McNally Bharat Engineering Company Ltd Directors Report

COMPANYS PERFORMANCE

Performance:

The Management Discussion and Analysis is annexed and forms a part of this Report. It covers, amongst other matters, the Companys performance during the financial year 2025-26 and the future outlook.

Borrowings:

As at 31st March 2026, the Companys long-term and short-term borrowings from Banks and Financial Institution stood at Nil.

Credit Ratings:

During the financial year, no credit rating was applicable to the Company since all its debts to Banks and Financial Institutions had been extinguished by virtue of the NCLT Order dated 19th December 2023 approving the Resolution Plan of BTL EPC Limited (the "SRA") and on payment of full purchase consideration by the SRA to the Financial Creditors on 17th October 2025.

Capital expenditure:

The Company did not incur any capital expenditure during the financial year 2025-26.

New Labour Code:

During the year, the Government of India notified the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020 and the Occupational Safety, Health and Working Conditions Code 2020 (collective, the "Labour Codes") which seeks to consolidate multiple existing labour laws into a unified framework governing employment and post-employment benefits.

Based on as assessment of the financial impact of these changes, the Company has recognized an incremental impact of gratuity and long-term compensated absences of Rs 93.42 Lakhs, mainly due to revised wage definition. It has been disclosed under the head "Employee Benefit Expenses" as past service cost in the Standalone Financial Results during the period ended 31st March 2026.

In accordance with the Boards mandate, the Company has implemented policies, systems and processes and restructured employee salary components to align with the requirements of the Labour Codes. The Company continues to monitor developments, including additional rules, clarifications or amendments, and will evaluate and account for the impact thereof in the relevant periods, as applicable.

Impact of Conflicts:

During the year under review, Operation Sindhoor in Quarter 1 and continuing geopolitical tensions and conflict in the West Asia region in Quarter 4, contributed to heightened uncertainty in the global economic environment with a corresponding impact on the Companys financial performance. The Company has been closely monitoring these developments and evaluating their potential impact on its operations, supply chain, fuel cost, overall market conditions and demand for engineering, procurement, construction and O&M.

While the direct impact on the Companys operations have not been significant during the financial year 2025-26, the resulting volatility may have implications for operating costs, business sentiment and demand for EPC business in the year 2026-27. Elevated fuel and energy prices may have an impact on operating costs.

The management has undertaken appropriate risk mitigation measures, including prudent cost management, continuous monitoring of demand trends including status of ongoing projects and operational preparedness to respond to changing market conditions. The Company remains focused towards maintaining operational resilience and financial discipline and will continue to assess the evolving situation and take such actions as may be necessary to safeguard the interests of the Company and its stakeholders.

STATE OF THE COMPANYS AFFAIRS

There has been no change in the nature of the Companys business operations and affairs during the financial year 2025-26. Key developments in the business, are detailed in the Management Discussion & Analysis.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 ("the Act") the Directors hereby confirm that:

i. in preparing the Annual Accounts, applicable accounting standards have been followed and there are material departures.ii. the Directors have selected accounting policies, applied them consistently and the Directors made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for the year;iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;iv. the Directors ensured the annual accounts of the Company have been prepared on a "going concern" basis;v. the Directors have laid down internal financial controls to be followed by the Company and these internal financial controls are adequate and operating effectively; andvi. the Directors they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

TRANSFER TO RESERVES

The Company has not transferred any amount to the reserves for the financial year ended 31st March 2026.

MATERIAL CHANGES, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY AFTER THE CLOSURE OF THE FINANCIAL YEAR TILL THE DATE OF THE REPORT.

No significant changes have occurred affecting the Companys financial position from the end of the financial year 2025-26 up to the date of this report.

DIVIDEND

There is no recommendation of dividend for Equity Shareholders during the financial year 2025-26. Further, in view of capital restructuring pursuant to implementation of the Resolution Plan, the paid-up Preference Share Capital of the Company stands extinguished with effect from 22nd February 2025.

BOARD MEETINGS

During the year, six Board Meetings were convened viz. on 22nd May 2025, 11th July 2025, 6th August 2025, 13th November 2025, 20th February 2026 and 24th March 2026.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Ms. Poonam Singhania (DIN: 11307969) will retire by rotation as a Director of the Company at the forthcoming Annual General Meeting and being eligible, offers herself for re-appointment. The Board recommends the re-appointment of Ms. Poonam Singhania as a director on the Board.

Mr. Mehar Chand Thakur (DIN: 08648033) will attain seventy-five years of age on 7th April 2027 during the continuation of his present term of directorship which is otherwise, valid till 21st October 2030. The Board recommends continuation of his directorship during his current term despite attaining the age of 75 years, subject to shareholders approval at the forthcoming Annual General Meeting.

The Independent Directors confirmed their compliance with the independence criteria outlined in Section 149(6) of the Companies Act (the "Act") and Regulation 16(1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board acknowledges that Independent Directors met the required criteria of independence.

The Independent Directors also confirmed their compliance with the Code for Independent Directors prescribed in Schedule IV to the Act.

COMMITTEES OF THE BOARD

The Board of Directors has constituted the following committees:

Audit Committee Nomination and Remuneration Committee Stakeholders Relationship Committee Risk Management Committee (voluntary).

Details of composition, terms of reference and number of meetings held during the financial year are given in the Report on Corporate Governance, which forms a part of this Report. Furthermore, during the year under review, all recommendations made by the various committees have been considered and accepted by the Board.

CORPORATE GOVERNANCE REPORT

The Corporate Governance Report along with the certificate from the Statutory Auditors forms a part of this report.

THE COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND SENIOR MANAGEMENT PERSONNEL APPOINTMENT AND REMUNERATION

The Companys policy on Directors Appointment and Remuneration ("Director Appointment Policy") and Senior Management and Key Managerial Personnel Appointment and Remuneration Policy ("Senior Management Policy") formulated in accordance with Section 178 of the Act, read with the Regulation 19(4) of the Listing Regulations can be accessed on the Companys website: https://www.mcnallybharat.com/assets/pdf/investor/policy/remunerationpolicy.pdf.

The key points outlined in the Directors Appointment Policy are as follows:

The Policy aims to appoint Directors (including Non-Executive and Independent Non-Executive Directors) who possess significant skills, competence, and experience in various fields such as business, finance, accounting, law, information technology, management, sales, marketing, administration, corporate governance, engineering, procure & construction, operation & management or other relevant disciplines related to the Companys business. These Directors should be capable of effectively performing their supervisory role in the management and general affairs of the Company. Evaluation of individuals against various criteria, including industry experience and other attributes necessary for successful performance in the role, while also considering the benefits of board diversity. Consideration of how the individual is likely to contribute to the overall effectiveness of the Board and collaborate constructively with other Directors. Assessment of the skills and experience the individual brings to the position and how these qualities will enrich the collective skillset and experience of the Board. Examination of the individuals current positions, including directorships or other affiliations, and how these roles might impact their ability to exercise independent judgment. Evaluation of the time commitment required from Directors to fulfill their duties to the Company effectively.

The main points of the "Senior Management Policy" are outlined as follows:

The objective of the Policy is to establish a framework and define standards for the appointment, compensation, and termination of Key Managerial Personnel (KMP) and Senior Managerial Personnel. These individuals are entrusted with the responsibility and capability to steer the Company towards its long-term objectives, development, and growth. The appointment and remuneration of Key Managerial Personnel and Senior Managerial Personnel are structured to align with the Companys interests and those of its shareholders, within an appropriate governance framework. Remuneration packages are designed to be in harmony with the Companys objectives, taking into consideration its strategies and risks. Compensation is linked to both individual and Company performance, thereby influencing the extent of variable pay. Remuneration structures are crafted to be competitive within the EPC industry or other relevant sectors for respective roles. Executives performing similar levels of job complexity receive comparable compensation packages.

ENERGY CONSERVATION MEASURES

The Company maintained highly focused energy conservation efforts throughout the financial year.

Energy conservation measures taken during the year included:

(i) routine steps like strict control and monitoring the consumption of energy on a continual basis; (ii) preventive maintenance of machines like AC units, DG sets etc. resulting in optimal usage of electrical parts; (iii) installation of LED lamps extensively across all sections of the Head Office and Sites, including flood lights; (iv) installation of several energy saving equipment progressively throughout the year.

During the financial year, the lateral shifting of the Corporate office layout has resulted in considerable savings in power consumption. Other operational measures included setting of benchmarks with respect to the current year with targets for increased savings, initiatives by energy conservation committees comprising of cross functional groups, close monitoring and performance evaluation of plants and machinery by conducting regular self-audit and up gradation of equipment used at the sites.

Some of the actions planned for next year include replacement of remaining conventional lamps with energy efficient LED lamps.

FOREIGN EXCHANGE EARNINGS & OUTGO

During the financial year 2025-26 and its previous financial year 2024-25 there have been no financial exchange earnings and outgo.

AUDITOR AND AUDITORS REPORT

At the 58th Annual General Meeting of the Company held in year 2021, shareholders approved the appointment of M/s. V. Singhi and Associates, Chartered Accountants (Firm Registration Number 311017E) as the Statutory Auditors of the Company to hold office for the second term of 5 (five) consecutive years from the conclusion of the 58th Annual General Meeting till the conclusion of the 63rd Annual General Meeting to be held in 2026.

The Board recommends the appointment of M/s Singhi & Co., Chartered Accountants, (Firm Registration No. 02049E) as the Statutory Auditors of the Company at the forthcoming Annual general Meeting.

The Auditors Report for the financial year 2025-26 does not contain any qualification, reservation or adverse remark.

SECRETARIAL AUDITORS

M/s Prakash Shaw & Company, Company Secretaries (COP: 16239) were appointed as the Secretarial Auditors of the Company for a term of five consecutive years commencing from financial year 2025-26 to financial year 2029-30.

The Secretarial Audit Report is annexed and forms part of this Annual Report. The certificate pursuant to Regulation 34(3) and Schedule V Para C clause (10) (i) of the Listing Regulations in respect of non-disqualification of Directors of the Company is also annexed and forms part of this report.

SECRETARIAL STANDARDS

During the year under review, the Company complied with applicable Secretarial Standards.

RELATED PARTY TRANSACTIONS

The contracts, agreements, and dealings initiated by the Company in the financial year with related parties were conducted within the regular scope of business and adhered to the arms length principle. Throughout the period, the Company did not engage in any significant contracts, agreements, or transactions with related parties that would qualify as material under the Companys Related Party Transaction Policy. Therefore, there are no transactions necessitating disclosure in Form AOC-2 as per Section 134(3)(h) of the Act, in conjunction with Rule 8(2) of the Companies (Accounts) Rules, 2014.

The Policy on Related Party Transactions can be accessed on the Companys website:

https://www.mcnallybharat.com/assets/pdf/investor/policy/related-party-transaction-policy.pdf

The details of Related Party Transactions are set out in Note No. 27 to the Standalone Financial Statement.

ANNUAL RETURN

In accordance with Section 92(3) of the Companies Act, 2013 read with the Rules made thereunder, the Annual Return of the Company in Form MGT-7 for the Financial Year 2025-26 has been placed on the website of the Company at: https://mcnallybharat.com/wp-content/uploads/2026/08/Annual-Return-2025-26.pdf

LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans given, investments made, guarantees given, if any, and the purpose for which the loan, guarantee and investment will be utilized are provided in the Standalone Financial Statement in Note nos. 5 & 6.

DEPOSITS

During the year, the Company has not accepted any deposits from the public.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy in place to report concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct. The Policy provides for protected disclosures for the Whistle Blower and also considers and investigates anonymous complaints. Disclosures can be made through e-mail or letter to the Whistle Officer or to the Chairperson of the Audit Committee and the CEO.

The Whistleblower Policy can be accessed on the Company website at the link: https://www.mcnallybharat.com/assets/pdf/investor/policy/MBECL-Whistleblower%20Policy-Revised%202022.pdf

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

As on 31st March 2026, the Company had only one Indian subsidiary company, namely, McNally Bharat Equipment Limited.

The Companys investment in the following foreign entities had been fully impaired in the past financial years and therefore, were not considered as part of the Resolution Plan which was approved by NCLT vide Order dated 19th December 2023 and accordingly not considered for consolidation of accounts for the relevant financial years:

(a) MBE Mineral Technologies Pte. Ltd., Singapore

(b) MBE Mineral Zambia Limited, Zambia(c) McNally Bharat Engineering (SA) Proprietary Limited, South Africa(d) EMC MBE Contracting Company LLC

The Company is a Lead Partner in three Joint Ventures namely, McNally AML (JV), McNally Trolex (JV) and McNally Trolex Kilburn (JV).

During the year under review, the Board of Directors reviewed applicability of "material subsidiaries" in accordance with Regulation 16 read with Regulation 24 of the Listing Regulations, and none of the above qualified the materiality criteria.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statements of the Company and its wholly-owned Indian subsidiary company for the financial year has been prepared in compliance with applicable provisions of the Act and as stipulated under Regulation 33 of SEBI Listing Regulations as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited consolidated financial statements together with the Independent Auditors Report thereon form part of this Annual Report. Pursuant to Section 129(3) of the Act, a statement containing the salient features of the Financial Statement of the subsidiary is attached to the Financial Statement in Form AOC-1. A copy of the Financial Statement of subsidiary is available on the Companys website at https://mcnallybharat.com/wp-content/uploads/2026/05/McNally-Bharat-Equipment-Limited-Audit-Financial-Result-2025-26.pdf

DIRECTORS/KEY MANAGERIAL PERSONNEL (KMP) REMUNERATION

Of the total strength of the Board, 6 (six) Non-executive Independent Directors and 1 (one) is Non-Executive NonIndependent.

The Independent Directors are only entitled to receive Sitting Fees for attending meetings of the Board and its committees. The total gross sitting fees paid during the year amounted to Rs 28,70,000.

(a) The ratio of the remuneration of each Director to the median remuneration of all the employees of the Company for the financial year:

Rs in Lakhs

*Appointed w.e.f. 05.05.2025

(b) the percentage increase in remuneration of any Director and KMP during the financial year is given below:

Rs in lakhs

*Appointed w.e.f. 05.05.2025

(c) the percentage increase in the median remuneration of the employees in the financial year 2025-26 was 42.37%

(d) the total number of employees on the rolls of the Company as at the end of the financial year was 323.

It is hereby affirmed that the remuneration of Key Managerial Personnel are as per the Remuneration Policy of the Company.

INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT SYSTEMS

The Company maintains a well-structured risk management framework designed to recognise, evaluate, and address risks effectively. Comprehensive information regarding internal financial controls, risk management endeavours including the execution of risk management policies and identification of key risks and their corresponding mitigating actions, are elaborated upon in the Management Discussion and Analysis Report.

BOARD EVALUATION

In accordance with the provisions of the Act and Regulation 17(10) of the Listing Regulations, the Company has a Board Evaluation Policy for evaluation of the Chairperson, individual Directors, Committees and the Board.

A structured questionnaire developed by the Nomination & Remuneration Committee covering various aspects of the Boards functioning, Board culture, performance of specific duties by Directors and contribution to the Board proceedings was circulated to members of the Board for the financial year 2025-26.

The Board as a whole, its Committees, the Chairperson and individual Directors were also separately evaluated in the Meeting of the Independent Directors held on 24th March 2026. The Meeting inter alia assessed the quality, quantity and timeliness of flow of information required for the Board to perform its duties properly. The entire Board, excluding the Director being evaluated, evaluated the performance of each Independent Director.

The Directors have expressed their satisfaction with the evaluation process conducted. Based on the findings from the evaluation process, the Board will continue to review its procedures, processes and effectiveness of Boards functioning, individual Directors effectiveness and contribution to the Boards functioning as well with a view to practicing the highest standards of Corporate Governance.

COST RECORDS

During the financial year, the Company has maintained cost records in accordance with Section 148 of the Companies Act, 2013 read with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 as specified by the Central Government in this regard.

M/s A. Bhattacharya & Associates, Cost Accountants (Firm Registration No. 100255) was appointed the Cost Auditor of the Company to audit the cost records for the financial year 2025-26 as required under Section 148(3) of the Companies Act, 2013 and Rule 14 of the Companies (Audit and Auditors) Rules, 2014.

VALUATION FOR ONE TIME SETTLEMENT

During the financial year 2025-26, there was no instance of one-time settlement with any bank or financial institution, except as mandated under the Resolution Plan approved by the NCLT vide Order dated 19th December 2023 and further Order 23rd September 2025 relating thereto, in accordance with which, the SRA (ie. BTL EPC Limited) paid the balance of 3rd tranche money to the Banks & Financial Institutions (collectively, the "Financial Creditors") on 17th October 2025.

PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

No fresh proceedings are initiated against the Company under the Insolvency and Bankruptcy Code, 2016 during the year under review.

SIGNIFICANT AND MATERIAL ORDERS, IF ANY

During the financial year, there were no significant and material orders passed by Regulators, Courts or Tribunals impacting the going concern status and the Companys operation in future.

PREVENTION OF SEXUAL HARASSMENT AT THE WORKPLACE

The Company has a zero-tolerance policy towards sexual harassment in the workplace. It has adopted a comprehensive policy for prevention of sexual harassment of its women employees at the workplace. In accordance with the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act") and the rules made thereunder, the Company has constituted Internal Complaint Committee (ICC) at its Corporate Office.

To ensure comprehensive coverage, the Company organized awareness workshops covering the majority of employees. The Company has also developed an e-module with self-assessment for imparting training

Details of complaints are provided in the Corporate Governance Report.

MATERNITY BENEFITS ACT, 1961

During the financial year ended 31st March 2026, the Company has filed necessary returns under the POSH Act and has been compliant with the provisions of the Employees State Insurance Act, 1948 including Rules thereto. Hence, compliance with Maternity Benefit Act, 1961 including Rules thereto, stands obviated.

OCCUPATIONAL HEALTH AND SAFETY

McNally Bharat Engineering Company Limited is an Occupational Health, Safety & Environment Management System (ISO 45001:2018, ISO 14001: 2015) certified Company with a brief scope of Project Management, Design, Manufacturing, Supply, Construction, Erection & Commissioning of Industrial and Infrastructure Development Projects on Turnkey Basis and Construction of Industrial and Infrastructure Development Projects.

The Company is committed for Occupational Health, Safety & Environment (OHS&E) organisation and capable of meeting the national or international OHS&E requirements.

In line with the said OHS&E requirement, the organisation has a consolidated OHS&E Management System Manual with risk assessment, legal requirement review, periodic audit, training, inspection, incident reporting or investigation and other operational procedures to ensure OHS&E compliance at the Companys projects and O&M sites.

The Company has devised a system to regularly update the Daily OHS& Message via email to all employees to build awareness on OHS&E requirements in its workplace. There is a common sharing in-house intranet webpage (MBE Bridge) which contain OHS&E policy, manual, different operational control procedures, checklists, rewards/certificates and training models for employees to access.

During the year, the Company focused on Employee Health & Safety awareness training through online or offline mode and conducted many online training on Hazard Identification & Risk Assessment (HIRA), Behavior Based Safety (BBS), Process Safety Management (PSM), Product Safety Management (Prod.SM), Contractor Safety Management (CSM) and Industrial Best Safety Practices, apart from the regular training module.

The Company strives towards for achieving Zero Fatality or Environmental Harm and in order to bring it into reality, strives to reduce Total Reportable Incident Rate. A low incident rate in an EPC company shows a sustainable improvement in Occupational Health, Safety & Environment Management System compared to other EPC firms in India.

McNally Bharat Engineering Company Limited has continued to adopt preventive measures on the spread of COVID-19 at office and jobsites, to control coronavirus infection among employees and service partners. Since 2020-21 the organisation has absorbed the COVID-related protocols into its day-to-day functioning and therefore continues to practice the preventive measures in the best interest of its employees and customers.

GENDER COMPOSITION

Gender composition of the Company as on 31st March 2026 was as follows:

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided to members on request.

CAUTIONARY STATEMENT

Risks, uncertainties or future actions could differ materially from those expressed in the Directors Report and the Management Discussion and Analysis. These statements are relevant on the date of this report. We have no obligation to update or revise any statements, whether as a result of new information, future developments or otherwise. Therefore, undue reliance should not be placed on these statements.

ACKNOWLEDGMENT

The Board takes this opportunity to thank all employees for their commitment, dedication and co-operation. The Board would also like to thank all the customers, investors including Banks and other business associates who have extended valuable support and encouragement.