NIBE Ltd Management Discussions

Your directors are pleased to present the Management Discussion and Analysis Report for the year ended on March 31, 2026. Investors are cautioned that these discussions contain certain forward-looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report consequent to new information or developments, events or otherwise.

Global economic overview:

According to the International Monetary Fund (IMF), global economic growth is estimated at approximately 3.1% in 2026 and 3.2 percent in 2027, reflecting a moderation from recent levels and remaining below the historical average of 3.7% observed during 2000-2019. This subdued trajectory is attributable to ongoing geopolitical tensions, shifting trade policies, and tightening financial conditions, partially offset by continued investment in technology, including artificial intelligence (AI), and supportive fiscal measures.

Similarly, the World Bank indicates that global growth is expected to slow to around 2.5%-2.6% in 2026, highlighting a structural deceleration and the possibility of the current decade becoming one of the weakest for global expansion in recent history. Growth remains uneven across regions, with emerging market and developing economies (EMDEs) outperforming advanced economies, although such growth is increasingly constrained by debt burdens, external vulnerabilities, and lower capital inflows.

Global inflation trends remained elevated though gradually moderating. The IMF estimates global headline inflation at approximately 4.4% in 2026, reflecting upward pressure from commodity prices and geopolitical developments, before declining to around 3.7% in 2027. Inflation dynamics remain divergent across regions, with some advanced economies experiencing slower disinflation relative to emerging markets.

Ref: www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026 : www.worldbank.org/en/publication/global-economic-prospects

Indian Economy:

The Indian economy continued to demonstrate robust resilience and sustained growth momentum during the financial year under review, supported by strong macroeconomic fundamentals, policy continuity, and broad-based sectoral expansion. As per the Government of Indias official assessment, the economy entered FY 2025-26 with a stable macroeconomic framework characterised by high growth, benign inflation, improving labour market conditions, and strengthened financial and external buffers. India remains among the fastest-growing major economies globally, with macroeconomic indicators reinforcing a growth trajectory anchored in domestic demand, structural reforms, and fiscal support measures.

As per the Economic Survey 2025-26 (Ministry of Finance), real GDP growth for FY 2025-26 is estimated at approximately 7.4%, with Gross Value Added (GVA) growth at 7.3%, reflecting sustained economic momentum. Growth has been predominantly driven by domestic demand, particularly private consumption and public investment, supported by improved balance sheets of households, corporates, and the banking sector.

High-frequency indicators released through PIB also demonstrate continued acceleration in economic activity, with GDP growth reaching 8.2% in Q2 FY 2025-26, supported by resilient consumption and strong industrial and services sector performance. The services and industrial sectors have remained key contributors, while agriculture has supported rural demand and income stability.

The medium-term growth outlook remains constructive, with the Government estimating Indias potential growth at around 7% and projecting real GDP growth in the range of 6.8% to 7.2% for FY 2026-27, even in the presence of external uncertainties.

Ref: www.pib.gov.in/PressReleasePage.aspx?PRID=2220800®=48&lang=2

Atmanirbhar Bharat Programme-Development Review (FY 2025-26):

The Atmanirbhar Bharat (Self-Reliant India) Programme continued to serve as a central pillar of the Government of Indias economic strategy during FY 2025-26, focusing on enhancing domestic manufacturing capabilities, strengthening supply chain resilience, promoting exports, and reducing import dependence.

A key feature of the programme in FY 2025-26 has been the continued emphasis on enhancing domestic manufacturing and industrial capacity, alongside the promotion of self-reliance in critical sectors such as energy, defence, and electronics. Government policy has further prioritised capital expenditure-led growth, with sustained public investment directed towards infrastructure development, thereby creating a multiplier effect on private investment and job creation.

The Atmanirbhar Bharat Programme has also facilitated substantial progress in the indigenisation of arms and ammunition, which is critical for strategic autonomy and operational readiness. Government policy initiatives have prioritised local design, development, and manufacturing of defence equipment, including ammunition systems, with a strong emphasis on reducing import dependence.

Ref: www.pib.gov.in/FactsheetDetails.aspx?Id=149238®=48&lang=2 www.libertify.com/interactive-library/imf-world-economic-outlook-2026/

Business and Industry Environment:

During FY 2025-26, the Indian defence sector achieved record levels of indigenous production and exports, underscoring the effectiveness of policy interventions under the Atmanirbhar Bharat initiative. As per official Government data, defence production reached an all-time high of approximately 1.78 lakh crore, reflecting a 15.6% growth over the previous financial year and more than doubling since FY 2020-21.

This growth trajectory is attributable to policy reforms, increased capital expenditure, improved procurement processes, and rising private sector participation, with the private sector contributing approximately 24% of total defence production, its highest share to date. The strengthening of domestic manufacturing capabilities forms a key pillar of defence self-reliance.

In parallel, defence exports recorded a historic high of 38,424 crore during FY 2025-26, reflecting a substantial increase of over 60% compared to the previous year. Indian defence products are now exported to over 80 countries, signalling enhanced global competitiveness and acceptance of indigenous systems. The Governments policy focuses on streamlining export procedures, promoting ease of doing business, and prioritizing domestic procurement under the Defence Acquisition Procedure (DAP) 2020 has significantly strengthened the domestic defence industrial ecosystem.

Structural reforms such as the revised Defence Acquisition Procedure (DAP) 2020, which accords highest priority to Buy (Indian-Indigenous Designed, Developed and Manufactured) categories, have ensured that a significant proportion of procurement is directed towards domestic suppliers. Additionally, schemes such as Innovations for Defence Excellence (iDEX) and liberalised FDI norms (up to 74% automatic route) have catalysed technology development, MSME participation, and industry-led innovation.

During the year, Indias space programme, led by ISRO, continued to achieve major milestones in satellite launches, planetary exploration, and human spaceflight initiatives, including progress under the Gaganyaan programme and international collaborations. These developments highlight Indias growing capabilities in advanced space technologies and strategic missions.

The Governments long-term vision under Space Vision 2047 includes ambitious goals such as establishing an indigenous space station, launching next-generation vehicles, and advancing deep space exploration missions, thereby reinforcing Indias commitment to self-reliance and global leadership in the space domain.

Ref: mod.gov.in/sites/default/files/Defence-production-soars-Financial-Year-2025-26.pdf www.pib.gov.in/FactsheetDetails.aspx?id=149238®=48&lang=2

Operational Performance:

The Company has recently inaugurated Advance Shirdi Defence Manufacturing Complex located at Shirdi MIDC in Maharashtra in the presence of Honble Shri. Rajnath Singh, Defence Minister of India and Honble Shri. Devendra Fadnavis, Chief Minister of Maharashtra and other dignities.

The integrated Defence Manufacturing Complex has been envisioned as a next-generation ecosystem dedicated to 155mm Ammunition Shell Manufacturing Plant, with a capacity of around 5 lakh shells annually, Inauguration of Indigenous TNT Plant Technology, Inauguration Indigenous RDX Plant Technology.

The Company has also had successfully completed technical trial against RFP of Indian Army 100 km Range at Pokhran & Joshimath (Malari) Uttarakhand and the Company has also announced the successful test firing of its SURYASTRA

Universal Rocket Launcher System ranging 300 km at ITR, Chandipur, Odisha with achievement of precision ranges of 150 Km range - CEP of 1.5 meters and 300 km range - CEP of 2 meters.

The Company has also Inauguration Bio-CNG & Hydrogen Fuel Plant, executed flag-off ceremony of Suryastra - 300 KM Universal Rocket Launching System and signed agreements for Space & Satellite Technologies.

The Company primarily focused on precision weapons, rocket launchers, surveillance communication equipment, Protective Vehicles, Defensive/Deterrence Systems and Components.

During the financial year 2025-26 Standalone Revenue from operations was Rs. 41,671.34 lacs as against Rs. 48,146.72 lacs in financial year 2024-2025. Profit before taxation for financial year 2025-26 stood at Rs. 2,623.56 lacs as against Rs. 3,760.98 lacs in financial year 2024-25.

Total Consolidated Revenue from operations for financial year 2025-26 was Rs. 47,444.76 Lacs and Profit before taxation for FY 2025-26 stood at Rs. 393.29 Lacs.

Risk Management:

The Company has a well-devised risk management process aimed at identifying, prioritizing, mitigating and monitoring risks. The key risks impacting its business include economic, foreign exchange, raw material, technology, funding, talent, changes in Government policies and cyber security risks. The Company has undertaken measures to mitigate these risks.

Risks:

Challenges on inflation and supply chain persist globally. These macroeconomic conditions remain critical to business growth of the Company. Central banks globally are increasing rates to cool down inflation. This may have an adverse impact on the Companys end customers demand and subsequently impact growth. Rapid expansion and capital expenditure requirements place pressure on working capital, profitability and cash flow. With rising shortage of skilled labour, retaining workers remains a risk for the Company to mitigate. Changing technology paradigms and dynamic customer needs are important to remain relevant and sustain business growth. Given the global nature of the Companys business, any disruption of movement of goods to its customers is a key operational risk.

Opportunities:

The government has developed numerous programs to help manufacturers, such as the Production Linked Incentive (PLI) Scheme, which is a cornerstone of the governments endeavor to achieve an Atmanirbhar Bharat. Diversification into aeronautics, space technologies, small arms, and defence electronics provides access to emerging high-growth verticals including UAVs, smart weapons, and satellite systems. Increase in defence spending by all major countries and the focus on infrastructure globally is acting as a tailwind for the Companys industrial business. Domestic producers are given a preference in the defence sector which will provide new opportunities to the industry.

Threats:

Any shift of Government policies may have a meaningful impact on our business. Global geopolitical developments and currency fluctuations may impact procurement priorities, export opportunities, and overall sector growth. Several new companies are entering the market, and existing rivals in adjacent product categories are also increasing their offering.

Internal Control Systems and their Adequacy:

The Company has a robust internal control system that authorizes, records, and reports transactions to safeguard assets and protect against loss from unauthorized use or disposition. The internal controls ensure the reliability of data and financial information to maintain accountability of assets. These internal controls are supplemented by extensive internal audits, management review, and documented policies, guidelines, and procedures.

Human Resource Development:

The Company believes that human capital is a critical factor of success and hence constantly strives to strengthen its work ethics, work culture and align the workforce towards the common goal. Current workforce of the Company is rightly poised to navigate through the current Volatile, Uncertain, Complex situation and to always maintain industry leading quality standards while maintaining the highest service levels.

The Company continues to focus on upgrading knowledge and skill levels among its employees through various Learning & Development training activities to enable them to move up the ladder. The Company has adopted a software programme for overall efficient development of the human resources of the Company and the Company has an well-defined HR policies in place which enables it to build a strong performance-oriented culture, belongingness to work and commitment to work.

Cautionary Statement:

The statements within this Management Discussion and Analysis report, articulating the Companys objectives, projections, estimates, expectations, or predictions, are considered forward-looking in compliance with applicable laws and regulations. These statements rest upon specific assumptions and anticipations of forthcoming events. However, it is crucial to acknowledge that actual results may substantially deviate from both expressed and implied expectations.

Several pivotal factors have the potential to significantly impact the Companys operations. These encompass fluctuations in finished goods prices, raw material costs and their availability, fluctuations in global and domestic demand-supply dynamics, shifts in exchange rates, alterations in Government regulations and tax structures, as well as economic developments within India and the nations with which the Company maintains business ties.

It is essential to note that the Company disclaims any responsibility concerning the forward-looking statements presented herein, as they may evolve in the future due to subsequent developments, additional information, or unforeseen events.

On behalf of Board of Directors For Nile Limited

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Registered Office: Plot No. E-2/2, Phase III MIDC Industrial Area, Nanekarwadi, Pune, Chakan, Khed, Maharashtra, India, 410501

Ganesh Ramesh Nibe Chairman & Managing Director DIN: 02932622

Dated: August 14, 2026 Place: Pune