Prima Innovation Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian material handling equipment and road safety products industry has evolved into a technologically advanced and quality-driven manufacturing sector, playing a vital role in supporting industrial operations, logistics, warehousing, transportation, and infrastructure development. Companies engaged in engineering and manufacturing of material handling equipments and road safety products are increasingly focusing on innovation, precision engineering, durability, and compliance with stringent quality and safety standards to meet the evolving requirements of domestic and international markets.

The industry is witnessing strong growth, driven by rapid industrialization, expansion of warehousing and logistics infrastructure, increasing investments in highways and urban mobility projects, and die rising adoption of automation across manufacturing facilities. Government initiatives such as Make in India, PM Gati Shakti, the National Infrastructure Pipeline (NIP), and continued investments in industrial corridors and smart cities have significantly enhanced demand for engineered material handling equipments and high-performance road safety products.

Simultaneously, increasing emphasis on workplace safety, efficient material movement, and road infrastructure safety has accelerated the adoption of technologically advanced and high-quality products. Manufacturers are investing in modern production facilities, automation, product innovation, and research & development to deliver customized, reliable, and sustainable engineering solutions. With growing opportunities in both domestic and export markets, the industry is steadily strengthening its position as a key contributor to Indias industrial growth and infrastructure development while enhancing its global competitiveness.

GLOBAL ECONOMY AND OUTLOOK

The macroeconomic landscape has been substantially destabilized by the outbreak of the US-Iran conflict in early 2026. The escalation of hostilities and the resulting blockades in the Strait of Hormuz-a critical artery responsible for roughly one-fifth of global liquefied natural gas (LNG) trade and significant daily crude oil transit-have triggered one of the most severe global energy security shocks in recent history. Brent crude oil prices surged by over 55% within the first month of the conflict, reaching peak highs of $113 to $119 per barrel. However, prices began to cool and drop back down to the S70-$90 range by June and July 2026. This sudden and sharp increase in energy costs is radiating across global commodity, financial, and industrial markets, reigniting inflationary pressures and complicating central bank monetary policies. Consequently, international trade organizations have downwardly revised global GDP growth projections for the year, citing that prolonged geopolitical friction, permanently elevated risk premiums, and compounding supply chain fragmentation will likely sustain market volatility and weigh heavily on global economic expansion for the foreseeable future.

The ongoing geopolitical crisis has fundamentally disrupted the cost structure and supply chain dynamics of the material handling equipment and road safety products industry⁷. With critical metal inputs, heavy⁷ structural steel, and specialty engineering polymers facing severe logistical bottlenecks, restricted maritime flows through key global corridors have choked the supply of heavy-duty components and specialized resins. As a result, the industry has witnessed a dramatic contraction in raw material availability⁷, driving core steel and polymer input prices up significantly in the first half of 2026 alone. Beyond direct raw⁷ material inflation, operating margins face compounding pressures from surging freight rates, heightened maritime and transit insurance premiums, and extended logistics lead times. These converging headwinds are squeezing profitability⁷ across the sector, compelling manufacturers to aggressively diversify procurement channels, implement stringent cost-pass through mechanisms to downstream industrial and municipal consumers, and carry⁷ higher safety inventories to mitigate the ongoing threat of sudden supply disruptions.

Indian Economy and Outlook

Even with global tensions and shifting trade relationships, the Indian economy has shown remarkable independent strength, standing out as a primary driver of global growth. In FY26, steady government investments in logistics and heavy infrastructure, alongside a healthy push toward industrial automation, kept our economy active, protecting India from the stalled growth and high inflation seen in many advanced nations. Although the US-Iran conflict caused unpredictable global energy prices, Indias proactive shift toward diverse energy sources and responsible government spending kept our broader economy stable.

At the close of the fiscal year, Indias core infrastructure and manufacturing sectors demonstrated a strong upward trajectory, driven by extensive highway expansions, urban development mandates, and successful incentive programs. Major global and domestic institutions now view India not just as a cost-effective location, but as a premier huh for high-quality heavy engineering and safety infrastructure. While the Reserve Bank of India (RBI) effectively anchored inflation and maintained stable interest rates through the fiscal year-end-fostering a favourable climate for industrial and municipal capital expenditure- subsequent global macroeconomic shifts have introduced renewed volatility in input costs and supply chain dynamics. As we navigate this rapidly evolving post-reporting environment, Prima Innovation Limited remains highly agile. Even though there was a scarcity of raw materials in domestic as well as international markets, still we are proactively managing these past and recent hurdles while staying well-positioned to capitalize on underlying domestic demand and the structural momentum of Indias Viksit Bharat 2047 vision

Business Overview

Prima Innovation Limited is a company incorporated on June 20, 2024 under the provisions of the Companies Act, 2013 bearing corporate identification number U22207DD2024PLC010039 with the Registrar of Companies.

Prior to the Scheme of Arrangement becoming effective, our Company was a wholly owned subsidiary of Prima Plastics Limited. Pursuant to the Scheme becoming effective on March 31, 2026 the rotational moulding business of Prima Plastics Limited, having its manufacturing facility in Pithampur, Madhya Pradesh and Daman, Gujarat got demerged and vested in our Company with effect from July 01, 2024 (i.e. the Appointed Date).

Main Objects of the Company

To carry on the business in India or elsewhere as manufacturers, buyers, sellers, dealers, importers, exporters, contractors, factor, agent, suppliers and profile plastic including but not limited to plastic moulded articles, moulded industrial articles, industrial components and articles, tubing film, roles or their allied and auxiliary plastic products, injections moulding, blow moulding, rotational moulding, compressor moulding, vaccum formings, housewares, different sizes and types of materials handling crates and/or containers, plastic palettes, plastic luggage articles suit cases, light and heavy automobiles parts, component and accessories, electrical appliances for T.V. Cabinets, Computer parts and plastic furniture vacuum flasks, Water Storage Tanks, Plastic Septic Tanks.

Product Portfolio

Prima Innovation offers a diverse range of material handling equipment and road safety products designed to enhance operational efficiency, safety, and reliability across industrial, logistics, infrastructure, and commercial sectors. Our products are developed with a focus on quality, durability, and cost-effectiveness, catering to the evolving requirements of customers across various industries.

With a strong commitment to innovation and customer satisfaction, the Prima Innovation brand continues to expand its market presence through a comprehensive product portfolio and trusted solutions.

Our wide spectrum of products caters to a diverse range of needs. In order to cater to evolving customer demands, we launch new products by leveraging our experience, market knowledge and in-house product design team. As at March 31, 2026 we had 217 (two hundred and seventeen) SKUs across our four product categories: Road safety, Pallets, insulated box and water tanks.

Road Safety

As at March 31, 2026 we had 24 (twenty-four) SKUs of our road safety product, namely, Heavy Duty Barricade, Economical Barricade, 5-piece Barricade, Light Barrier / Antiglare, Light Barrier, Bullnose Barrier, Safety Cone, New Jersey Barricade, Safety Fence, Metro Barricade, Mini Barricade, Bollard and Water Fillable Barrier.

Pallets

Our Company manufactures lightweight, cost-effective and customized plastic pallets, catering to various industries such as pharmaceuticals, automotive, textiles, FMCG, logistics. The Companys product portfolio is segregated into pallet categories, namely, Two-way Pallets, Drum Pallet, 9-Leg Pallet, Euro Pallets, Reversible Pallet, Pallet Containers, Drum spill Pallet, Cylindrical Container and Pallet Load Testing. As at Macrh 31, 2026 we had 143 (one hundred and forty three) SKUs of our pallet product.

Water Tanks

As at March 31, 2026 we had 19 (nineteen) SKUs of our water tank products, namely, Double Layer Water Tank and Triple Layer Water Tanks.

Insulated Box

The Company has expanded its product range, offering boxes with capacities of upto 1400 litres, which addresses requirements in food processing, fisheries and related industries. As at March 31, 2026 we had 31 (thirty-one) SKUs of our insulated box products.

OPPORTUNITIES

1. Government initiatives promoting road safety and infrastructure projects.

2. Increasing demand for automation and efficient material handling solutions.

3. Expansion into new domestic and international markets.

4. Product innovation and adoption of advanced technologies.

5. Rising demand for customized and value-added engineering solutions.

THREATS

1. Fluctuations in raw material prices

2. Rapid technological advancements may require continuous investment in product innovation.

3. Supply chain disruptions, geopolitical issues, or delays in procurement of critical raw materials may affect production schedules.

4. Changes in government regulations and compliance requirements.

5. Rapid technological changes requiring continuous investment in R&D.

EXPORTS

Your Companys export was worth Rs. 91 -96 lakhs during the year under review against Rs. 23 08 lakhs in previous year.

Company has strived to always maintain and build its relationship with the existing and prospective importers worldwide. During the year under review, the Company started relationships with the new customers with die new products and new markets.

Expanding our international footprint forms an integral part of Prima Innovations strategic roadmap. By leveraging established global trade relationships and a reputation for uncompromising product quality, the Company is actively targeting export opportunities in neighboring developing regions and emerging markets.

RISKS AND CONCERNS

The major risks that poses concern to your Company are summarized below:

Foreign Exchange Risk:

Your Company operates internationally and portion of the business is transacted in several currencies and consequently the company is exposed to foreign exchange risk through purchases from overseas supplies and sales & services overseas in foreign currencies. The foreign exchange transactions exposure could hinder the sourcing of raw materials and it could adversely affect companys financial performance.

To mitigate die risk, the Company regularly evaluates exchange rate exposure arising from foreign currency transactions. The Company follows the risk management policies and standard operating procedures to hedge exposure to forex currency risk.

Operating Business Risk:

Apart from the risks on account of foreign exchange and commodity prices, the business of the Company is exposed to certain business operating risk which may be internal or external risk, requiring quick identification, analysis and mitigation of risk by appropriate control measures and collective actions.

Raw Material Risk:

The Company is exposed to raw material supply and pricing risks due to geopolitical tensions, global supply chain disruptions, and volatile commodity markets. Price fluctuations in key inputs can directly impact production costs and margins, The Company continuously monitors global developments, diversifies sourcing strategies, and enters into long-term supply arrangements to ensure stability and mitigate the impact of raw material cost volatility.

Risks related to legislation and regulation:

Changes in the policies of the Government of India or worldwide political instability may adversely affect economic conditions in India generally, which could impact our business and prospects.

Our international expansion plans subject us to risks inherent to doing business internationally. The Company has an effective risk management framework in place to primarily control business and operational risks.

The Companys comprehensive Business Risk Management ("BRM") framework helps it identify risks and opportunities and monitor them. The major risk areas are periodically and systematically reviewed by the Senior Management of the Company. Comprehensive policies and procedures helps to identify, mitigate and monitor risks at various levels. By taking such proactive measures, the Company ensures that strategic business objectives are achieved seamlessly. The Company has a well-documented risk management policy, which is reviewed by the management periodically.

INTERN AL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company maintains an adequate and effective internal control system commensurate with its size and complexity. We believe that these internal control systems provide among other things a reasonable assurance that transactions are executed with managements authorization and that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles and that the assets of your Company are adequately safe guarded against significant misuse or loss.

Your Company has in place, adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses were observed.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

(Note: As an entity newly established via demerger to house the rotational moulding business, financial reporting reflects initial standalone operations and asset segregation executed under the scheme of arrangement.)

Revenue from Operation:

On a standalone basis, the revenue from operations for FY 2025-26, was Rs. 5,096.93 lakhs which Increased by 22.96% compared to Rs. 4,1*5.02 lakhs for the previous year 2024-25. The standalone EBITDA is Rs. 88.74 lakhs for FY 2025-26 which is 59.84% lesser than previous year 2024-25 i.e. Rs. 220.95 lakhs.

Operating Profit:

The Company witnessed operating profit of Rs. 357.77 lakhs in comparison to Rs. 398.17 lakhs in previous year.

Finance Cost:

The finance cost for the FY 2025-26 was Rs. 160.73 lakhs which was increased by 65.99% compared to Rs. 96.83 lakhs in the previous year.

Profit:

Your Company has registered a loss before Tax of Rs. 270.02 lakhs as compared to previous year Rs. 15.13 lakhs and Net loss after Tax of Rs. 202.78 lakhs as compared to Rs. 11.32 lakhs in previous year.

HUMAN RESOURCE

At Prima Innovation Limited, our people are the cornerstone of our success and a key driver of our long-term growth and innovation. We believe that a skilled, motivated, and engaged workforce is essential to delivering operational excellence, fostering innovation, and creating sustainable value for all our stakeholders. Our commitment is to build an inclusive, collaborative, and performance-driven work environment where employees are empowered to contribute meaningfully to the Companys growth journey.

The Company continues to invest in employee development through structured learning initiatives, technical training, leadership development programmes, and continuous skill enhancement. We are committed to providing equal opportunities for professional growth and nurturing a culture that encourages innovation, accountability, teamwork, and continuous improvement. Through transparent communication, employee engagement initiatives, and a merit-based performance management system, we strive to create a workplace that attracts, develops, and retains talented professionals.

Safety, employee well-being, and ethical business conduct remain integral to our organizational values. We endeavour to provide a safe, healthy, and inclusive work environment while promoting mutual respect, diversity, and collaboration across all levels of the organization.

As of March 31, 2026 we have a workforce of 142 (one hundred and forty-two) personnel, including personnel engaged in production, sales and marketing, quality control, packing, human resource and administration. Our employees are not unionized into any labour or workers unions and have not experienced any major work stoppages due to labour disputes or cessation of work since incorporation.

CHANGES IN KEY FINANCIAL RATIOS

Pursuant to provisions of Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule V Part B(i) details of the change in key financial ratios is given hereunder:

Particulars	Category	Year Ended		Deviation (in %)
		March 31,2026	March 31,2025
Debtors Turnover	In days	109	140.20	(22)
Inventory Turnover	In days	97.06	81.06	20
Interest Coverage Ratio	Times	(0.68)	0.84	(181)
Current Ratio	Times	1.56	1.74	(11)
Debt Equity Ratio	Times	0.96	0.69	38
Operating Profit Margin	%	7.02	9.61	(27)
Net Profit Margin	%	(3.98)	(0.27)	(1357)

CHANGE IN RETURN ON NET WORTH

The return on Net worth for the financial year 2025 - 26 has decreased by 1,827.76% as compared to preceding financial year due to higher raw material prices, increased in finance cost and other expenses during the year.

DISCLOSURE OF ACCOUNTINGTREATMENT

In the preparation of financial statements, there is no difference in treatment from that of prescribed in an Accounting Standards.

CAUTIONARY STATEMENT:

In the Management Discussion and Analysis section there may be forward looking statements within the meaning of applicable laws and regulations. The forward looking statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed in this section due to external factors beyond the control of the Company. The Company assumes no responsibility to any forward looking statements on the basis of any subsequent developments.