Pennar Industries Ltd Management Discussions

Economic Overview

Global Economy

The global economy in calendar year 2025 demonstrated resilience despite an environment of elevated trade policy uncertainty, tariff realignments and geopolitical tension. Global output grew by an estimated 3.4 per cent in 2025. The International Monetary Fund, in its April 2026 World Economic Outlook, projects global growth to moderate to 3.1 per cent in 2026 before recovering to 3.2 per cent in 2027, with the near term outlook shaped by the conflict in West Asia, the resultant volatility in energy prices and the continuing reconfiguration of global supply chains. Global headline inflation is projected at 4.4 per cent in 2026, easing to 3.7 per cent in 2027.

For a diversified engineering enterprise such as ours, the implications of this environment are threefold. First, energy price inflation feeds into commodity and logistics costs, which must be managed through price variation clauses and disciplined procurement. Second, tariff and trade policy shifts in the United States alter the competitiveness of cross border supply, which affects our exports even as our manufacturing presence within the United States insulates the bulk of our American revenue. Third, the sustained capital expenditure cycle in the United States, led by data centres, manufacturing reshoring and industrial construction, continues to expand the addressable market for our metal buildings businesses.

Source: IMF World Economic Outlook, April 2026

Indian Economy

The Indian economy delivered a strong performance in FY 2025-26. As per the Provisional Estimates released by the National Statistics Office in May 2026, real GDP grew by 7.7 per cent during the year, with nominal GDP expanding by 8.9 per cent. Momentum strengthened through the year, with fourth quarter growth at 7.8 per cent. Of particular relevance to the Company, manufacturing gross value added grew by 10.7 per cent and construction by 7.4 per cent, the two sectors that most directly drive demand for engineered steel products, pre engineered buildings, tubes and industrial components.

The macroeconomic backdrop remained supportive. Consumer price inflation stayed benign through the year, at 3.40 per cent in March 2026, giving the Reserve Bank of India room to ease policy; the repo rate was reduced in stages to 5.25 per cent by December 2025, lowering the cost of working capital and supporting the private capex cycle. Public capital expenditure remained the principal demand engine: the Union Budget for 2026-27 has provided a capital outlay of Rs. 12.22 lakh crore, an increase of about 11.5 per cent over the revised estimate of Rs. 10.96 lakh crore for FY 2025-26, with Rs. 2.81 lakh crore allocated to Railways and Rs. 3.10 lakh crore to Road Transport and Highways.

Indias engineering goods exports crossed USD 122 billion in FY 2025-26, underscoring the growing competitiveness of Indian manufacturing in global supply chains. The notification of the four Labour Codes in November 2025 marks a structural reform of the employment law framework; the Company has assessed the indicative financial impact and will give effect to the final Central and State rules as they are notified.

Sources: MoSPI Provisional Estimates of GDP for 2025-26 (May 2026); MoSPI CPI Press Release March 2026; RBI Monetary Policy Statements; Union Budget 2026-27 documents

Industry Overview and Demand Drivers

The Companys businesses serve infrastructure, industrial and mobility value chains in India and overseas. The demand environment in each of the relevant industries during FY 2025-26 is analysed below.

Steel and Engineering

India remained the fastest growing large steel market in the world. Crude steel production rose 10.7 per cent to 168.4 million tonnes in FY 2025-26, while finished steel consumption grew by about 7 to 8 per cent to nearly 164 million tonnes. Installed capacity stood at approximately 220 million tonnes and is projected to approach 300 million tonnes by 2030. Finished steel exports surged 35.9 per cent to 6.6 million tonnes while imports declined 31.7 per cent, restoring Indias position as a net exporter. For the Company, steel is both the principal input and the substrate of value addition; steel price volatility during the year, accentuated by energy price inflation, was managed through price variation clauses in the order book and pass through pricing.

Source: Ministry of Steel data as reported for FY 2025-26

Pre Engineered Buildings, India

The Indian pre engineered buildings industry continues to be one of the fastest growing segments of construction, with industry studies projecting growth at roughly 12 per cent annually over the coming decade. Demand is broadening beyond conventional warehousing and logistics into data centres, semiconductor and electronics fabrication, solar module plants, food processing and general manufacturing, aided by production linked incentive schemes, the PM Gati Shakti national master plan and the states industrial corridor programmes. Speed of construction, cost certainty, superior quality control and sustainability continue to shift share from conventional construction towards factory fabricated steel buildings. Process industries in South India were a particularly strong source of enquiries and orders for the Company during the year, alongside solar related structures.

Metal Buildings, United States

The addressable market for metal buildings and metal building components in the United States exceeds USD 10 billion annually. The defining feature of the year was the extraordinary strength of data centre construction, where annualised spending crossed USD 50 billion and overtook conventional office construction, alongside continued strength in manufacturing and industrial facilities. The Company operates in the South and Midwest of the United States through three plants and holds an estimated share of under 3 per cent of the national market, which frames a long runway for growth through geographic expansion, capacity addition and the newly acquired structural steel capability.

Source: US Census Bureau construction spending data, 2025-26

Automotive and Auto Components

The Indian automotive component industry grew 12.7 per cent in FY 2025-26, with supplies to OEMs growing 16.3 per cent. Electric vehicle related supplies, though still 4.6 per cent of OEM sales, are growing quickly and are reshaping product requirements towards lightweighting, high strength steels and modular body structures. These trends play directly to the Companys Body in White capabilities, hydraulics and precision tubes, where in house die making, automated body shops and expertise in high strength and ultra high strength steels position it as a value added partner to OEMs.

Source: ACMA industry performance review, FY 2025-26

Railways

Indian Railways continues on a sustained modernisation and capacity expansion programme, with a capital outlay of Rs. 2.81 lakh crore for 2026-27 and an expanded pipeline of high speed corridors, dedicated freight infrastructure and modern rolling stock. The Company supplies coach and wagon components and assemblies to Integral Coach Factory, Rail Coach Factory, Wabtec and other customers, and is aligned to the modernisation of passenger and freight rolling stock.

Process Heating and Boilers

Investment across food processing, rice milling, chemicals, textiles and distilleries is sustaining healthy demand for industrial boilers, waste heat recovery systems and heat exchangers. Tightening emission norms and rising fuel costs favour energy efficient combustion technologies such as AFBC and waste heat recovery, both areas where the Company secured its highest capacity orders during the year.

Hydraulics

Demand for hydraulic cylinders and systems is underpinned by mechanisation in construction, material handling, agriculture and mining. The imposition of tariffs in the United States had disrupted export order flows earlier in the year; this impact has since moderated and customers have resumed placing orders. The European market presents an additional avenue that the Company has begun to address.

Engineering Services

Global demand for structural steel detailing, pre engineered metal building design and plant engineering remains strong, led by the construction cycle in the United States and Europe. The economics of the industry are being reshaped by artificial intelligence assisted design, which automates lower end detailing man hours while raising the premium on engineering judgement, project management and statutory certification. As billing in this industry is predominantly project outcome based rather than man hour based, productivity gains from AI accrue to the service provider, a dynamic the Company views as a structural tailwind rather than a threat.

Solar Energy

India added a record 44 GW of solar capacity in FY 2025-26, taking cumulative installed solar capacity to about 150 GW as at March 2026, with the country now ranked third globally in renewable energy installed capacity. Domestic module manufacturing is scaling rapidly under the approved list of models and manufacturers regime and production linked incentives. The Company participates in this value chain through solar module mounting structures and through ZAP91 Solar India Private Limited, its solar module manufacturing joint venture with Zetwerk, whose plant at Sadashivpet is being commissioned.

Sources: MNRE and industry data for FY 2025-26

Company Overview

Pennar Industries Limited, incorporated in 1975 and headquartered in Hyderabad, is a diversified engineering company serving customers in India, the United States, Europe and West Asia. The Company operates thirteen manufacturing facilities across India, the United States and France, supported by engineering services centres in India and marketing subsidiaries overseas. Its portfolio spans pre engineered buildings, precision tubes, cold rolled steel products, industrial components, Body in White assemblies, hydraulic cylinders, boilers and process heating equipment, railway components and engineering design services, delivered to a base of more than 500 customers across infrastructure, automotive, railways, energy and general engineering.

The Company reports its operations under two segments: Diversified Engineering, which houses tubes, steel products, industrial components, Body in White, hydraulics, boilers and engineering services; and Custom Designed Building Solutions and auxiliaries, which houses the pre engineered and metal buildings businesses in India and the United States. During the year the group comprised thirteen subsidiaries and one joint venture, including Pennar Global Inc. USA, Ascent Buildings LLC, Ascent Structural LLC, Pennar GmbH Germany, Cadnum SARL France, Pennar FZCO UAE and Pennar Metals Private Limited.

Key Corporate Developments During the Year

- Acquisition of a structural steel fabrication business in the United States (Ascent Structural LLC, June 2025) for a consideration of about USD 14 million, extending the American platform from metal building systems into structural steel and adding new capacity in Alabama.

- Incorporation of Pennar Global Investments Alabama LLC (June 2025) and acquisition of Agile Traders FZCO by Pennar FZCO (December 2025), strengthening the international holding and trading structure.

- Divestment of the Companys entire 51 per cent stake in Enertech Pennar Defense and Engineering Systems Private Limited (September 2025), consistent with the stated policy of recycling capital away from non prioritised businesses.

- Additional equity investment of Rs. 5.80 crore in the ZAP91 Solar India joint venture to fund completion and commissioning of the solar module plant at Sadashivpet, targeted before 30 June 2026; the Company holds 45 per cent in the joint venture.

- Commissioning of an AGT robotics welding line in the United States and expanded automation of painting, surface treatment and assembly operations in India, addressing labour availability and cost while improving precision.

- Reaffirmation of credit ratings by CARE Ratings in March 2026: CARE A with Stable outlook on long term bank facilities of Rs. 754.46 crore (enhanced from Rs. 712.46 crore) and CARE A1 on short term bank facilities of Rs. 1,012.50 crore.

- Subsequent to the year end, the Board approved and shareholders sanctioned the issue of 30,00,000 convertible warrants to a promoter on preferential basis at Rs. 168 per warrant, aggregating to about Rs. 50.40 crore, reinforcing the equity base for growth.

Operational Review of Business Verticals

Order inflows remained healthy through the year, with orders worth Rs. 902.26 crore received across business verticals in the fourth quarter alone. The position and performance of each vertical is discussed below.

Pre Engineered Buildings, India

The PEB India business closed the year with an order backlog of Rs. 810 crore and exit capacity utilisation of 70 per cent. Performance during the year was held back by labour availability constraints, which affected fabrication throughput and deferred revenue; these issues were resolved by the fourth quarter through expanded labour sourcing arrangements, long term contractor partnerships and targeted automation of painting, surface treatment and assembly. Inventory levels were brought down in the closing quarter. With the backlog rebuilt, quote activity strong and utilisation targeted to reach about 80 per cent, the business is positioned for double digit growth in FY 2026-27. The Company remained selective on order intake, prioritising product mix and margin over volume. Customers added during the year include Reliance, JSW Steel, Toyo Engineering, MRO Air India and Powermech, among others.

Metal Buildings, United States (Ascent Buildings and Ascent Structural)

The United States buildings platform delivered strong double digit growth in revenue and profitability, anchored by sustained demand from data centres, warehouses and industrial end markets. The combined order backlog of Ascent Buildings and Ascent Structural stood at about USD 63 million at the year end, having grown about 20 per cent in the final three months of the year. The Ascent Structural acquisition extends the offering into structural steel, and the new AGT robotics line automates end plate fitment and stiffener welding, materially reducing man hours per tonne. With capacity headroom, an expanding customer roster of American general contractors and a market share of under 3 per cent, this platform is expected to remain the principal growth contributor through FY 2026-27.

Engineering Services

Engineering Services delivered healthy double digit growth in revenue and profit before tax for the year, led by pre engineered metal building design and structural design and detailing. The Company has deployed AI assisted design and detailing within its delivery workflow, improving throughput on the lower end of the value chain while retaining the engineering review, optimisation and statutory certification that customers value. Investment in a dedicated sales infrastructure in the United States during the year positions the business for accelerated growth. The BIM and plant automation practice, which had underperformed, has been strengthened on both business development and delivery.

Boilers and Process Equipment

The boilers business enters FY 2026-27 with an order backlog of about Rs. 145 crore, up strongly during the year. The Company secured its highest capacity orders to date, comprising a 100 tonne per hour AFBC boiler and an 80 tonne per hour waste heat recovery boiler, and added new product lines in hot water generators and reciprocating grate systems. The customer base spans rice mills, food processing, agro processing and steel, with repeat orders reflecting design capability and execution reliability.

Hydraulics

The hydraulics order backlog rose to about Rs. 34 crore from Rs. 22 crore over the closing months of the year, as the disruption from United States tariffs moderated and customers resumed ordering. The business is developing European customers to diversify its export base, while domestic demand from construction equipment, material handling and railway applications remains steady.

Body in White and Industrial Components

The Body in White plant being established for Hyundai is in the final stages of completion and is expected to be commissioned early in FY 2026-27, following which the vertical will scale as a long term OEM programme. The industrial components business continued to serve marquee customers including WABCO, Emerson, Endurance, IFB and Xylem. The precision tubes business sustained order flows from automotive and engineering customers including Toyota Boshoku, Thermax and ALF Engineering; steel profiles served Saint Gobain, Schaeffler, VECV and others. Parts of the legacy steel and solar EPC revenue streams, which are not part of the prioritised portfolio, declined during the year in line with the Companys deliberate strategy of redeploying capital towards higher margin businesses; legacy streams now account for roughly 30 to 35 per cent of revenue and this share will continue to fall.

Railways

The railways vertical continued to supply coach and wagon components and assemblies to Integral Coach Factory, Rail Coach Factory, Wabtec, Tritdent and OFPL, and is positioned to benefit from the record capital outlay for rolling stock modernisation.

Solar Module Joint Venture (ZAP91)

The ZAP91 Solar India joint venture with Zetwerk, in which the Company holds 45 per cent, is completing its solar module manufacturing plant at Sadashivpet, Telangana, with commissioning targeted before 30 June 2026. The module technology has been upgraded to the G12R format during project execution. The Company made a final equity infusion of Rs. 5.80 crore during the year to fund completion; no further capital commitments are envisaged, with future funding needs of the venture to be met within the joint venture structure.

Financial Performance Review

The analysis below is based on the audited consolidated financial results for the year ended 31 March 2026. FY 2025-26 was the strongest financial year in the Companys history, with the highest ever revenue, EBITDA, profit after tax and cash balances.

Revenue Analysis

Consolidated revenue from operations grew 12.2 per cent to Rs. 3,620.09 crore. Growth was led by the overseas subsidiaries, which contributed revenue of Rs. 959.62 crore, driven by the United States buildings platform including the Ascent Structural acquisition and continued growth in engineering services. Standalone revenue grew 6.6 per cent to Rs. 2,747.75 crore. The revenue mix continued its planned migration towards higher margin streams: prioritised businesses now constitute about 65 to 70 per cent of revenue and are growing meaningfully faster than the Company average, while legacy steel and solar EPC streams were allowed to taper.

Segment Performance

Segment (Rs. crore)	FY26 Revenue	FY25 Revenue	FY26 Result	FY25 Result
Diversified Engineering	1,871.77	1,721.32	223.04	194.41
Custom Designed Building Solutions	1,835.60	1,584.44	178.28	152.58
Less: inter segment revenue	(87.28)	(79.18)	-	-
Total	3,620.09	3,226.58	401.32	346.99

Custom Designed Building Solutions grew 15.9 per cent, powered by the United States, where the acquisition and organic backlog conversion offset execution challenges in PEB India in the earlier part of the year. Diversified Engineering grew 8.7 per cent with an improvement in segment margin from about 11.3 per cent to 11.9 per cent, reflecting richer value addition in Body in White, industrial components, boilers and engineering services; the decline in legacy steel and solar revenue moderated the segments headline growth.

Costs, Margins and Profitability

Material cost as a proportion of revenue was broadly stable, with gross margins in the region of 42 to 43 per cent, supported by value added mix despite commodity price inflation during the second half. Employee benefits expense rose to Rs. 392.11 crore, reflecting the consolidation of acquired entities and capability building in the United States and in engineering services; the engineering services business model records revenue in sales while its principal cost sits in employee benefits, which should be kept in view while reading gross margins. Other expenses rose in line with higher order execution, job work and manpower rates. Finance costs at about 3.7 to 3.8 per cent of total income remained within the Companys ceiling of 4 per cent. Depreciation increased 22.3 per cent on account of the robotics installations in the United States, the acquired assets and India capex. EBITDA grew 15.51 per cent to Rs. 401.32 crore and profit after tax grew 16.22 per cent to Rs. 138.83 crore, with the PAT margin improving to about 4 per cent, continuing the multi year trend of margin expansion. Return on capital employed stood at 13 per cent against 14 per cent in the previous year, and return on net worth at about 12.8 per cent.

Balance Sheet and Capital Structure

The consolidated balance sheet expanded to Rs. 3,550.59 crore of total assets from Rs. 2,954.19 crore, reflecting the acquisition, growth capex and working capital to support higher revenue. Net worth rose to Rs. 1,163.15 crore from Rs. 999.60 crore. Gross borrowings increased to Rs. 1,141.52 crore from Rs. 775.12 crore, taking the debt to equity ratio to 1.05 from 0.92. This increase warrants a candid explanation: about USD 14 million relates to the funding of the Ascent Structural acquisition, and the balance is predominantly working capital borrowing that scaled with revenue, alongside a conscious build up of inventory ahead of price increases. Cash, cash equivalents and bank balances stood at a record Rs. 269.93 crore, so that net gearing was materially lower. The Company has stated a firm intent to bring the debt to equity ratio down to 0.8 or below during FY 2026-27 through internal accruals, the promoter warrant infusion and working capital release.

Net working capital stood at 82 days of revenue against the Companys target of 75 days. Receivables increased by Rs. 151 crore, of which a portion pertains to project sites awaiting handover formalities, expected to be collected in the early part of FY 2026-27; debtor days moved from 65 to 66. Inventory was consciously procured ahead of announced steel price increases and will normalise over the coming quarters. Trade payable days reduced by two days.

Cash Flows and Capital Expenditure

Net cash from operating activities was Rs. 202.12 crore against Rs. 255.98 crore in the previous year, the reduction reflecting the working capital absorption described above. Investment outflows of Rs. 328.27 crore on property, plant and equipment and capital work in progress covered the Ascent Structural assets, the robotics lines in the United States, the Body in White facility for Hyundai and automation and maintenance capex in India. Planned capex for FY 2026-27 is modest at under Rs. 100 crore, principally the completion of the Body in White plant and further automation, and will be funded comfortably from internal accruals, keeping free cash flow generation strongly positive.

Credit Rating

CARE Ratings reaffirmed the Companys ratings in March 2026 at CARE A with a Stable outlook for long term bank facilities of Rs. 754.46 crore, enhanced from Rs. 712.46 crore, and CARE A1 for short term bank facilities of Rs. 1,012.50 crore, reflecting the improving business profile and financial discipline.

Key Financial Ratios

Key financial ratios are set out below. In terms of the SEBI Listing Regulations, ratios with a change of 25 per cent or more over the previous year require specific explanation; no key financial ratio registered a change of 25 per cent or more during the year.

While no ratio changed by 25 per cent or more, two movements merit comment. The debt to equity ratio increased from 0.92 to 1.05 primarily on account of borrowings for the acquisition of the structural steel business in the United States and higher working capital utilisation in step with revenue growth and a planned inventory build; net of the record cash and bank balances of Rs. 269.93 crore, gearing was materially lower, and the Company is committed to reducing the ratio during FY 2026-27 through internal accruals, the promoter warrant proceeds and working capital release. Return on capital employed moderated as recently deployed capital, including the acquisition and the Body in White facility, is yet to contribute full year earnings; the medium term objective of raising ROCE remains unchanged.

Opportunities and Threats

Opportunities

- Sustained public capital expenditure in India, growing at double digits, directly expands demand for pre engineered buildings, railway components and engineered steel.

- The United States data centre and industrial construction cycle, with a sub 3 per cent current market share, offers a long growth runway for the American buildings and structural steel platform.

- AI assisted engineering services convert an industry disruption into a productivity advantage under project outcome based billing.

- Energy efficiency and emission norms drive replacement demand for AFBC and waste heat recovery boilers.

- Vehicle lightweighting, electrification and the Hyundai Body in White programme open multi year OEM revenue streams.

- Indias solar manufacturing expansion, addressed with limited capital through the 45 per cent joint venture and mounting structure supply.

Threats

- Commodity and energy price inflation, accentuated by the West Asia conflict, pressuring input costs and requiring continuous pass through.

- Trade policy volatility and tariffs in key export markets, as witnessed in hydraulics during the year.

- Labour availability and rising labour costs in both India and the United States, mitigated through automation but with transition costs.

- Intensifying competition in PEB with industry capacity additions, which can pressure pricing in the short term.

- Elevated working capital intensity inherent to project businesses, with attendant borrowing costs.

Risks and Concerns

The Company operates an enterprise risk management framework overseen by the Risk Management Committee of the Board. The principal risks and their mitigation are summarised below.

- Commodity price risk: steel is the dominant input; mitigated through price variation clauses in project contracts, pass through pricing, and inventory planning.

- Market and cyclicality risk: mitigated by the two segment, multi vertical portfolio across geographies and end markets, and by the rising share of recurring OEM and services revenue.

- Working capital and receivables risk: elevated debtor and inventory levels at the year end; mitigated through a defined reduction programme targeting 75 working capital days, site handover completion and collection focus.

- Currency risk: a growing share of revenue and assets is denominated in US dollars and euros; hedging through forward cover, natural hedges from local manufacture, and translation effects monitored; the year recorded a favourable translation movement in other comprehensive income.

- Trade policy risk: tariff changes can disrupt export streams; mitigated by manufacturing within the United States and market diversification towards Europe and West Asia.

- Labour and talent risk: labour shortages affected PEB throughput during the year; mitigated through contractor partnerships, wage benchmarking and automation of repetitive operations.

- Cyber security risk: mitigated through hardened IT infrastructure, cloud migration and periodic vulnerability assessment.

- Regulatory risk: implementation of the Labour Codes notified in November 2025 is being tracked; the financial impact will be recognised as rules are finalised.

- Climate risk: addressed through renewable energy adoption at plants, zero liquid discharge systems and energy efficient product lines.

SWOT Analysis

Strengths

Five decades of engineering pedigree and brand equity; diversified portfolio of over 1,000 engineered products with more than 90 per cent of revenue from value added categories; integrated design to delivery capability with in house tooling; manufacturing presence in India, the United States and France; long standing blue chip customer relationships with high repeat order rates; reaffirmed CARE A and A1 credit ratings.

Weaknesses

Working capital intensity of project led businesses; presence of lower margin legacy revenue streams still constituting about a third of revenue; scale in individual verticals below the largest single vertical competitors; gearing temporarily above the internal comfort level.

Opportunities

Underpenetrated United States market with structural data centre demand; Indias public and private capex cycle; AI led productivity in engineering services; energy transition demand in boilers and solar; OEM programmes in Body in White.

Threats

Commodity and energy inflation; global trade policy uncertainty; competitive capacity additions in PEB; labour market tightness; interest rate and currency movements.

Outlook for FY 2026-27

The Company enters FY 2026-27 with expanded order backlogs across its priority businesses: Rs. 810 crore in PEB India, about USD 63 million in the United States buildings platform, Rs. 145 crore in boilers and a rebuilt hydraulics book. Management has committed to profit after tax growth of at least 20 per cent for FY 2026-27, to be delivered through higher capacity utilisation in PEB India, scale up of Ascent Structural and the robotics enabled American operations, commissioning of the Body in White programme, continued double digit growth in engineering services and operating leverage on a contained fixed cost base. Margin expansion is expected to continue the four year trend as the revenue mix shifts further towards prioritised businesses.

On the balance sheet, the stated objectives for the year are a reduction of working capital from 82 to 75 days, restoration of the debt to equity ratio to 0.8 or below through cash generation and the promoter warrant proceeds of about Rs. 50.40 crore, and capex held under Rs. 100 crore. The Board is also evaluating options for unlocking value from non core land assets and will communicate developments as decisions are taken. Key variables to monitor are steel and energy prices, the trajectory of the West Asia conflict, United States trade policy and the pace of receivables collection.

Internal Control Systems and Their Adequacy

The Company maintains a system of internal controls commensurate with the size and complexity of its operations, encompassing authorisation protocols, segregation of duties, IT enabled process controls and periodic physical verification. The internal audit function, supported by an independent firm of chartered accountants appointed for FY 2026-27, reviews the adequacy and effectiveness of controls across locations, and its findings are placed before the Audit Committee. The statutory auditors have opined on the adequacy and operating effectiveness of internal financial controls over financial reporting, and have issued unmodified opinions on both the standalone and consolidated financial statements for the year. Cost records are subject to audit by an independent cost auditor.

Human Resources and Industrial Relations

The Companys performance in a labour intensive industry rests on its people. The year tested this in a specific way: labour availability constraints affected fabrication output in the PEB business during the first half. The response combined expanded engagement of labour contractors, improved onboarding and wage benchmarking, buffer manning of fabrication and surface treatment lines, and a decisive acceleration of automation in painting, surface treatment, assembly and welding. These measures restored full manning by the fourth quarter and are expected to lift operating margins beyond earlier levels as automation matures. Industrial relations remained cordial across plants during the year. The Company continues to invest in technical, behavioural and safety training and in building engineering and sales talent in India and the United States, and is preparing for the implementation of the new Labour Codes.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied on account of factors that include global and domestic economic conditions, movements in steel and energy prices, currency exchange and interest rates, changes in government regulations and tax laws, trade policy developments, labour availability and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement on the basis of subsequent developments, information or events.