Pritika Engineering Components Ltd Management Discussions

Forward Looking Statement

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally. The financial statements are prepared as per the IND AS guidelines and comply with the Accounting Standards notified under Section 133 of the Act read with the Companies (Accounting Standards) Rules, 2015. The management of Pritika Engineering Components Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner, the state of affairs and profit for the year. The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "PECL", "Pritika" are to Pritika Engineering Components Ltd.

ECONOMIC OVERVIEW

Global Economy Outlook

US-China Trade Tensions and Tariff Regime

Global trade dynamics remained volatile throughout FY26, driven primarily by the continuation and escalation of US tariff policy under the Trump administration. The Liberation Day tariff initiative of April

2025 imposed reciprocal tariffs across more than 20 countries, triggering retaliatory measures from several major trading partners and causing significant disruption in established supply chains across electronics, automotive, and heavy manufacturing sectors. The sudden imposition of these tariffs resulted in rushed inventory build-ups, order cancellations, and a period of acute uncertainty for globally integrated manufacturers. The US subsequently agreed on a provisional framework with China, reducing total tariffs on Chinese goods to 55% from an earlier peak of 145%, following high-level diplomatic negotiations in Geneva. However, even at reduced levels, these tariff rates represent a structurally elevated trade barrier that has accelerated the diversification of global supply chains away from China. Countries such as India, Vietnam, Mexico, and Indonesia have emerged as key beneficiaries of this realignment, with several multinational OEMs actively expanding their supplier base in these geographies. For PECL, this structural shift creates medium-term opportunities to participate in global supply chains as North American and European OEMs seek alternative precision component suppliers. Despite some de-escalation, global trade sentiment remained fragile throughout FY26, with businesses deferring large capital expenditure decisions and maintaining leaner inventory buffers. The World Trade Organization revised its global merchandise trade growth estimate for 2025 downward, reflecting the chilling effect of trade policy uncertainty on cross-border flows.

Source: https://www.whitehouse.gov; https://ustr.gov; https://www.wto.org

Geopolitical Flashpoints and Energy Markets

The Middle East remained a persistent source of global economic anxiety during FY26, with the Israel-Iran conflict and associated regional tensions threatening broader disruption to energy supply chains. The Strait of Hormuz - a critical chokepoint for global oil exports - remained under heightened security surveillance, with shipping insurance premiums rising substantially. Given Indias significant reliance on Middle Eastern oil imports, which account for approximately 60% of crude oil procurement, the conflict scenario posed material risks to energy security, inflation management, and the current account deficit. India maintained its traditionally neutral diplomatic posture while ensuring energy security through portfolio diversification, increasing purchases from Russian Urals crude at discounted prices. The Reserve Bank of India remained vigilant on the imported inflation channel, keeping monetary policy appropriately calibrated. Though a ceasefire remained the base case among analysts by Q4 FY26, Brent crude prices remained elevated in the range of USD 78 90 per barrel across much of the year, adding to input cost pressures for energy-intensive manufacturing sectors, including auto component manufacturing. The Company managed energy costs through a combination of operational efficiencies and, where possible, renewable energy sourcing initiatives.

Source: https://www.iea.org; https://www.opec.org; https://www.rbi.org.in

US Budget and Fiscal Indicators

The US budget deficit moderated in May 2025 to USD 316 billion, down 9% year-on-year, aided by record customs receipts of USD 23 billion as tariff collections surged under the new tariff regime. Gross customs receipts on a fiscal year-to-date basis were up nearly 60% to USD 86 billion, reflecting the sweeping tariff changes implemented since early FY26. While the immediate fiscal position showed improvement, economists noted that tariff revenues tend to be volatile and self-limiting over time as trade volumes adjust. The Congressional Budget Offices long-term fiscal outlook highlighted persistent concerns around US federal debt trajectories, with public debt-to-GDP ratios projected to remain elevated through the decade. Elevated US interest rates, while on a gradual declining trajectory through FY26, continued to exert upward pressure on global financial conditions. Emerging market currencies, including the Indian Rupee, faced periodic depreciation pressures due to portfolio outflows triggered by the interest rate differential. The INR traded in the range of approximately Rs. 83 87 to the US Dollar during FY26, with the RBI intervening periodically to prevent excessive volatility. The relatively stable exchange rate environment supported PECLs raw material import costs and reduced financial uncertainty for its newly established US subsidiary, Omnia Engineering Inc.

Source: https://home.treasury.gov; https://www.cbo.gov

Chinas Deflationary Pressures

China continued to struggle with deflationary pressures through significant parts of FY26, with CPI inflation dipping to -0.7% at certain points during the year. While core inflation (excluding food and energy) showed moderate recovery at 0.6% in May 2025, domestic demand conditions remained subdued. The Chinese government implemented a combination of interest rate cuts, property market support measures, and consumption stimulus packages, but the structural challenges of a highly leveraged property sector and weak consumer confidence persisted throughout the year.

Chinas subdued demand had a nuanced but important effect on global commodity markets. Steel prices - a primary input cost variable for PECL - remained relatively range-bound through parts of FY26, with Chinese steel exports rising as domestic demand weakened. This dynamic, while creating import competition concerns for Indian steel manufacturers, provided some cost relief on the input side for Indian auto component manufacturers. However, the 12% tariff imposition on certain steel imports into India from April 2025 partially offset these benefits, creating a more complex input cost environment that the Company navigated through procurement optimization and long-term supplier agreements.

Source: https://www.stats.gov.cn; https://www.imf.org/en/Home; https://www.steelmint.com

Indian Economy Outlook

Indias economic performance in FY26 was one of the standout stories globally, with real GDP growth estimated at 7.6% for the full year by MoSPI (Second Advance Estimate), revised upward from the initial advance estimate of 7.4%. Nominal GDP growth stood at 8.6%, with the economy surpassing USD 3.9 trillion in nominal terms and consolidating Indias position as the fastest-growing major economy among G20 nations. The International Monetary Fund, the World Bank, and the Asian Development Bank all cited Indias macroeconomic resilience, policy continuity, and demographic dividend as key structural supports for sustained growth. The quarterly growth trajectory was consistently strong throughout the year. Q1 FY26 GDP growth came in at 7.8% - a five-quarter high - driven by strong summer consumption and robust public infrastructure spending. Q2 FY26 surged to 8.2%, reflecting the benefits of an excellent southwest monsoon on rural demand and a rebound in manufacturing activity. Q3 FY26 moderated slightly to 7.8% but remained robust. Key demand-side drivers included Private Final Consumption Expenditure (PFCE) growing 7.7%, reflecting urban wage growth and rural income improvement; Gross Fixed Capital Formation (GFCF) at 7.1%, anchored by continued government capital expenditure of Rs. 11.11 lakh crore in Union Budget FY26; and Government Final Consumption Expenditure (GFCE) at 6.6%. On the supply side, the manufacturing sector emerged as a particularly important growth driver, posting double-digit growth and benefiting from the structural push under Production-Linked Incentive (PLI) schemes across twelve identified sectors. The services sector maintained above 9% real GVA growth, anchored by financial services, IT exports, and a recovering hospitality and tourism sector. Agriculture grew at 3.7% in Q1 FY26, supported by an above-normal southwest monsoon in 2025, boosting kharif output, reservoir levels, and rural purchasing power with positive downstream effects on tractor demand. Inflation remained largely manageable, with headline CPI averaging approximately 4.2% for the full year, within the RBIs 2 6% tolerance band. Indias foreign exchange reserves remained comfortable at over USD 640 billion, providing ample import cover and buffer against external shocks.

Source: https://www.mospi.gov.in; https://ddnews.gov.in/en/india-projects-7-6-gdp-growth-for-fy26-nominal-growth-at-8-6/; https://www.ibef.org/economy/indian-economy-overview

Indian Auto-Components Industry

The Indian auto component industry demonstrated steady resilience in FY26, navigating global headwinds, rising import competition, and evolving technology demands from the progressive shift towards electric mobility. According to ACMA (Automotive Component Manufacturers Association of India), industry turnover in H1 FY26 (April September 2025) rose 6.8% year-on-year to Rs. 3.56 lakh crore (USD 41.2 billion), compared to Rs. 3.33 lakh crore in H1 FY25. The full-year industry turnover is expected to have comfortably crossed Rs. 7 lakh crore, positioning the Indian auto component industry as one of the largest in Asia. Supplies to OEMs, the dominant revenue stream accounting for approximately 85% of total industry revenues, rose 7.3% to Rs. 3.04 lakh crore (USD 35.2 billion), led by strong demand from the passenger vehicle, light commercial vehicle (LCV), and tractor segments. The aftermarket also outperformed, growing 9% year-on-year to Rs. 53,160 crore (USD 6.1 billion), aided by an expanding vehicle fleet base exceeding 300 million vehicles and the progressive formalisation of multi-brand service networks. Export growth remained healthy at approximately 6 8%, though imports grew at a faster pace, resulting in a marginal trade deficit during the period - a concern flagged by the industry body for policy attention. The PLI Scheme for automobiles and auto components, with a budgetary outlay of Rs. 25,938 crore, continued to attract significant fresh investment commitments from both domestic and multinational players. The scheme incentivises incremental sales over a four-year base period, with a focus on Advanced Automotive Technology (AAT) vehicles including EVs, CNG/hydrogen fuel cell vehicles, and hybrid vehicles. The industry is expected to have attracted USD 2.89 3.46 billion in FY26 for capacity expansion, EV component localisation, and process technology upgrades. GST reduction on select vehicle categories post-September 2025 further stimulated demand in H2 FY26, particularly in two-wheelers and passenger vehicles, with positive spill-over demand for component suppliers like PECL.

Indian Agricultural Tractor Market

Indias tractor industry delivered a historic and landmark year in FY26, crossing the one-million unit threshold in domestic retail sales for the first time ever. Total retail tractor sales touched 10,50,077 units in FY26, representing an 18.95% increase over FY25s 8,82,825 units. Domestic wholesale dispatches were estimated at 11,60,231 units, reflecting a 23.47% rise year-on-year. This milestone underscores the rapid mechanisation trajectory of Indian agriculture and the continued rise of tractor usage beyond traditional farming into construction, infrastructure, and haulage applications. The exceptional performance was underpinned by multiple converging tailwinds. The 2025 southwest monsoon was above the long-period average and ranked among the best in recent years, supporting strong kharif output of rice, oilseeds, and pulses, while ensuring healthy reservoir levels heading into the rabi season. The rabi season was equally robust, with wheat and mustard sowing at near-record levels, supported by government-mandated Minimum Support Price (MSP) hikes that enhanced farmer income expectations. Direct benefit transfers under PM-KISAN and continued MGNREGS spending supported rural household incomes. Pre-buying ahead of the mandatory TREM V emission norms (effective April 1, 2026) provided an additional and significant fillip to wholesale volumes in Q4 FY26, as OEMs and dealers aggressively liquidated TREM IV-compliant inventory.

Market leadership remained firmly with the Mahindra & Mahindra group, which together with its Swaraj brand commanded a 42.57% market share. Mahindras Farm Equipment Sector achieved its highest-ever annual sales of 5,05,930 units, reflecting 24% growth, a significant outperformance of the industry. TAFE achieved record sales of approximately 2,14,951 units while Sonalika Tractors posted its highest-ever annual volumes at 1,80,504 units, gaining market share in the Punjab-Haryana belt where PECL has its manufacturing presence. Escorts Kubota and International Tractors Limited also delivered strong performances. Rural markets accounted for approximately 81% of total retail in FY26, while urban and construction-related demand grew at 22.37% - faster than the rural growth rate of 18.17% - reflecting the diversification of tractor end-use into non-farm applications.

Segment Analysis: Engine Power

30-50 HP Segment Largest & Fastest Growing Segment

The 30-50 HP segment continued to dominate the Indian agricultural tractor market in FY26, accounting for most industry volumes. The segment remains the preferred choice for Indian farmers owing to its optimal balance of affordability, fuel efficiency, versatility, and suitability for small and medium-sized land holdings. Demand was further supported by increasing farm mechanization, healthy farm cash flows, and strong replacement demand across key agricultural states. The segment witnessed robust growth during FY26 as farmers increasingly preferred tractors capable of handling multiple agricultural applications such as tillage, sowing, spraying, haulage, and post-harvest activities. Additionally, leading OEMs continued to introduce technologically advanced models in the 40-50 HP category, strengthening the segments appeal among first-time buyers as well as existing tractor owners upgrading their fleets. The segment is expected to remain the primary growth driver for the Indian tractor industry over the medium term owing to rising mechanisation levels and favorable government support towards agricultural productivity. The 30 50 HP segment continued to dominate with approximately 86% market share, broadly aligned with PECLs core component product mix.

Other Engine Power Segments

The Under-30 HP segment caters primarily to horticulture, orchard farming, vineyards, and small land holdings where compact tractors offer better maneuverability and lower operating costs. The 51-80 HP segment witnessed healthy demand from progressive farmers and commercial farming operations requiring higher power for heavy-duty implements and haulage applications. The Above-80 HP segment, while relatively niche, continued to gain traction in large-scale farming operations, infrastructure projects, and commercial applications where higher horsepower and productivity are critical. Growing adoption of advanced implements and precision farming techniques is expected to support gradual expansion across these higher horsepower categories.

Segment Analysis: Drive Type

Two-Wheel Drive (2WD) Segment Market Leader

The Two-Wheel Drive (2WD) segment remained the dominant category in the Indian tractor industry during FY26. Its widespread adoption is driven by lower acquisition costs, better fuel efficiency, ease of maintenance, and suitability for the majority of Indian farming conditions. Small and marginal farmers, which constitute a significant portion of Indias agricultural landscape, continue to prefer 2WD tractors due to their affordability and ability to efficiently perform core farming activities such as ploughing, sowing, spraying, and transportation. Leading manufacturers including Mahindra, Swaraj, TAFE, Sonalika, Escorts Kubota, and John Deere continue to maintain extensive product portfolios in this category, reinforcing its market leadership.

Four-Wheel Drive (4WD) Segment Fastest Growing Category

The Four-Wheel Drive (4WD) segment emerged as one of the fastest-growing categories during FY26, supported by increasing mechanisation, labour shortages, and the need for enhanced productivity. These tractors offer superior traction, improved operational efficiency, and better performance in challenging field conditions such as wet, uneven, or hilly terrain. Demand has been particularly strong among large farmers and commercial operators who require tractors for heavy-duty applications involving cultivators, loaders, rotavators, and haulage equipment. Manufacturers have continued to expand their 4WD portfolios with advanced features and improved fuel efficiency, contributing to the segments growing acceptance across the country.

Segment Analysis: Application

Row Crop Tractors Largest Application Segment

Row crop tractors remained the largest application segment within the Indian agricultural tractor market during FY26. These tractors are widely used for multiple farming activities including ploughing, harrowing, seed drilling, spraying, inter-cultivation, transportation, and threshing operations. Their versatility, higher productivity, and ability to reduce dependence on manual labour have made them the preferred choice across Indias major agricultural regions. Growing labour shortages, rising wage costs, and increasing focus on improving farm productivity continue to drive adoption of row crop tractors. Manufacturers are increasingly introducing technologically advanced models equipped with enhanced ergonomics, improved fuel efficiency, digital instrumentation, and precision farming capabilities to cater to evolving farmer requirements.

Orchard & Other Applications

Orchard tractors continue to serve specialised farming applications such as fruit orchards, vineyards, plantations, and horticulture. Their compact design, lower turning radius, and ease of operation make them suitable for confined farming environments. Meanwhile, utility tractors under the Other Applications category remain popular across livestock farming, dairy operations, transportation, and general-purpose agricultural activities. Rising diversification within the agriculture sector and increasing mechanisation across allied farming activities are expected to support demand for these specialised tractor categories over the coming years.

Tractor Industry Statistics (FY26)

The Indian tractor industry recorded its strongest-ever performance during FY26, with domestic wholesale tractor sales reaching approximately 11.6 lakh units, representing a growth of around 23% YoY. This marked the first time the industry crossed the one-million-unit milestone in a financial year. Strong monsoons, improved reservoir levels, healthy farm incomes, increased government support, GST rationalisation, favourable financing availability, and rising mechanisation across rural India were key growth drivers during the year. Retail tractor sales also reached a record high of approximately 10.5 lakh units during FY26, registering growth of nearly 19% YoY. Market leaders including Mahindra, Swaraj, Sonalika, TAFE, Escorts Kubota, and John Deere reported strong growth across most regions, reflecting broad-based demand recovery and improving rural sentiment.

The industry outlook remains positive, supported by continued mechanisation trends, increasing tractor penetration levels, government initiatives aimed at improving farm productivity, and rising demand from both replacement and first-time buyers. However, monsoon performance, commodity prices, farm income trends, and implementation of stricter emission norms are expected to remain key factors influencing industry growth going forward. Source: Tractor & Mechanization Association (TMA), FADA, Industry Reports, FY26.

Particulars	FY25	FY26
Domestic Retail Sales (Units)	8,82,825	10,50,077
YoY Growth (%)	7%	18.95%
Domestic Wholesale (Units)	9,39,000	11,60,231
Mahindra Group Market Share	41%	42.57%
30 50 HP Segment Share	86%	86%
Industry Size Outlook by 2034		USD 15.3 Bn (7% CAGR)

Source: https://www.tmaindia.in; https://www.autocarpro.in; https://www.tractorjunction.com

CONSOLIDATED FINANCIAL OVERVIEW

The consolidated performance of the Company for the financial year ended March 31, 2026, is as follows: Total revenue from operations at Rs. 161.87 crore for the year ended March 31, 2026, as against Rs. 117.38 crore for the corresponding previous period, an increase of 37.90%. The EBIDTA (Earnings before Interest, Tax, Depreciation & Amortisation) excluding other income was Rs. 21.51 crore for the year ended March 31, 2026, as against Rs. 18.27 crore, an increase of 17.76%. The Net Profit was Rs. 7.31 crore for the year ended March 31, 2026, as against Rs. 5.74 crore for the corresponding previous period, a rise of 27.26%. EPS was at Rs. 2.77.

RESOURCES AND LIQUIDITY

As on March 31, 2026, the consolidated net worth stood at Rs. 53.20 crore and the consolidated debt was at Rs. 98.16 crore. The Net debt to equity ratio of the Company stood at 1.85 as on March 31, 2026. The Company is dealing in single segment i.e. manufacturing of Auto Components/parts. The consolidated performance of Pritika Engineering Components Limited for the financial year ended March 31, 2026 reflects meaningful improvements across all key financial parameters - revenue, profitability, and capital efficiency - driven by the favourable tractor industry environment, expanded OEM relationships, and sustained operational improvements at the Companys Hoshiarpur manufacturing facility.

Particulars ( Crore)	FY25	FY26
Revenue from Operations	117.38	161.87
EBITDA (Excluding Other Income)	18.27	21.51
EBITDA Margin (%)	15.56%	13.29%
PBT	7.22	8.83
PAT	5.74	7.31
PAT Margin (%)	4.89%	4.52%
Basic EPS ( )	2.18	2.77
Debt ( Crore)	71.15	98.16
Net Debt / Equity (x)	1.56	1.85

DEVELOPMENTS IN BUSINESS DURING THE YEAR:

FY26 marked a significant year of strategic expansion and diversification for Pritika Engineering Components Limited. The Company strengthened its global ambitions through the incorporation of its wholly owned US subsidiary, Omnia Engineering Inc., establishing a platform to access North American OEM markets and global supply chains. During the year, the Company secured a 70 crore contract from a leading material handling equipment manufacturer and a long-term 50 crore order from a multinational tractor OEM, enhancing revenue visibility and diversifying its customer base. The Company also progressed its entry into the railway components segment through RDSO approval initiatives, aligning with Indias growing infrastructure and railway modernisation opportunities. Further, PECL continued to ramp up production of high-value tractor components, supported by expanded manufacturing capacity and operational improvements at its Hoshiarpur facility, strengthening its position as a preferred engineering solutions provider.

RISKS AND CONCERNS

The company encounters various risks, both internal and external, as it conducts its daily operations and works towards its long-term goals. A comprehensive policy is developed, and dedicated risk workshops are conducted for each business vertical and key support functions. These workshops focus on identifying, assessing, analyzing, and either accepting or mitigating risks to a level deemed acceptable within the organizations risk appetite. The risk policy undergoes periodic reviews to ensure its effectiveness and relevance. The Companys Audit Committee and Board of Directors exercise oversight on risk identification and mitigation.

The Company faces the following Risks and Concerns:

Economy and Market Risk

The Companys expansion is closely tied to the cyclical nature of the agricultural and automotive sectors. The fluctuations in the Indian commercial vehicle and tractor industries directly influence the demand for associated components. Given the significant impact of the automotive sector on economic growth, any downturn in the overall economy would have repercussions on the commercial vehicle industry.

Credit Risk

Pritika has established a credit policy to handle its credit exposure, including procedures for credit limit requests and approvals. Before bidding on projects, the company conducts thorough research on clients financial health and project potential. It diligently follows up with clients to ensure payments are made according to schedule. The company has optimized its processes to create a targeted and proactive receivables management system, ensuring collections are received on time.

Interest Rate Risk

The company has effectively handled its debt-equity ratio by employing a combination of loans and internal cash flows. It has also efficiently managed its working capital to maximize cost optimization in terms of overall interest expenses.

Contractual Risk

Pritika adheres to a rigorous procedure for assessing the legal risks associated with contracts and determining its legal obligations according to relevant contract laws. It meticulously evaluates worst-case scenarios and, as a strategic measure with input from advisors, incorporates stringent terms to limit liabilities to the fullest extent feasible.

Competition Risk

As is typical across industries, growth prospects bring about increased competition. We encounter competition at various levels, including from domestic and multinational firms. Pritika has established distinct advantages in project execution, quality, and timely delivery, making it resilient against competitive pressures. Additionally, the company maintains a competitive edge through ongoing investments in technology and employee development. Our robust and enduring client base, consisting of both large and mid-sized enterprises, contributes to a healthy order backlog and shields the company from this risk. We also mitigate this risk through our focus on infrastructure quality, customer-centric approach, and innovative solutions tailored to customer needs, supported by competitive pricing and an assertive marketing strategy. Our disciplined project management practices, along with prudent financial and human resource management and cost control measures, further strengthen our resilience against competitive challenges. Therefore, we anticipate minimal impact from this risk.

Input Cost Risk

Changes in raw material prices, power costs, and other input expenses could impact our profitability and cost efficiency. These risks, particularly those related to raw material pricing and power availability, are potentially significant and require vigilant monitoring.

Technology and EV Transition Risk

The gradual shift towards electrification in tractors and commercial vehicles could impact demand for certain ICE-related components over the long term. To address this risk, the Company is exploring new product categories relevant to both conventional and electric platforms while diversifying into material handling and railway segments to reduce dependence on ICE-driven applications.

KEY FINANCIAL RATIOS

There was no significant change i.e. 25% or more in the key financial ratios except as follows:

Particulars	Year ended	Year ended	Change	Reason
	31.03.2026	31.03.2025
Net Capital Turnover Ratio (In times)	6.85	9.43	-27.41%	Due to increase in Turnover

Details of any change in Return on Net Worth as compared to the immediately previous financial year

Particulars	Year ended	Year ended	Change	Reason
	31.03.2026	31.03.2025
Return on Net	13.32	12.84	3.68%	Increase in return on net
Worth				worth is due to increase in
(In %age)				net profit.

The Companys capital efficiency metrics indicate that growth is being delivered without proportionate capital dilution, which is a favourable signal for long-term equity value creation.

OPPORTUNITIES

- Record tractor industry volumes and healthy FY27 demand outlook

- Supportive government policies driving farm mechanisation and tractor adoption - Entry into Railway and Defence sectors unlocking new growth opportunities - US expansion through Omnia Engineering Inc. to access global OEM markets - Diversification into material handling and non-tractor OEM segments - TREM V implementation creating opportunities for new component development - Rising FDI inflows and PLI benefits supporting domestic auto component suppliers - Increasing non-farm tractor usage expanding addressable market opportunities - Group synergies with Pritika Auto Industries enhancing scale and competitiveness

THREATS

- Intensifying competition from domestic and global component manufacturers - Elevated leverage and interest costs impacting profitability - Global trade uncertainties and tariff-related disruptions

- Long-term technology transition towards electrification - Dependence on agricultural demand and monsoon conditions - Raw material price volatility, particularly steel costs - Margin pressure from competitive OEM pricing environment - Skilled workforce availability and retention challenges - Execution risks associated with multi-segment expansion

INTERNAL CONTROL SYSTEMS AND ADEQUACY

For the purposes of effective internal financial control, Pritika has adopted various policies and procedures to ensure orderly and efficient conduct of its business, including adherence to companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. There has not been any significant change in such control systems. The control systems are reviewed by the management regularly. The same are also reviewed by the Statutory Auditors and Internal Auditors from time to time. Additionally, the Company has adopted various policies and procedures to safeguard its interest. These policies and procedures are reviewed from time to time. A proper reporting mechanism has been implemented in the organization for reporting any deviation from the policies and procedures. Compliance audit is conducted from time to time by external agencies on various areas of operations.

HUMAN RESOURCES

Pritika has Human Relations and Industrial Relations policies in force. These are reviewed and updated regularly in line with the Companys strategic plans. The human relations team continually conducts training programs for talent development. The Company aims to develop the potential of every individual associated with it as a part of its business goal. Pritika leverages a mix of experienced as well as young talent to drive growth. The company values its human resources as the principal drivers of change. The Company focuses on providing individual development and growth in a work culture that encourages team work and high performance. As on March 31, 2026, the Company had a workforce of approximately 686 (permanent and contractual employees) reflecting growth in headcount aligned with expanded production capacity and higher order intake. Industrial relations remained harmonious during FY26, with no significant labour disruptions.

OUTLOOK

The outlook for Pritika Engineering Components Limited remains positive, supported by a strong order book, expanding OEM relationships, and strategic diversification initiatives. Following record tractor industry volumes in FY26, demand is expected to remain healthy in FY27, driven by improving rural incomes, increasing farm mechanisation, and the rollout of TREM V emission norms, which are expected to create opportunities for new component development and supply. The Company is also well-positioned to benefit from growth in the domestic auto component industry, supported by favourable government policies, rising localisation, and PLI-led investments. Its expanded manufacturing footprint in Hoshiarpur provides adequate capacity to support future growth while improving operating leverage. PECLs long-term growth strategy is further strengthened by its international expansion through Omnia Engineering Inc., entry into the railway sector, and diversification into material handling equipment, reducing dependence on the tractor segment and broadening its revenue base. Going forward, the Company remains focused on improving profitability, reducing debt, enhancing operational efficiencies, and creating sustainable value for stakeholders. Backed by strong industry fundamentals, strategic initiatives, and an experienced management team, PECL is well-positioned to deliver long-term growth.