Paras Defence and Space Technologies Ltd Directors Report

To

The Members

Paras Defence and Space Technologies Limited

The Directors of your Company are pleased to present Seventeenth (17^th) Annual Report on the business and operations of the Company along with the Audited Financial Statements for the Financial Year ended March 31, 2026.

1. FINANCIAL SUMMARY AND HIGHLIGHTS

Particulars	Standalone	Consolidated
	FY 2025-26	FY 2024-25	FY 2025-26	FY 2024-25
Revenue from Operations	41,654.41	33,385.41	47,657.54	36,466.12
Other Income	1814.38	1,185.63	1,597.99	792.22
Total Income	43,468.79	34,571.04	49,255.53	37,258.34
Less: Total Expenditure	32,405.87	25,890.21	37,773.25	28,901.01
Less: Share of (Profit)/Loss of associate	-	-	6.69	(2.75)
Profit before Exceptional Items	11,062.92	8,680.83	11,475.59	8,360.07
Less: Exceptional items	-	-	291.02	-
Profit Before Tax	11,062.92	8,680.83	11,766.61	8,360.07
Less: Income tax	2,888.73	2,269.94	2,987.22	2,304.59
Less: Deferred Tax	(100.68)	(96.03)	(123.93)	(93.67)
Less: Income Tax for earlier years	(42.08)	-	(41.94)	-
Profit after Tax	8,316.95	6,506.92	8,945.26	6,149.15
Other Comprehensive Income (Net of taxes)	(11.53)	38.92	(56.28)	28.68
Total Comprehensive Income for the year	8,328.48	6,468.00	9,001.54	6,120.47

On a standalone basis, the total income for the Financial Year ended March 31, 2026 was Rs. 43,468.79 Lakhs, which is 25.74 % higher than the previous years income of Rs. 34,571.04 Lakhs. Our total income on a consolidated basis for the Financial Year ended March 31, 2026 was Rs. 49,255.53 Lakhs, compared to Rs. 37,258.34 Lakhs for the Financial Year ended March 31, 2025.

On a standalone basis, the net profit after tax (PAT) for the Financial Year ended March 31, 2026 stood at Rs. 8,316.95 Lakhs as against previous years net profit of Rs. 6,506.92 Lakhs, thereby recording an increase of 27.82%. Our net profit after tax (PAT) on consolidated basis for the Financial Year ended March 31, 2026 amounted to Rs. 8,945.26 Lakhs as compared to Rs. 6,149.15 Lakhs in the previous year.

2. TRANSFER TO RESERVES

During the year under review, the Company has not transferred any amounts to the General Reserve. For complete details on movement in Reserves and Surplus during the Financial Year ended March 31, 2026, please refer to the ‘Statement of Changes in Equity included in the Standalone and Consolidated Financial Statements of this Annual Report.

3. DIVIDEND

The Board of Directors have recommended a Dividend of Rs. 1/- (Rupee One only) per equity share of Rs. 5/- (Rupees Five only) each, for the Financial Year ended March 31, 2026.

The Final Dividend on equity shares, if approved by the Members, would involve a cash outflow of Rs. 8.05 crores (8,05,87,330 equity shares @ Rs.1 per share). As per Indian Income Tax Act, 1961, Dividend paid and distributed by a Company is taxable in the hands of members and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates. The Record date for the purpose of the Final Dividend for the Financial Year ended March 31, 2026, is August 28, 2026.

Unpaid Dividend-

In accordance with the provisions of Sections 124 and 125 of the Companies Act, 2013 ("Act") read with the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), dividends that remain unclaimed or unpaid for a period of seven consecutive years from the date of transfer to the Unpaid Dividend Account are required to be transferred to the Investor Education and Protection Fund (IEPF) administered by the Central Government.

During the Financial Year ended March 31, 2026, the Company was not required to transfer any unclaimed dividend to the IEPF.

As of March 31, 2026, an amount of Rs. 34,587 (Rupees Thirty Four Thousand Five Hundred and Eighty Seven) is lying in the Unpaid Dividend Account of the Company. Further, all shares in respect of which dividends have remained unclaimed for seven consecutive years shall also be transferred to the IEPF.

Members who have not yet encashed their dividend warrants for previous years are requested to contact the Companys Registrar and Transfer Agent, MUFG Intime India Private Limited (formerly Link Intime India Private Limited), at their office at C-101, Embassy 247, L.B.S. Marg, Vikhroli (West), Mumbai - 400 083 or write to the Company Secretary at the Registered Office.

The Company has in place a Dividend Distribution Policy in accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is available on the Companys website at https:// parasdefence.com/investors.

4. STATE OF THE COMPANYS AFFAIRS

The information on Companys affairs and related aspects is provided under Management Discussion and Analysis Report, which has been prepared, inter-alia, in compliance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and forms part of this Report.

5. CHANGE IN THE NATURE OF BUSINESS

There were no changes in the nature of business during the Financial Year ended March 31, 2026.

6. MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments which affect the financial position of the Company that have occurred between the end of the Financial Year to which the financial statements relate and the date of this report.

7. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans given, investments made, guarantees given and securities provided during the year and as covered under Section 186 of the Companies Act, 2013 form part of the Standalone Financial Statements of the Company provided in this Annual Report.

8. DEPOSITS

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement of furnishing details relating to deposits covered under Chapter V of the Act or the details of deposits which are not in compliance with Chapter V of the Act, are not applicable.

9. DETAILS OF SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

A SUBSIDIARIES

As on March 31, 2026, the Company has 8 (Eight) Subsidiaries, out of which 7 (Seven) are Indian Subsidiaries and 1 (One) is Foreign Subsidiary.

The details of the Subsidiaries are as follows:

Name of the Company	Type of Subsidiary
*Opel Technologies Pte. Ltd.	Foreign Wholly Owned Subsidiary
Paras Aerospace Private Limited	Indian Subsidiary
Paras Anti-Drone Technologies Private Limited	Indian Subsidiary
Quantico Technologies Private Limited	Indian Wholly Owned Subsidiary
Mechtech Thermal Private Limited	Indian Subsidiary
Paras Heven Advanced Drones Private Limited	Indian Subsidiary
Paras Avionics Private Limited	Indian Subsidiary
Paras Semiconductors Private Limited	Indian Subsidiary
Ayatti Innovative Private Limited	Ceased to be a Subsidiary with effect from March 30, 2026

*Opel Technologies Pte. Ltd. became a material subsidiary of your Company w.e.f. April 01,2023.

B. ASSOCIATE AND JOINT VENTURE COMPANIES

As on March 31, 2026, there are 3 (Three) Associate Companies within the meaning of Section 2(6) of the Companies Act, 2013.

The details of the Associate/Joint Venture Companies are as follows:

Name of the Company

Krasny Paras Defence Technologies Private Limited

Controp-Paras Technologies Private Limited

Himanshi Thermal Solutions Private Limited

10. PERFORMANCE AND FINANCIAL HIGHLIGHTS OF SUBSIDIARY COMPANIES AND THEIR CONTRIBUTION TO OVERALL PERFORMANCE OF THE COMPANY

The Consolidated Financial Statements of the Company form a part of this Annual Report. A Statement containing salient features of the financial statement of subsidiaries pursuant to first proviso to Sub-Section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014 in the prescribed Form AOC-1 are enclosed as Annexure - 1 to this report.

11. SHARE CAPITAL

A. Authorized Share Capital

The Authorised Share Capital of the Company is Rs. 6,050.00 Lakhs comprising of 12,10,00,000 Equity shares of Rs.5/- each.

B. Issued, Subscribed and Paid-up Share Capital

The Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 4,029.37 Lakhs comprising of 8,05,87,330 Equity Shares of H 5/- each.

During the Financial Year, the equity shares of the Company were sub-divided such that 1 (One) equity share of face value of Rs.10/- (Rupees Ten Only) each was sub-divided into 2 (Two) equity shares of face value of Rs.5/- (Rupees Five Only) each, pursuant to approval of the members resolution dated June 07, 2025. The record date for the said sub-division was July 04, 2025. The Authorised, Issued, Subscribed and paid-up share capital of the Company remains unchanged on account of the sub-division of equity shares.

12. Employee Stock Option Plan - Paras Defence ESOP 2024

The Members of the Company approved the adoption and implementation of the Paras Defence and Space Technologies Limited - Employee Stock Option Plan, 2024 ("Paras Defence ESOP 2024") at the 15^th Annual General Meeting. The Plan enables the grant of stock options to eligible employees as a long-term incentive aimed at rewarding performance, retaining talent and aligning employees interests with the long-term objectives and growth of the Company.

Under the Paras Defence ESOP 2024, the total number of stock options proposed to be issued shall not exceed 7,95,000 (Seven Lakh Ninety-Five Thousand) in aggregate. Each stock option, upon vesting and exercise, entitles the option holder to acquire one fully paid-up equity share of the Company having a face value of Rs.10/- (Rupees Ten Only), in one or more tranches, in accordance with the terms of the Plan.

Subsequent to the Members approval dated June 07, 2025, for the sub-division of equity shares, whereby 1 (One) equity share of face value of Rs.10/- each was sub-divided into 2 (Two) equity shares of face value of Rs.5/- each, 7,95,000 entitlements under the Paras Defence ESOP 2024 stand appropriately adjusted, in compliance with applicable laws. Accordingly, the aggregate number of stock options available for grant under the Plan stands increased to 15,90,000 (Fifteen Lakh Ninety Thousand), with each stock option entitling the holder, upon vesting and exercise, to acquire one fully paid-up equity share of face value of Rs.5/- (Rupees Five Only).

The Plan has been formulated in compliance with the provisions of the Companies Act, 2013, read with the rules framed thereunder, and the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB & SE Regulations"). The Nomination and Remuneration Committee of the Board administers and oversees the implementation of the Plan and acts as the Compensation Committee in terms of the SBEB & SE Regulations.

During the Financial Year 2025-26, other than the aforementioned modification on account of sub-division of equity shares, there was no modification in the structure or key terms of the Paras Defence ESOP 2024.

Under Phase -1 of the Plan, the Company has granted 78,450 (Seventy Eight Thousand Four Hundred and Fifty) number of Stock options of face value of H 10/- each on January 22, 2025. Subsequent to the Members approval dated June 07, 2025, for the sub-division of equity shares, the said 78,450 Stock Options of face value of H 10/- each stand readjusted to 1,56,900 (One Lakh Fifty-Six Thousand Nine Hundred) Stock Options of face value of H 5/-

Under Phase-2 of the Plan, the Company granted 1,56,400 (One Lakh Fifty-Six Thousand Four Hundred) Stock Options of face value H 5/- on March 13, 2026.

No stock options were vested or exercised during the year under review. The detailed disclosures as required under applicable laws are provided in the Note no. 39 to the Financial Statements forming part of this Annual Report.

The disclosure relating to ESOPs required to be made under the provisions of the Companies Act, 2013 and the Rules made thereunder and the Securities and Exchange Board of India (Share Based Employee Benefit and Sweat Equity) Regulations, 2021 is provided on the website of the Company. A certificate from the Secretarial Auditors confirming that the scheme has been implemented in compliance with the SEBI (SBEB & SE) Regulations has also been obtained. These documents are available for electronic inspection by Members during the AGM and can also be accessed on the Companys website at https:// www.parasdefence.com

13 OTHER SHARES RELATED DISCLOSURES

During the year under review, the Company has not issued any bonus shares, equity shares with differential voting rights nor has it granted any sweat equity. As on March 31, 2026, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

14. ISSUE OF DEBENTURES, BONDS AND ANY OTHER NON-CONVERTIBLE SECURITIES/WARRANTS

During the year under review, the Company has not issued any debentures, bonds or any other non-convertible securities nor the Company has issued any warrants.

15. CREDIT RATING

During the year under review, your Company has been rated by ICRA Limited for its bank facilities as follows:

ICRA Limited
Instrument Type	Amount ( Rs. in Crores)	Rating Outlook	Rating Action
Long term - Fund Based - Cash Credit	39.00	ICRA A- (Positive)	Reaffirmed and Outlook revised to Positive from Stable
Long term - Fund based - Overdraft	5.00	ICRA A- (Positive)
Long term/Short term - Non-Fund Based - Bank Guarantee	157.75	ICRA A- (Positive) /ICRA A2+

CRISIL Ratings Limited has withdrawn its rating during FY 2025-26.

16. UTILISATION OF QUALIFIED INSTITUTIONS PLACEMENT (QIP) PROCEEDS

Pursuant to Sections 42 and 62 of the Companies Act, 2013, along with the applicable rules made thereunder and the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, the Company, on October 08, 2024, successfully raised an amount aggregating to Rs. 135.182 Crores by way of Qualified Institutions Placement (QIP) and allotted 12,93,604 equity shares at an issue price of Rs. 1,045 per equity share (including a premium of Rs. 1,035 per equity share).

The funds raised through the QIP were utilised strictly in accordance with the objects of the issue as disclosed in the placement documents. ICRA Limited was appointed as the Monitoring Agency to monitor the utilisation of the net proceeds of the issue, in terms of the applicable SEBI regulations. The Company has duly submitted the Monitoring Agency reports and quarterly statements of utilisation of funds to the Stock Exchanges in accordance with Regulation 32 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations").

Pursuant to Regulation 32(7A) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of utilisation of QIP proceeds up to March 31, 2026, are given below:

Particulars	Utilization of QIP proceeds ( Rs. in Crores)
1 Funding working capital requirements of the Company	120.000
2 General corporate purposes (excluding QIP expenses)	10.987
3 Issue expenses	4.195
Total	135.182

The Company has fully utilised the entire proceeds of H 135.182 Crores as of the quarter ended June 2025. There has been no deviation or variation in the use of proceeds from the objects stated in the offer documents, and accordingly, the disclosure requirements under Regulation 32(1) and 32(7A) of the SEBI Listing Regulations have been duly complied with.

Further, as on March 31, 2026, there were no unutilised proceeds remaining from the issue.

17. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls with reference to the financial statements. The Audit Committee reviews the internal control systems at regular intervals internally, the adequacy of internal audit functions and reviews the significant internal audit findings with the management and also updates and recommends the same to the Board for their review.

18. BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A Composition of Board of Directors

The composition of Board of Directors of the Company, as on March 31, 2026, is as follows:

Name of Director	DIN	Category
Sharad Virji Shah	00622001	Promoter, Chairman & Non-Executive Non- Independent Director
Munjal Sharad Shah	01080863	Promoter, Managing Director
Shilpa Amit Mahajan	01087912	Whole-Time Director
Manmohan Handa	06942720	Non-Executive Independent Director
Hina Amol Gokhale	08712659	Non-Executive Independent Director
Suresh Katyal	08979402	Non-Executive Independent Director

B. Changes in the position of Directors of the Company

The details of change in position of Directors of the Company, during the year under review, are given in the table as hereunder:

Name of Director	Designation	Nature of Change (Appointment/ Re-appointment/ Cessation)	Date of Shareholders Approval	Tenure
Suresh Katyal	Non-Executive Independent Director	Re-appointment	December 19, 2025	For a second term of five years commencing from January 05, 2026 to January 04, 2031

C. Retirement by rotation and subsequent reappointment

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Companys Articles of Association, Mrs. Shilpa Amit Mahajan (DIN: 01087912), Whole-Time Director, retires by rotation at the ensuing Seventeenth (17^th) Annual General Meeting and being eligible, offers herself for re-appointment.

D. Key Managerial Personnel (KMP)

The composition of Key Managerial Personnel of the Company as on March 31, 2026 is as follows:

Name of Key Managerial Personnel	Category
Munjal Sharad Shah	Managing Director
Shilpa Amit Mahajan	Whole-Time Director
Harsh Dhirendra Bhansali	Chief Financial Officer

E. Changes in the position of Key Managerial Personnel other than Directors of the Company

The details of change in position of Key Managerial Personnel of the Company during the year and after the close of Financial Year are given in the table as hereunder:

Name of Key Managerial Personnel	Designation	Nature of Change (Appointment/Cessation)	Date of Appointment/ Cessation
Jajvalya Raghavan	Company Secretary and Compliance Officer	Cessation	February 03, 2026
Minal Bhate	Company Secretary and Compliance Officer	Appointment	April 06, 2026

Apart from the above, there was no other change in the composition of the Key Managerial Personnel during the period under review.

F. Declarations Given by Independent Directors

The Company has received necessary declarations and disclosures from the Independent Directors under Section 149(7) and Section 184(1) of the Companies Act, 2013 ("the Act") stating that they meet the criteria of independence as laid down in Section 149(6) of the Act and under the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and disclosing their interest in form MBP-1. All the Directors have certified that the disqualifications mentioned under Sections 164, 167 and 169 of the Act do not apply to them. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Act.

The Board of the Company has taken the disclosures on record after verifying the due veracity of the same. In the opinion of the Board, all the Independent Directors possess the integrity, expertise and experience including the proficiency required to be Independent Directors of the Company, fulfil the conditions of independence as specified in the Act and the SEBI Listing Regulations and are independent of the management and have also complied with the Code for Independent Directors as prescribed in Schedule IV of the Act. All the Independent Directors of the Company are also registered with the databank of Independent Directors as required under the provisions of the Act.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees and reimbursement of expenses, if any.

The Directors and the senior management personnel have affirmed compliance with the Code of Conduct for Directors and Senior Management Personnel during the year under review.

G. Board and Committee Meetings

i. Board Meetings

The Board of Directors met 12 (Twelve) times during the financial year under review. The details of the Board meetings and attendance of each Director there at are provided in the Corporate Governance Report forming part of this Boards Report as Annexure - 2.

ii. Committees of the Board

The Company has 5 (Five) Board-Level Committees, which have been established in compliance with the provisions of the Act and SEBI Listing Regulations:

iii. Audit Committee

The Companys Audit Committee composition is in line with the requirements of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations.

The Members of the Audit Committee are financially literate and have requisite accounting and financial management expertise. The composition, terms of reference of the Audit Committee and the particulars of meetings held and attendance thereat are mentioned in the Corporate Governance Report forming part of the Annual Report. During the year under review, all the recommendations of the Audit Committee in terms of its reference were considered positively by the Board of Directors of your Company.

iv. Other Committees

The details of other Committees of the Board are given under the Report on Corporate Governance section forming part of this Annual Report and the list of Committees of the Board is also available on the website of the Company viz. www. parasdefence.com/investors

19. COMPLIANCE WITH SECRETARIAL STANDARDS

During the period from April 01, 2025 to March 31, 2026, the Company complied with the Secretarial Standard - 1 on Board Meetings and Secretarial Standard - 2 on General Meetings, issued by the Institute of Company Secretaries of India.

20. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Companys Sustainability, Environment, Social and Governance Report is provided separately as part of the Annual Report.

The brief outline of the Companys CSR initiatives undertaken during the year under review is furnished in Annexure-3 in the format as prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time. The Companys CSR Policy is placed on the website of the Company https://parasdefence.com/investors .

The brief terms of reference, particulars of meetings held and attendance there at are mentioned in the Corporate Governance Report forming part of the Annual Report.

21. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

In line with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the Company has formulated a Policy on Related Party Transactions and the same can be accessed using the following link: https:// parasdefence.com/investors

During the year under review, all other contracts / arrangements / transactions entered by the Company with Related Parties were in the ordinary course of business and on an arms length basis. A statement giving details of all Related Party Transactions, as approved, is placed before the Audit Committee for review on a quarterly basis. The details of the transactions entered into between the Company and the related parties under Sections 188 and 134(3)(h) of the Act, are given in AOC - 2 enclosed as Annexure - 4 to this report.

The Disclosures as required under Indian Accounting Standard - 24 (Ind AS-24) "Related Party Disclosures" notified under Rule 7 of the Companies (Accounts) Rules, 2014 have been provided in note no. 34 forming part of the Standalone Financial Statements.

22. PARTICULARS OF REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL (KMP) AND EMPLOYEES AND DISCLOSURES IN BOARDS REPORT

The disclosure on remuneration of Directors, Key Managerial Personnel and Employees pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 5 to this Report. None of the employees listed in the said Annexure - 5 is related to any Director of the Company except to the extent specified therein.

In terms of proviso to Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the members excluding certain information covered under Annexure - 5.

23. MANAGEMENT DISCUSSION AND ANALYSIS

In terms of provisions of Regulation 34(2)(e) and Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report is enclosed as Annexure - 6 to this Report.

24. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

In accordance with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, the Board of Directors carried out an annual evaluation of its overall performance, that of Individual Directors, and the functioning of its various Committees. The performance of the Board as a whole and of its Committees was evaluated by the Board through a structured questionnaire covering multiple aspects such as composition and quality, meeting and procedures, contribution to Board deliberations, effectiveness of assigned functions, rapport with management, professional development and the adequacy, appropriateness and timeliness of information etc.

Taking into consideration the responses received from the Individual Directors to the questionnaire, the performance of the Board and its Committees was evaluated. The performance of the Independent Directors was evaluated by the entire Board, excluding the respective Independent Director evaluated. The Directors expressed their satisfaction with the evaluation process.

Pursuant to Schedule IV of the Companies Act, 2013, a separate meeting of the Independent Directors was held on Saturday, January 10, 2026.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is enclosed as Annexure - 7 to this report.

26. AUDITORS

I. Statutory Auditors

In accordance with the provisions of the Companies Act, 2013, M/s. Chaturvedi & Shah LLP, Chartered Accountants (FRN: 101720W/W100355) (‘C&S) have been appointed as the Statutory Auditors of the Company, at the 14^th Annual General meeting held on September 29, 2023 for a period of five years i.e. until the conclusion of 19^th AGM of the Company to be held in the year 2028. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.

II. Internal Auditors

The provisions of Section 138 of the Companies Act, 2013 for appointing Internal Auditors are applicable to the Company.

Based on the recommendation of the Audit Committee, the Board of Directors had appointed M/s. Shaparia Mehta & Associates LLP, Chartered Accountants (FRN: 0112350W / W-100051), as Internal Auditors for conducting the internal audit functions of the Company for FY 2025-26. During FY 2025-26, M/s. Shaparia Mehta & Associates LLP, Chartered Accountants changed its name to S M L and Co

LLP while retaining the same Firm Registration Number (FRN 0112350W / W-100051). They have submitted their reports periodically to the Audit Committee and Board of Directors for their review. M/s. S M L and Co LLP have been appointed as the Internal Auditors of the Company for FY 2026-27.

III. Secretarial Auditors

M/s. DM & Associates, Company Secretaries LLP, Practising Company Secretary, were appointed as the Secretarial Auditors of the Company, at the 16^th AGM held on August 21, 2025, for a term of 5 (five) consecutive financial years, commencing from the Financial Year 2025-26 to the Financial year 2029-30.

The Secretarial Audit Report in Form MR-3 for the Financial Year ended March 31, 2026 is annexed and marked as Annexure 8 to this Report.

The Secretarial Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Company Secretaries of India (ICSI) and hold valid certificate issued by the Peer Review Board of ICSI. They have also confirmed that they are not disqualified from continuing as the Secretarial Auditor of the Company.

The Secretarial Audit was not applicable to any of the subsidiaries of the Company during the year under review.

iv. Cost Auditors

The provisions of Section 148 of the Companies Act, 2013 for maintaining the Cost Records are applicable to the Company and accordingly the Company has made and maintained cost accounts and records in respect of the applicable products for the year ended March 31, 2026.

The Board, based on the recommendation of the Audit Committee, at its meeting held on May 13, 2026, has approved the appointment of M/s. Dinesh Jain & Company, Practicing Cost Accountants, Mumbai (FRN: 100583), as the Cost Auditors for the Company for the Financial Year ending March 31, 2027. M/s. Dinesh Jain & Company, confirmed their independent status and that they are free from any disqualifications under Section 141 of the Companies Act, 2013. A proposal for ratification of remuneration of the Cost Auditors for the FY 2026-27 is placed before the members for approval in the ensuing AGM.

27. AUDIT REPORTS

The Statutory Auditors Report and the Secretarial Auditors Report do not contain any qualification, reservation, adverse remark or disclaimer.

The Statutory Auditors have issued an unmodified opinion on the Financial Statements, both standalone and consolidated, for the Financial Year ended March 31, 2026. Their Reports for the Financial Year ended March 31, 2026 on the financial statements of the Company forms part of this Annual Report. There is no incident of fraud, requiring reporting by the Statutory Auditors under Section 143(12) of the Act.

In view of the above, no comments are offered by the Board of Directors.

28. ANNUAL RETURN

In compliance with Section 92(3) of the Companies Act, 2013 ("the Act") read with Section 134(3) of the Act, the Annual Return of the Company as on March 31, 2026 will be available on the website of the Company at https://parasdefence.com/ investors Rs.tab=1

29. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors, based on the representations received from the operating management and after due enquiry, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year March 31, 2026 and of the profit of the Company for that period;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30. HUMAN RESOURCES / INDUSTRIAL RELATIONS, INCLUDING NUMBER OF PEOPLE EMPLOYED

Your Company had 617 permanent employees as on March 31, 2026 while the count was 537 as on March 31, 2025. Your Company provides regular training to employees to improve skills. Your Company has put in place a performance appraisal system that covers all employees.

31. CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements under the Companies Act, 2013, and as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). A separate section on corporate governance under the SEBI Listing Regulations, along with the certificate from the

Practicing Company Secretary confirming the compliance, is enclosed as Annexure - 2D of this report.

32. COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

Your Company has adopted a policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013.The said policy is available on the website of the Company https://parasdefence.com/investors.

33. RISK MANAGEMENT POLICY

In line with regulatory requirements, the Company has framed risk management policy to identify and assess with the regulatory risk areas and a risk mitigation process. A detailed exercise is being carried out at regular intervals to identify, evaluate, manage and monitor all business risks. The Company has a Risk Management Committee in place which periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

34. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT A WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL), ACT 2013

The Company is committed to provide a healthy environment to all the employees and thus does not tolerate any sexual harassment at workplace. The Company has in place, "Policy for Prevention of Sexual Harassment (POSH) at Workplace." The policy aims to provide protection to employees at the workplace and preventing and redressing complaints of sexual harassment and it covers matters connected or incidental thereto. The Company has complied with the provisions relating to the constitution of Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The details of the POSH Complaints during the year

Number of sexual harassment complaints received	: Nil
Number of complaints disposed off	: Nil
Number of cases pending for more than 90 days	: Nil

During the year under review, the Company has not received any complaint of sexual harassment.

35. COMPLIANCE WITH THE MATERNITY BENEFIT ACT, 1961

With a significant percentage of women in its workforce, the Company believes that it is not merely about empowering women — rather, PARAS is empowered by them. The Company is committed to supporting the needs, health and safety of mothers and complies with the provisions of the Maternity Benefit Act, 1961.

36. WHISTLE BLOWER POLICY / VIGIL MECHANISM

Pursuant to Section 177(9) read with Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has duly established Whistle Blower Policy /Vigil Mechanism Policy ("Policy") to report to the management instances of unethical behavior, actual or suspected, fraud or violation of the Companys code of conduct. The functioning of the Policy is reviewed by the Audit Committee / Board on periodical basis. During the financial year ended March 31, 2026, the Company has not received any complaint under the Whistle Blower Policy of the Company.

37. CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the members of the Board of Directors and Senior Management Personnel. All Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the Financial Year ended 31^st March, 2026.

38. POLICIES AND DISCLOSURE REQUIREMENTS

In terms of provisions of the Companies Act, 2013 and provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted the requisite policies, which are available on Companys website - https://parasdefence.com/investors

39. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

The Company has provided Business Responsibility and Sustainability Report in line with the requirement based on SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business notified by Ministry of Corporate Affairs (MCA). Pursuant to the provisions of Regulation 34 of the

SEBI Listing Regulations, the said report is attached separately, which forms part of this Annual Report.

40. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL

During the year, there were no significant material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of the Company and its future operations.

41. DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

During the year under review, there was no instance of onetime settlement with banks or financial institutions, hence the requirement to disclose the details of difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions, along with the reasons thereof, is not applicable.

42. IBC CODE AND COURT ORDERS

There is no proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (IBC Code). There are no significant and material order passed by the regulators or courts or tribunals impacting the going concern status of the Company and its operations in future.

43. ACKNOWLEDGEMENTS

Your Board takes this opportunity to thank all its employees for their dedicated service and firm commitment to the goals of the Company. Your Board also wishes to place on record its sincere appreciation for the wholehearted support received from members, clients, bankers and all other business associates. We look forward to continued support of all these partners in progress.