Permanent Magnets Ltd Management Discussions

Global Economy Overview

The global economy in FY26 remained resilient under pressure. Activity held up better than expected through most of 2025 despite higher tariff barriers and policy uncertainty, before facing a fresh test in early 2026 with the outbreak of conflict in the Middle East. The conflict has renewed energy- price volatility, lifted inflation expectations, and complicated the monetary-easing cycle that several major central banks had begun. Underlying growth remains subdued, the cumulative effect of successive shocks continues to weigh on potential output, and downside risks have risen.

The International Monetary Funds April 2026 World Economic Outlook projects global growth at 3.1% in 2026, easing to 3.2% in 2027, a downgrade from the January 2026 update that largely reflects the Middle East disruption. The World Banks January 2026 Global Economic Prospects offers a similarly cautious assessment, forecasting 2.6% growth in 2026 and 2.7% in 2027, and notes that, on the current trajectory, the 2020s are on track to be the weakest

decade for global growth since the 1960s. The OECD has made a similar assessment, with global activity continuing to track well below pre-pandemic trends.

The slowdown is broad-based but uneven. The United States is projected to grow between 1.6% and 2.2% in 2026, supported by fiscal incentives but constrained by the impact of tariffs on investment and consumption. China is expected to expand by 4.4% to 4.7%, aided by modest policy easing and a partial recalibration of US tariff rates. The eurozone is forecast at around 1.1%, a marginal improvement on 2025 but still weak. Among emerging markets, India remains the fastest-growing major economy, outperforming peers at a time when much of the world is decelerating.

The drivers of the subdued outlook are inter-related. Trade-policy uncertainty, though less acute than in mid-2025 after partial de-escalation between major economies, continues to depress investment intentions. The Middle East conflict has lifted oil prices and pushed the IMFs 2026 global headline

India enters FY27 with domestic resilience set against external turbulence. FY26 delivered real GDP growth of 7.6%, the strongest in recent years.

inflation forecast to 4.4%, an upward revision that narrows the room for monetary easing. Of particular relevance to industrial supply chains, Chinas rare- earth export controls announced in April 2025 and extended in October 2025 created a supply shock in critical materials. This prompted global manufacturers in automotive, wind energy and electronics to pursue alternative sourcing, accelerate adoption of alternate technologies.

Emerging-market and developing economies face a more constrained environment. The World Bank notes that per-capita income growth in developing economies has slowed to around 3% in 2026, roughly a percentage point below the prepandemic average, widening the convergence gap with advanced economies. Public debt is elevated, policy buffers have eroded, and the fiscal space to respond to fresh shocks has narrowed across much of the developing world, complicating the agenda of inclusive growth and poverty reduction.

Looking ahead, the global outlook is one of cautious stabilisation with elevated downside risk. A prolonged Middle East conflict, deeper geopolitical fragmentation, disappointment over Al-led productivity gains, or renewed trade frictions could each derail the projected recovery.

Source: IMF, World Bank, OECD

Indian Economy Overview

India enters FY27 with domestic resilience set against external turbulence. FY26 delivered real GDP growth of 7.6%, the strongest in recent years, which had supported a forecast of 7.0% to 7.4% for FY27 before the outbreak of the West Asia war at the end of February 2026 changed the macroeconomic outlook. India remains among the better-performing economies in an uncertain global setting. The IMFs April 2026 World Economic Outlook raised Indias growth forecast for FY27 to 6.5%, an upward revision of 0.1% point over its January 2026 estimate, supported by carry-over momentum from FY26, a reduction in United States tariffs on Indian goods from 50% to 10%, and resilient domestic demand. Indias policy buffers, sound financial system, and sustained public investment provide some insulation against the shock.

High-frequency indicators point to continued resilience, with some signs of stress in March 2026. E-way bill generation reached an all-time high of 140.6 million in March 2026, though year-on-year

growth has moderated from its November 2025 peak. The Manufacturing PMI eased to 53.9 in March 2026 from 56.9 in February, and the Services PMI moderated to 57.5, with both remaining in expansion. The Index of Eight Core Industries declined by 0.4% in March 2026, taking full-year FY26 growth to 2.6%, against 4.5% a year earlier, as the West Asia crisis weighed on energy and input supply chains.

Inflation remained moderate at the consumer level, with retail inflation at 3.4% in March 2026 and core inflation stable at around 3.7%, aided by measures to shield households from higher fuel prices. The wholesale price index, however, rose from 2.1% in February to 3.9% in March, signalling cost-push pressures that could transmit to consumer prices if supply disruptions persist. The Reserve Bank of India maintained a cautious stance, keeping the repo rate unchanged at 5.25% while monitoring second- round effects. System liquidity remained in surplus, and bank credit grew by 17.1% year-on-year as of 31 March 2026 on a broad-based footing, with financial stability indicators remaining strong.

Indias external sector remained resilient through FY26. Total exports of goods and services rose 4.2% year-on-year to a record $860.1 billion, services exports crossed $400 billion for the first time to reach $418.3 billion, and non-petroleum exports reached a high of $387.8 billion. The effects of the West Asia crisis were visible in March 2026, when total exports and imports declined by 4.6% and 5.7% respectively.

The outlook is shaped by both opportunity and risk. The conflict represents a supply shock, with higher energy, fertiliser, and industrial input prices likely to raise inflation and pressure fiscal and external balances, while a below-normal Southwest monsoon, linked to possible El Nino conditions, poses a further risk to food prices. To ease these pressures, the Government has increased gas allocation to fertiliser production, waived customs duty, and raised the nutrient-based subsidy for the Kharif season. The Second Advance Estimates for FY26 project record foodgrain output. With strong domestic fundamentals and a tradition of strategic autonomy, India is well placed to benefit from a multipolar global order, while policy is expected to safeguard medium-term fiscal and external stability.

Source: Economic Review, April 2026, Department of Economic Affairs; Economic Survey of India 2025-26

Global EV Trends

The global electric vehicle (EV) market continued to move from early-stage adoption towards mainstream penetration. According to the IEA, electric car sales reached ~21 million units globally, rising over 20% year-on-year, with one in four new cars sold worldwide being electric. This follows approximately ~17 million electric car sales in 2024, with the cumulative global stock now exceeding ~70 million vehicles by the close of 2025. Electric mobility extends well beyond passenger cars. Two- and three-wheelers account for the largest electrified share of road transport globally, with China, India, and Southeast Asia driving the bulk of adoption in these segments.

The IEA projects that EVs will account for more than 40% of global car sales by 2030, up from 25% in 2025. As the EV fleet grows, ICE vehicles will face continued displacement, with passenger cars and light-duty vehicles leading this shift, while electric commercial vehicles are set to play a growing role in the years ahead. The near-term outlook carries some uncertainty, particularly from the policy reversal in the United States and ongoing international trade tensions, but the overall direction of the global automotive industry towards electrification remains intact.

Chinas EV market created a milestone in 2025, with electric cars accounting for more than half of all new car sales in the country for the first time. Strong domestic competition, a broad range of models across price points, and continued policy support drove this outcome. BYD has overtaken Tesla to become the worlds largest seller of electric vehicles. In Europe, the Unions electric car sales grew 30%, led in absolute volumes by Germany, Spain, and Italy, with Poland recording the sharpest percentage

increase at 140%; the United Kingdom grew over 25%, and Norway saw battery electric vehicles reach a record 96% share of new car sales. In the United States, electric car sales declined 2% following the elimination of federal tax credits after September 2025 and the removal of financial penalties for non- compliance with fuel economy standards. Outside China, electric car sales in emerging and developing economies grew approximately 80% in 2025. India recorded a new annual high of ~2.3 million total EV units, with electric car sales growing over 75% year- on-year. Southeast Asian markets more than doubled their volumes, with Indonesia growing 125%, while Latin American and Caribbean markets grew -70%, reaching close to 350,000 units.

The oil demand implications of growing EV adoption continue to build. The IEA projects that EVs will displace more than 5 million barrels per day of oil

consumption by 2030 under current policy settings. Norways 96% battery electric share of new car sales in 2025 shows how the energy profile of road transport can shift in markets with long-standing adoption. Lithium iron phosphate (LFP) battery chemistry has become the dominant technology in the global EV market, lowering costs and extending cycle life, which is enabling more affordable models and broadening the consumer base in price-sensitive markets. Expansion of public charging networks and policy support across most major markets continue to support adoption, even as the regulatory environment in the United States and certain trade dynamics introduce near-term uncertainty in some regions.

Source: IEA and Recharged EV Market Trends 2026

Global Smart Meters

Advanced metering infrastructure has become a key component of the modern electricity grid.

Smart meters capture real-time data on electricity consumption, including voltage, current, and power factor, enabling utilities to manage networks with greater precision and giving consumers visibility into their own usage. The global smart meters market was valued at USD 35.13 billion in 2025 and is projected to grow from USD 39.58 billion in 2026 to USD 105.43 billion by 2034, at a CAGR of over -13%. The global smart electricity meters segment is separately expected to expand from USD 29.51 billion in 2026 to USD 48.04 billion by 2034, growing at a CAGR of -6%. Asia Pacific accounted for -58% of global smart electricity meter volumes in 2025, driven by large- scale rollouts across China, India, and Southeast Asia.

Smart meter penetration across developed markets is at advanced levels. The United States has converted -94% of its electricity meters to smart meters; Canada stands at -96% and the European Union at -63%, while Australia has achieved around 57% adoption. India, by contrast, has installed -26% of its 250-million-unit national target under RDSS, representing one of the largest near-term deployment opportunities in the world. Government mandates and national rollout programmes remain the main driver of adoption across markets at earlier stages of the transition, and the pipeline of planned installations across Asia, Latin America, and Africa points to sustained industry growth through the decade.

The operational and financial case for smart metering continues to strengthen. By providing electricity distribution companies with continuous data on network conditions, smart meters enable more precise load forecasting, faster fault identification, and more effective detection of electricity losses and theft. For consumers, the transition brings accurate billing, faster restoration after outages, and the ability to monitor and respond to their own consumption in real time. For utilities, the financial benefits include lower field operation costs, reduced reliance on manual meter reading, and an improvement in billing and collection efficiency, with the potential to recover revenue currently lost to commercial losses.

As renewable energy penetration grows and electric vehicles add demand variability to distribution networks, smart meters are taking on a broader role in grid management. They provide the data infrastructure for integrating rooftop solar, battery storage, and residential EV charging into the network, enabling utilities to implement time-of-use tariffs and manage peak loads more effectively. Looking ahead, the industrys expansion will be shaped by two dynamics: the replacement of legacy metering infrastructure with advanced AMI systems in mature markets, and large-scale greenfield deployments in emerging ones. North America and Europe continue to invest in next-generation platforms, while India, Southeast Asia, Latin America, and the Middle East and Africa are expected to account for a growing share of global installations over the forecast period. Countries including Brazil, Mexico, South Africa, and those in the GCC are expected to see strong growth in the coming years.

Source: Straits Research, Fortune Business Insights, Brightly, Electronics Media, Energy Networks, RDSS

India Smart Electricity Meters

Indias smart metering programme, anchored in the Government of Indias Revamped Distribution Sector Scheme (RDSS), is the largest smart meter rollout in the world. Launched in July 2021 with a total outlay of ?3,03,758 crore, including ?97,631 crore in central government budgetary support, the RDSS is a reform-based programme aimed at improving the operational efficiency and financial sustainability of Indias power distribution companies (DISCOMs). The schemes key targets are the reduction of Aggregate Technical and Commercial (AT&C) losses to 12-15% and the elimination of the gap between Average Cost of Supply (ACS) and Average Revenue Realised (ARR). AT&C losses, which capture electricity stolen, lost in transmission, and not collected, have declined from 21.91% in FY21 to 15.04% in FY25, reflecting progress under the schemes reform framework.

The programme covers smart metering works sanctioned for 45 distribution utilities across 28 states and Union Territories, targeting 19.79 crore consumers, 52.53 lakh distribution transformers, and 2.05 iakh feeders. Rollout is executed by Advanced Metering Infrastructure Service Providers (AMISPs) selected through a standard bidding process mandated by the Ministry of Power. AMISPs take on end-to-end responsibility for supply, installation, operation, and maintenance under the TOTEX (total expenditure) model, with costs covered through debt and equity financing under long-term concession contracts of ten years. This structure enables real-time energy accounting, provides DISCOMs with granular consumption data for loss identification, demand forecasting, and renewable energy management, and ensures a single point of accountability for metering performance across each project geography.

Central funding under the RDSS is linked to demonstrated performance at the utility level. Release of funds is conditional on accountability parameters, including timely filing of tariff petitions, publication of audited financial statements, and clearance of state subsidy and departmental dues. Complementary policy measures support DISCOM financial viability through rules for timely subsidy disbursal, mechanisms for passing through fuel and power purchase costs, and performance-based borrowing limits for states. Data security is embedded in the programmes standards, with cyber security provisions incorporated into the Standard Bidding Document covering communication infrastructure, cloud security requirements, cyber incident management, and compliance with the Digital Personal Data Protection (DPDP) Act.

Deployment has accelerated over the course of FY26. As of 30th April 2026, the Ministry of Power reports that 224 million smart meters have been sanctioned under the RDSS, with contracts formally awarded for 151 million units and 65 million meters physically installed, compared to approximately 28 million in place as of May 2025. The scheme has been extended to FY2027-28, with completion of the full

250-million-meter target now expected by March 2028. The estimated cumulative investment required to complete Indias smart meter programme stands at approximately USD 30 billion. Among states, Maharashtra leads with 11.2 million meters installed, followed by Uttar Pradesh at 10.0 million, Bihar at 8.9 million, Assam at 5.7 million, and Madhya Pradesh at 4.0 million.

The financial and operational benefits of smart metering are growing. For DISCOMs, prepaid smart meters drive advanced revenue collection, improve collection efficiency, reduce outstanding receivables, and lower working capital requirements by reducing the float between supply and payment. The Ministry of Power estimates that full deployment could reduce annual revenue leakage by approximately ?10,000 crore through reduced power theft and improved billing accuracy. For consumers, smart meters provide near real-time consumption visibility through mobile applications, enabling usage monitoring, budgeting, and alerts for low balance. Distribution utilities are also implementing consumer awareness programmes, including pamphlets, community outreach, and mobile app support, to build familiarity with prepaid metering. Taken together, the RDSS is building the operational and data infrastructure that Indias power distribution sector needs to manage an increasingly complex grid as renewable energy penetration and electric vehicle adoption grow.

1 State	1 Total Sanctioned 1	Awardedl	Total Installed
Maharashtra	2,35,64,747	2,48,33,656	1,12,93,270
Uttar Pradesh	3,09,78,280	3,09,78,280	1,00,36,630
Bihar	1,72,08,939	1,72,08,600	89,97,596
Assam	67,35,074	68,30,374	55,74,044
Rajasthan	1,49,00,527	1,49,15,307	44,26,852
Gujarat	1,65,10,860	1,64,97,860	44,23,846
Madhya Pradesh	1,34,44,401	62,64,783	40,82,681
Chhattisgarh	59,62,115	70,70,288	38,52,073
Andhra Pradesh	56,10,846	56,73,063	28,66,154
Punjab	1,12,32,507	28,99,700	22,92,965
Jammu and Kashmir	21,34,095	20,72,763	14,02,210
Jharkhand	18,64,065	18,64,065	12,36,747
Himachal Pradesh	29,52,685	30,27,927	10,33,114
Haryana	10,00,000	10,00,000	8,47,467
West Bengal	2,12,08,759	37,24,273	6,04,945
N=LEFT>Uttarakhand	15,87,870	15,87,870	5,50,243
Delhi	2,60,000	2,60,000	2,60,000
Tripura	4,47,489	4,47,489	2,46,419
Kerala	1,32,90,166	1,97,359	1,74,312
Tamil Nadu	3,01,40,849	1,40,849	1,29,641
Sikkim	1,44,680	1,44,680	89,000
Andaman and Nicobar	1,58,773	75,200	75,200
Arunachal Pradesh	2,87,446	2,87,446	71,427
Ladakh	58,930	58,930	55,580
Puducherry	4,03,767	4,03,767	52,035
Manipur	1,54,400	1,54,400	50,079
Nagaland	3,17,210	3,17,210	45,970
Mizoram	2,90,039	2,90,039	45,299
Chandigarh	29,433	29,433	24,214
Telangana	8,882	8,882	8,882
Goa	7,41,160	7,41,160	8,712
Odisha	4,500	4,500	4,500
Meghalaya	4,60,000	4,60,000	0
Grand Total	22,40,93,494	15,04,70,153	6,48,62,107

Smart Meter Installation

(Units in Mn)

Neodymium & Rare Earth Magnets

Rare earth permanent magnets, particularly neodymium-iron-boron (NdFeB) magnets, have become a critical component of the global electrification and energy transition ecosystem. NdFeB magnets are among the strongest commercially available permanent magnets and are widely used across electric vehicles, wind turbines, industrial automation systems, robotics, consumer electronics, and energy-efficient motors. Their high magnetic strength and compact size make them essential in applications where efficiency, miniaturisation, and power density are critical. Global demand for NdFeB magnets was estimated at approximately 119,000 tonnes in 2020 and is projected to rise to nearly 387,000 tonnes by 2030, driven primarily by accelerating adoption of electric mobility and renewable energy infrastructure.

The automotive industry remains one of the largest demand drivers for NdFeB magnets. Modern vehicles incorporate a number of electric motors across systems such as electric power steering, pumps, sensors, infotainment systems, and safety applications. Electric and hybrid vehicles require higher magnet intensity than internal combustion engine vehicles, particularly in traction motors where high-performance permanent magnets improve energy efficiency and torque density. At the same time, the expansion in onshore and offshore wind installations globally is creating another demand driver, as direct-drive wind turbines require substantial quantities of NdFeB magnets. Industrial automation, robotics, white goods, and advanced electronics are also contributing to the expanding market for rare earth magnetic materials.

Alongside rising demand, the global rare earth magnet supply chain has become a strategic focus. China continues to dominate the rare earth ecosystem across mining, oxide separation, metal refining, alloy production, and finished magnet manufacturing. According to the U.S. Department of Energy, China accounted for -92% of global NdFeB magnet production capacity in recent years. Export controls introduced by China during 2025, covering several

medium and heavy rare earth elements including dysprosium and terbium, accelerated global efforts to diversify supply chains and reduce dependence on a single geography. In response, manufacturers globally are increasingly adopting technologies that reduce or eliminate the use of heavy rare earths through grain boundary diffusion and material optimisation techniques. This is driving a broader industry transition towards light rare earth magnet chemistries based primarily on neodymium and praseodymium.

India has the potential to become an alternative manufacturing and supply-chain destination within the global rare earth ecosystem. According to the Department of Atomic Energy and Atomic Minerals Directorate, India possesses substantial monazite resources containing light rare earth elements such as neodymium and praseodymium. As global OEMs seek alternate supply-chain partners outside China, opportunities are emerging for Indian manufacturers with capabilities across alloys, magnet processing, machining, and integrated magnetic assemblies.

Source: IEA, U.S. Department of Commerce, U.S. Department of Energy, Neo Performance Materials, OPvF America, Atomic Minerals Directorate (AMD), Department of Atomic Energy (DAE), UBS Electric Vehicle Teardown Analysis

Company Overview

Established in 1960, Permanent Magnets Limited (PML) brings over six decades of experience in magnets, magnetic assemblies and shunt technologies. The Company is a provider of electrical components and assemblies, with core technological capabilities that serve a range of industries, including automotive, energy metering, renewable energy, aerospace and defence, and food and beverage.

PML has built specialized capability across 5 principal product categories: magnetic sensing, current sensing, magnetic assemblies, special alloys, and multislide ZAMAK die-casting. Across these areas, the Company delivers customer-specific solutions tailored to the needs of each industry it serves.

The Companys expertise spans metallurgy, mechanical and electrical engineering, and electronics, allowing PMLto offer integrated solutions to its clients. Decades in the industry have given PML a close understanding of the stringent quality standards and customer expectations in its markets.

PMLs capabilities extend to the design and simulation of components and modules, including rapid prototyping for client-specific applications.

The Company works with a range of metals and metallurgical processes and uses manufacturing technologies that include assembly and finishing, hot chamber die-casting, and precision plastic moulding. PML operates 6 manufacturing facilities and is supported by a team of 800+ members, including 79 engineers.

Working closely with a global clientele, many of whom are leaders in their sectors, PML is often one of only two or three suppliers for specialized products and the exclusive supplier for several key customers. PML is a preferred partner for -50% of the worlds tier-1 automotive manufacturers, supplying components for both conventional internal combustion engine (ICE) vehicles and electric

vehicles (EVs). It is also a trusted supplier to the top 3 electricity meter manufacturers globally and leading domestic meter manufacturers, holding a leading position and long-term relationships in this segment.

FY26 Standalone Performance Discussion

On a standalone basis, PMLs Revenue from Operations for FY26 grew 13% to ?225.46 Crores from ?199.54 Crores in the previous year, with total income up 14% to ?231.65 Crores. EBITDA (excluding other income) expanded 43% to ?39.01 Crores, and the EBITDA margin improved to 17% from 14%, aided by a favourable product mix and the scale-up of the Alloys division. Profit Before Tax and Exceptional Items grew 45% to ?29.45 Crores, and after an exceptional charge of ?1.74 Crores (on account of Provisions for New Labour Code Implementation), Profit Before Tax stood at ?27.70 Crores. Net Profit (including other comprehensive income) rose 36% to ?20.69 Crores from ?15.16 Crores, translating into Earnings Per Share of ?24.06 against ?17.63 in the prior year. The year carried higher finance costs, up 44% to ?3.12 Crores, and higher Depreciation and Amortisation, up 35% to ?12.63 Crores, reflecting ongoing capital investments.

FY26 Consolidated Performance Discussion

On a consolidated basis, PMLs Total Income for FY26 grew 11% to ?232.30 Crores from ?209.21 Crores, with Revenue from Operations up 10% to ?226.24 Crores. EBITDA (excluding other income) rose 21% to ?36.70 Crores, and the EBITDA margin expanded to 16% from 15%. Profit Before Tax grew 16% to ?24.14 Crores, and after an exceptional charge of ?1.75 Crores (on account of Provisions for New Labour Code Implementation), Profit Before Tax stood at ?22.39 Crores. Net Profit (including other comprehensive income) was ?15.07 Crores against ?15.74 Crores in the previous year, a decline of 4%, reflecting higher depreciation and amortisation, up 27% to ?14.52 Crores, and higher finance costs, up 71% to ?4.10 Crores, from ongoing capital investments across the Companys growth platforms. Earnings Per Share were ?17.52 against ?18.30 in the prior year.

Financial Ratios

Ratios 1	FY26 1	FY25 1	% Change	1 Remarks
Current ratio (in times)	3.70	4.40	(15.87%)	NA
Debt-equity ratio (in times)	0.23	0.14	64.28%	Due to increase in borrowings in FY 25-26, Ratio increased
Debt service coverage ratio (in times)	3.45	3.66	(5.82%)	NA
Return on equity ratio (in %)	13.31%	10.89%	22.20%	NA
Inventory turnover ratio (in days)	87.72	98.76	(11.18%)	NA
Trade receivables turnover ratio (in days)	76.03	72.19	5.33%	NA
Trade payables turnover (in days)	55.96	60.46	(7.44%)	NA
Net capital turnover ratio (in days)	169.91	190.97	(11.03%)	NA
Net profit ratio (in %)	9.18%	7.60%	20.82%	NA
Return on capital employed (in %)	11.20%	13.81%	(18.93%)	NA
Return on Investment	NA	NA	NA	NA

Outlook

PML enters FY27 with improved operational momentum and progress across its strategic growth projects. The Company expects the Alloys, Relay and Ouantum Magnetics businesses to be the key drivers of future growth.

The Alloys division commenced operations of its new furnace during C4FY26 and entered FY27 with better order visibility and growing enquiries from oil b gas, aerospace and industrial customers. The AS 9100D:2016 certification strengthens the Companys ability to address opportunities in aerospace applications.

The Relay manufacturing facility is progressing through testing and customer qualification, with commercial production expected to commence in H2FY27. The facility has been designed with scalable capacity to support future growth in the smart metering sector.

Ouantum Magnetics is advancing Phase 2 implementation, covering block cutting, machining and surface treatment capabilities. The Company expects commercialisation of rare earth magnet solutions to begin progressively as localisation efforts strengthen and supply-chain dependencies reduce.

Indias expanding smart metering programme, rising electrification, renewable energy adoption and the global focus on supply-chain diversification continue to create long-term opportunities for the Company. For FY27, PML plans to continue investing in capacity expansion and to pursue incremental growth opportunities. The Company remains focused on strengthening customer relationships, improving operational efficiency and enhancing value-added product offerings, while maintaining a disciplined approach to capital allocation and execution.

Risk and Concerns

Product Life Cycle Risk

PML operates across industries characterised by evolving technologies and changing product requirements. Shifts towards digital and solid- state solutions, particularly in smart metering, may impact demand for certain products. The Company mitigates this risk through continuous product development, including Latching Relays and advanced shunt assemblies, to maintain portfolio relevance and competitiveness.

Macroeconomic and Geopolitical Risk

Global economic uncertainty, geopolitical tensions, tariff actions, and supply-chain disruptions may impact export demand, raw material availability, operating costs, and borrowing conditions. US tariff-related disruptions affected exports during H1FY26. The Company mitigates such risks through customer diversification, geographic spread, and prudent operational and financial management.

Supply Chain and Critical Raw Material Risk

Chinas rare-earth magnet export restrictions impacted Quantum Magnetics during FY26 and disrupted raw material availability. The Company is pursuing localisation initiatives to strengthen supply-chain resilience. PML also remains exposed to fluctuations in prices of copper, specialty alloys, ZAMAK, and other key inputs linked to global commodity cycles.

?Project Execution and Ramp-Up Risk

PML has undertaken multiple growth projects across the Alloys, Relay, and Quantum Magnetics businesses, which involve execution-related risks including delays in commissioning, approvals, and commercial ramp-up. Any delay in project implementation or customer acceptance may impact anticipated revenues and profitability. The Company continues to monitor execution closely k through phased investments and project oversight.

Technological Risk

Rapid advancements in electrification, industrial automation, and smart infrastructure may alter customer requirements and increase the risk of technological obsolescence. The Company continues to invest in engineering capabilities, process development, and technology partnerships to align its products and manufacturing capabilities with evolving industry trends and customer expectations.

Competitive Risk

Increasing competition from domestic and global players may impact pricing, margins, and market share across product categories. Competition within the NdFeB rare-earth magnet segment is also expected to intensify.

PML continues to strengthen its competitive positioning through quality certifications, customer relationships, engineering expertise, and value-added solution offerings.

Foreign Exchange Risk

PMLs export and import operations expose the Company to fluctuations in foreign exchange rates. In addition, the External Commercial Borrowing undertaken by Quantum Magnetics increases currency-related financial exposure. Significant movements in INR/USD and INR/EUR exchange rates could impact operating margins, profitability, and debt servicing obligations.

Policy and Regulatory Risk

The Company operates across multiple regulated industries and geographies requiring compliance with various product, quality, and environmental standards. Changes in government regulations, trade policies, or industry norms could impact business performance. At the same time, supportive initiatives such as RDSS and PLI schemes continue to provide growth opportunities.

Internal Controls and Systems

The Company has established adequate internal control systems and procedures commensurate with the nature and scale of its operations. These controls are designed to ensure efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. The internal control framework covers operational, financial, compliance, and risk-management processes across the organisation. Internal audits and statutory audits are conducted periodically to review the adequacy and effectiveness of these systems.

The Audit Committee regularly reviews internal audit findings, control systems, financial reporting processes, and compliance matters, and ensures timely implementation of corrective actions wherever necessary. The Finance and Accounts function comprises qualified and experienced professionals who actively monitor budgets, financial controls, and reporting systems. During FY26, the Company reviewed and tested its internal financial controls and observed no material weakness in their operating effectiveness.

Industrial Relations and Human Resource Management

PML believes that its employees are central to its long-term growth. The Company remains committed to building a performance-driven, collaborative, and

learning-oriented work environment that supports employee development and organisational growth. The Human Resources function remained actively engaged in supporting workforce productivity, capability building, and organisational effectiveness. Industrial relations across all manufacturing facilities remained cordial and harmonious throughout the year. The Companys permanent employee strength stood at 166 as of March 31, 2026.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations, estimates, or projections may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied. Important factors that may affect the Companys operations include changes in economic conditions, raw material prices, customer demand, government regulations, foreign exchange fluctuations, interest rates, energy costs, competitive intensity, technological developments, project execution timelines, and other unforeseen events. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.