Pennar Industries Ltd Management Discussions

Global Economy

FY2025 has been a year of moderate but resilient economic growth for the world, set against a backdrop of persistent to moderate inflation pressures, monetary policy recalibrations and intensifying geopolitical complexities.

Contributing to a 2.8% global GDP growth rate, the key drivers have been ceasing inflation due to broad-based service sector demand, consumer spending and gradual easing of supply chain pressures. Global inflation eased to around 3.5% this year from 4.5% in FY2024, though services and wage inflation remained sticky in many regions. Central banks around the world signalled a cautious shift toward rate normalisation, aiming to support growth while avoiding a resurgence in inflation. Emerging markets maintained a mixed policy stance - while some continued tightening, others initiated cuts to stimulate investment.

7 Source: International Monetary Fund (IMF)

Year	Global Economy (%)	Advanced Economies (%)	Emerging Market & Developing Economies (%)
2024	3.3	1.8	4.3
2025	2.8	1.4	3.7
2026	3.0	1.5	3.9

Significant geo political changes marked the year under analysis. The U.S. introduced broad tariff hikes on imports from China, EU and select Asian countries, prompting retaliatory moves from China and the EU and thereby reigniting trade tensions. Strategic realignments also ruled the world. Europe launched its Readiness 2030 defence and industrial strategy to reduce dependence on foreign supply chains. There was an increased focus on supply chain resilience, especially in semiconductors and critical minerals. The Global South attracted steady investment flows, particularly in renewable energy, digital infrastructure and manufacturing.

The year was also wrought with risks and vulnerabilities across the globe. Ongoing conflicts, including regional tensions in Asia and Eastern Europe, affected investor sentiment. Rising interest rates exposed debt vulnerabilities in low- and middle-income economies. Climate volatility affected food and energy supplies, amplifying inflationary pressures in select regions. Global supply chains experienced further stress, especially for critical minerals essential for clean energy technologies. Emerging markets saw mixed trends - India and Southeast Asia gained inflows, while China witnessed net capital outflows, reflecting geopolitical risk recalibration.

Commodity markets remained volatile, with energy prices fluctuating due to geopolitical and OPEC-related uncertainty. Conflicts in Europe and the Middle East, alongside China-U.S. strategic rivalry, created global investment uncertainty.

Outlook

The global economy in FY2025 showed cautious recovery and resilience amid complexity, supported by consumer demand, policy recalibration and technological transformation. However, the path forward remains sensitive to geopolitical tensions, trade fragmentation, supply chain realignments, structural transitions in energy, technology and labour markets and the pace of inflation moderation. IMF has projected the global growth rate for 2026 to moderate around 3%.

Central bank interest rate decisions, Chinas real estate and export recovery, trade realignment and reshoring and green energy transition financing are some areas for scrutiny in FY2026.

Indian Economy

India retained its position as the fastest-growing major economy, buoyed by strong public capital expenditure, domestic consumption and a healthy services sector. It emerged as the fastest-growing major economy with a growth rate of approximately 6.5%,² in comparison to 2.7% in U.S., 4.6% of China and 1.6% in Eurozone.

Country	2025 GDP Growth (%)	2026 GDP Growth (%)
UK	1.6	1.5
USA	2.6	2.7
Brazil	2.1	2.2
Japan	1.1	0.8
China	4.6	4.5
India	6.5	6.5

2 Source: Ministry of Information and Broadcasting

Growth was supported by record infrastructure spending under the Union Budget 2024 - 25. There was continued momentum in manufacturing, construction and financial services and rural revival aided by normal monsoon and targeted schemes.

Agriculture had a stable output due to timely monsoon; MSP hikes and subsidies supported rural incomes. Construction, cement, steel and PLI-driven manufacturing exhibited strong performance. There was visible growth in IT, digital, finance and travel and tourism sectors. Real estate progressed due to growth in residential housing and office space absorption in Tier-1 cities.

Inflation averaged around 5.3% during the year, easing from FY2024 but still above RBIs target. RBI held the repo rate at 6.5% through most of the year, focusing on anchoring inflation expectations. Core inflation moderated due to supply chain normalization, though food inflation remained volatile.

Merchandise exports faced headwinds due to weak global demand and geopolitical disruptions. Services exports, especially IT and fintech showed resilience. Current Account Deficit (CAD) was controlled at around 1.5% of GDP owing to robust remittances and FDI inflows. Forex reserves remained stable above 600 billion USD, ensuring external stability. Fiscal deficit for FY2025 was estimated at 5.1% of GDP, on track to reach 4.5% target by FY2026.

Structural reforms and digital economy took centre stage. Expansion of ONDC, UPI and JAM trinity continued to formalize the economy. Implementation of Gati Shakti, PLI 2.0 schemes and Make in India strengthened domestic manufacturing. MSME digitization and startup ecosystem saw new growth opportunities through targeted incentives.

The country, however, was not sheltered completely from global slowdown and external shocks like oil prices and geopolitical events. This was evident from persistent food inflation and supply chain bottlenecks in agriculture and delays in private investment pick-up, despite government efforts.

Indias economy in FY2025 demonstrated resilience and high growth momentum, with strong macroeconomic fundamentals, robust infrastructure investments and digital transformation at its core. While global risks persist, India enters FY2026 with a stable fiscal outlook, moderate inflation and a credible growth trajectory.

Top 10 World Economies in 2025: Percentage Change in GDP Over the Last 10 Years

Country	Percentage Change in GDP (2015-2025)
India	103.1%
China	75.8%
United States	65.8%
Canada	49.7%
Germany	43.7%
France	34.4%
Italy	33.3%
Brazil	28.2%
United Kingdom	27.4%
Japan	-1.3%

Source: IMF

Per Capita GDP at Current Prices (in 7 Lakh)

(As per SBI Report - CAGR of 9.1% from FY14 to FY25)

Financial Year	Per Capita GDP (7 Lakh)
FY14	0.90
FY15	0.98
FY16	1.07
FY17	1.18
FY18	1.30
FY19	1.42
FY20	1.50
FY21	1.46
FY22	1.72
FY23	1.94
FY24	2.16
FY25	2.35

Source: SBI Research

Annual GDP Estimates and Growth Rates

Year	GDP Level (Rs. Lakh Crore)	GDP Growth Rate (%)
2012-13	100.0	5.5
2013-14	108.0	6.4
2014-15	115.0	7.4
2015-16	124.0	8.0
2016-17	134.0	8.3
2017-18	145.0	6.8
2018-19	155.0	6.5
2019-20	161.0	3.9
2020-21	152.0	-5.8
2021-22	167.0	9.7
2022-23 (FRE)	179.0	7.0
2023-24 (PE)	194.0	8.2
2024-25 (FAE)	206.0	6.4

Source: The Ministry of Statistics and Programme Implementation, GOI

CPI Inflation Rate

Year	India (%)	Advanced Economies (%)	Emerging Market and Developing Economies (%)	World (%)
2021	5.5	3.1	5.8	4.7
2022	6.7	7.3	9.5	8.6
2023	5.4	4.6	8.0	6.6
2024	4.7	2.6	7.7	5.7
2025	4.2	2.5	5.5	4.3

Source: IMF

Global Infrastructure Overview

Global construction spending reached approximately USD 15.6 trillion in 2025, a 6.4%³ year-over-year increase, with infrastructure accounting for about 33% of this total. The highest rate of business expansion was in Europe, the Middle East and Africa (EMEA). Fundraising activity in infrastructure saw a resurgence, benefiting from lower interest rates as investors sought yield. Mid-sized infrastructure projects, particularly in data centers and circular economy models, offered compelling investment opportunities amid broader market volatility. The EUs Global Gateway and the G7s Partnership for Global Infrastructure and Investment aimed to provide sustainable infrastructure alternatives to Chinas Belt and Road Initiative. Cities worldwide prioritized infrastructure resilience to climate shocks, integrating sustainability into urban planning to attract investment and talent. The MSCI World Infrastructure Index outperformed broader markets with a 29.4% return over the year, reflecting strong investor confidence in the sector.

Outlook

The global infrastructure sector demonstrated resilience and adaptability in FY2025, navigating economic uncertainties and geopolitical shifts. Global infrastructure funding will remain sound in FY2026. With continued emphasis on sustainable development, digital transformation and climate resilience, the sector is poised for sustained growth in the coming years.

Infrastructure construction spending is a key driver in the U.S., Europe, Australia and Canada, as well as in certain emerging markets such as India, Saudi Arabia and Singapore. Global infrastructure spending is expected to rise by about 9.4%³ in 2025, outperforming other non-residential construction sectors. Transportation and Water and Sewer sectors will experience outsized growth and expand by about 10% in FY2026. The Infrastructure Investment and Jobs Act (IIJA) and autumn budget in the U.S., the Next Generation EU plan in the EU and AMP8 in the U.K. are the factors which are expected to drive growth.

3 Source: S&P Global Global infrastructure spending

Key Developments Sector Wise in India

Budget 2025-26, core to the vision of Viksit Bharat @ 2047, allocates Rs. 11.21 lakh crore for the infrastructure sector.

Sector	FY17-23 (Rs. trillion)	FY24-30 Expected (Rs. trillion)
Roads	18.3	37.3
Energy	15.5	39.1
Railways	12.4	25.6
Other Infra	11.1	15
Urban Infra	8.6	18.9
Transport	0.8	7

Source: CRISIL

Buildings And Infrastructure - Pre-Engineered Buildings (PEB)

The buildings sector in India experienced steady growth in FY2025, driven by rapid industrialisation, e-commerce warehousing, logistics hubs and infrastructure development initiatives. The increasing preference for Pre-Engineered Buildings (PEBs) due to faster construction timelines, cost- effectiveness and sustainability continues to reshape the sector.

Indias PEB sector is witnessing rapid expansion, driven by rising demand for faster, cost-effective and sustainable construction solutions across industrial, commercial and infrastructure segments. According to industry research, the Indian PEB market, valued at around USD 2 billion in 2024, is projected to grow at a compounded annual growth rate of approximately 11-12 per cent through the end of this decade, with forecasts placing the market size at USD 3.9 billion by 2030 and USD 6.3 billion by 2033. The growth is supported by government-led infrastructure initiatives such as the PM Gati Shakti plan, Smart Cities Mission, industrial corridors and the continued emphasis on Make in India.

Rising public-sector spending on infrastructure is poised to lift demand PEBs across airports (hangars and terminal blocks), highway toll plazas and rail yards or station components. Because these factory-fabricated systems arrive on site ready for bolt-up, they can be erected roughly 40-50 % faster than conventional construction methods, a speed advantage that also cuts steel usage and labour bills, delivering significant overall cost savings.

For Micro, Small and Medium Enterprises (MSMEs), investing in PEBs is a strategic move towards operational efficiency, financial prudence and sustainable growth. By embracing PEBs, businesses can navigate the complexities of the modern market landscape with agility and confidence, setting a foundation not just for survival but for long-term success.

For growing businesses, this model provides a rare blend of rapid deployment and long-term cost efficiency, making them the preferred choice for manufacturers, logistics firms and new-age enterprises.

The revenue growth of PEB players is constrained by optimal capacity utilisation, hence the industry is witnessing capacity addition.

The PEB market is evolving beyond niche industrial applications to become a mainstream construction solution. Growing awareness of its lifecycle cost advantages, faster construction timelines and lower environmental footprint positions PEBs as a transformative force in redefining Indias building and infrastructure landscape.

Source: CRISIL, Steel Structures and Metal Buildings (SSMB)

Year	Concrete Structure (USD Bn)	Steel Structure (USD Bn)	Civil Structure (USD Bn)	Others (USD Bn)	Total Market Size (USD Bn)
2024	0.45	0.75	0.5	0.31	2.01
2025	0.5	0.85	0.55	0.4	2.3
2026	0.55	1	0.6	0.45	2.6
2027	0.6	1.1	0.65	0.55	2.9
2028	0.7	1.2	0.7	0.6	3.2
2029	0.8	1.4	0.8	0.6	3.6
2030	0.9	1.6	0.9	0.6	4
2031	1	1.8	1.05	0.65	4.5
2032	1.2	2.1	1.2	0.6	5.1
2033	1.4	2.4	1.5	1.03	6.33

Source: IMARC

Pennars Industry-Specific Offerings

Pennar Industries is a leading player in Indias Pre-Engineered Buildings (PEB) segment, providing end-to-end solutions from design and engineering to fabrication and on-site assembly. Leveraging its advanced Raebareli facility and robust engineering capabilities, Pennar delivers customized steel building solutions for industries such as warehousing, logistics, manufacturing, commercial infrastructure, and retail.

Innovative Design & Engineering: Advanced PEB designs focused on reducing construction time and overall lifecycle costs while ensuring durability and sustainability.

Manufacturing Strength: Equipped with state-of-the-art technologies like CNC machines, plasma cutting, and robotic welding, enabling precision and high-quality output.

Scalable Infrastructure: A strong order book (7780 crore in FY2025) showcases Pennars ability to deliver large-scale industrial, warehousing, and commercial building projects.

Pennar is actively driving the shift from traditional construction to steel-intensive PEB solutions, offering faster project delivery, cost efficiency, and minimal environmental impact. Its expertise positions it as a preferred partner for industrial and infrastructure projects across India.

Oil And Gas

FY2025 marked another pivotal year for Indias oil and gas sector, a cornerstone of national energy security and economic growth. As the worlds third-largest oil consumer, Indias petroleum product consumption grew by 3.5% to around 200 MT in 9 months of FY 2024, with overall annual demand rising ~4.6%.

Despite domestic crude output falling to 28.7 MMT, covering only 12.3% of demand, production remains steady due to over-reliance on imports. Natural gas output reached ~35 BCM, while LNG imports swelled by approximately 12%, underscoring growth in the gas value chain.

Source: Nishith Desai Counselling

Robust growth in product demand, profitability dynamics and infrastructure build out are the upticks in this sector. India is projected to lead global oil demand growth in 202526, growing faster than China at ~3.4% annually, partly driven by industrial and transport sector expansion. Policy programs, including the New Exploration Licensing Policy (NELP) and Hydrocarbon Exploration Licensing Policy (HELP), promote domestic E&P while mitigating import dependencies.

Indias oil and gas sector has been solidified as an essential component of economic infrastructure, despite rising import dependency. Demand surged across fuels and petrochemicals, bolstered by robust industrial and transportation activities. With strategic investments in refining, pipelines and city gas networks, along with supportive policies, the sector is set to enhance energy transition initiatives further and support economic growth in FY2026 and beyond.

Source: OPEC monthly report

Oil and Gas sector Market in India 2024 to 2033 (CAGR 5.23%)

Year	Market Size (USD Million)
2024	710.5
2025	760
2026	800
2027	860
2028	920
2029	980
2030	1050
2031	1100
2032	1170
2033	1164.4

Source: IMARC

Pennars Industry-Specific Offerings

Pennar Industries plays a crucial role in supporting Indias oil and gas infrastructure by supplying precision-engineered products, process equipment, and value-added engineering solutions. The companys expertise spans the design and manufacture of process heating equipment, precision tubes, steel structures, and specialised components used in refineries, petrochemical plants, and pipelines.

Precision Tubes & Steel Products: Supply of high-strength, corrosion-resistant tubes and profiles for critical oil and gas applications, including heat exchangers and pipeline systems.

Process Heating Solutions: Manufacture of boilers, heaters, and thermal processing equipment, which are essential for refining and petrochemical operations.

Custom Engineering Services: Value Analysis and Value Engineering (VAVE) solutions tailored for E&P (Exploration & Production), midstream, and downstream facilities to enhance operational efficiency.

Structural Steel & Fabrication: Engineering and fabrication of heavy-duty structures, storage tank components, and support frames for oilfield and refinery infrastructure.

Railways

In the fiscal year 2024-25, Indian Railways achieved significant milestones across financial performance, infrastructure development and modernisation efforts. It was another year of record-high capital outlay, best-ever freight volumes, a rebound in passenger traffic and visible progress on flagship modernisation programmes such as Vande Bharat trains, station redevelopment and the Kavach safety system.

The Union Budget allocated Rs. 2.52 lakh crores for Indian Railways, maintaining the previous years investment level. This substantial funding underscores the governments commitment to infrastructure development and

modernisation efforts.

Source: Press Information Bureau (PIB), Time of India (TOI)

The government plans to introduce additional Vande Bharat, Amrit Bharat and Namo Bharat rapid rail services over the next few years to offer faster, more comfortable and energy-efficient travel options for passengers and the deployment of advanced signalling technologies like the Kavach Automatic Train Protection system to enhance safety and operational efficiency across the network.

Significant investments were made in metro and mass rapid transit systems, with a 46.41% increase in allocation compared to the previous year, supporting urban mobility and reducing congestion.

Development of dedicated freight corridors and multimodal logistics parks aimed to increase freight capacity, reduce transit times and lower logistics costs, contributing to economic growth. Commissioning of 91 Gati Shakti multimodal cargo terminals facilitated efficient cargo handling and streamlined supply chains.

The Green Energy Project is an initiative to make Indian Railways environment-friendly by focusing on renewable sources of energy.

The railway sector is witnessing strong revenue growth, driven by freight and passenger demand. Ongoing capital expansion and electrification efforts are enhancing capacity and sustainability. Technological upgrades are improving efficiency, safety, and asset reliability. This positions the sector to meet Indias rising transportation and logistics needs effectively.

All the above developments underscore Indian Railways commitment to enhancing efficiency, safety and passenger experience, aligning with broader national goals of infrastructure modernization and economic growth. Significant advancements focusing on modernization, sustainability and enhanced connectivity in this sector provide a positive outlook in the coming years.

The sector now anchors multiple national priorities, logistics efficiency, green mobility and regional connectivity, and enters FY2026 with healthy momentum, albeit tempered by execution-risk, funding pressures and the need to lift nonfare revenues.

Financial Year	Budget Allocation (Rs Crore)
2021-22	110000
2022-23	140000
2023-24	235000
2024-25	255000
2025-26	255000

Pennars Industry-Specific Offerings

Pennar Industries is a trusted partner for Indian Railways, metro projects, and global rolling stock manufacturers, offering high-quality, precision-engineered components

and sub-assemblies. With decades of expertise, Pennar supports the modernization and expansion of Indias railway infrastructure by supplying products that meet stringent safety and performance standards.

Railway Coach Components: Manufacturing roof panels, side walls, underframes, and crashworthy coach structures for passenger coaches and metro trains.

Wagon Assemblies: Supply of bogie frames, cross members, and load-bearing wagon parts, designed for high durability and performance in freight transportation.

Metro Rail Systems: Providing custom steel profiles, aluminum panels, and interior fitments for metro rail projects across major cities.

Precision Tubes & Sections: Used in rail car frames, handrails, seating structures, and safety-critical parts.

Engineering Services & VAVE: Offering design-to-cost and design-to-manufacture solutions to enhance efficiency and reduce operational costs for railway clients.

Automotive Value Engineering

Indias automotive engineering services market (which includes Value Engineering) is projected to grow at an unprecedented rate. This sector has emerged as a strategic differentiator, enabling OEMs and suppliers to optimise costs while enhancing performance and quality. With 7.1% of GDP and 49% of manufacturing output tied to the automotive sector, VE services have become integral to meeting global competitiveness.

Several factors like cost efficiency, export readiness, tech transition support, favourable policies and ecosystem have been lending the necessary boost to the sector. Value engineering in India now represents a core capability, supporting OEMs in transitioning toward high-precision, cost-efficient and technologically advanced mobility solutions. With the industrys shift toward EVs, digitalisation and global sourcing, the VE sector is poised to play a central role in Indias aspirations to become a global automotive hub.

The auto component sector and automotive value engineering (VE) are deeply connected, with each driving the growth and innovation of the other. Auto component manufacturers rely on VE to optimize design, material usage and manufacturing processes, ensuring high-quality, cost-effective components that meet global standards. Conversely, the VE sector depends on insights from the auto component industry, including performance data, evolving technologies and regulatory requirements, to innovate and create lighter, stronger and more efficient designs. Together, both the sectors form a synergistic ecosystem that ensures competitiveness, faster time-to-market and alignment with OEM requirements.

The Government of India has urged Indian auto component manufacturers to minimize their dependence on imports and increase manufacturing within the country. He further

suggested that they should ambitiously reach a USD 100 billion export target by 2030.

The auto component sector achieved a trade surplus of USD 453 million in FY2025, up from USD 300 million in FY2024, reflecting increasing export of value-added parts, many of which are outcomes of cost-and-value optimization processes. The industry, which accounts for 2.3% of Indias GDP currently, is set to become the 3^rd largest globally by end of the year.

Source: Business Standard, IBEF

Financial Year	Number of Automobiles Produced (in million)
FY17	25.33
FY18	29.07
FY19	30.92
FY20	26.36
FY21	22.65
FY22	23.04
FY23	25.93
FY24	28.43
FY25	31.03

Source: Society of Indian Automobile Manufacturers (SIAM)

Financial Year	Industry Size (USD Billion)
FY2020	49.3
FY2021	45.9
FY2022	56.6
FY2023	69.7
FY2024	74.1
FY2025(F)	80.4

Source: ACMA, Rubix

Pennars Industry-Specific Offerings

Pennar Industries plays a critical role in the automotive value engineering (VE) ecosystem, partnering with leading OEMs and Tier-1 suppliers to deliver cost-optimized, high- performance components and assemblies. Leveraging decades of expertise in precision engineering, materials science and design-to-cost principles, Pennar focuses on improving product efficiency, reducing weight and enhancing manufacturability while maintaining stringent quality and safety standards.

Body-in-White (BIW) Solutions: Pennar designs and manufactures structural sub-assemblies, welded components, and chassis parts that adhere to global OEM specifications.

Precision Tubes & Components: Supplies high-precision tubes for fuel lines, suspension systems, and structural reinforcements, vital for both conventional and electric vehicles.

Value Analysis and Value Engineering (VAVE): Offers design-to-cost solutions, optimizing material usage and manufacturing processes to reduce total lifecycle costs.

EV Transition Support: Works on lightweighting strategies and advanced materials to support the emerging EV and hybrid vehicle platforms.

Collaborations with Leading OEMs: Partners with leading auto giants, offering concept-to-production support.

Heavy Engineering

Indias engineering industry has become the backbone of the countrys industrial base, housing roughly 27% of all registered factories and attracting about 63% of foreign technical-collaboration agreements. Demand for engineering goods and services keeps climbing as marquee sectors, including infrastructure, heavy electrical equipment, machine tools, power, mining, oil & gas, refining, steel, automotive and consumer durables expand capacity at pace. The sector also supports critical segments including railways, road transport, renewables, construction and defense.

Infrastructure and construction equipment demand softened, with mining and construction machinery volumes growing 3% year-on-year, reflecting a slowdown in project awards and execution delays amidst liquidity constraints. Despite the mild slowdown, Indias steel demand grew by 8%, making the country one of the few major economies with sustained steel expansion, a key raw material input for heavy engineering.

Thanks to competitive manufacturing costs, deep process knowhow and an innovationoriented talent pool, Indian firms now hold a costandcapability edge across many engineering subsegments and have seen remarkable growth in output and exports over the past few years. Closely intertwined with both manufacturing and largescale infrastructure development, the engineering sector therefore remains a strategic pillar of Indias economic trajectory.

Capital goods and machine tool subsectors continued to invest in digital automation and sustainability, as outlined by the Ministry of Heavy Industries vision for a globally competitive and tech-driven yellow goods ecosystem.

The engineering industry has been de-licensed and allows 100% Foreign Direct Investment (FDI). Additionally, it has grown to be the biggest contributor to the nations overall merchandise exports. Export recovery was underway: engineering goods, including steel and components, rerecorded growth in mid-2025, contributing to 27% of Indias merchandise exports. Export of engineering goods is expected to reach USD 200 billion by 2030.

Indias Engineering Goods Export (USD billion)

Fiscal Year	Value
FY17	65.24
FY18	76.2
FY19	80.95
FY20	75.9
FY21	76.62
FY22	111.63
FY23	107.04
FY24	109.32
FY25*	87.22

Source: IBEF

Investment in engineering R&D sector is expected to reach USD 63 billion by 2025.

Source: IBEF

The Make in India initiative and the governments focus on ease of doing business is likely to present several opportunities in the engineering and capital goods sector in the upcoming years.

Pennars Industry-Specific Offerings

Pennar Industries is a key player in Indias heavy engineering ecosystem, offering end-to-end solutions that span design, fabrication, assembly, testing, and logistics. With over four decades of expertise, Pennar supports industries such as power, oil & gas, infrastructure, steel, defense, and mining by delivering high-precision, large-scale engineered products and systems.

Process Equipment & Boilers: Pennar manufactures boilers, heat exchangers, pressure vessels, and process heating equipment, essential for power plants, oil refineries, and petrochemical facilities.

Fabricated Structures & Components: Provides custom heavy fabrication services for bridges, cranes, industrial buildings, and heavy machinery.

Value Engineering & Automation: Incorporates New Product Introduction (NPI), Continuous Process Improvement (CPI), and Value Analysis/Value Engineering (VAVE) methodologies to reduce cost and improve performance.

Logistics & Turnkey Capabilities: Pennar delivers end-to- end solutions by integrating design, manufacturing, and project logistics, enabling seamless execution of complex heavy engineering projects.

Solar Energy

India has emerged as one of the worlds largest solar energy markets, driven by its commitment to achieving 500 GW of non-fossil fuel-based capacity by 2030, with 280 GW planned from solar alone. With a focus on sustainability, energy security and decarbonization, the country is making rapid strides in solar power generation, driven by government initiatives, favourable policies and growing industrial and consumer demand.

India is the third-largest solar power generator, following China and the U.S. and is a key player in the International Solar Alliance (ISA).

According to the Ministry of New & Renewable Energy (MNRE), Indias cleanenergy expansion stayed on a fast track in FY2025, adding a record 29.52 GW of new capacity during the year. That buildout lifted the countrys cumulative installed renewable portfolio to 220.10 GW by 31 March 2025, up from 198.75 GW a year earlier. The milestone keeps India firmly on course to reach its 500 GW nonfossil target for 2030, a pillar of the Panchamrit commitments announced by Prime Minister Narendra Modi at COP 26.

Solar energy contributed the most to the years clean energy capacity expansion, with 23.83 GW added in FY2025, a significant increase over the 15.03 GW added in the previous year. The total installed solar capacity now stands at 105.65 GW. This includes 81.01 GW from ground- mounted installations, 17.02 GW from rooftop solar, 2.87 GW from solar components of hybrid projects and 4.74 GW from off-grid systems. The growth demonstrates continued uptake of solar energy across utility-scale and distributed categories.

Source: GOI

Year	Cumulative Solar Power Capacity (GW)
2015	5
2016	9
2017	13
2018	21
2019	29
2020	36
2021	43
2022	50
2023	63
2024	79
2025	106

Programs such as PM Surya Ghar Muft Bijli Yojana (Subsidizing rooftop installations for homes), Production- Linked Incentive (PLI) Scheme for Solar Manufacturing (Boosting domestic solar manufacturing), ALMM Mandate (Ensuring quality through the Approved List of Models and Manufacturers), National Solar Mission and International Solar Alliance (ISA) (India continues to lead this global coalition promoting solar adoption) have accelerated both domestic production and installations.

Pennars Industry-Specific Offerings

Pennar Industries plays a pivotal role in supporting Indias renewable energy mission by offering engineered solar structures and component solutions for a wide range of photovoltaic (PV) applications. The Company is a trusted supplier of solar module mounting structures (MMS), purlins, C-channels and cold roll-formed sections for ground-mounted, rooftop and hybrid solar projects across India.

With its state-of-the-art manufacturing facilities and inhouse design and fabrication capabilities, Pennar delivers customized, corrosion-resistant structures that ensure longterm durability and performance. The Companys offerings are optimized for ease of installation, cost efficiency and structural stability, enabling rapid deployment of solar parks and distributed generation setups.

Pennar is actively contributing to major utility-scale and rooftop solar projects, partnering with EPC contractors, solar developers and power producers. By aligning with national sustainability goals, Pennar strengthens the solar infrastructure ecosystem and contributes to the transition toward clean, renewable energy.

The Company has established a state-of-the-art 2-acre photovoltaic solar module manufacturing facility, with an annual production capacity of 250 MW. The facility produces polycrystalline, monocrystalline and bifacial solar modules ranging from 315 Wp to 400 Wp. All modules are tested and certified by TUV Rheinland, in compliance with IEC and BIS standards. The facility is ISO 9001 certified, has been successfully audited by the National Institute of Solar Energy (NISE) and is listed as an approved ALMM supplier by the Government of India.

To date, Pennar has manufactured and shipped over 200 MW of solar modules to more than 70 satisfied customers, with installations across 500+ sites. These modules have demonstrated exceptional performance and reliability, reinforcing Pennars position as a trusted contributor to Indias solar energy ecosystem.

Another step in this direction is the joint venture between Pennar Industries and Zetwerk which is a leap for Pennar into full-scale solar-module manufacturing. The JV will tansform Pennars small solar arm into a capital- efficient growth engine while giving Zetwerk a strategic stake in Indias upstream PV build-out—pairing Pennars metallurgical depth with Zetwerks manufacturing agility to chase a multibillion-dollar clean-energy market.

White Goods

Indias rising disposable incomes and rapid technological advancements are driving strong demand for a diverse range of consumer durables. This surge is intensifying competition among numerous brands operating nationwide. Multinational companies increasingly view India as a key market poised to contribute significantly to their future growth trajectories.

The White Goods market was in the USD 13-14 billion range in FY2025 and expanding at a CAGR of 5.5%, it is expected to cross the18.1 billion mark by FY2030. Domestic manufacturing contributes nearly USD 4.6 billion on average to this industry.

Robust growth in disposable income, urbanization and home ownership and the demand for furnishing new homes with appliances, led to a 72% surge in consumer durable spending in FY2025, according to the CMS Consumption Report 2025. Expansion into Tier-2 and Tier-3 markets and rising demand for energy-efficient and smart appliances boosted adoption across rural and urban India.

In the year, the white goods category (mainly air conditioners, refrigerators, washing machines, dishwashers, microwaves) remains dominant, while small appliances like air fryers and mixer grinders showed faster growth.

E-commerce and omni-channel retailing have significantly increased reach and accessibility, driving growth in appliance adoption.

With PLI schemes for electronics and domestic manufacturing incentives, global giants are expanding their India footprints. Sustained steady market growth through 2030 is expected, driven by lifestyle upgrades and technological adoption.

The sector, currently contributing 0.6% to Indias GDP, aims to boost its share by 1.5 times and become the fourth- largest market by 2027 and with strong growth, it aspires to lead the global industry by 2030.

Source: IBEF, GOI

Company Overview

About Pennar

Founded in 1975, Pennar Industries Limited is one of Indias leading engineering and manufacturing companies, known for its diversified product portfolio, technological expertise and customer-centric solutions. Headquartered in Hyderabad, Pennar operates 10 state-of-the-art, ISO- certified manufacturing facilities, serving a wide range of sectors including pre-engineered buildings (PEBs), process heating, oil & gas, solar, automotive, railways and heavy engineering.

The companys strategic focus on innovation, value engineering (VAVE) and sustainable manufacturing practices ensures its continued leadership across high- growth industries. With a strong order book, global presence and robust operational performance, Pennar Industries is well-positioned for scalable and sustainable growth.

Pre-Engineered Buildings (PEBs) - Build and Deliver strength of Pennar showcased by PEB.

The PEB division remains a cornerstone of the Companys growth strategy. With a robust order book of Rs. 780 crores and marquee customers such as L&T, Ultratech Cement, Dr. Reddys Laboratories and Reliance Retail, this division continues to scale new heights. The Raebareli facility played

a pivotal role in ramping up production, catering to the growing industrial and infrastructure demand across India. Expertise in customized design and execution has solidified its position as a preferred partner for leading industrial and commercial projects.

Pennars focus on innovative engineering, customization and quality excellence has solidified its leadership in the PEB space. The company is well-positioned to leverage opportunities arising from industrial parks, warehousing expansions and commercial building projects, thereby driving sustainable growth in this segment.

Precision Tubes

The precision tubes division has maintained a strong growth trajectory, serving critical sectors such as automotive, construction equipment, general engineering and power. With state-of-the-art manufacturing technologies, including CNC machines, laser and plasma cutting systems, we are able to deliver high-quality, precision-engineered solutions. Our extensive product portfolio of over 1,000 variants ensures a steady revenue stream and mitigates market fluctuations.

Process Heating

Pennars process heating solutions have seen increasing adoption, particularly in sectors such as renewable energy, oil and gas, and power generation. Through engineering excellence, we have enhanced product efficiency, safety and energy optimization, which has positioned us as a trusted solutions provider in this high-growth sector.

Hydraulics

The hydraulics business has demonstrated robust performance, driven by demand in industries such as automotive, heavy machinery, and material handling. Our advanced hydraulic cylinders and systems are designed for durability and precision, meeting international standards of performance. The continued focus on R&D and customized solutions has allowed us to expand into new segments and markets.

Heavy Engineering

Pennar Industries continues to strengthen its footprint in the engineering services sector, leveraging its decades of experience, domain knowledge and robust manufacturing capabilities. With a focus on value engineering, design innovation and cost optimization, Pennar has evolved into a trusted solutions provider for clients across sectors such as automotive, railways, infrastructure, process engineering and heavy machinery.

The company offers a wide array of engineering services ranging from product design, prototyping, simulation and tooling to digital engineering and manufacturing support. These services are driven by a blend of technical expertise and a deep understanding of industry-specific requirements, enabling customers to reduce lead time, improve efficiency and enhance product performance.

By integrating its engineering services with its product offerings, Pennar is reinforcing its position as a holistic industrial partner, driving innovation and operational excellence for its customers in India and overseas.

Business Review - Performance Highlights Summary

(Rs. Cr.)

Division	FY2025 Revenue	FY2024 Revenue	% Change
Steel Products and Profiles	738.03	670.37	10.09%
Railways& Assembly sub parts	187.63	183.86	2.05%
Industrial Components	277.41	258.51	7.31%
Precision Tubes	303.84	317.58	(4.33%)
Boilers	108.55	82.20	32.06%
BIW	191.45	145.00	32.03%

Operational and Financial Overview

Net Revenue: The Company has reported a Net Revenue of Rs. 3226.58 crores during the year 2024-25 as against Rs. 3130.57 crores in the previous year, resulting in an increase of 3.07%.

Other Income: Other income comprises of gain on sale of mutual funds, Interest on Bank Margin Money deposits, interest on income tax refund, Profit on Sale of Property, Plant and Equipment, Investment Property(net) and miscellaneous income. The other income of the company for the year is Rs.36.69 crores as against Rs.40.31 crores of the previous year.

Finance cost: The Finance cost during the year has increased to Rs. 119.6 crores from Rs. 115.36 crores of the previous year.

Depreciation: The Companys depreciation for the year has increased from Rs. 66.5 crores to Rs. 68.89 crores.

Tax Expense: The tax expense of the company for the year 2024-25 is Rs. 38.95 crores as against Rs. 33.07 crores of previous year.

EBITDA: The Company has reported an EBITDA of Rs. 346.89 crores as against Rs. 313.28 crores in the previous year.

Profit after Tax: The Company has reported a Profit after Tax of Rs. 119.45 crores as against Rs. 98.35 crores in the previous year and reported a growth of 21.45%. The Increase is mainly due to increase in volume of operations.

Equity & Liabilities:

Net worth: The Companys net worth changed from Rs. 877.47 crores to Rs. 999.60 crores.

Borrowings (Long-Term & Short-Term): During the year under review, the borrowings changed by Rs. 775.12 crores from Rs. 733.95 crores.

Assets:

Property, Plant & Equipment (PPE): The Companys PPE (Net block plus Capital WIP) increased by Rs. 60.25 crores (net) in 2024-25 from Rs. 825.96 crores to Rs. 886.21

crores. The increase in PPE is mainly for new projects received during the year 2024-25.

Investments: The investments increased by 268% from Rs. 2.86 crores to Rs. 10.53 crores during the year 2024-25.

Inventories: The Companys inventories stand at Rs. 935.33 crores as against Rs. 825.17 crores of the previous year.

Trade Receivables (Current & Non-Current): The Companys trade receivables increased by Rs. 69.16 crores in 2024-25 from Rs. 511.63 crores to Rs. 580.79 crores.

Cash Flow: During the year, the Company reported Net cash inflows from operating activities of Rs. 255.98 crores as against Rs. 224.72 crores, Net cash used in investing activities Rs. 104.97 crores as against Rs. 256.75 crores and Net cash used in financing activities Rs.100.39 crores as against Rs. 22.3 crores in the previous year.

Key Financial Ratios

	FY 2024	FY 2025	% Change
Current Ratio	1.04	1.14	9%
Debt Equity Ratio	0.84	0.78	7%
Return on Capital employed(ROCE)	7.31%	7.42%	2%
Inventory Turnover Ratio	4.09	3.67	(10%)
Trade receivable turnover ratio	6.12	5.56	(9%)
Operating Profit Margin	9.88%	10.63%	8%
Net Profit Margin	3.10%	3.66%	18%
Return on Net Worth	11.87%	12.73%	7.18%

Internal Control System

The Company has adequate system of Internal Controls to help Management review the effectiveness of the Financial and Operating Controls and assurance about adherence to Companys laid down Systems and Procedures. As per the provisions of the Companies Act, 2013, Internal Controls and documentation are in place for all activities. Both Internal Auditors and Statutory Auditors have verified the Internal Financial Controls (IFC) at entity level and operations level and satisfied about control design and operating effectiveness. The evaluation included documentation review, inquiry, inspection, testing and other procedures. The controls are reviewed at regular intervals to ensure that transactions are properly authorized, correctly reported and assets are safeguarded. The Audit Committee periodically reviews the findings and recommendations of the Auditors and takes corrective action as deemed necessary. The

Company is adopting digital solutions on an ongoing basis to further strengthen the internal control mechanism commensurate with the Companys growth.

Risks and Concerns

The Company has an integrated and structured Enterprise Risk Management process to manage risks with the ultimate objective of maximising stakeholders value.

The risk management system at the Company has the following key features:

• Risk Management Committee review

• Appropriate policies, procedures and limits

• Comprehensive and timely identification, measurement, mitigation, control, monitoring and reporting of risks

• Appropriate Management Information Systems (MIS) at the business level

• Comprehensive internal controls as required for business operations and governing laws and regulations

Some of the key risks that the Company faces, along with their mitigation strategies adopted, are listed below:

Political Risks: The Company has operations in multiple locations in multiple states and is consequently subject to various geopolitical risks. Appropriate mitigation strategies are in place to address the same.

Competition Risks: There has been an increase in the number of operators in the niche segment in which the Company operates. However, the Companys competitive advantage is derived from an experienced workforce, quality and timely delivery, strong track record, technical expertise, financial strength, brand equity and regular engagement with Clients and representatives.

Operational Risks: To suit the project requirements, due care is exercised in the selection of sub-contractors, vendors, key technical and non-technical employees, insurance coverages, financial tie-ups, timely obtaining of Right of Way and designs and drawings. Identification of associated risks and initiation of mitigation measures are helping the Company to address the operational risks.

Market Risks: Securing orders is always a big challenge for engineering companies and the same depends upon potential in various States and Departments. In order to mitigate the market risks and to ensure continuous order booking, the Company is operating in multiple segments. The Company strategically participates in bids using its multi-segmental experiences.

Working Capital Risks: Project delays, cost overruns and consequent delays in receipt of payments from the clients lead to an increase in working capital requirement. There is a process of close monitoring and follow-up with the clients for timely approvals and payments for better working capital management.

Contract & Claims: In the competitive environment, to address the foreseeable litigations and claims, the Company maintains a robust documentation and follow up mechanism with clients, sub-contractors and vendors to address related claims and disputes. To mitigate the possible risks due to the differences and disputes with the clients, sub-contractors and vendors, the Company uses its in-house capabilities in handling contracts & claims.

Cyber Security Risks: With increasing use of IT in business areas and as systems get interconnected, cyber security becomes an important challenge for the organization in order to protect its information and systems, so as to maintain confidentiality, data integrity and to prevent loss of data. The Company has implemented a cyber-security framework to identify, detect and prevent such risks. The Company has been focusing on systematic communication of possible cyber risks and the remedial measures to be followed through awareness programs for all the employees concerned.

Talent Risks: The large volume of projects by both the Central and State Governments of India has increased the demand for key skill sets and as such, talent risks are likely to persist. Through continuous trainings, institution of rewards and recognition, the Company is able to attract and retain the talent pool.

Financial Risks: Financial risk management is governed by the Risk Management Framework and Policy approved by the Company under the guidance of the Board.

To mitigate financial risks, we maintain robust budgeting and forecasting processes, rigorous project cost tracking and diversify both our client & supplier base to reduce exposure to market volatility. Regular financial scenario planning and risk assessments also help ensure stability and informed decision-making across all operations.

Supply Chain Risks: These risks may arise due to the volatile geo-political environment and in the long-term, persistence of these challenges may result in adverse outcomes. The Company has long-term tie ups with the suppliers and strategic arrangements for uninterrupted supplies.

Climate Change: Climate change increases the impact and likelihood of some physical risks, which could lead to execution disruption and losses. Some of the major challenges are:

a. Heavy and unforeseen rains pose a significant risk to project schedules

b. Climate change poses an additional burden in terms of higher contingencies and insurance costs

c. Availability of adequate water due to changing rainfall patterns

To mitigate such risks, we conduct assessments both at the bidding stage and also during the project execution. Other proactive measures include participating in tenders for projects with green energy choices, rescheduling work-rest cycle taking into account extreme weather patterns, and enhancing site drainage and safety protocols.

SWOT Analysis

Pennars diversified vertical set, certifications and recent capacity additions give it strong defensive moats and multiple growth levers. Continued integration of systems and accelerated green-energy adoption will be pivotal to convert these structural strengths and market opportunities into sustained value, while cushioning the firm against commodity-price shocks, global competition and tighter ESG scrutiny.

The SWOT analysis below captures Pennars competitive posture as it gears up for its next growth cycle.

Strengths	Weaknesses
Brand positioning leading engineering service provider for 40+ years	Capital-intensive verticals - buildings and boilers require continuous capex (debottlenecking, new lines)
Diversified, capacity-rich portfolio - spanning PEB/structural steel, precision tubes, hydraulics, boilers and engineering services summing to more than 1000 products	High cost in replacement - replacing the experienced personnel and established expertise
Robust order visibility - with PEBS Pennars domestic backlog Rs. 750 cr	Moderate scale vs. Tier-1 global peers - limited bargaining power in bulk steel and logistics contracts
Integrated value chain & certifications like ISO 9001/14001/45001, ISO 3834-2 & EN 15085-2 welding, IATF 16949, AS 9100	Margin sensitivity to steel prices - raw material swings can have an impact; Indias steel sector faces import- price pressure and cost volatility
International presence & cross-sell potential - with customers spread across 25+ cities, thus increasing international visibility	Long supply chain
Enormous brand equity - Because of its quality, it is one of the most trusted and famous brands not only in India but also globally	Sustainability score - quite high due to heavy use of natural resources
Strengths	Weaknesses
Government Support - immense support and recognition received through various awards from the Government of India
Sustainable innovation - focus on providing sustainable innovations and commitment to sustainability
Strategic tie ups - Acquisitions and Joint Ventures help in expanding product offering

 

Opportunities	Threats
Booming Indian PEB market	Competitive intensity - severe from both local and foreign players
Export diversification - helps expand market share globally	Input-cost & FX volatility - use of resources which are limited increases the cost
Rapid economic expansion - in India and few sectors globally	Cheap steel imports / dumping
Accelerated technological innovations & advances - Rapid technical advancements are increasing industry productivity	Talent shortages in automation
Local Collaboration - Tie ups with companies could help achieve economies of scale	Governmental regulations - stricter laws for engineering industries to maintain their control over the consumption of natural resources.
Government support - seeking more government contracts would open new revenue streams