Prime Industries Ltd Management Discussions

COMPANY OVERVIEW

Prime Industries Limited is a listed company headquartered in Ludhiana, Punjab. During FY 2025-26, the Company continued its standalone activities and simultaneously enlarged its business profile through the strategic investment in Linga Agri Trading & Machinery Private Limited.

The Company acquired 50.001 of the equity share capital of Linga Agri Trading & Machinery Private Limited. The subsidiary is engaged in manufacturing and supplying farm and agricultural machinery, implements, mechanical and scientific equipment and related products. The Companys FY 2024-25 annual report also described the subsidiarys activities in waste management, food-processing machinery, agricultural equipment and related engineering activities.

1. ECONOMIC AND INDUSTRY ENVIRONMENT

The financial year 2025-26 was a year of significant change in the operating profile of Prime Industries Limited. During the year, the Group expanded its consolidated business base through the acquisition of a controlling interest in Linga Agri Trading & Machinery Private Limited. The transaction resulted in Linga Agri becoming a subsidiary of the Company and broadened the Groups exposure to agricultural machinery, food-processing machinery and waste-management solutions.

The operating environment for agricultural and industrial machinery continues to be influenced by agricultural investment, mechanisation, demand for productivity-enhancing equipment, food processing and the increasing requirement for organised waste-management solutions. These areas provide potential avenues for business development, while also exposing the Group to competition, project-execution requirements, working-capital cycles and changes in input costs.

2. BUSINESS DEVELOPMENTS DURING FY 2025-26

The acquisition of the controlling interest in Linga Agri is the principal structural development reflected in the consolidated financial statements for FY 2025-26. As a result, the consolidated financial statements include the financial performance and assets and liabilities of the subsidiary.

The transaction has materially increased the scale of the Groups consolidated operations. Managements focus going forward will include effective integration, working-capital discipline, execution of business opportunities and strengthening of operational controls across the expanded Group.

3. FINANCIAL PERFORMANCE

The following table summarises the key financial performance indicators for FY 2025-26 and FY 2024-25.

- Consolidated profit after tax before adjustment for minority interest was Rs160.07 million. Profit attributable to owners of the Company was Rs84.12 million and Rs75.95 million was attributable to non-controlling interests.

4.1 Standalone Performance

Standalone total income increased to Rs108.37 million in FY 2025-26 from Rs34.10 million in FY 2024-25. Revenue from operations for FY 2025-26 was Rs79.53 million, while other income was Rs28.84 million. Profit before tax was Rs17.26 million and profit after tax was Rs12.86 million.

The standalone balance sheet reflected total assets of Rs784.82 million as at 31 March 2026 compared with Rs584.70 million as at 31 March 2025. Current assets increased to Rs732.18 million, primarily reflecting higher cash and cash equivalents and loans and advances.

4.2 Consolidated Performance

Consolidated revenue from operations was Rs905.91 million and consolidated total income was Rs930.38 million during FY 2025-26. Consolidated profit before tax stood at Rs164.27 million and profit after tax before adjustment for minority interest was Rs160.07 million.

The substantial increase in consolidated scale compared with the previous year is principally attributable to the inclusion of the newly acquired subsidiary. Consolidated total assets increased to Rs1,710.65 million as at 31 March 2026 from Rs584.70 million as at 31 March 2025.

5. BALANCE SHEET AND FINANCIAL POSITION

5.1 Liquidity

The standalone current ratio was approximately 1.87 times as at 31 March 2026, while the consolidated current ratio was approximately 1.57 times. The Group maintained cash and cash equivalents of Rs406.36 million on a consolidated basis at year-end.

The consolidated cash-flow statement records net cash used in operating activities of Rs667.08 million. The movement was significantly influenced by increases in inventories, trade receivables and other financial assets. Managements continued focus on collection, inventory management and operating working capital will therefore remain important.

5.2 Cash Flow

5.3 Key Financial Ratios

- Consolidated margin and ROE use profit attributable to owners of the Company of Rs84.12 million. Consolidated profit after tax before minority interest was Rs160.07 million. Ratios are indicative and should be read with the consolidated capital structure and acquisition effects.

6. OPERATIONAL PERFORMANCE

The Groups operating profile during FY 2025-26 was substantially broader than in the preceding year because of the consolidation of Linga Agri Trading & Machinery Private Limited. The subsidiarys activities cover agricultural and farm machinery, food-processing machinery and waste-management-related solutions.

The Groups consolidated revenue of Rs905.91 million indicates a material increase in the scale of operations. At the same time, the balance sheet demonstrates the working-capital intensity associated with the expanded business, with consolidated trade receivables of Rs370.18 million and inventories of Rs198.49 million at year-end.

7. STRENGTHS, WEAKNESS OPPORTUNITIES AND THREATS

A. Strengths

Diversified Business Portfolio: The Company has expanded its business presence across multiple segments, reducing dependence on a single business activity.

Strategic Subsidiary Acquisition: The acquisition of a controlling stake in Linga Agri Trading & Machinery Private Limited has strengthened the Companys consolidated business platform.

Agricultural and Industrial Machinery Exposure: The Group has exposure to agricultural machinery, food-processing machinery and related industrial equipment, providing opportunities across multiple customer segments.

Waste-Management Solutions: The Groups activities in waste management, including composting, material recovery and related solutions, provide exposure to an emerging and increasingly important sector.

Strengthened Asset Base: The expansion of the consolidated business has resulted in a larger asset base and broader operational capabilities.

Potential for Business Synergies: The Companys diversified operations provide opportunities to leverage common resources, customer relationships and business capabilities across its various activities.

B. Weakness

Working Capital Requirements: Expansion of operations and increased business scale may require higher working capital, particularly for inventories, receivables and project execution.

Dependence on Subsidiary Performance: The Companys consolidated financial performance is increasingly influenced by the performance and operational execution of its subsidiary.

Integration Requirements: The expansion of the Groups business portfolio requires effective integration of systems, processes, financial controls and management practices.

Cash Flow Management: The business may experience fluctuations in operating cash flows due to changes in working capital requirements and the timing of customer collections.

Competitive Business Environment: The machinery and waste-management sectors are competitive and require continuous focus on product quality, pricing, technology and customer service.

Need for Continuous Operational Strengthening: As the business expands, continued strengthening of internal processes, controls, reporting systems and operational monitoring remains important.

C. Opportunities

Agricultural Mechanisation: Increasing mechanisation of agricultural activities can create opportunities for agricultural machinery and equipment businesses.

Food-Processing Sector: Growth in food processing and allied industries may create demand for specialised machinery and processing equipment.

Waste-Management Market: Increasing focus on sustainable waste management, recycling, composting and resource recovery presents potential opportunities for the Group.

Government and Institutional Projects: Government initiatives and institutional programmes relating to agriculture, infrastructure, sanitation and waste management may create new business opportunities.

Expansion of Customer Base: The Company can explore opportunities to expand its geographical presence and customer base across different markets and industry segments.

Cross-Business Synergies: The diversified business structure may provide opportunities to develop synergies between the Companys existing operations and the businesses of its subsidiary.

D. Threats

Intense Competition: Competition from established players and new entrants may exert pressure on margins, pricing and market share.

Input Cost Fluctuations: Changes in the prices of raw materials, components, energy and other inputs may affect operating costs and profitability.

Working Capital and Receivable Risks: Delays in customer payments or higher working capital requirements may adversely affect liquidity and operating cash flows.

Project Execution Risks: Delays in execution, procurement, installation or commissioning of projects may affect revenue recognition and profitability.

Regulatory and Policy Changes: Changes in government policies, taxation, environmental regulations and industry-specific requirements may impact business operations.

Economic and Market Conditions: Changes in economic conditions, demand patterns, interest rates and investment activity may influence the demand for machinery and related solutions.

9. RISK MANAGEMENT

The Groups risk management approach is intended to identify, assess and monitor material financial and operational risks. Key areas include liquidity risk, credit risk, market and input-cost risk, operational and project-execution risk, regulatory risk and risks associated with business expansion.

Particular attention is required to working-capital management as the Group scales up. Management is expected to continue monitoring receivables, inventory, cash flows, borrowing levels and counterparty exposures and to take corrective measures where required.

10. INTERNAL CONTROL SYSTEMS

The Company maintains internal financial controls commensurate with the nature and scale of its operations. The internal control framework is intended to safeguard assets, support reliable financial reporting, maintain proper accounting records and promote compliance with applicable laws and regulations.

As the Groups consolidated operations have expanded, continued strengthening of financial controls, delegation frameworks, transaction monitoring, working-capital controls and subsidiary-level reporting will remain important to support disciplined growth.

11. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Human resources remain an important enabler of the Groups operational and growth objectives. The Company seeks to maintain a professional working environment and to support employee capability, accountability and continuous improvement.

The expanded business profile places additional emphasis on technical capabilities, manufacturing and project execution skills, finance and commercial controls, and effective coordination between the Company and its subsidiary.

12. OUTLOOK

The Group enters FY 2026-27 with a materially expanded consolidated operating base. The presence of the subsidiary provides exposure to agricultural machinery, food-processing machinery and waste-management solutions and creates a broader platform for business development.

Managements focus is expected to remain on sustainable growth, disciplined working-capital management, effective execution of business opportunities, operational efficiency and appropriate financial controls. The ability to convert business opportunities into profitable and cash-generating operations will remain an important focus area.

13. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations and future outlook may constitute forward-looking statements. Actual results may differ materially from those expressed or implied due to various factors, including changes in economic conditions, demand and supply conditions, competition, government policies, regulatory changes, taxation, availability and cost of resources, project execution, working-capital requirements and other risks and uncertainties.

The Company assumes no responsibility for updating forward-looking statements except as may be required under applicable laws and regulations.

14. NOTE ON FINANCIAL INFORMATION

This Management Discussion and Analysis has been prepared with reference to the audited standalone and consolidated financial statements for the year ended 31 March 2026. All amounts are stated in Rs million unless otherwise indicated. Ratio calculations are derived from the financial statement figures and are intended to assist readers in understanding the financial position and performance.

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

(i) The ratio of the remuneration of the Director to the median remuneration of the employees of the company for the financial year 2025-26: Nil. No other Director of the Company is being paid any remuneration.

(ii) The percentage increase in remuneration of each Director, Chief Financial Officer, Company Secretary, if any, in the financial year.

(iii) Percentage increase in the median remuneration of employees in the financial year 2025-26:

(iv) Number of permanent employees on the rolls of company: 4

(v) Average percentile increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: NIL

(vi) The key parameters for any variable component of remuneration availed by the Directors: Commission on Net Profits of the Company to be paid to Promoter Directors: NIL

(vii) Affirmation that the remuneration is as per the remuneration policy of the Company: The Company affirms that the remuneration is as per the remuneration policy of the Company.