FTAs were formalised, and policy support for the textile sector strengthened, optimism for a sectoral rebound emerged. The division experienced a steady flow of orders from textile majors for projects and modernisation. Product innovation remained a key driver, with successful launch of newer versions of Ring Frame, Card, Draw Frame and the Winder machinery.

The division used the time well.

It initiated a Business Process Reengineering exercise.

This initiative re-examined every business process for its relevance and updation to align with prevailing business needs. The exercise focused on embedding automation and digitisation across all business processes to enhance efficiency and productivity. The Division focused on integrating AI and Machine Learning solutions into its machines and processes to transition to a Controlled Room manufacturing ecosystem.

Sectoral Overview

The textile machinery industry remained in a cyclical slowdown during FY25-26, with investment activity subdued despite optimal utilisation across spinning mills.

DOMESTIC MARKET

The Indian textile market currently presents a split scenario, with optimal operational activity but limited capacity expansion. Spinning mills are operating at very high utilisation levels of around 80-85%; however, new capital expenditure remains frozen. Instead of expanding, mills are focusing on maximising output from existing assets. This cautious approach is driven by thin yarn margins and uncertainty around textile tariffs, which are discouraging fresh investments. Despite these challenges, long-term industry growth continues to be supported by government initiatives such as PLI schemes, PM MITRA parks and GST rationalisation for Man-Made Fibre (MMF). Lifting of the US tariffs has been a positive sentiment with a rise in exports and yarn prices resulting in textile mills looking for future investments. However the recent geo-political developments in West Asia is subduing this sentiment.

INTERNATIONAL MARKET SHIFTS

The export market for textile machinery has shrunk significantly, with its contribution declining from a historical 20-25% to just 9-10% of total turnover. Investment activity in Turkey has slowed due to high inflation and rising production costs, while Bangladesh has faced geopolitical and economic challenges that have impacted machinery investments. In contrast, Egypt is emerging as a new spinning hub, supported by strong domestic cotton production and increasing foreign investments.

TECHNOLOGICAL AND OPERATIONAL TRENDS

Textile hubs such as Tamil Nadu are gradually shifting from pure cotton production to blended and ManMade Fibre (MMF) yarns, driving the need for advanced machinery capable of handling multiple fibre types. Automation technologies, including robotic auto-piecing, are gaining traction in spinning mills, largely due to rising labour costs in export markets such as Turkey. Despite subdued domestic demand for new textile machinery, India continues to produce some of the most cost-effective yarn globally due to lower energy and conversion costs, supporting strong yarn exports. Demand for smart machines with artificial intelligence is on the rise.

The Cotton Industry

Indias Cotton Industry in the 2025-26 season is characterised by a surplus-driven market, with stable production but declining domestic consumption. The Cotton Association of India (CAI) estimates total cotton pressing at 317 lakh bales, a slight increase from the previous season, primarily driven by higher yields in Telangana and Maharashtra. However, total supply is projected to rise sharply to 427.59 lakh bales, driven by significant carry-forward stocks and a surge in imports.

Key trends and figures for the FY25-26 include:

• Consumption and Demand:

Domestic mill consumption is projected to fall to 305 lakh bales from 314 lakh bales the previous year. This decline is attributed to moderate demand and weak international orders for Indian yarn and fabric.

• Government Support: To protect farmers, the government increased the Minimum Support Price (MSP) to C7,710 per quintal for medium-staple and C8,110 per quintal for long-staple cotton. A 5-year mission for Cotton Productivity has been announced in the budget to boost yields, promote ELS varieties and also ensure sustainable cultivation of cotton.

• Stock Levels: Due to high supply and soft demand, closing stocks by 30^th September 2026, is projected to rise ~78% to 107.59 lakh bales, ensuring comfortable raw material availability for domestic mills despite uneven monsoon and import pressures.

49; Adoption of Blends: The industry is moving away from processing pure cotton to blends and Man-Made Fibres (MMF).

• Cost Competitiveness: India produces one of the most cost- effective yarns globally, driven by the cost of raw material itself (cotton), along with lower energy and conversion costs. This raw material advantage sustains strong yarn exports to markets such as China and Bangladesh, even as domestic machinery Capex remains subdued.

BUSINESS DIVISION 3

Machine Tool

Division (MTD)

Precision Engineering. Market Diversification.

LMWs Machine Tool Division (MTD) capitalises on the Companys core engineering expertise to serve key sectors including automotive, aerospace, medical equipment, and oil & gas. LMWs Machine Tool Division is recognised for manufacturing high-precision CNC machines that deliver exceptional accuracy, consistent repeatability, and superior cost-efficiency per component.

As one of the pioneering facilities in India, MTD produces CNC Turning Centres, Machining Centres, and Turn-mill Centres, incorporating advanced technologies such as precision linear guideways, robust machine frameworks, automation solutions, pallet changers, and Industry 4.0-enabled monitoring systems.

Automation Integration in CNC Machining

Catering to the Indian automotive sector, characterised by high volumes and stringent cost-per- component requirements, MTD offers comprehensive integrated automation solutions. These include simple loaders, gantry systems, and robotic arms, tailored to the customers specific part mix and cycle time demands. Such customised solutions facilitate lights-out manufacturing, enabling machines to operate autonomously for extended durations, thereby enhancing operational efficiency and productivity.

Performance in FY26

The Machine Tool Division (MTD) has emerged as LMWs growth engine during FY25-26, offsetting cyclical weakness in the textile segment. The Division operated at about 70% to 75% capacity utilisation.

The Division is strategically leveraging the dynamic growth across the Automotive, EMS, Aerospace, and Defence sectors, all of which are experiencing accelerated expansion driven by the Atmanirbhar Bharat initiative.

By aligning its internal policies with the national agenda of selfreliance and advancing its machine technology and performance to meet global standards, the Division has established itself as a key provider of import substitution solutions, successfully penetrating competitive markets traditionally dominated by international players.

The Divisions core product portfolio, particularly Turning Centres and Vertical Machining Centres, has been instrumental in driving enhanced performance. Additionally, the Division has developed a comprehensive strategic roadmap to accelerate growth in its Horizontal Machining Centres segment, as user sectors have matured considerably and are now better able to absorb the technology.

The team has been instrumental to the success of the Machine Tool Division (MTD), with every function consistently focused on enhancing both workforce capabilities and operational efficiency. To align talent development with evolving sectoral trends, the Division has strengthened its people capabilities, ensuring a future-ready workforce capable of driving sustained innovation and competitive advantage.

Leveraging advanced Product Lifecycle Management (PLM) technology, the Division has markedly accelerated its transition from simulation to manufacturing, optimising the supply chain and reducing lead times to expedite time-to-market.

Proactive customer engagement facilitates the collection of vital firsthand feedback, allowing the team to align product development with market needs. This data- driven approach has bolstered their business acumen driving overall divisional performance.

Sectoral Overview

Global: The global machine tool industry in 2025 was characterised by steady growth, underpinned by the integration of Industry 4.0 technologies, despite prevailing geopolitical and trade-related challenges.

The market is valued at US$ 90.88 billion in 2025 and is projected to expand from US$ 95.72 billion in 2026 to US$ 189.06 billion by 2034, reflecting a compound annual growth rate (CAGR) of 8.90%. The Asia-Pacific region held a dominant 58% market share in 2025, driven by substantial investments in precision machining and industrial automation, particularly in China and India.

CNC machines remain the primary growth catalyst, with the automotive sector being the largest consumer segment, driven by rising demand for high-precision electric vehicle (EV) components. Technological innovations, including AI-enabled machine control and digital twin applications, are revolutionising machining processes through real-time optimisation and virtual commissioning.

Nevertheless, the industry experienced margin pressure due to escalating U.S. tariffs in 2025, which disrupted supply chains and increased inventory costs for critical components such as bearings and motors.

Domestic: In India, the machine tool industry demonstrated robust growth in FY25-26, driven by the surge in electronics manufacturing and strategic defence localisation initiatives. The sector is projected to achieve approximately 10% growth in both production and consumption during FY26, with exports also experiencing a significant uptick.

The Machine Tool Division (MTD) is well-positioned to capitalise on the favourable long-term structural shift in Indian capital expenditure. However, competitive intensity is rising as global machine tool manufacturers, responding to slowdowns in Europe and China, increasingly target the Indian market.

While the automotive and auto components sector continues to account for nearly half of overall demand, the industry is progressively diversifying into the aerospace, defence, railways, and electronics sectors to mitigate cyclical risks and enhance market resilience.

Challenges: While challenges persist, such as the influx of low- cost imports and the need for better indigenous high-precision technologies, the industrys expansion into strategic sectors and new export markets in the Middle East and Africa positions it for sustained growth.

Future Outlook Drivers: The industry is supported by the National Manufacturing Mission, announced in the Union Budget 2025-26, which focuses on five focal areas: ease of doing business, a future-ready workforce, MSME support, technology availability and quality products.

BUSINESS DIVISION 4

Advanced

Technology

Centre (ATC)

Precision Expansion. Next-Frontier -j Shift. **

To leverage its precision-engineering expertise in the high-growth aerospace and defence sectors, LMW established the Advanced Technology Centre (ATC).

The primary rationale was to decouple growth from the cyclical volatility of the textile industry by diversifying into stable, long-term strategic sectors.

The Division represents the apex of LMWs technical diversification, serving as a one-stop solution for aerospace customers by manufacturing complex metallic and composite components & assemblies for space exploration, civil aviation and defence programmes.

By developing specialised capabilities in dealing with exotic alloys and composites, LMW has positioned itself to capture opportunities in Indias A&D sector, becoming a trusted partner for national missions, including HALs Tejas programme and ISROs space initiatives.

Transitioning to the Next Level

The ATC Division has successfully pivoted from a domestic defense focus toward a robust, export- driven revenue model.

This transition leverages the consistent and predictable demand of global aerospace majors, ensuring a steady growth trajectory and long-term operational stability.

Exports now represent 90% of ATCs turnover, with "Metallics" accounting for 75% of the segments revenue. LMWs competitive advantage lies in its ability to provide both Metallic and Composite solutions—a dual capability that increases wallet share with international customers and creates a significant moat for domestic tenders.

LMW remains deeply integrated into the domestic defence landscape, contributing its technical excellence to critical long-range projects that define the industrys future. The division is well-positioned for future localisation requirements, though current performance is anchored by immediate demand from export orders.

Dynamic and Challenging World of Aerospace Technology

The aerospace industry is defined by extreme precision, complexity and zero-tolerance standards, where products must perform flawlessly in demanding environments such as space, high altitudes and combat conditions.

It involves long, capitalintensive development cycles, strict regulations and rigorous certification processes. With high barriers to entry and constant innovation in advanced materials and engineering, aerospace remains one of the most demanding and strategically significant industries globally.

Performance in FY26

The ATC Division delivered a healthy performance in FY25-26, marked by revenue growth and improved margins, driven by the scaling up of the composite business. Moreover, the order book at the end of the fiscal year provides mid- to longterm revenue visibility.

The metallics segment continues to track industry growth rates while contributing the dominant share of revenues, providing stability to the overall business. In contrast, the composites segment is scaling at a materially higher growth rate, with a robust order pipeline offering strong medium-term revenue visibility and upside potential. By contributing the critical payload fairings, adaptors, nose cone assembly for a heavy-lift rocket, the team showcased its ability to meet the rigorous technical demands of major space missions. The Division is now positioning the composite facility to take on more complex aerospace and space programs to drive future margin expansion.

Operationally, the Division navigated supply chain challenges and workforce attrition by strengthening retention, building bench strength and adopting advanced technologies to move from simple to complex parts and processes and improving the divisions overall productivity.

As a predominantly export-driven business, ATC remains exposed to global trade dynamics, but its transition toward higher-value, technologically advanced manufacturing positions it as one of the most future-ready and scalable segments within LMWs portfolio.

Sectoral Overview

Global: Driven by heightened geopolitical tensions, military spending (US$2.47 trillion in 2024) and subsequent military modernisation programmes, the global aerospace industry expanded at an annual rate of 6.20% to US$847 billion in 2025.

The aerospace and defence market is expected to grow strongly over the next few years. It is further expected to grow to US$1.18 trillion by 2030, at a CAGR of 7.10%.

Simultaneously, commercial aviation is experiencing a robust recovery, with a combined industry (two major aircraft manufacturers) backlog exceeding 15,300 aircraft and passenger traffic projected to grow at 3.60% annually.

Technologically, the sector is pivoting toward Industry 4.0, integrating AI-native machining, digital twins and sustainable technologies such as Sustainable Aviation Fuel (SAF). Space commercialisation and autonomous systems are also critical growth frontiers.

However, significant headwinds persist; for instance, 2025 tariff escalations have sharply inflated costs for essential materials such as titanium and composites, while supply chain disruptions have risen 35% year-over-year. North America remains the dominant market with a majority share.

Domestic: The Indian aerospace and defence industry is experiencing a historic shift toward self-reliance, characterised by a transition from an import- dependent ecosystem to a robust indigenous production hub.

This period has been defined by sweeping policy reforms aimed at modernising the armed forces through streamlined procurement and improved ease of doing business. A strategic mandate prioritising domestic sourcing for capital equipment has catalysed the growth of local manufacturers, integrating them more deeply into global supply chains.

The private sector, including a burgeoning community of innovators and small enterprises, now plays a pivotal role in delivering cutting-edge solutions. Significant milestones include advancements in indigenous fighter jet programs and the expansion of the national space economy, which has increasingly adopted a commercially oriented model. Strategic industrial corridors have strengthened regional manufacturing clusters. This comprehensive evolution reflects a unified national vision for technological sovereignty and strategic autonomy.

OPPORTUNITIES

Defence Policy Milestones:

Approval of the AMCA (Advanced Medium Combat Aircraft) program and implementation of the new Defence Procurement Manual (DPM) in Nov 2025.

Union Budget Feb 2026: Defence allocation sentiment boosted with a 15.20% increase to C7.85 lakh crore, including C20,000 crore for private- sector R&D.

Space Sector Growth: Expected to reach US$44 billion by 2033, supported by a C13,705.63 crore budget allocation and a growing ecosystem of 300+ private start-ups.

Aviation Market Size: Already established as the worlds third- largest domestic aviation market with 237.42 million passengers recorded between April and October 2025, India is now on an upward trajectory to become the third-largest aviation market overall (encompassing both domestic and international sectors) by 2030.

Airport Infrastructure: Airport network expanded to 163 operational airports by late 2025.

Aircraft Fleet Expansion: Airlines have placed orders for more than 1,500 aircraft, driving growth across the sector.

MRO Industry Potential: The Domestic Maintenance, Repair & Overhaul (MRO) market is expected to reach US$4 billion by 2031.

Global Supply Chain Integration:

Global OEMs already source over US$2 billion in aerospace components annually from India.

Human Resource

People are at the core of LMWs progress. The Company believes that a resilient, motivated workforce directly shapes operational excellence and longterm competitiveness. With this conviction, LMW has embedded employee well-being, capability building and inclusivity into its strategic priorities.

A strong focus has been placed on building multi-skilled teams. Through structured cross-functional training, employees are equipped to handle diverse responsibilities, strengthening operational agility and enabling the organisation to respond effectively to shifting business conditions. By rewarding merit and fostering professional growth, the Company ensures that specialised knowledge stays within the organisation, creating a steady and reliable pipeline of future leaders.

Diversity remains a growing priority, particularly through the increased participation of women in manufacturing functions, fostering a more balanced and progressive workplace culture.

Technology integration is reshaping HR and manufacturing processes alike. Smart systems and real-time monitoring tools are enhancing productivity, transparency and decision-making, supported by comprehensive training to ensure teams confidently adopt new technologies.

Employee welfare initiatives continue to strengthen long-term engagement, extending support to both current and retired personnel. Looking ahead, LMWs people strategy will emphasise advanced skill development, technology- enabled workforce optimisation and structured system upgrades to ensure sustainable growth. As of 31^st March 2026, the Company has been operating with 3,506 permanent employees.

Risk Management

Risk management at the Company is embedded in its strategic framework and plays a vital role in safeguarding long-term performance. A structured system identifies potential threats, evaluates their impact and implements timely mitigation measures across functions.

Oversight rests firmly with the Board, which regularly examines the risk landscape and reviews the effectiveness of controls in place. Through ongoing evaluation and refinement of mitigation plans, the Board ensures that emerging challenges are addressed proactively and that governance standards remain robust. This disciplined approach strengthens resilience, supports informed decision-making and reinforces the Companys commitment to sustainable and responsible growth.

Internal Control System & Adequacy

The Company operates within a structured governance framework supported by a fully integrated ERP platform that documents and standardises key processes. At the start of each financial year, detailed operating plans are formulated, forming the basis for quarterly revenue and capital allocation targets. Performance is continuously tracked against these benchmarks, with deviations analysed and corrective measures implemented promptly.

An independent internal audit function reviews operations across departments to ensure adherence to policies, process integrity and financial discipline. In parallel, a dedicated statutory compliance team monitors regulatory obligations and reports its findings to management for prompt action.

The Audit Committee meets regularly to examine audit observations and review financial disclosures, reinforcing transparency, accountability and strong corporate oversight.

Movement in Key Ratios

Ratio	2025-26	2024-25	Change %	Remarks
Current Ratio	2.21	2.60	-15.00%	-
Debt-Equity Ratio	Not Applicable
Debt Service Coverage Ratio	Not Applicable
Return on Equity*	5.27%	8.61%	-38.80%	***
Inventory Turnover Ratio	5.63	5.17	8.95%	-
Trade Receivables Turnover Ratio	12.64	14.94	-15.43%	-
Trade Payables Turnover Ratio	3.37	3.27	3.04%	-
Net Capital Turnover Ratio	2.34	1.79	30.74%	Better Working Capital Management
Operating Profit Ratio**	4.53%	2.16%	109.80%	Machine Tool division, Foundry and Advanced Technology Centre performed better during the year.
Net Profit Ratio*	5.14%	8.49%	-39.42%	***
Return On Capital Employed* Return On Investment	6.88% 6.82%	9.81% 7.07%	-29.82% -3.46%	*** ****

*Net Profit after exceptional items **Operating Profit before exceptional items

*** For the year 2024-25, profit includes a profit amount of C 131.61 Crores (C 118.92 Crores after tax) on sale of investment in the shares of wholly owned subsidiary companies such as LMW Textile Machinery (Suzhou) Co., Ltd, China and LMW Global FZE, UAE to LMW Holding Limited, UAE.

**** including interest income from Fixed Deposit with Banks.

Financial Performance (Rs crores)

Particulars	2025-26	2024-25
Gross Profit before Interest, Depreciation and Tax*	322.31	394.13
Interest
Depreciation	114.43	107.26
Provision for Tax	53.96	48.63
Profit after Tax	153.92	238.24
Earnings Per Share (before exceptional item) (Amount in C)	156.42	99.81
Earnings Per Share (after exceptional item) (Amount in C)	144.08	223.01

*Profit after exceptional items

CAUTIONARY STATEMENT

THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS REGARDING EXPECTED EVENTS AS WELL AS THE FINANCIAL AND OPERATIONAL RESULTS OF THE COMPANY. BY THEIR NATURE, FORWARD-LOOKING STATEMENTS REQUIRE THE COMPANY TO MAKE ASSUMPTIONS AND ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES. THERE IS A SIGNIFICANT CHANCE THAT THE ASSUMPTIONS, PREDICTIONS, AND OTHER FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARDLOOKING STATEMENTS, AS SEVERAL FACTORS COULD CAUSE ASSUMPTIONS AND ACTUAL RESULTS AND EVENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED HERE.