Mahindra EPC Irrigation Ltd Management Discussions

Management Discussion and Analysis Report for the year under review, as per regulation 34(2) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 is presented as below.

ECONOMIC REVIEW:

A. Indian Economy

India continues to demonstrate resilience as one of the fastest growing large economies, supported by strong domestic demand, sustained public capital expenditure and policy continuity. For Mahindra EPC, the macroeconomic environment during F26 remained broadly favourable, particularly in the context of agriculture, water management and rural infrastructure development except the last month of year which experienced the effects of Geopolitical challenges.

Agriculture and allied activities continue to play a critical role in the Indian economy, contributing approximately 18% to Gross Value Added (GVA) and providing livelihoods to a significant portion of the population. The Government of India (GoI) remains focused on improving farm productivity, income resilience and sustainability, with water-use efficiency identified as a key priority in the face of declining per-capita water availability and increasing climate variability.

Micro irrigation is recognised as a structurally important intervention to address these challenges. Despite cumulative coverage of close to one crore hectares under government programmes, penetration remains limited against the estimated potential, providing a long-term demand opportunity. The continued emphasis on "Per Drop More Crop", climate-resilient agriculture and efficient use of natural resources align well with the Companys purpose of enabling farmers to Rise through sustainable precision farming solutions.

Policy Environment and Sectoral Focus

During F26, micro irrigation continued to be supported under the Per Drop More Crop (PDMC) component, implemented through umbrella schemes PM Rashtriya Krishi Vikas Yojana (PM-RKVY), with fair involvement of State Governments. While overall budgetary allocations and the disbursements under irrigation schemes have been moderated, the core policy intent towards water conservation, productivity improvement and sustainability remains intact.

State Governments play a decisive role in scheme execution, including allocation of funds both for state mandatory and Top Up share of subsidy, pricing, crop prioritisation and administrative processes. The pace of implementation therefore varies across states, reinforcing the importance of Mahindra EPCs diversified geographic presence and calibrated risk approach.

A significant possible positive development is the increasing attempt to converge major irrigation infrastructure with on-farm micro irrigation, particularly through command area development, pressurised pipeline networks and community irrigation projects. Mahindra EPCs has supported these initiatives with focus on project-based irrigation solutions and have helped reduce dependence on dynamics of subsidy-linked demand.

Rural Economy, Farmer Economics and Demand Trends

The rural economy during F26 continued to remain influenced by:

• Extended Monsoon distribution and intensity

• Input cost dynamics (fertilisers, power, labour)

• Government support mechanisms

Rising cultivation costs and climate-related risks are increasing the relevance of solutions that improve input efficiency and productivity. Micro irrigation, by enabling savings in water, fertiliser, energy and labour while improving yields, continues to be viewed as a value-enhancing investment by farmers, rather than merely a capital expense.

For Mahindra EPC, these drivers will support the Companys strategic emphasis on agronomy-led solutions, quality product and services, digital enablement and after-sales support, which strengthen long-term adoption and customer trust.

B. Global Economic Overview

As per the International Monetary Fund (IMF) - World Economic Outlook (WEO) Update, January 2026, global economic growth is projected at approximately 3.3% in 2026 (unless affected by the prevalent Geopolitical situation) and 3.2% in 2027, reflecting steady but uneven growth across regions. The IMF characterises the global economy as "steady amid divergent forces", where progress on disinflation, technology investment and improved financial conditions is offset by geopolitical risks and climate-related disruptions. Global economic growth in 2025 was estimated to be subdued or slowing, generally hovering around 2.8% to 3.2%, as the world economy faces geopolitical crisis, trade tensions and increased tariff barriers. While showing resilience in some sectors, growth is expected to slow from 2024 levels, with advanced economies facing stricter constraints, while emerging markets like India and Indonesia maintain stronger momentum.

For the agriculture and water-intensive sectors, the WEO highlights that climate stress, resource constraints and geopolitical fragmentation are becoming structurally embedded risks rather than cyclical challenges.

Climate Change, Water Stress and Agriculture - IMF Perspective

The IMF has consistently emphasized that climate change and water stress are among the most important macro-critical risks facing the global economy, with agriculture being the most exposed sector. According to IMF-aligned analysis and partner multilateral institutions, declining water availability and increasing climate volatility are already affecting:

• Crop yields and farm productivity

• Food price stability

• Rural employment and incomes

Regions facing chronic water stress are increasingly advised to invest in water-efficient irrigation technologies and climate-resilient farming practices to safeguard food security and economic stability.

From a sectoral perspective, this macro trend supports long-term global demand for micro irrigation, precision water management and resilience-focused Agri-infrastructure.

Geopolitical Conflicts and Input Cost Volatility

The IMF WEO identifies escalation of geopolitical tensions as a key downside risk to global growth. Ongoing conflicts, particularly in energy-rich regions, have materially disrupted:

• Petrochemical and polymer supply chains

• Energy markets

• Global logistics and maritime trade routes

The IMF notes that disruptions at critical chokepoints such as the Strait of Hormuz have resulted in higher crude oil prices, elevated freight and insurance costs and volatility in petrochemical feedstocks. For sectors dependent on polymer-based inputs, including micro irrigation systems, such volatility translates into input cost pressures and margin sensitivity.

Global Food Security and Investment in Irrigation

The IMF, along with institutions such as the World Bank and Food and Agriculture Organization of the United Nations ("FAO"), recognizes that food security risks are rising in many regions due to climate shocks, energy price volatility and supply chain disruptions. These risks are prompting governments and development agencies to prioritize investments in:

• Irrigation efficiency

• On-farm water management

• Sustainable agricultural productivity

Global policy discourse increasingly views micro irrigation not only as an agricultural input, but as a macroeconomic stabiliser that can mitigate food inflation, reduce water scarcity risks and improve resilience of rural economies.

Implications for Emerging Economies and India

Emerging and developing economies are expected to contribute most of the global growth in the medium term, but remain more vulnerable to external shocks, commodity price volatility and climate stress. Countries like India, with large agricultural sectors and significant exposure to water scarcity, face a dual challenge:

• Protecting farmer incomes and food security

• Managing imported input costs and fiscal pressures

In this context, investments in water-efficient agriculture and micro irrigation are aligned with both domestic economic resilience and global sustainability goals, reinforcing the medium-to-long term relevance of the micro irrigation industry.

Outlook for Micro Irrigation and Agri-Solutions Sector Key Trends and Observations from CRISIL:

• Policy-Driven Demand: Demand for micro-irrigation is heavily dependent on state and central government subsidies and budgetary allocations. While the sector has seen long-term growth, short-term demand can be volatile, impacted by election cycles (e.g., in fiscal 2025) and agricultural policy changes.

• Working Capital Intensity: Companies in this sector, including key players, face high working capital requirements due to delayed payments from state governments, resulting in high receivable days.

• Industry Restructuring: Leading firms are shifting focus towards cash-and-carry models, reducing dependence on EPC projects with long payment cycles, and expanding into non-subsidy-based products to improve liquidity.

• Operating Margins: Profitability is sensitive to fluctuations in raw material prices (polymers like HDPE/PVC) and the ability to pass on cost increases to government bodies.

• Market Position: CRISIL highlights a strong market position for key players with established dealer networks and strong parent support

The global outlook for the micro irrigation and Agri-solutions sector over F27 and beyond indicates few critical areas:

• Structural demand drivers arising from water stress, climate adaptation and food security concerns

• Near-term volatility in energy, polymer and logistics costs driven by geopolitical developments

• I ncreasing policy and institutional support for water-use efficiency and sustainable agriculture

• Greater emphasis on productivity-enhancing investments in emerging economies

While cost pressures may create short-term challenges, the IMFs assessment indicates that investment in water-efficient agricultural infrastructure is likely to accelerate globally, creating sustained opportunities for players with technology, scale and execution capabilities.

Company Profile:

Mahindra EPC Irrigation Limited ("Mahindra EPC" or "the Company") is listed Subsidiary Company of the Mahindra & Mahindra Limited and one of the pioneers of Micro Irrigation in India, In the year 2026 the Company has completed its 40 years of operations. The Company enables farmers to Rise through Sustainable Precision Farming Solutions across Micro Irrigation, Water Management, Automation, Community Irrigation and Protected Cultivation.

Mahindra EPC is a part of Mahindra Agriculture Business. This brings in lot of synergies and strategic support.

Mahindra EPC responsibly carries the legacy of over 75-Year-old Diverse Mahindra Group. We work for ‘Driving Positive Change in the lives of our community and believe in ‘Only when we enable others to Rise will we Rise Together We Rise.

Mahindra EPC provides customized end to end Irrigation and Water Management solutions to individual farmers as well as communities and stands out for superior quality. This is made possible through the Companys Multi State Presence, Technical Expertise, Superior Manufacturing Facilities, Wide range of Quality Products as well as Highly Qualified and Capable team. To get closer to the point of consumption in the recent past the Company has set up multi-locational manufacturing facilities in India. Further the Company is also known for its Quality Services in the space of Irrigation Planning, Design, Installation, Agronomy, After sales Services - In person as well as through Digital delivery.

Over the past few years, we have successfully proved application of Drip Technology on even Non-Traditional Crops such as Paddy. It is our constant endeavour to innovate our products, services as well as solution delivery approach.

Mahindra EPC is registered in all major states of India under the Per Drop More Crop scheme (PDMC) of the Government of India (GoI) for subsidy program, which is ably supported by respective State Governments. To deliver on various solutions under this program, Mahindra EPC has a strong network of over 1000 channel partners which is supported by its branch offices across India. The Company also has developed expertise in addressing needs of urban customers such as landscaping and other irrigation needs.

In recent years Mahindra EPC has moved beyond India to the African Continent through its channel partners and have executed a few irrigation projects in international markets.

Further, in India the Company has conceptualised, designed and executed many Community irrigation projects (CIPs) enabling communities to improve water use efficiency and improve farm productivity.

As a responsible corporate, we are aligned to Sustainability Commitments, have signed Science Based Targets and are committed to a Carbon Neutrality Road map.

Overview:

With about 65 percent of the people in India engaged in agriculture and allied activities directly and about 55 percent of the workforce engaged in agriculture and allied activities, agriculture continues to be a critical sector to the sustenance and progress of the country. As per the Ministry of Statistics and Programme Implementation (MoSPI), first advanced estimates of the GVA for F26 the agriculture sector GVA contributes to 18% to Indias nominal GVA. Whereas the real GVA of Agriculture and allied sector has been estimated to grow by 2.4% during F26 as compared to the growth of 3.8% witnessed during the last year, i.e., F25. Apart from meeting domestic requirements, India has also rapidly emerged as the net exporter of agricultural products in recent years in last couple of years the exports of agricultural products from India have been in the range of $48-53 Bn.

Further, rightly there is a focus on ‘Atmanirbhar Bharat and thus ‘Make in India. Which means a further required push for the secondary sectors while balancing the growth in Primary sector. With this background the availability of fresh water availability and its criticality to various sectors becomes crucial .

India has 18% of the worlds population however, freshwater availability is merely about 4% of worlds water resources. As per Central Water Commission, in India, the figure is a whopping 80% for the agriculture sector with just 7% for industries and power generation, 6% for domestic use and 7% for other use. The per capita water availability in India was relatively low at around 1,545 cubic meters per person per year in 2011 and it is expected to be at 1340 cubic meter in 2025 and 1140 cubic meter in 2050 with increasing population growth and urbanization. Further, the irrigation efficiency in India is estimated to be 38% which is much lower than many countries.

With this background and considering the required and actual rates of growth in Manufacturing, Construction as well as Services, larger share of water needs to be made available for these sectors. With a natural limit on sources of water, it needs to come from a reduced water consumption in Agriculture. Other than the surface/ ground water conservation/ recharge/ projects ‘On Farm Water Management and efficiency improvement is necessarily the way ahead.

Thus, the sustenance and growth story of Indian economy in general and Agriculture in particular will remain a challenge without Micro Irrigation.

Micro Irrigation addresses issues such as Water use efficiency, Productivity and Farmer income improvement, which aligns with Hon. Prime Ministers vision of doubling farmer income. Various studies have proved that Micro irrigation benefits the farmer by saving cost such as Fertiliser, Labour and Electricity in the range of 20-30% while improving the productivity by 30-40%.

Till date about 11 Mn Ha has been covered under Micro Irrigation so far. Which is about 16% of the total identified current potential for Micro Irrigation in India. The potential is based mostly on ground water availability and some portion of surface water. As there have been efforts to improve water use efficiency of surface water too, in case all the surface water irrigated land is considered the potential for Micro Irrigation just doubles.

Recognizing the importance of Micro Irrigation and its ability to save water as well as improve productivity, the Government of India (GoI) identifies Micro Irrigation as one of the key tools to improve water use efficiency and double farmer Income.

Though this is very encouraging, the funding from State Governments is equally important. As major part of the subsidy and execution is controlled by state, various critical aspects of the scheme such as pricing decision, are taken by state Governments whereas, GoI issues guidelines and defines boundary conditions such as the Unit cost norms.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Micro Irrigation System (MIS) Industry in India has been broadly segmented based on types of micro irrigation systems (drip and sprinkler irrigation systems), applications of micro irrigation systems and with or without subsidy assistance. The subsidy business has been further segmented basis the approach of solution delivery and subsidy disbursement into the project market and open market. Project markets being the ones where the Company directly supplies and installs the solution at Farmers field against the work orders received from the State Nodal Agency, whereas open markets are the states in which the Companys solutions reach to farmers through its dealers and farmer claims the subsidy directly.

In the recent past the Industry after a steep drop in F21 v/s F20 and then a slow revival in F22, F23 and F24, industry stood at 10.28 Lakh Ha V/s a 11.74 Lakh Ha of F20 which is a -ve CAGR of 2.5% for F20 to F25 (All growth number are based on Industry Coverage data in Hectares published on official portal). F26 was a better year, the industry faced certain challenges in the first half on account of incessant and extended rainfall up to October 2025 end, and a better second half of the year with states like AP and TG supporting the operations. Industry kept surprisingly low in some key states on account of fund availability and thus No/ Low farmer workorders.

Over last couple of years and based on the coverage in Hectares published by the GoI, industry is witnessing a higher rate of industry growth in some Northern and Eastern states compared to traditional states in Central and South India. This trend continued for few states in the year F26.

Considering growth in the major states like AP and TG as well as few northern states and a likely degrowth in some other critical states, the industry is likely to improve over previous year number of 10.28 Lakh Ha by about 6-7%.

In the year F26 GoI stabilised the process of SNA- SPARSH and despite issuing 50% of mother sanction in the month of April 2025, due to previous year pendency of few critical states the industry witnessed a far extended cash cycle.

This made it a play of individual Companys risk appetite, resulting in sporadic performance improvements of players in key states accompanied by increased receivables days for many players.

As discussed in earlier years too, the profitability of the industry is primarily driven by the Prices from State Governments and the Raw Material Prices which is the largest contributor to input costs. This year the state Government prices remained unchanged, and the Raw Material Prices remained stable/ soft for a significant part of the year. Only towards the end of the year, industry saw a sharp increase in raw material prices on account of ongoing Geopolitical challenges, though for a short time this affected overall supplies and viability thus restricting the overall industry performance.

Further, as we look at the various key states, states like AP, TG, TN and Gujarat have clarified their intent through improved budget allocations for F27 and directionally looking positive on the implementation, states like Maharashtra may possibly come to normalcy towards second half of F27 with POCRA implementation coming through, stable state like TN is likely to continue its support to the scheme. Also, few critical northern states will continue their growth trend.

The Government of India (GoI) strongly believes in Micro Irrigation as one of the key tools to save water as well as double farmer Income and thus Hon Prime Minister has been pushing for 20 Lakh Ha, a year target for Micro Irrigation.

With GST reduction from 12% to 5%, prices stabilised, range bound RM (Current peak can be considered as event drive abrasion), key states getting active and new states emerging, various Industry players expect a reasonable growth in the coming years.

OPPORTUNITIES AND THREATS

Micro-irrigation being a proven solution to improve water use efficiency, productivity improvement and improving farmer income, stands as a compulsive tool to ‘Double Farmer Income, ‘Water conservation and support the ‘Growth of Sectors other than Agriculture.

Further we are experiencing few tends such as:

Increased number of farmers are getting aware of the benefits of Micro Irrigation which may lead to improved demand; increasing ‘Sustainability awareness in urban regions may lead to improved usage of Micro irrigation and is likely to improve demand in retail markets too.

Most importantly the supportive policy environment:

Hon. PM is pushing for 1 Cr Ha to be covered in next five years, this translates to an Avg. of 2 Mn Ha a year v/s likely 1.5 Mn Ha of F26; Key states such as AP is aiming to cover 3 Lakh Ha, a year over next four years; Few critical states have approved improved allocations for F27 in their recent budget sessions. In F27 several current active states are expected to remain active giving a positive push to the industry; As mentioned earlier, few states in the north are showing growth for last couple of years e.g., Uttar Pradesh, with processes becoming more transparent and these states are likely to contribute to the overall Industry; Multiple Ministries are actively working on laying a roadmap and also looking at convergence of schemes and policies e.g. Developing projects around identified clusters - connecting major irrigation to Micro Irrigation, Inclusion of pressurized piping systems in the detailed project reports (DPR) for Irrigation Infrastructure.

Further there are efforts being put by the GoI to improve/ modernize the irrigation infrastructure, though it currently is aimed at the major irrigation projects, eventually in few years this will help improve Micro Irrigation potential.

These are early signs of a positive environment. These indicators will help both in the micro irrigation business as well as community irrigation projects business. The Company will focus on small, faster cycle projects for which some early success is seen.

With these positive trends there are certain trends which could pose a challenge such as RM prices, after an almost two years of stable RM price environment the last month of the F26 posed challenges with steep increase of RM prices in the month of March which may continue for a substantial period of Q1 F27, with Geopolitical situation eventually getting normal the RM prices may start reverting to February 2026 levels by end of Q1 F27, though these are not enough to take us to FY20 material cost levels they would definitely be better compared to March 2026 and Q1 F27 prices. Only caveat is that there should not be any further deterioration of Geopolitical situation. Further, though F27 is predicted by some agencies as on setting of El Nino effect there is still a possibility of near normal monsoon in F27; With ground water situation improved on account of successive years of good monsoon in the recent past the year F27 should pose minimal challenge on account of water availability for micro irrigation led crops.

However, to unlock opportunity and overcome possible challenges we also need strong coordination between Central and State governments and regularizing of fund disbursement. This is critical for the positive signs to convert into steady and healthy industry growth in the long term.

The overall Agriculture Space is experiencing a lot of technological interventions in precision agriculture, leaving possible opportunities for adoption, convergence, and collaboration.

i. Strong Policy Continuity & Government Support (FY 2026-27)

The Government of India continues to position micro-irrigation as a cornerstone of its long-term strategy for water conservation, climate resilience, and sustainable agriculture, despite a moderation in overall PMKSY budgetary allocations. As of F26, approximately 11 Mn hectares have been covered under the Per Drop More Crop (PDMC) programme; however, this represents only 16% of the estimated national potential, underscoring a significant latent demand opportunity.

PDMC remains operational under the PM-RKVY framework, with a shared funding mechanism between the Centre and States, ensuring policy continuity and decentralised execution. Further, the increasing deployment of Direct Benefit Transfer (DBT) mechanisms in some states and digital workflows is enhancing transparency and improving farmer participation as well as confidence in the system.

Opportunity:

A stable and predictable policy environment with clear long-term intent enables industry participants to confidently invest in manufacturing capacity, product innovation, digital platforms, dealer networks, and the development of non-subsidy business models, subject to clarity of fund disbursements and openness for dynamic price revisions by the state Governments

ii. Command Area Development & Piped Irrigation Convergence

A structurally transformative opportunity is emerging from the convergence of large irrigation infrastructure projects with micro-irrigation solutions at the farm level. The cabinet-approved 1,600 crore Command Area Development & Water Management (CADWM) sub-scheme provides for pressurised piped water supply up to the farm gate, fundamentally changing irrigation delivery architecture.

Importantly, micro-irrigation systems and pressurised pipelines are now explicitly incorporated into project DPRs, ensuring alignment between bulk water conveyance and efficient on-farm application. This integrated approach not only improves water-use efficiency but also reduces land acquisition challenges and operational losses associated with open canal systems.

Opportunity:

This convergence drives demand for community-based irrigation projects, large-scale drip and sprinkler networks, and end-to-end irrigation solutions. It also reduces seasonality in demand and gradually lowers dependence on individual farm-level subsidies, supporting longer-term, institutional revenue streams.

iii. Climate Stress & Water Scarcity Increasing Adoption Pressure

Indias rapidly declining per-capita freshwater availability and rising climate variability are compelling states to either mandate or strongly incentivise micro-irrigation, particularly in drought-prone regions and water-intensive crops. Agriculture currently accounts for nearly 80% of Indias freshwater consumption, making efficiency gains in this sector critical for overall water security.

Micro-irrigation systems deliver 30-40% water savings while simultaneously improving crop productivity and input efficiency. Increasingly, farmers are viewing micro-irrigation not merely as a cost input but as a risk-mitigation tool against rainfall uncertainty, groundwater depletion, and yield volatility.

Opportunity:

These dynamics support sustained adoption beyond traditional crops, extending into horticulture, plantations, orchards, and protected cultivation, thereby structurally expanding the addressable market.

iv. Global War Scenario - Indirect Demand Support

The current global geopolitical environment, particularly ongoing conflicts in the Middle East and the Russia-Ukraine region, is indirectly reinforcing the case for efficiency-enhancing agricultural technologies. Rising fertiliser, energy, and logistics costs are increasing the economic pressure on farmers and governments alike to optimise resource utilisation and protect domestic food security.

In this context, governments are more likely to prioritise productivity-enhancing and cost-saving interventions that reduce dependence on volatile imported inputs and stabilise farm incomes.

But these events if not resolved at the earliest, also pose a threat on RM prices remaining high for a significant period of the year.

Opportunity:

Micro-irrigation increasingly positions itself as a strategic hedge against input cost inflation, offering both immediate operational savings and long-term yield stability, thereby reinforcing its relevance in policy and procurement priorities.

v. Growth of Non-Subsidy & Institutional Markets

Beyond subsidy-linked agricultural demand, micro-irrigation is witnessing growing traction in non-subsidy and institutional/ Private player segments, including urban landscaping, industrial water management, protected cultivation, and export-oriented farming. Simultaneously, several states are promoting community-managed irrigation assets and Water User Association (WUA)-led models, expanding the scope of organised demand.

Opportunity:

These segments offer moderate margins, faster execution cycles, decent cash flows, and moderate working capital intensity, providing a natural hedge against the cyclical nature of government subsidy disbursements and enhancing overall business quality.

THREATS

Impact of Global Geopolitical Developments

Ongoing global geopolitical conflicts and military tensions have introduced volatility in crude oil prices, polymer supply chains, logistics costs and foreign exchange markets. As polymers constitute a significant portion of the Companys raw material costs, any adverse movement resulting from war-related disruptions may exert pressure on input costs.

During F27, the Company expects raw material prices to remain range-bound with intermittent volatility especially in the Q1 F27. The Company continues to monitor geopolitical developments closely and has undertaken mitigation actions such as cost optimization, vendor diversification, inventory planning, value engineering and logistics & supply chains efficiency improvement.

Therefore, Company has identified and initiated to diversify the revenue streams, strengthen the prudence inworking capital management, strong cost controls and expanding capability to execute non-subsidy and project-based businesses to navigate volatility and capitalize on long-term growth opportunities.

Operations and Financial Performance

In F26 despite incessant rains up to October 2025, the company performed better in the current financial year v/s F25. Registered better revenue and profits. Throughout this year major markets like Maharashtra remained subdued and the state like Karnataka did not pick the usual way in second half of the year. This was compensated to some extent through active states like AP and TG which supported overall operations. Along with these, continued actions in the areas of developing new states, Irrigation Projects and overall nonsubsidy focus resulted in improvement in overall business performance.

Overall, during the year, the RM prices remained range bound except the month of March 2026.

During the year F26, the Company achieved a Sales Turnover of Rs. 312.09 Crores as compared to Rs. 272.67 crores in the preceding year, a growth of about 14.45%.

The Company continued its focus on debtor management and processes. But due to delays in fund release by key states of criticality the Companys debtor days increased in F26, but as a process the operating management has ensured the steps needed to secure the payments as and when the funds are disbursed by the Government.

The Company consciously controlled the operations in certain states of strength to strengthen processes including Revenue Recognition, Debtor reduction etc. as well as for mitigating business concentration risks.

While doing so the Company worked on improving the product mix, state mix and segment mix. During this period Company achieved its highest ever Non-Subsidy Revenue. With continued efforts, the Company has developed a strong work order pipeline for irrigation projects.

As a result, in F26, the Company has registered 35% of its revenue from non-subsidy segments, a stride towards reducing dependence on subsidy.

The strategic actions taken by the Company are in the areas of: Focus on few critical markets, strengthening new geographies, explore non-subsidy business avenues, optimize product mix, improve working capital efficiency, optimizing costs.

The Company continued its focus on serving the Customers needs resulting in lower Customer complaints, Lower rejections across all production locations.

The Company further continued efforts on asset efficiency improvement and frugal engineering as well as the action on working capital to reduce the impact on the external changes impacting bottom line. The Companys commitment to sustainability (SBTi), social responsibility and delivering quality services to the farming community will strengthen further in times to come.

The Company continued its focus on Total Productive Maintenance (TPM), Total Quality Management (TQM) Continuous Improvement Team (CIT), Mahindra Yellow Belt Programme, Kaizen, Quality Parameters on all machines and Service Quality Index. These measures have resulted in improvements in production efficiencies, improving asset life, reduction in rejections and improvement in customer satisfaction levels.

The Company continues to provide support to farmers by way of the Agri Helpline for online support besides undertaking initiatives such as supporting farmers for productivity improvement through our Demo Plots and creating success stories for horizontal deployment of Drip Irrigation technology, organizing farmer meetings and agronomy services for farmers.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING

Details of significant change of 25% or more as compared to the immediately previous financial year in provided the following key financial rations. The Company as such have shown improvement in all the parameters except Debtor Days, the improvement in the below mentioned financial ratios is evidence for the same. The said ratios are provided to the stakeholders for reference and better understanding purposes;

Ratio	Numerator	Denominator	FY 2026	FY 2025	% Change	Remarks
Debtors Turnover (Days)	Average Debtors	Net Sales	276	263	5.1%	No major change
Inventory Turnover (Times)	COGS	Average Inventory	3.58	2.91	22.9%	On account of increase in operation and profits of the Company
Debt Service Coverage Ratio	Earnings available for debt service	Debt Service	7.71	8.20	-5.9%	No major change
Current Ratio (Times)	Total Current Assets	Total Current Liabilities	1.74	2.13	-18.5%	No major change
Debt Equity Ratio (Times)	Debt	Shareholders Equity	0.24	0.15	67.4%	Due to increase in current borrowings during the year.
Net Profit Margin (%)	PAT	Net Sales	4.1%	2.6%	53.8%	On account of increase in operation and profits of the Company
Return on Equity (%)	PAT	Net Worth	7.1%	4.4%	61.7%	On account of increase in operation and profits of the Company
Trade Payable Turnover (Days)	Average Trade Payables	Net Purchases	226	201	12.8%	No major change
Return on Capital employed	EBIT	Capital Employed	9.6%	6.6%	46.3%	On account of increase in operation and profits of the Company
Working Capital Turnover Ratio	Net Sales	Average Working Capital	2.55	2.04	25.2%	On account of increase in operation and profits of the Company
Return on Investments	Income generated from invested fund	Average invested funds in treasury investment	5.8%	6.2%	-6.8%	No major change

F26 was a peculiar year with many business factors, external as well as internal impacting the working capital.

The first and the foremost, delayed collections from key states, some of these have still a pendency of receivables from F24 and F25. The Company has worked on its part of the responsibility to ensure clearance of inspections and completeness of documents and with this most of the receivables falling in these buckets for these states are at ‘Final Payment stage i.e., as and when the states Governments release the funds the Company will receive the same.

Further there was a delay in collections at an overall level due to critical state not achieving the smooth routing of State Top Up funds and in some cases even the State mandatory funds in time.

In the year F26, 65% of the revenue came from H2 F26 and thus with this revenue skew towards the year end, considering even the normal collection cycle i.e., Supply-Installation- Inspection-Collection, most of the revenue in Q4 for project markets is in queue for inspections and will be released in the F27. As a result, the debtor days for the Company have increased by 48 days of sales. The impact to working capital to some extent got compensated by efficiently managing inventory and payables.

Thus, Company has managed the cash well with some change in the operating cash flow compared to the F25.

With continued efforts, improvement in the collection process, as well as expected normalcy at the nodal agencies, we expect an improved performance in F27.

The Company has done a detailed review of old receivables and taken actions to recover the same.

Personnel cost of F26 includes Rs. 3.1 Cr., toward past service costs owing to notification of The Code on Social Security, 2020.

The Company in its efforts to optimise costs has managed to keep the fixed costs such as Employee Cost at a reasonable level compared to F25 which is only 5% increase reflects the efficiency of cost optimization despite the inflations, salary increase for year. Further, over last three years the revenue has increased by a CAGR of 14% whereas the fixed costs went up by a CAGR of 5.3%.

OUTLOOK

Low penetration levels of micro irrigation in India present a long-term structural growth opportunity. Supportive government policies, increasing farmer awareness, technological advancements and rising sustainability consciousness are expected to drive demand.

The growth outlook, however, remains contingent upon timely fund releases by State Governments, administrative efficiencies and stability in raw material prices.

However, Mahindra EPC is well positioned to leverage:

• Structural growth in micro irrigation adoption

• Increasing convergence of irrigation infrastructure and on-farm solutions

• Growth in non-subsidy, project-based and community irrigation segments

At the same time, the Company remains mindful of risks arising from raw material price volatility, state-level execution dynamics and working capital intensity associated with subsidy-linked business.

RISKS AND CONCERNS

The major concerns faced by the industry are, absence of all year round working of the scheme in many states, delayed Opening of the scheme even in key states, lack of implementation of dynamic price revision and delayed funds release by certain State Governments. Though the intent of the GoI as well as State Governments is to increase the speed of MI coverage, these concerns presently remain.

However, the Key risks include delays in subsidy disbursements, geopolitical volatility impacting raw material costs, uneven rainfall distribution, policy changes and increased competition. The Company continues to mitigate these risks through diversification, prudent financial management and strong governance.

There are many deliberations and representations taking place through the competent Industry bodies and the importance of the same has been conveyed to the relevant authorities. With improving transparency of the State Nodal Agency Portals and GoI Fund disbursement process, the industry is assured that in the future consistent and cohesive Central and State policies will bring in effective solutions on the same. Till then tighter internal controls have been exercised for debtor monitoring along with rigorous cost controls.

In order to make it shock-proof, the Company has reduced business concentration risks in terms of specific states or geographies, and has strengthened processes and defined a tighter commercial policy towards balancing growth, profitability and working capital. The Company has continued to improve efficiencies and has kept a tight control on manpower costs and manufacturing efficiency. The Company has started improving coverage in emerging markets such as the North India.

Keeping in view a possible restriction on spending by the Government in the Subsidy business, the Company has undertaken initiatives to reduce dependence on subsidy markets. This has and will lead to maintaining sustainable business activity levels as well as improve on working capital.

Additionally, uneven distribution of rainfall, increasing presence of unorganized sector and high dependence on polymer prices are a few more risks. The risks due to seasonality and distribution of monsoon are mitigated with Companys diversified operations across different States.

Considering the impact and ever staring water crisis Micro Irrigation creates a strong case to address the key challenges surrounding the agriculture sector which include, innovation in technology and mechanisation with increased penetration. The Company has identified a latent need for technology intervention which possibly will become the order of the industry. To safeguard the Company from possible disruptions due technology play, the Company is working on technology solutions for the farmers through its collaborations and tie- ups with various partners in this space.

With only 16% penetration of Micro Irrigation, Surface irrigation will still dominate as the primary irrigation method for some years, the efforts of the Government agencies to create policies that include connection of surface water to on-farm water management will further improve the scope for Micro Irrigation, and the area under micro-irrigation will continue to expand. The Company is continuously contributing to the policy advocacy for bringing more area under micro irrigation on its own as well as through various industry bodies. Thus, to prepare itself for such situations Company has initiated developing Projects Business for last couple of years. So far, the Company has developed capability to conceptualise, design and execute small/ medium size community irrigation projects which include the connect between major and micro irrigation.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an effective and reliable internal financial control system commensurate with the nature of its business, the size, and the complexity of its operations. The internal financial control system provides for well-documented policies and procedures, that are aligned with Mahindra Groups standards, processes, and policies; and enable the Company to adhere to statutory requirements for the orderly and efficient conduct of business, safeguarding of assets, detection and prevention of frauds and errors, adequacy and completeness of accounting records and timely preparation of reliable financial information.

The Company uses an ERP System as a business enabler and to maintain its books of accounts. The transactional controls built in the ERP System provide segregation of duties and appropriate levels of approval mechanism and maintenance of audit trail. The ERP system and the Standard Operating Procedures are reviewed by the management and strengthened wherever required. These systems and controls are audited by the Internal Auditors and their findings and recommendations are reviewed by the Audit Committee. The Action Plan is prepared by the management for all the Audit findings and recommendations and is continuously monitored on monthly basis, while the action taken report is reviewed by the Audit Committee every quarter. The Company continuously makes efforts to automate its processes to enhance the controls.

The internal control framework covers all major business processes and the risks therein, bringing control and integrity. These are tested by the management based on the Risk Control Matrix, the same is reviewed by an external audit firm. The results of the same are shared with the audit committee.

Based on managements assessment and testing of controls, it is concluded that the Company has proper internal financial controls which are considered adequate and are operating effectively.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS INCLUDING NUMBER OF PEOPLE EMPLOYED

In line with its commitment to deliver superior performance through its dedicated, capable, and agile workforce in all spheres of business, the Company has focused on Collaboration at work, capability enhancement systems, new ways of Learning & Development and Work-Life Balance to ensure higher productivity. The Company emphasizes capability development, ethical conduct, safety, employee engagement and industrial harmony.

With the core purpose of Together We Rise philosophy, the introduction of Refresh Rise has shown the new path towards "Rise for a More equal world", "Rise to be Future-Ready", and "Rise to create Value" in the life of our communities.

Given the challenging environment and in line with Mahindra FES philosophy the Company has made changes to its performance management system and has brought in weightages to ECAB behaviours i.e., Ethical, Collaborative, Agile and Bold Behaviours, the employees would be assessed twice a year during the performance appraisal period. The process of performance assessment both for business as well as the employees covers all four aspects - financial perspective, customer perspective, and Internal business process. This also aligns with the long-term strategic initiatives of the Company. This practice ensures balance across multiple dimensions of the performance of employees.

Human resources initiatives such as skill level upgradation, online training courses, re-deployment of manpower for better utilization, productivity improvement of sales force through building crop-specific capability, appropriate reward and recognition systems and productivity improvement are the key focus areas for the development of the employees of the Company. In past two years there have been number of instances wherein the senior positions have been filled through internal talent, which is in line with our strong succession planning policy. This gives opportunities for individuals for job rotation, learning and strengthening the capabilities. As we look ahead, we are confident that our strong, positive people philosophy and practices will make us a preferred organization for talent.

In line with Mahindra culture of promoting ‘Speak up and ‘Zero Tolerance on Ethics and Governance, the Company has a ‘Ethics help line which is promoted through all communications by senior management. The events reported are addressed by the Ethics Committee through a laid down process.

Further in line with the Mahindra Auto Farm Sector, the Company has implemented ‘Safe2Express drive which ensures progress towards an organization open to listen, understand and address the issues. This further ensures ‘Emotional Safety. The senior Management is assessed on the same through various surveys and in the due course this will be cascaded down the line.

This year in line with the M&M Limited Auto Farm Sector the Company launched Rephrased Values and conducted detailed awareness and training programs for the employees for better understanding and cascading.

The organisation has established a proactive Grievance handling mechanism and addressed issues at the very initial stage, to ensure industrial peace and higher productivity. The organisation engages with the union and opinion makers to ensure better engagement of the workforce leading to better productivity. In line with the wage settlement in force, the organisation has ensured to comply with long term settlement (LTS) with union to ensure harmony at the workplace.

The Companys employees proactively participate in ‘Employee Social Options and the Company is experiencing an overwhelming response by the employees to selflessly participate in ‘Mahindra Volunteers Day, which coincides with ‘World Volunteer Day.

The Company is also sensitizing its people to maintain allaround wellness to ensure the safety of themselves, their families and society at large. To note that the Company achieved 2,129 consecutive "Zero Accident Days" up to July 17, 2025. An inadvertent accident occurred on July 18, 2025. Thereafter, for the period from July 19, 2025 to March 31, 2026, the Company recorded 256 days of "Zero Accident Days". In the assessment of Safety processes, the Company was adjudged at ‘Stage 4 in the Mahindra Group Safety Assessment, this is despite the assessment criteria getting stringent.

As of 31^st March 2026, the Company had 327 employees. Further, during the year under review the Company has employed 38 number of people.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

Return on Net-worth for FY 2025-26 is 6.86% as compared to previous financial year of 4.18%. The reason for such increase is due to improved profit led by increased revenue from operations during the year as compared to previous year

Disclosure of Accounting Treatment:

The Company has followed the treatment laid down in the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in the preparation of financial statements. There are no audit qualifications in the Companys financial statements for the year under review.

CAUTIONARY NOTE

Statement in this Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable Securities Laws and Regulations.

Actual results could differ materially from those expressed or implied. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent development, information or events or otherwise.

Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors.

For and on behalf of Board of Directors of
Mahindra EPC Irrigation	Limited
Sd/-	Sd/-
Ramesh Ramachandran	Ami Goda
Managing Director	Director (Non-Executive, Non-Independent)
DIN : 09562621	DIN : 09136149
Date : April 21, 2026 Place : Nashik