INTRODUCTION
The global aerospace, defense and space sectors are entering a sustained phase of growth, driven by rising geopolitical uncertainties, higher defense spending, accelerating commercial aviation demand and increasing investments in space exploration. Governments across major economies are modernizing defense capabilities, strengthening domestic manufacturing ecosystems and diversifying global supply chains, creating significant opportunities for trusted manufacturing and engineering partners.
In India, policy initiatives such as Make in India, Atmanirbhar Bharat, defense offsets and growing export ambitions are fostering a conducive environment for indigenous aerospace and defense companies to participate more meaningfully in both domestic and international programs. At the same time, emerging technologies, including unmanned aerial systems, advanced avionics, electronic warfare, intelligent connectivity and next-generation space platforms are expanding the industrys addressable market and creating avenues for higher-value engineering-led solutions.
With diversified presence across defense, commercial aerospace and space programs, Rossell Techsys is well positioned to capitalize on these long-term growth drivers through its established relationships with leading global OEMs As customer requirements evolve, the Company is steadily expanding its role beyond Build- to-Print manufacturing towards higher-value Design- to-Specification and Build-to-Specification solutions, strengthening its position as an integrated engineering and manufacturing partner.
GLOBAL MACROECONOMIC SCENARIO
Global economic growth is estimated at 3.4% in 2025 and is expected to ease to 3.1% in 2026, as easing inflation, supportive policy measures, and continued investments in technology help sustain economic momentum despite persistent geopolitical and trade-related uncertainties. The prolonged Russia-Ukraine conflict, coupled the outbreak of conflict in the Middle East since late February 2026, continues to disrupt energy markets and commodity flows. Shipping through the Strait of Hormuz and other strategic trade routes resulted in significant volatility in crude oil prices and supply chain integrity. Meanwhile, the intensifying US-China strategic rivalry, marked by tariff disputes, tighter technology restrictions, and competition over critical minerals, could further accelerate supply chain diversification.
Furthermore, instability across several emerging markets, shifting global alliances, and sanctions are reshaping global trade, investment, and capital flows. Businesses are reassessing sourcing strategies, investment priorities, and geographic exposure, while economies are strengthening domestic manufacturing, expanding clean energy and electric mobility ecosystems and accelerating digital infrastructure to support long-term growth.
Growth prospects continue to vary across regions. Advanced economies are expected to witness moderate growth, supported by targeted fiscal measures and sustained investments in digital and technology infrastructure. Europe is showing signs of stabilization, aided by stronger public spending, particularly in Germany, and resilient performance in countries such as Ireland and Spain. Emerging market and developing economies continue to benefit from policy reforms and improving macroeconomic stability, although structural challenges persist in several markets.
Energy prices are likely to remain volatile due to geopolitical developments, supply dynamics, and changing demand patterns. While geopolitical tensions, trade barriers, and policy uncertainty may weigh on near-term sentiment, their impact on growth is expected to gradually diminish, contributing to a more stable global macroeconomic environment over the medium term.
While global economic growth is expected to moderate, sustained defense spending, rising geopolitical tensions, fleet modernization programs, and increasing investments in advanced aerospace technologies continue to support
long-term industry demand. At the same time, global supply chain diversification through friend-shoring and near-shoring is creating opportunities for reliable, export- oriented Tier-1 suppliers with strong engineering and precision manufacturing capabilities. Against this backdrop, companies like Rossell favorably to strengthen export competitiveness, expand global partnerships, and drive sustainable long-term growth.
INDIAN MACROECONOMIC SCENARIO
Positioned as a key driver of global growth, India recorded a GDP growth of 7.7% in FY 2025-26, marking its fourth consecutive year as the worlds fastest-growing major economy. This growth was driven by strong domestic demand, led by private consumption, which accounts for 61.5% of GDP, alongside sustained investments. Retail
inflation moderated to a historical low of 2.6%, due to softer food and fuel prices, and remained well within the RBIs 2%-6% target, providing policymakers flexibility to focus on growth.
Robust direct and indirect tax collections, GST rationalization, and calibrated expenditure prioritization enabled the government to strengthen capital formation and social spending while maintaining fiscal prudence. At the same time, cumulative repo rate cuts, targeted liquidity measures, and stronger banking sector balance sheets improved systemic liquidity and lowered borrowing costs, supporting credit growth and creating a conducive financing environment for businesses and households.
GDP Growth Trend (%)
| 2021-22 | 2022-23 | 2023-24 | 2024-25 | 2025-26 |
| 8.7 | 7.0 | 7.2 | 7.1 | 7.7 |
E: Estimated
Indias aerospace and defense sector continues to strengthen its position as a strategic manufacturing and engineering hub, supported by sustained defense capital expenditure, increasing private sector participation, expanding export opportunities and deeper integration with global supply chains.
Indias growing manufacturing capabilities and policy-led procurement reforms have enhanced the role of domestic companies in both indigenous programs and global OEM supply chains. At the same time, the countrys rapidly expanding commercial aviation market, increasing aircraft fleet additions, airport infrastructure development and growing demand for maintenance, repair, and overhaul (MRO) services are creating sustained opportunities across the aerospace value chain. Defense exports reached a record INR 38,424 Crores in FY2025-26, reflecting the increasing global acceptance of Indian defense products and reinforcing Indias position as a reliable manufacturing partner.
GLOBAL AEROSPACE AND DEFENSE SECTOR REVIEW
The global aerospace and defense (ASD) industry recorded another year of robust growth, supported by elevated defense spending, a recovery in commercial aviation, and increasing investments in advanced technologies and space programs. According to PwCs 2026 Aerospace & Defense Outlook, the worlds top 100 aerospace and defense companies collectively crossed USD 1 trillion milestone in annual revenue in 2025. Industry operating profits
increased by 46% year-on-year, driven by higher aircraft production, record aftermarket activity, improved engine deliveries and continued strength in defense programs. At the same time, the commercial aviation industry continues to benefit fromorder backlogs representing nearly a decade of production, providing manufacturers and suppliers with multi-year revenue visibility.
Commercial aerospace maintained its recovery momentum during 2025 as global passenger demand reached record levels, supported by strong leisure travel and business travel recovery. Aircraft manufacturers ramped up production, despite shortages of engines, castings and skilled labor. Airbus maintained high production levels while Boeing significantly improved deliveries. According to PwC, the global commercial aircraft backlog approached 15,000 aircraft, representing nearly a decade of production at current manufacturing rates. The aftermarket also remained exceptionally strong as airlines extended the operating life of their existing fleet, driving sustained demand for maintenance, repair and overhaul (MRO) services, avionics upgrades, engine services and replacement components.
To meet the projected increase in passenger and cargo traffic and replace aging fleet, the global commercial aircraft fleet is expected to nearly double, from 24,730 aircraft at the end of 2024 to 49,210 aircraft by 2044. According to Airbus Global Market Forecast, this growth will require the delivery of approximately 43,420 new aircraft, comprising 34,250 single-aisle and 9,170 widebody aircraft. Single-aisle aircraft will continue to dominate fleet expansion, driven by
rising demand for domestic and regional connectivity, while widebody aircraft will support growing long-haul passenger traffic and air cargo operations, particularly across Asia and other high-growth international markets. Of the total projected deliveries, around 18,930 aircraft will replace older-generation fleets, reflecting the aviation industrys continued focus on fleet modernization and fuel efficiency. This large-scale replacement cycle is expected to support sustained demand across the aerospace value chain, creating significant opportunities for aircraft manufacturers, engine producers, avionics suppliers and aerospace component manufacturers over the coming decades.
The long-term outlook for global commercial aviation remains robust, underpinned by sustained growth in passenger demand across both mature and emerging markets. According to Airbus Global Market Forecast, global passenger traffic, measured in Revenue Passenger Kilometers (RPKs), is expected to grow at an average annual rate of 3.6% through 2044. While established aviation markets are projected to maintain steady expansion, the strongest growth is expected to originate from emerging economies, particularly in Asia and the Middle East. Among the fastest-growing major traffic flows are Indias domestic market, forecast to expand at 8.9% annually, followed by emerging Asia-China routes (8.5%) and emerging Asia-Middle East corridors (5.3%). This shift in global air traffic patterns is expected to drive sustained demand for fuel-efficient, technologically advanced and versatile aircraft, while creating significant opportunities across the aerospace value chain, including aircraft manufacturing, avionics, maintenance, repair and overhaul (MRO), and aerospace component suppliers.
(Source: https://www.pwc . com/us/en/industries/industrial- products/library/aerospace-defense-review-and-forecast. html?utm, https://www . deloitte. com/us/en/insights/industry/ aerospace-defense/aerospace-and-defense-industry-outlook. html?utm, https://www . airbus, com/en/products-services/ commercial-aircraft/global-market-forecast)
DEFENSE SECTOR: RECORD MILITARY
EXPENDITURE SUPPORTS LONG-TERM DEMAND
The global defense sector continued to demonstrate strong structural growth, supported by rising geopolitical tensions, ongoing regional conflicts and accelerated military modernization programs. According to the Stockholm International Peace Research Institute (SIPRI), global military expenditure increased by 2.9% to a record USD 2.89 trillion in 2025, marking the 11th consecutive year of growth. Global military spending represented 2.5% of world GDP, the highest level since 2009, highlighting the governments sustained focus on strengthening national security and defense preparedness.
Despite a 7.5% decline in US military expenditure to USD 954 Billion, primarily due to the absence of new military assistance packages for Ukraine during 2025, the US remained the worlds largest defense spender. Investments continued in nuclear modernization, advanced aerospace platforms, missile defense, autonomous systems and Indo- Pacific force readiness. Furthermore, the US Congress approved defense spending exceeding USD 1 trillion for 2026, indicating that the temporary decline is unlikely to alter the long-term growth trajectory of global defense expenditure. Excluding the US, global military expenditure increased by 9.2%.
Europe remained the principal driver of defense spending growth. Regional military expenditure increased by 14% to USD 864 Billion, supported by continued military assistance to Ukraine, large-scale rearmament programs and NATOs enhanced defense spending commitments. Combined defense expenditure by the 29 European NATO members reached USD 559 Billion, with 22 countries meeting or exceeding the Alliances 2% of GDP spending guideline. Germany increased military expenditure by 24% to USD 114 Billion, while Spain recorded a 50% increase, reflecting accelerated investments in military modernization, ammunition replenishment and defense industrial capacity. These developments have strengthened long-term procurement pipelines across combat aircraft, missile systems, radar, electronic warfare, defense electronics and advanced manufacturing.
Military spending across Asia and Oceania increased by 8.1% to USD 681 Billion, recording the regions fastest annual growth since 2009. China expanded defense expenditure by 7.4% to USD 336 Billion, marking its 31st consecutive annual increase, as it continued to advance military modernization and strategic capability development. Japan increased defense spending by 9.7% to USD 62.2 Billion, the highest share of GDP since 1958, while Taiwan recorded a 14% increase amid heightened regional security concerns. The sustained increase in defense budgets across the Indo-Pacific is expected to drive continued investments in aerospace platforms, naval systems, unmanned technologies, missile defense, cyber security and intelligence systems.
Governments are increasingly prioritizing indigenous manufacturing, resilient supply chains and strategic technologies including unmanned systems, artificial intelligence, electronic warfare, secure communications, advanced avionics and precision-guided munitions. These trends are creating significant opportunities for suppliers of aerospace structures, wiring harnesses, electromechanical assemblies, defense electronics and mission-critical subsystems.
GREEN INITIATIVES AND SUSTAINABILITY IN AVIATION
The aviation industry continues to accelerate its transition towards sustainable operations, with fleet modernization, increased adoption of Sustainable Aviation Fuel (SAF), advanced propulsion technologies and operational efficiency improvements staying central to achieving their net zero target by 2050. According to the International Air Transport Association (IATA), SAF is expected to contribute around 65% of the emissions reductions required to achieve the sectors net-zero goal, although it currently accounts for less than 1% of global aviation fuel consumption, highlighting significant growth potential. Meanwhile, aircraft manufacturers are introducing next-generation aircraft that offer better fuel efficiency, while regulatory initiatives such as ICAOs CORSIA framework and the European Unions ReFuelEU Aviation program are accelerating investments in cleaner aviation technologies and sustainable aerospace manufacturing.
(Source: https://www.iata.org/en/programs/sustainability/ sustainable-aviation-fuel-saf/)
GLOBAL SPACE SECTOR REVIEW
The global space sector continued its strong growth trajectory, driven by increasing commercialization, record launch activity and growing investments in strategic space capabilities. According to the Space Foundations The Space Report 2025, the global space economy reached USD 613 Billion in 2024, with commercial space activities accounting for approximately 78% of the sector, while government space expenditure increased to USD 132 Billion, reflecting higher investments in satellite infrastructure, launch capabilities, scientific exploration and national security programs. The year witnessed sustained deployment of Low Earth Orbit (LEO) satellite constellations and a record pace of orbital launches, supported by reusable launch vehicles and growing private- sector participation, significantly improving the accessibility and cost-efficiency of space missions.
Lunar and deep-space exploration also gathered momentum during the year. China successfully launched theTianwen-2 mission in May 2025 to collect samples from the near-Earth asteroid Kamooalewa and demonstrate advanced deep- space exploration capabilities, while Japan-based ispaces HAKUTO-R Mission 2 (Resilience) attempted a commercial lunar landing in June 2025, reflecting the growing role of private enterprises in lunar exploration. Furthemore, NASA and its international partners continued spacecraft integration, testing and crew preparations for the Artemis II mission, which will mark the first crewed lunar mission in more than five decades. These developments underscore the increasing strategic importance of the space sector for communications, navigation, Earth observation, scientific research and national security, while creating significant
long-term opportunities for satellite manufacturers, launch providers and suppliers of advanced aerospace systems, electronics and mission-critical components.
(Source: https://www.spacefoundation.org/2025/07/22/the-space- report-2025-q2/ , https://www.nasa.gov/humans-in-space/artemis/ , https://ispace-inc . com/)
GLOBAL SEMICONDUCTOR SECTOR REVIEW
The global semiconductor industry continues to enter a new phase of structural growth, propelled by the rapid expansion of artificial intelligence (Al), high-performance computing and cloud infrastructure. Global semiconductor sales are projected to reach USD 975 Billion in 2026, growing by 26% after an estimated 22% expansion in 2025. Looking further ahead, the industry is expected to surpass USD 2 Trillion in annual revenues by 2036, reflecting sustained demand for advanced computing technologies.
This growth, however, is increasingly concentrated in Al- driven applications. While Al chips account for nearly half of the industrys revenue, they represent less than 0.2% of total semiconductor unit volumes, underscoring a sharp shift towards high-value, performance-intensive products. In contrast, traditional end markets such as automotive, smartphones, personal computers and communication devices are expected to witness comparatively moderate growth, creating a more differentiated industry landscape.
The unprecedented investments in Al infrastructure are reshaping semiconductor demand, with hyperscale data centres emerging as the primary growth engine. However, the industrys long-term trajectory will depend on several critical factors. The pace at which enterprises monetise Al investments will influence future data centre expansion, while power availability and grid infrastructure could become significant constraints as Al workloads continue to increase. At the same time, rapid advances in chip architectures and Al model efficiency are expected to redefine compute requirements, accelerating technology refresh cycles and intensifying competitive pressures. This evolving landscape presents significant opportunities for semiconductor ecosystem participants, while also demanding continuous investment in advanced technologies, capacity expansion and differentiated product capabilities to remain competitive.
(Source: https://www.deloitte.com/us/en/insights/industry/
technology/technology-media-telecom-outlooks/semiconductor-
industry-outlook.html)
BUSINESS REVIEW
Rossell Techsys is a leading engineering and manufacturing partner to the global aerospace and defense industry, delivering precision-driven solutions across the product lifecycle. Established as an independent entity in 2011 following the demerger of the Aerospace and Defense
business of Rossell India Limited, the Company has earned the trust of leading OEMs through its unwavering focus on quality, delivery excellence, and cost competitiveness. Its integrated operating model combines advanced infrastructure, highly skilled talent, robust quality systems, and engineering expertise to consistently deliver complex, high-value programs.
Anchored by two advanced manufacturing facilities in Devanahalli, Bengaluru, with a combined footprint of approximately 4.5 Lakhs sq. ft., Rossell Techsys has established a world-class manufacturing ecosystem for the aerospace and defense industry. The Companys infrastructure, comprising owned and leased facilities built to IGBC LEED-Gold standards with a roadmap towards LEED Platinum certification is complemented by Rossell Techsys Inc. (RTI) in Tempe, Arizona, USA, enabling closer collaboration with global customers. Operating through specialized Centers of Excellence, the Company delivers end-to-end Build-to-Print and Build-to-Specification solutions with precision, quality, and speed. Its capabilities span wire harnesses, electrical interconnect systems, electronic assemblies and specialized test equipment for a wide range of platforms, including fighter aircraft, commercial aircraft and space applications.
STRENGTHS
World-Class Infrastructure and Certifications
The Company has established world-class manufacturing infrastructure supported by dedicated facilities and Centers of Excellence that meet the stringent requirements of the global aerospace and defense industry. Its operations are backed by internationally recognized certifications, including ITAR registration and leading quality standards, enabling it to serve some of the worlds most demanding customers.
Sustained Financial Performance, Strong Revenue Visibility
The Company has consistently demonstrated its ability to scale operations while maintaining high standards of quality and delivery. Over the past three years, revenue grew from INR 217 Crores to INR 259 Crores, and further to INR 485 Crores, reflecting operational excellence, and a proven track record of on-time program delivery. With confirmed orders of over INR 750 Crores, and bids worth more than INR 4,500 Crores, the Company enjoys strong visibility into future revenues. Its expanding order pipeline provides a solid foundation for sustained growth.
Trusted Global Partnerships
The Company has built long-standing relationships with over 30 customers across multiple sectors, underpinned by decades of trust, consistent execution, and recognized program performance. These enduring partnerships
reinforce its reputation as a reliable global aerospace and defense partner.
Multi-Dimensional Scaling Platform
The Company is scaling its business across multiple dimensions, including customer relationships, order book expansion, talent development, infrastructure enhancement, and product capabilities. This diversified approach positions it to capture long-term growth opportunities while strengthening organizational resilience.
Deeply Embedded in High-Reliability Platforms
The Company is deeply integrated into high-reliability aerospace, defense, and space programs where qualification requirements, technical expertise, and long development cycles create significant entry barriers. Its increasing platform participation enhances customer stickiness and supports long-term business sustainability.
High Entry Barriers and Strong Customer Stickiness
High-reliability systems demand flawless performance, extensive qualification processes, and multi-year customer approvals, resulting in high switching costs and long-term customer relationships. Once qualified, the Company becomes an integral part of customers platforms, providing recurring program visibility and predictable revenues. Supported by globally recognized certifications such as AS9100D, NADCAP, and ITAR, these capabilities create high barriers to entry that are difficult for new participants to replicate.
STRATEGIC PRIORITIES
Strengthening Capacity and Global Presence
To support future growth and a robust order pipeline, the Company is expanding its manufacturing footprint and strengthening its global delivery capabilities. The Company has leased an additional 210,000 sq. ft. facility to accommodate the growing requirements of its space and semiconductor businesses. Simultaneously, the Company is enhancing the capabilities of its US subsidiary to deepen engagement with global customers, particularly in the rapidly expanding space sector, while continuing to strengthen its position within Indias defense and aerospace ecosystem through strategic domestic partnerships.
To fund its next phase of expansion, the Company is pursuing a Qualified Institutional Placement (QIP), with proceeds intended to support capacity expansion, operational infrastructure and working capital requirements.
Diversifying into High-Potential Semiconductor and Space Segments
Rossell Techsys is expanding into high-potential segments, such as semiconductors and space, alongside its established aerospace and defense business.
The Company sees significant growth potential in both segments by FY 2026-27 and aimsto build a semiconductor business with a significant contributor to its overall revenue mix over the next three to five year. In parallel, the Company is positioning itself for a transformational entry into the commercial aerospace market, with participation in major commercial aircraft programs. Over the medium term, it seeks to establish a balanced mix with equal contribution from aerospace and defense, and non-aerospace businesses.
Expanding across the Aerospace Value Chain
The Company is strategically progressing from supplying individual components to delivering higher-value electromechanical integrated systems and assemblies. This is expected to significantly increase its content share across existing platforms, enhancing revenue per platform while supporting margin expansion. The Company has also entered the MRO and aftermarket services segment by acquiring key licenses and certifications, which enable it to provide comprehensive lifecycle support to customers.
Enhancing Operational Excellence and Financial Strength
Continued investments in automation, digital manufacturing technologies and workforce capability development are expected to improve productivity, enhance quality and support scalable operations. Alongside these initiatives, it remains focused on improving working capital efficiency by reducing inventory cycles, creating a leaner and more agile operating model capable of delivering sustainable and profitable growth.
PERFORMANCE REVIEW Segment-wise Performance
During FY 2025-26, the Companys aerospace and defense business maintained a strong on-time delivery record, reinforcing its reputation as a reliable manufacturing partner for global OEMs. Recognition from Boeing, including the decision to level-load future production schedules, underscores the strength of the Companys execution capabilities and the long-standing trust established through consistent quality and delivery. During the year, Rossell Techsys also secured repeat orders from a major global defense customer, reflecting the depth of its strategic customer relationships.
The semiconductor business emerged as a significant growth engine, supported by growing customer confidence and increasing market acceptance. Following successful customer qualification in the second quarter, production volumes ramped up rapidly, demonstrating the Companys manufacturing readiness and ability to scale. The business has evolved into an established revenue pillar, supported by growing customer confidence and increasing market
acceptance. In addition, Rossell Techsys is onboarding another major international customer, which is expected to further strengthen the segments growth trajectory.
The Companys space business progressed from qualification to volume production during the year, with the successful execution of its first large-scale production batches. This milestone establishes a strong platform for future expansion, supported by a growing order pipeline and ongoing customer additions. The segment is expected to contribute meaningfully to the Companys medium-term growth as production scales and program participation expands.
In India, Rossell Techsys expanded its presence within the domestic aerospace and defense ecosystem by securing initial program orders and strengthening strategic partnerships. While domestic revenues remain at an early stage, these engagements establish important market credentials. The acquisition of the DPL license and AS9110 MRO certification have further expanded the Companys capabilities across manufacturing, repair, overhaul, and aftermarket services, enabling participation in a broader range of domestic opportunities.
Rossell Techsys also continued to advance its strategic positioning in commercial aerospace. While the Company currently operates as a Tier 2 supplier, it is progressively building the capabilities, certifications, and customer relationships required to participate in larger commercial aerospace programs. Successful entry into these programs would significantly expand the Companys addressable market, diversify its revenue base, and create a meaningful long-term growth opportunity.
Meanwhile, growing demand from international customers is strengthening the strategic importance of Rossell Techsys Inc. (RTI), the Companys US subsidiary. Existing customers have expressed interest in expanding the Companys manufacturing footprint in the US, while additional customers are evaluating RTIs capabilities for future programs. The Company is assessing opportunities to enhance its US infrastructure to support this increasing demand, positioning RTI as a key element of its global growth strategy.
FINANCIAL PERFORMANCE REVIEW
For FY 2025-26, the Company reported revenue grew 87% to INR 485 Crores from INR 259 Crores in FY 2024-25. EBITDA rose from INR 38 Crores to INR 66 Crores while Profit before tax more than doubled from INR 10 Crores to INR 28 Crores. The Company delivered such strong financial performance despite continued investments in manufacturing capacity, talent, inventory, and strategic market expansion, which reflects the strong operating leverage playing out and the Companys ability to scale profitably. Furthermore, the Company delivered its highest
ever quarterly performance, demonstrating robust execution across its core business segments and the successful scaling of new growth initiatives.
KEY RATIOS
| Ratio | As at March 31, 2026 | As at March 31, 2025 | Variance | Reasons for variance |
| Current Ratio | 1.07 | 1.07 | (0.14%) | NA |
| Debt-equity Ratio | 2.69 | 1.82 | 48.17% | (i) |
| Debt Service Coverage Ratio | 2.01 | 1.29 | 55.70% | (ii) |
| Return on Equity Ratio | 14.58% | 5.73% | 154.34% | (iii) |
| Inventory Turnover Ratio | 1.14 | 0.71 | 60.13% | (iv) |
| Trade Receivables Turnover Ratio | 5.12 | 3.86 | 32.48% | (v) |
| Trade Payables Turnover Ratio | 11.24 | 5.36 | 109.58% | (vi) |
| Net Capital Turnover Ratio | 15.14 | 13.09 | 15.70% | NA |
| Net Profit Ratio | 4.27% | 2.85% | 49.85% | (vii) |
| Return on Capital Employed | 9.14% | 7.40% | 23.41% | (viii) |
| Explanation for variances change more than 25% compared with previous year. |
| (i) The Debt-equity ratio is increased due to increase in short term borrowings. |
| (ii) The increase in debt servicing ratio is due to increase in profit margin. |
| (iii) The Return on equity ratio is increased because of increase in profit after tax during the year. |
| (iv) The Inventory turnover ratio is increased because of increase in higher consumption/purchase cost. |
| (v) The trade receivables turnover ratio is increased on account of increase in sales. |
| (vi) The trade payables turnover ratio is increased on account of increase in business during the year. |
| (vii) The net profit ratio increased because of the increase in sales and better profitability during the year. |
| (viii) The return on capital employed is increased because of profitability during the year. |
RISK MANAGEMENT
| Key Risks | Risk Definition | Mitigation Strategy |
| Customer Concentration | Dependence on a limited number of strategic global OEMs could expose the Company to fluctuations in order volumes, program schedules or procurement strategies. | Diversify the customer portfolio across aerospace, defense, semiconductor and space sectors; expand domestic customer base; deepen engagements with existing customers through long-term strategic partnerships. |
| Supply Chain Disruptions | Global shortages of electronic components, logistics disruptions, geopolitical events and supplier concentration may impact production schedules, costs and delivery commitments. | Strengthen supplier diversification, maintain strategic inventory, enhance supply chain visibility, develop alternate sourcing channels and strengthen local procurement capabilities. |
| Regulatory & Export Control | Aerospace and defense operations are subject to stringent domestic and international regulations, export controls, certifications and licensing requirements. Regulatory changes could impact business continuity. | Maintain robust compliance systems, renew certifications proactively, strengthen regulatory monitoring, and adhere to international standards including ITAR, EAR, AS9100 and other customer- specific requirements. |
| Technology & Innovation | Rapid technological advancements may require continuous investments in new manufacturing technologies, automation and advanced engineering capabilities. | Invest consistently in R&D, advanced manufacturing technologies, automation, digital engineering and capability enhancement while working closely with global OEMs on next-generation programs. |
| Cybersecurity & Information Security | Handling sensitive defense and aerospace programs exposes the Company to cybersecurity threats, intellectual property theft and data breaches. | Maintain internationally recognized cybersecurity standards, implement robust IT security architecture, conduct regular audits, strengthen access controls and continuously upgrade cyber resilience. |
| Talent Availability & Retention | Competition for skilled aerospace engineers and technicians could affect the Companys ability to execute complex programs and sustain growth. | Invest in employee development through Rossell School of Learning, leadership development, competitive employee value proposition, succession planning and employee engagement initiatives. |
| Program Execution | Delays in program execution, qualification processes or customer approvals may affect revenue recognition and profitability. | Adopt rigorous program management practices, maintain strong quality systems, strengthen project governance and collaborate closely with customers throughout program lifecycles. |
| Integration & Scalability | Rapid expansion into new facilities, geographies and adjacent businesses may create operational integration and execution challenges. | Scale operations in a phased manner, strengthen organizational capabilities, invest in infrastructure, standardize operating procedures and reinforce governance frameworks. |
| Intellectual Property & Confidentiality | Leakage of proprietary know-how or customer information could weaken the Companys competitive advantage and affect customer relationships. | Implement comprehensive confidentiality agreements, strengthen information security protocols, protect proprietary processes and continuously monitor data access and usage. |
| Financial & Liquidity | Capital-intensive expansion, working capital requirements and debt obligations could impact liquidity and financial flexibility. | Maintain prudent capital allocation, strengthen cash flow management, optimize working capital, diversify funding sources and regularly monitor financial covenants. |
| Competitive | Increasing competition from established global suppliers and emerging domestic manufacturers could exert pressure on pricing and margins. | Differentiate through engineering expertise, superior quality, certifications, customer intimacy, operational excellence and expansion into high-value technology segments. |
| Macroeconomic & Geopolitical | Economic slowdowns, geopolitical tensions, foreign exchange volatility and changes in defense spending may affect customer demand and international operations. | Diversify across geographies, end markets and programs, expand domestic business, monitor geopolitical developments and adopt appropriate currency risk management practices. |
| Geographical Concentration | A substantial portion of the Companys revenues is derived from customers and programs in the United States. Changes in economic conditions, trade policies, export regulations, geopolitical developments, defense spending priorities, or customer procurement strategies in any single geography could adversely impact business performance. | The Company is actively pursuing geographic diversification by expanding customer engagement across Europe, Israel, and other strategic international markets, while also strengthening its presence within the domestic aerospace and defense ecosystem. Continued diversification across regions, customers, and end markets is expected to reduce dependence on any single geography and enhance business resilience. |
| Business Continuity | Natural disasters, infrastructure failures, pandemics or operational disruptions could interrupt manufacturing activities. | Maintain business continuity and disaster recovery plans, strengthen infrastructure resilience, establish backup systems and regularly test emergency response procedures. |
| Quality & Certification | Failure to maintain stringent aerospace quality standards or customer certifications could affect program eligibility and customer confidence. | Sustain a robust quality management system, undertake regular internal and external audits, invest in workforce training and maintain global certifications and accreditations. |
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Rossell Techsys has established a comprehensive internal control framework designed to support operational efficiency, financial integrity, regulatory compliance and effective risk management across its operations. The Companys control environment is aligned with the stringent quality and governance requirements of the global aerospace and defense industry, with well-defined processes governing engineering, manufacturing, program execution, financial reporting and asset protection. Internal controls are continuously monitored and strengthened to ensure compliance with statutory requirements, contractual obligations and evolving business needs as the Company expands its operations.
The Companys internal control framework is reinforced by globally recognized certifications and management systems, including AS9100 Rev D, ISO 9001, ISO 27001, ISO 14001, ISO 45001, ISO 37001, ISO 17025, NADCAP AC7121, CEMILAC registration and ISO 31000-based risk management practices. In addition, Rossell Techsys maintains robust cybersecurity and export control processes, including compliance with NIST SP 800-171, while its US subsidiary is registered under ITARand certified
to AS9100 Rev D. Supported by strong governance policies covering ethics, anti-bribery, whistleblower mechanisms, information security and intellectual property protection, the Companys internal control systems are considered adequate and commensurate with the size, scale and complexity of its business.
CAUTIONARY STATEMENT
Statements in this report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, expectations, or predictions may be forward- looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied since the Companys operations are influenced by many external and internal factors beyond its control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, based on any subsequent developments, information, or events. Readers are cautioned that the risks outlined here are not exhaustive. Readers are requested to exercise their judgment in assessing the risks associated with the Company.
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