Omnitech Engineering Ltd Management Discussions

Economic Overview

Global Economy

According to the IMFs World Economic Outlook (WEO) dated January 2026, the global economy entered the year with growth holding near 3.3%. This headline figure masked underlying divergence in performance, with advanced economies expanding at a modest pace while emerging markets continued to outperform, supported by shifting trade alliances and targeted policy interventions.

Inflationary pressures eased over the course of the year, while global trade growth moderated from its post-recovery highs, prompting businesses across sectors to diversify supply chains and strengthen value networks in pursuit of greater operational resilience. This stability was underpinned by a technology-led investment cycle, sustained investment in artificial intelligence, and accommodative financial conditions, even as geopolitical uncertainty and periodic financial market instability posed offsetting risks to the broader growth outlook. Geopolitical shifts are also reshaping global sourcing strategies, with OEMs increasingly reassessing geographic concentration, dual-sourcing critical inputs and building more resilient multi-country supply networks.

Looking ahead, continued policy coordination and supply chain resilience remain critical to the medium-term global economic trajectory, with growth momentum expected to be led by the United States and emerging economies, while Europe is anticipated to see more moderate expansion over the near term.

Indian Economy

Indias economy demonstrated resilience through FY26, with real GDP growth estimated at 7.6% for the year, supported by strong domestic demand, higher investments, and robust performance across services and manufacturing, as per KPMGs April 2026 study, Decoding The Indian Economy. This momentum is expected to moderate slightly to 6.5% in FY27, reflecting a natural normalisation even as strong fundamentals and ongoing reforms continue to cushion the economy against global disruptions.

Inflation remained well-anchored below the RBIs 4% tolerance threshold since early FY26, supported by healthy agricultural output and stable food prices, with annual average inflation projected at 2.1% for the year. On the fiscal front, Indias position strengthened, with the gross fiscal deficit narrowing 16.1% year-on-year in the first ten months of FY26, while GST collections grew 8.3% year-on-year, reflecting the impact of the GST 2.0 reforms introduced in September 2025.

Real GDP projected growth (per cent, y-o-y)*⁴

Real GDP growth is forecast at 6.5 per cent in FY27, reflecting moderation from FY26. Strong economic fundamentals, together with reform initiatives, helped India limit the impact of global disruptions.

Indias external position also remained robust, with total exports growing 5.8% year-on-year between April 2025 and February 2026, driven by market and product diversification and strong services exports, even as a widening merchandise trade deficit reflected robust domestic consumption and higher gold imports. FDI equity inflows rose 21.7% year-on-year in the first nine months of FY26, led by investment in computer software, hardware, and services, while foreign exchange reserves strengthened through the year. Indias growth engines continue to expand, including a fast-growing MSME sector contributing 31.1% of GDP, an active Global Capability Centre ecosystem employing nearly 1.9 million professionals, and rising digital public infrastructure adoption, alongside emerging pillars such as semiconductors, green hydrogen, nuclear energy, and critical minerals.

External risks include capital-flow volatility, currency depreciation, and delays in finalising trade agreements with the United States, United Kingdom, and European Union, while domestic concerns centre on elevated input costs and fiscal stress from subsidy spending. Indias improving credit growth and strengthening foreign reserves serve as meaningful buffers against these risks, positioning the economy to steadily expand its role globally, supported by sound macroeconomic fundamentals and a young consumer base.

Sources:

World Economic Outlook Update, January 2026: Global Economy: Steady amid Divergent Forces

World Economic Outlook, April 2025: A Critical Juncture amid Policy Shifts Decoding the Indian Economy FY2026 KPMG India Economic Outlook Deloitte

Industry Overview

Global Precision Engineering Components Market

In CY2024, the global market for precision engineered goods stood at USD 269.1 billion, exhibiting a CAGR of 6.4% during the period of CY2018 to CY2024. Going forward, by CY2028, the market is expected to reach a value of USD 395.4 billion, representing a CAGR of 9.9% during the period of CY2025 to CY2028 as per the ICRA analysis. Precision components include shafts, gears, valves, and customized fittings machined from metals such as steel, aluminum, and titanium. They are manufactured using advanced CNC and numerical control processes to meet extremely tight tolerances. These parts are critical to industries where performance, durability, and stability cannot be compromised, including aviation, automotive, medical equipment, electronics, and defense. Growth is shaped by a combination of technological, regulatory, and structural shifts across end- use industries, alongside a broader industry push toward more sustainable manufacturing practices. Alongside market growth, OEM sourcing models are evolving towards qualified manufacturing partners capable of contract manufacturing and integrated, end-to-end engineering support rather than sourcing individual components in isolation.

Growth Drivers in the Global Precision Engineering Components Market

Regional Insights

North America holds a leading position in the global precision-engineered goods market, supported by a strong industrial base, advanced manufacturing infrastructure, significant R&D investment, and stringent quality and regulatory standards, characteristics that continue to sustain demand for high-precision, reliable, and compliant engineered components across a wide range of industrial applications.

Growth in the region is underpinned by sustained investment across energy, aerospace, defence, industrial equipment, automation, electronics, and advanced manufacturing. As one of the worlds largest energy and industrial markets, North America continues to require precision-engineered components for demanding applications involving drilling, flow control, power systems, machinery, and critical equipment, while increasing adoption of automation, AI, IoT, and smart manufacturing is raising requirements for accuracy, repeatability, and traceability.

The region is also witnessing a gradual shift in sourcing strategies, with customers increasingly diversifying supply chains, reducing geographic concentration, and working with qualified manufacturing partners capable of delivering consistent quality, scalable capacity, and broader engineering support, creating opportunities for global precision engineering companies that can support machining, fabrication, special processes, assemblies, and other value-added manufacturing requirements.

Europe continues to hold a significant position in the precision-engineered goods market, supported by its strong manufacturing heritage, advanced engineering capabilities, and established presence across aerospace, industrial machinery, energy, automation, and other high- value industrial sectors. The regions regulatory framework places considerable emphasis on quality, sustainability, safety, and environmental performance, reinforcing demand for suppliers with robust manufacturing systems and strong compliance standards.

Europes continued focus on industrial modernisation, Industry 4.0, automation, and energy efficiency is expanding the role of precision engineering across manufacturing value chains, with investments in renewable energy, power infrastructure, advanced industrial equipment, and specialised engineering applications further supporting demand for high-quality components and assemblies. In Oil & Gas, particularly across offshore markets such as the North Sea, continued focus on operating efficiency, reliability, and asset performance remains supportive of precision- engineered products.

As in North America, European customers are increasingly evaluating supply-chain resilience and supplier diversification, encouraging greater engagement with qualified global manufacturing partners that can offer competitive engineering capabilities, reliable delivery, strong traceability, and integrated manufacturing solutions, creating a favourable environment for capable precision-engineering companies.

Key Challenges

The market faces constraints from the high capital investment required for advanced production equipment, including CNC machines, laser cutters, and precision inspection systems, along with the cost of skilled labour to operate them. These financial barriers can limit market entry and scalability for smaller manufacturers. Fluctuating raw material prices, particularly for metals and specialty polymers, continue to pressure profit margins industry-wide.

Indian Precision Engineering Components Market

In FY2025, the precision engineered goods market in India is projected to have reached a value of USD 7,375 million, exhibiting a CAGR of 7.5% during the period of FY2019 to FY2025, as per an ICRA analysis. Going forward, by FY2029, the Indian market is projected to reach a value of USD 11,615 million, showcasing a CAGR of 11.8% from FY2026 to FY2029.

Key Growth Drivers

Sources:

Precision Engineering Components Market Size, Share To 2035 Business Research Insights India Precision Engineering Market Size & Forecast to 2034 IMARC Group ICRA Analysis

Company Overview

Omnitech Engineering Limited is a Rajkot-based manufacturer of high-precision engineered components and assemblies, catering to safety-critical applications across global industrial sectors including Energy, Motion Control and Automation, and Industrial Equipment Systems. Established in FY 2007, the Company has built nearly two decades of manufacturing expertise, offering precision machining capabilities of up to 5 microns across bar stock, tubes, forging, and casting products. The Company is progressively positioning itself to deepen strategic partnerships with customers through contract manufacturing and end-to-end Precision Engineering Solutions.

The Company operates three manufacturing facilities in Rajkot, Gujarat at Metoda, Chhapara, and Padavala, spanning over 80,802 square meters, supported by an international warehouse in Houston, USA, operated through its subsidiary, Omnitech Group Inc. During Fiscal 2026, the Company supplied customized precision components to over 256 customers across 24 countries, with approximately 75% of revenue derived from outside India, led by North America (53.2%) and India (24.6%).

Omnitechs manufacturing capabilities span design and engineering, machining, fabrication, surface treatment, assembly, and quality testing with supply chain solutions of warehousing options in USA and supported by certifications including ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, IATF 16949:2016, AS9100:2016 for aerospace, and API Q1/20J/7-1/5CT for oil and gas applications. The Company was listed on the NSE and BSE during FY2026, further strengthening its capital base to support planned capacity expansion, including a new manufacturing facility in Hyderabad and an expanded facility at Chhapara. The broader objective is to combine machining, special processes, precision fabrication, assembly, testing and logistics under a more integrated manufacturing model that can support customers across a larger share of the product lifecycle.

Company Outlook

Omnitech Engineerings outlook for the year ahead is anchored around six strategic priorities designed to convert current momentum into sustained, diversified growth. At the core, the Company will focus on converting its existing Energy order book through on-time, right-firsttime execution while maintaining disciplined working capital management. Alongside this, Omnitech aims to deepen its position in Motion Control by expanding wallet share within long-standing customer relationships across automation and fluid-power applications. Across segments, the Company intends to increase the depth of customer engagement by moving from individual component opportunities towards longer-term strategic partnerships and contract manufacturing programmes.

Growth in new segments remains a key priority. The Company has commenced First Article development and qualification work across Gas Turbine and Data Center infrastructure value chains, including opportunities linked to Power Generation, cooling and flow-control systems. Aerospace, Defence and Space continue to represent a strategic growth vector, with the Company focused on converting First Article development orders into repeat production programmes and progressing special-process qualifications to unlock further opportunities in this high-value segment.

Underpinning all of these initiatives is a continued focus on capacity commissioning. Capacity and capability will move together. The proposed Chhapara expansion has been initiated, while automation, metrology, special- process qualification and digital traceability will continue to strengthen execution. Solar roofing at Chhapara is also a key FY27 initiative. Together, these priorities position Omnitech to build a more diversified, resilient growth base across FY2027 and beyond, though realisation remains subject to execution timelines, customer qualification cycles, and prevailing market conditions.

Financial Results (Consolidated)

Revenue and profitability

Revenue from operations grew 49.1% to Rs. 5,113.0 million (FY25: Rs. 3,429.1 million), supported by deeper wallet share with existing global customers, new programme additions and steady conversion of a rapidly expanding order book. Other income rose to Rs. 245.1 million (FY25: Rs. 67.9 million), largely Forex gain and interest income on unutilised IPO proceeds, taking total income to Rs. 5,358.1 million. Total expenses grew 45.8% to Rs. 4,278.4 million, below revenue growth. Consumption held at 23.7% of revenue; employee benefit expenses rose 52.8% to Rs. 840.5 million and other expenses 51.5% to Rs. 1,347.7 million as the organisation was built ahead of the capacity ramp. EBITDA grew 45.4% to Rs. 1,711.1 million with the margin at 33.5% (FY25: 34.3%).

The margin moderation was concentrated in the fourth quarter, where costs relating to capability building, new programme development and the addition of resources and key talent were incurred ahead of the FY27 growth trajectory; these costs have been fully absorbed in the FY26 statement of profit and loss. Depreciation rose 25.0% to Rs. 481.6 million and finance costs 32.8% to Rs. 394.8 million, both below revenue growth, taking profit before tax up 92.0% to Rs. 1,078.7 million. After a tax expense of Rs. 285.6 million (effective rate 26.5% against 21.9%), profit after tax rose 80.9% to Rs. 793.4 million, with the margin improving to 15.5% from 12.8% and earnings per share to Rs. 7.5 from Rs. 4.3.

Balance sheet, capital expenditure and working capital

Net worth increased 3.3 times to Rs. 6,797.0 million, an addition of Rs. 4,760.6 million of which Rs. 793.4 million came from profits and approximately Rs. 3,967 million from the fresh issue of equity shares. Borrowings stood at Rs. 3,978.1 million against Rs. 3,306.3 million; with cash and cash equivalents at Rs. 1,638.0 million, net debt reduced to Rs. 2,340.1 million and net debt to equity improved to 0.34 times from 1.60 times. Property, plant and equipment increased to Rs. 2,861.7 million from Rs. 2,036.7 million and the fixed asset base expanded 33.0% to Rs. 3,571.4 million, with installed capacity up 52.7%. Inventories rose 75.6% to Rs. 3,145.4 million and trade receivables 67.0% to Rs. 2,138.0 million, taking net working capital days to 294 against 283. The increase in inventory days is linked to the

initial ramp-up of new programmes, where minimum order quantity commitments with key material suppliers required a higher material build-up; this is a strategic investment to support future execution.

FY27 will be shaped by three concurrent initiatives including commissioning the new facility, expansion at the proposed new facility being built out of the IPO proceeds. Alongside this, the Company is focused on converting the order book, tightening working capital and restoring return ratios as the capital raised is deployed into revenue-generating capacity, while sustaining growth and margins broadly in line with the historical trend.

Key Ratios

Disclosed pursuant to Regulation 34(3) read with Schedule V(B)(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Explanations are given where the change is 25% or more.

Basis: Return on capital employed is EBIT divided by capital employed, being total equity (including non-controlling interest) plus non-current and current borrowings, where EBIT is profit for the year plus finance costs and total tax expense. Return on equity is profit for the year (excluding the share of noncontrolling interest) divided by total equity (excluding non-controlling interest). Neat debt to equity is net debt (non-current and current borrowings less cash and cash equivalents) divided by total equity. Net working capital days are net working capital divided by revenue from operations, multiplied by 365; net working capital is net current assets (total current assets excluding investments and cash and cash equivalents) less net current liabilities (total current liabilities excluding current borrowings).

Opportunities and Threats

• Growth and capacity momentum. A sharply growing order book, including large multi-year contracts, signals strong revenue visibility and deepening trust from global customers. This is complemented by capacity expansion, with the new facility for new product development (NPD) in Hyderabad and expansion at Chhapara positioning the Company to capture rising demand without near-term constraints. The focus is not only on increasing manufacturing capacity, but also on building the process capability, people and quality systems required to support sustainable growth.

• New segment and market expansion. Progress in Aerospace, Defence and Space, backed by AS9100 certification and progressing NADCAP approval, opens access to a technically demanding, high- value segment beyond the Companys traditional base. This is reinforced by global diversification, with a broad customer base spanning 24 countries and marquee clients across energy, oil & gas, and industrial equipment reducing dependence on any single market or sector. First Article qualifications are expected to remain an important route to programme conversion and longer-term production opportunities.

• Macro and policy tailwinds. Government initiatives such as "Make in India" and "Aatmanirbhar Bharat". Geopolitical shifts are reshaping global supply chains and sourcing strategies and rising demand across renewables. New policies in the power segment and the demand to grow power generation support long-term sector growth. Sustainability positioning, including initiatives such as solar roofing, further aligns with global OEM preferences for environmentally responsible suppliers, potentially strengthening customer relationships. This shift can create additional opportunities for Indian precision manufacturers that can consistently meet global quality, delivery, traceability and compliance requirements.

• Financial and technological strength. A

strengthened balance sheet provides headroom to fund growth and pursue new opportunities as they arise, while continued investment in automation, loT, and precision manufacturing technologies improves efficiency, quality, and competitiveness.

• Shifting global trade dynamics. Changes in tariffs, trade agreements, or protectionist policies in key export markets could alter the competitive landscape and affect market access.

• Customer concentration and demand slowdown.

A meaningful share of revenue tied to a limited number of marquee clients means the loss or reduction of any single relationship could disproportionately impact business volumes, a risk compounded by the possibility of a cyclical downturn in oil & gas, energy, or industrial equipment demand globally, which could reduce order inflows across the Companys core segments.

• Technological disruption. Rapid advancements in manufacturing technology globally could shift customer expectations or enable new entrants, requiring continuous investment to remain competitive.

• Talent and skilled labour availability. Sustaining growth in precision manufacturing depends on access to a skilled workforce, which can be a constraint amid rapid capacity expansion and broader industry-wide demand for the same talent pool.

• Qualification and programme conversion.

Expansion into Gas Turbines, Data Center infrastructure and Aerospace, Defence and Space involves development, First Article and customer qualification cycles that may be lengthy, and successful qualification may not immediately translate into production volumes.

Risk Management Framework

Omnitech Engineering Limiteds Risk Management Policy is founded on the principle that risk management shall provide reasonable assurance in the protection of business value from uncertainties and consequent losses. Under the Policy, all concerned process owners of the Company are responsible for identifying and mitigating key risks within their respective areas, with the occurrence of risk and the progress and status of mitigation plans monitored on a periodic basis. The Policy establishes a structured risk management process comprising four core activities: a framework for risk identification, risk assessment, measures for risk mitigation, and monitoring and reporting.

Key Risks and Mitigation Strategies

Material Developments in the Human Resources

At Omnitech Engineering Limited, human capital remains a critical driver of sustainable growth, operational excellence, and long-term value creation. The Company is guided by the conviction that a skilled, future-ready workforce is essential to delivering on its strategic objectives amid a constantly evolving global landscape.

Through FY 2025-26, the Company deepened its investment in people practices, with sustained emphasis on performance excellence, leadership development, succession planning, capability building, and organizational effectiveness. The Human Resources

function remained closely aligned with business priorities, while nurturing a culture grounded in meritocracy, accountability, collaboration, diversity, and inclusion. As the Company enters more technically demanding sectors, workforce capability building will increasingly focus on advanced machining, precision fabrication, metrology, special processes, quality systems, programme management and digital manufacturing.

Adequacy of Internal Control Systems

The Company maintains an internal control framework commensurate with the size and complexity of its operations, aimed at ensuring reliable execution, regulatory compliance, and prompt management response to exceptions. As the Company scales, controls remain embedded across ERP- driven workflows, defined approval matrices, and quality systems aligned with its ISO, IATF, AS9100, and API certifications. For new programmes, the control framework is being progressively strengthened around customer-specific requirements, First Article approvals, process qualification, traceability and controlled change management.

These are supported by cybersecurity measures safeguarding digital infrastructure, inventory management systems ensuring accurate tracking across facilities, and customer credit processes that monitor counterparty risk and protect working capital. Capital expenditure is governed through a structured capex approval and review framework, particularly relevant given ongoing capacity expansion.

The effectiveness of these controls is periodically assessed through internal audits, with findings reviewed by the Audit Committee to ensure timely corrective action and continued Board oversight. The Company believes its internal control systems are adequate and effective in relation to the nature and scale of its current operations.

Cautionary Statement

This report contains forward-looking statements concerning Omnitech Engineering Limiteds strategy, market opportunities, capacity initiatives, qualifications and future business development. Such statements are based on current information, external industry estimates and management priorities and are subject to risks and uncertainties. Actual outcomes may differ materially due to customer programmes, qualification timelines, demand conditions, commodity and foreign-exchange movements, regulatory requirements, competition, execution, supply chains, financing and other factors.