Pitti Engineering Ltd Management Discussions

Trade policy remained a primary risk as major economies continued to recalibrate their tariff regimes. Rising protectionism threatens to disrupt global supply chains, inflate input costs, and restrict cross-border trade and investment flows. Over the longer

term, a prolonged escalation of trade restrictions could deepen geoeconomic fragmentation and drag heavily on global growth.

Amid these headwinds, economic performance followed divergent trends across regions:

] Advanced Economies: Growth remained anchored primarily by resilient services sector activity, though manufacturing and trade-oriented sectors faced weaker momentum

] Emerging Economies: These markets continued to outpace developed nations, buoyed by robust domestic demand and strong local investment activity

This protectionist shift was most visible in the metals sector, where the US raised Section 232 tariffs on imported steel and aluminium to 50%. This move triggered a sharp realignment of global trade flows: rather than contracting overall volumes, it redirected exports towards alternative international markets. This was particularly evident within the metals sector, which kept global steel prices volatile. For electrical steel users, this volatility translated into wider quarter-on-quarter swings in input costs. This development underscores the strategic value of robust price pass-through arrangements and disciplined inventory management to mitigate margin risks.

From a geographic standpoint, the forward-looking demand trajectory exhibits a clear divergence:

] MENA Region: Structural diversification programmes and extensive public infrastructure pipelines continue to provide strong visibility for heavy industrial and engineering demand

] Southeast Asia: Accelerating manufacturing shifts and regional grid-modernisation initiatives are expected to remain key drivers of volume growth

Real GDP Projections (% Annual Change)

Indian Economy Overview

India proved notably resilient in 2025-26, powered by robust domestic demand even as global trade slowed. This growth drew on higher public capital expenditure, steady urban consumption, and a marked recovery in rural demand on the back of a strong rabi harvest. Spurred by these broad-based growth drivers and a revised base-year accounting framework, Indias real GDP is estimated to have expanded by 7.6% in 2025-26, up from 7.1% in the previous fiscal, cementing its position among the worlds fastest-growing major economies.

Outlook

India remains positioned as a primary driver of emerging- market growth over the medium term, sustained by infrastructure investments, structural reforms, rapid urbanisation, and deepening manufacturing capabilities. Backed by stable macroeconomic frameworks, the domestic economy is projected to reach nearly USD 7.3 trillion by 2029-30, establishing its position as the worlds third-largest economy.

While core economic fundamentals remain strong, nearterm inflation is expected to see temporary supply-side pressure in 2026-27 due to volatile global energy markets and weather-driven food price uncertainties. However, contained core inflation signals negligible demand-side risk. Reflecting this environment, the Reserve Bank of India (RBI) has maintained the policy repo rate at 5.50% with a neutral stance, preserving critical policy flexibility to support industrial momentum as global supply pressures stabilise. Concurrently, ongoing federal regulatory reforms, measures to enhance trade competitiveness, and initiatives targeting increased labour force participation continue to strengthen private capital formation, productivity, and Indias long-term industrial output.

Industry Overview

Rotating Electrical Equipment Industry Motors

Motors convert electrical energy into mechanical energy and are essential across industrial machinery, transportation, home appliances and energy systems, enabling the operation of a wide range of rotating equipment.

Types of Motors

Motor Type

I Permanent Magnet Synchronous Motors (PMSMs)

I Induction Motors I Brushless DC Motors (BLDCs)

I Other Motor Types Key Advantage

I High efficiency and torque density I Reliable, versatile and widely used I Compact, efficient and low maintenance I Precision motion control for specialised needs

Typical Applications

I Electric vehicles, robotics, industrial automation,

HVAC compressors

I Pumps, conveyors, HVAC systems, industrial machinery, household appliances

I Electric two-wheelers, fans, air conditioners, power tools

I Industrial automation, medical equipment, consumer electronics, instrumentation

Generators

Generators convert mechanical energy into electrical energy and are widely used in conventional power plants, renewable energy installations and backup power applications to ensure a reliable electricity supply.

Alternators

Alternators generate alternating current (AC) electricity by converting mechanical energy into electrical power. They are integral to diesel generator (DG) sets, automotive systems and wind turbines, supporting continuous and efficient power generation.

Key Components

Stator: The stationary component that generates the magnetic field and supports the motor or generator windings.

Rotor: The rotating component that converts electromagnetic energy into mechanical motion and transmits torque.

Electrical Laminations: Thin electrical steel sheets that minimise energy losses and improve magnetic efficiency.

Shaft: Transfers rotational motion and mechanical torque between the rotor and the driven equipment.

Housing (Stator Frame): Provides structural support, protects internal components and aids heat dissipation.

Global Electric Motor and Generator Market Size

Market Size (USD billion)

Indian Electric Motor Market Size

Market Size (USD million)

Indian Generator Market Size

Market Size (USD billion)

Long-term Growth Drivers

Electrification

Indias electric vehicle market is projected to expand from USD 3.71 billion in CY 2025 to USD 191.04 billion by CY 2034, driven by supportive government policies, rising consumer adoption and increasing investments. As electrification gathers pace across mobility segments, demand for high-efficiency motors, electrical laminations and precision-engineered components is expected to strengthen.

Industrial Automation

Manufacturers are increasingly adopting automation and smart manufacturing technologies to improve operational efficiency. Reflecting this trend, the global smart manufacturing market reached USD 527.89 billion, creating sustained demand for advanced motors and precision-engineered components.

Energy Efficiency

The focus on reducing energy consumption and meeting stricter efficiency standards is driving the replacement of conventional motors with high-efficiency alternatives. Industrial motor systems account for nearly 70% of global industrial electricity consumption, increasing demand for low-loss electrical laminations and energy-efficient rotating electrical equipment.

Metal Casting Industry

The Indian metal casting industry is expanding on the back of demand from railways, renewable energy and off-highway equipment manufacturing. Railway electrification and metro rail expansion are driving higher offtake of cast iron and steel components: motor housings, frames and end shields, for traction motor manufacturing. In wind energy, the shift towards higher-capacity turbines is increasing demand for large-format ductile (SG) iron castings, including hubs, nacelle housings and gearbox housings. The off- highway segment - construction, mining and agricultural equipment, continues to require grey iron, ductile iron and steel castings for engine blocks, transmission housings, axle housings and chassis components. Government-led infrastructure investment and domestic manufacturing initiatives are reinforcing this demand base, positioning precision-engineered castings as a critical input across Indias transportation, energy and heavy engineering value chains.

Key Industry Driver

Infrastructure and capital expenditure: Continued investments in railways, metro rail, roads, mining and power infrastructure are driving demand for precision-engineered castings used in transportation and heavy engineering equipment.

Renewable energy and industrial manufacturing: Expansion of wind energy, power generation and industrial machinery manufacturing is increasing demand for large, high-strength castings used in turbines, generators and rotating equipment.

Make in India and localisation: Government initiatives promoting domestic manufacturing, import substitution and global supply chain diversification are strengthening Indias position as a preferred sourcing hub for high-quality engineering castings.

Machined Components Industry

Machined components are value-added engineered products manufactured from castings, forgings and rolled metal components through precision machining, heat treatment, grinding, coating and other specialised processes. They are designed for complex, safety-critical and high-precision applications across diverse industrial sectors.

Key Products

Shafts: Transmit torque and rotational motion across motors, gear systems and industrial equipment.

Pedestal Gearboxes and Gear Cases: Provide structural support and protection for gear assemblies while ensuring reliable power transmission.

Stator Frames: House and support the stator assembly, providing structural stability and efficient heat dissipation.

Cylinders and Cannon Tubes: Precision-machined structural components designed for high-strength industrial and heavy engineering applications.

Axle Boxes, Centre Pivots and Journal Boxes: Critical railway components that support wheelsets, absorb loads and ensure safe and reliable rail operations.

Flywheel Flanges and Module Endplates: High-precision components used in power transmission systems and hydrogen electrolyser applications, ensuring structural integrity and performance.

Key Industry Drivers

Increasing Localisation of Manufacturing

Government initiatives such as Make in India and the PLI Scheme are accelerating domestic manufacturing and reducing import dependence. OEMs are increasingly sourcing machine components locally to strengthen supply chains, improve quality control and achieve shorter delivery timelines.

Rising Demand for Precision-Engineered Components

Growing investments in automotive, aerospace, industrial automation and electric mobility are driving demand for high-precision machine components. Manufacturers are adopting advanced CNC machining, automation and digital manufacturing technologies to meet stringent quality and performance requirements.

Adoption of Advanced Materials and Smart Manufacturing

The use of high-performance alloys and digitally integrated manufacturing processes is gaining momentum across the industry. Investments in CAD/CAM solutions, metrology systems and process automation are enabling manufacturers to enhance productivity, improve accuracy and deliver value-added engineering components.

Sector-Specific Growth Drivers

Tractors and Pumps - Mechanising Rural India

Agricultural mechanisation, increasing rural credit availability, and government support continue to lift tractor demand, with additional pull from construction and rural infrastructure deployment. Indias tractor market, at USD 9.39 billion in CY 2025, is projected to reach USD 16.80 billion by CY 2034, registering a 6.12% CAGR during the forecast period. On the pumps side, the Jal Jeevan Mission, urban sanitation programmes, and smart irrigation are widening demand. Additionally, the shift to energy-efficient and solar-powered pumping raises the specification and lamination content of each motor sold.

Railways

The global rail transport market is projected to grow from USD 572.46 billion in 2025 to USD 607.84 billion in 2026, registering a CAGR of 6.2%, supported by investments in rail infrastructure, urban transit and freight corridors. India operates the worlds fourth-largest railway network, with 99.6% of its broad-gauge network (69,873 route km) electrified and Rs. 2.78 Lakh crores allocated to Railways in the Union Budget 2026-27.

Indias railway modernisation is driving sustained investments across rolling-stock procurement, locomotive production,

Vande Bharat trainsets, metro rail systems, Dedicated Freight Corridors and seven High-Speed Rail Corridors. With Indian Railways operating close to 25,000 trains daily, the expanding rail ecosystem continues to support demand for traction motors, electrical laminations, machined components and precision- engineered assemblies used in modern rolling stock.

Generators and Data Centres - Powering the Digital Build-Out

Rising global electricity demand, driven by rapid industrialisation and increased commercial activity, continues to support the expansion of the global generator market. Growing dependence on uninterrupted power across data centres, telecom towers, healthcare facilities and manufacturing plants is further driving demand for reliable and efficient generator sets. The global data centre market is expected to grow from USD 230.53 billion in 2025 to USD 506.09 billion by 2034, registering a CAGR of 9.13% between 2026 and 2034, driven by increasing data generation and technology adoption.

In India, operational data centre capacity is projected to reach 1.7 GW before CY 2027, while the domestic generator market is expected to expand significantly. Rising investments across data centres, healthcare and industrial infrastructure are supporting demand for high-efficiency generators, custom stators, rotors and rotating electrical equipment.

Mining

The global oil and gas market is projected to grow from USD 8.33 trillion in 2025 to USD 8.75 trillion in 2026, at a CAGR of 5.0%, supported by industrialisation, transportation fuel demand, upstream exploration and petrochemical activity. In India, the market is expected to grow from USD 23.28 billion in CY 2025 to USD 24.42 billion, at a CAGR of 5.05%, driven by continued investments in refining, city gas distribution and upstream exploration.

Renewable Energy - Electrifying the Supply Side

The global renewable energy market is undergoing a rapid transformation, driven by rising sustainability imperatives, strong policy support and continuous technological advancement. The sector is increasingly viewed as a core pillar of long-term decarbonisation and economic growth. In India, the renewable energy market is projected to reach USD 52.58 billion by CY 2034, supported by the target of 500 GW of non-fossil fuel capacity by CY 2030 and non-fossil installed capacity of around 275 GW by March CY 2026. Continued investments across solar, wind and other clean energy projects, including the national 30 GW offshore wind target, are expected to support demand for generators, motors, electrical laminations, machined assemblies and balance-of-plant equipment across the renewable energy ecosystem.

Home Appliances, Automotive and Industrial Applications

Demand across home appliances, automotive and industrial applications continues to firm, supported by rising consumer spending, increasing manufacturing activity, and sustained infrastructure investments. Widening adoption of energy-efficient appliances, expansion of the automotive industry, increasing industrial automation, and greater use of recycled materials are reshaping demand. Together, they are creating durable opportunities for precision-engineered components across varied end uses.

Company Overview

Over four decades, we have evolved from a specialised electrical lamination manufacturer into Indias largest manufacturer and exporter of electrical laminations and a vertically integrated engineering solutions provider. We offer electrical steel laminations, motor cores, die-cast rotors, machined castings, fabricated components and value-added assemblies for diverse industries, including railways, power generation, renewable energy, data centres, mining, oil & gas, industrial machinery and appliances.

Supported by six manufacturing locations across Telangana,

Maharashtra and Karnataka, we combine integrated manufacturing capabilities, advanced automation and engineering expertise to deliver value-added solutions to more than 100 marquee OEMs across 11 + countries. During the year, the integration of Pitti Industries and Dakshin Foundry further strengthened our manufacturing platform, expanded our product portfolio and enhanced our ability to serve customers through a broader range of integrated engineering solutions. 2025-26 reflected our continued strategic progress, with total income of Rs. 1,628.90 crores, ongoing investments in manufacturing capacity and a sustained shift towards higher-value engineering products and assemblies.

Financial Performance (in crores)

The Next Phase of Growth

Our investment programme now moves to the foreground. The ongoing Rs. 150 crores expansion and the planned Rs. 290 crores capex are expected to materially strengthen lamination, casting and machining capabilities. This, in turn, will support higher volumes and improved operating efficiencies. Alongside capacity, the strategic emphasis stays on mix: a steady shift from standalone laminations to integrated assemblies and complex engineered components, which brings both margin and customer retention.

Demand visibility across key end markets remains encouraging: railways, data centres, renewable energy, and domestic mining, with growing export opportunities across USA, Mexico, and other international markets. We continue to weigh geographical expansion, particularly in North India, and adjacent capabilities such as forging that would extend our integrated value chain further. A diversified portfolio, expanding customer relationships, and prudent capital allocation underpin our confidence in sustainable, profitable long-term growth.

Risk Management

We follow a robust enterprise risk management framework to identify, assess, and mitigate risks before they impact business performance. Embedded across our organisation, the framework boosts supply chain resilience, reinforces financial discipline, and ensures operational continuity. It also enables us to respond effectively to evolving market and regulatory conditions.

Human Capital

Our people are key to our performance. Our Companys success is driven by their expertise, commitment, and dedication. As of 31^st March 2026, our talent base stood at 1,982 employees.

We invest in them on two fronts: capability and culture.

Merit-based progression, continuous learning, and structured skill development build the workforce; a safe, inclusive, and engaging workplace keeps it committed. Open communication, employee participation, and regular feedback strengthen collaboration, reinforce our shared values, and cultivate a shared sense of ownership across the organisation.

Industrial relations remained cordial throughout the year. During the year, two registered trade unions were formed at the Companys Chhatrapati Sambhajinagar manufacturing facility. As on the date of this Report, neither union has been recognised for collective bargaining.

Internal Controls and Governance Architecture

We have established a comprehensive internal control framework commensurate with the scale, nature and complexity of our operations. We periodically strengthen the framework in line with evolving regulatory requirements and leading governance practices to safeguard our assets, ensure the reliability of financial reporting, support operational efficiency and promote compliance with applicable laws and our internal policies.

An integrated Management Information System (MIS) across our key business functions enables effective monitoring and timely decision-making. Internal controls are embedded across our operational processes and are regularly reviewed through independent internal audits conducted by M/s. Laxminiwas & Co., Chartered Accountants. Our Audit Committee periodically reviews the adequacy and effectiveness of the internal control framework, monitors the implementation of audit recommendations and guides continuous improvement. In addition, our statutory auditors provide assurance on the adequacy and operating effectiveness of our internal financial controls over financial reporting.

Forward-Looking Statement

This Management Discussion and Analysis contains certain forward-looking statements that reflect the Companys current views, expectations, and strategic intentions. These statements are based on projections, estimates, and assumptions are inherently subject to risks and uncertainties that are beyond our control. As such, actual results could differ materially from those anticipated. We assume no obligation to publicly revise or update these statements in light of future developments.

The risks presented herein are indicative and not exhaustive. Readers are advised to use their discretion when interpreting forward-looking elements and are encouraged to consider broader economic, geopolitical, and sectoral dynamics in their evaluation.