Sigma Advanced System Ltd Management Discussions

Global economic overview

Global economic growth remained unchanged at 3.5% in both 2024 and 2025. The effects of the war in the Middle East were largely offset by stronger, demand-driven momentum in the global technology cycle, supported by rapid advances in artificial intelligence (AI) and its growing adoption.

The impact, however, differed significantly across countries. Energy exporters outside the conflict zone benefited from favourable terms of trade, while economies closely integrated into the global technology value chain experienced stronger economic activity, even when they were net energy importers. In contrast, energy-importing economies with limited exposure to the technology-led upturn - including many low-income countries recorded comparatively weaker growth.

Growth in advanced economies remained broadly stable at 1.9% in both 2024 and 2025. Emerging markets and developing economies also maintained a steady growth rate of 4.5% in 2025, unchanged from 2024.

Global inflation declined significantly in 2025, falling to an estimated 4.1% from 5.8% in 2024. This continued the broader trend of disinflation that had been underway since early 2024.

Given the difficulty of establishing stable, real-time assumptions for economic projections, the IMF World Economic Outlook Update assumes that the Strait of Hormuz will begin reopening in mid-September 2026, with conditions gradually returning to their pre-war state by March 2027. These assumptions are consistent with commodity price projections based on market pricing as of 10 June 2026.

Under this baseline scenario, global economic growth is projected to slow to 3.0% in 2026 before recovering to 3.4% in 2027. Global inflation is expected to increase to 4.7% in 2026 as the disinflation process that began in 2024 temporarily stalls, before easing to 3.9% in 2027.

(Source: IMF World Economic Outlook Update — July 2026, World Economic Forum, Federal Reserve, Bank of England, European Central Bank, Bank of Japan)

Indian economic overview

The Indian economy remained resilient, with real GDP growth accelerating to 7.7% in FY 2025-26 from 7.1% in FY 2024-25, driven by robust consumption and investment. Real GDP at constant prices increased to an estimated Rs. 323.12 lakh crore from Rs. 299.89 lakh crore.

Inflation remained subdued, with full-year CPI inflation estimated at 2.1%, creating room for cumulative interest- rate cuts of 125 basis points and supporting domestic demand. Despite favourable macroeconomic conditions, the Indian rupee depreciated 9.88% during the year to Rs. 94.83 against the US dollar, reflecting global capital flows, dollar strength, and geopolitical uncertainty.

Equity markets faced pressure amid the West Asia conflict and concerns over potential tariff measures under the Donald Trump administration. Indias market capitalisation declined 7.2% to USD 4.5 trillion, while the BSE Sensex and Nifty 50 fell 7.0% and 5.05%, respectively.

Looking ahead, India is expected to remain the fastest-growing major economy, with the World Bank projecting growth of approximately 6.6% in FY 2026-27. Strong domestic demand, recovering investment, GST rationalisation, stable exports, favourable demographics, and structural reforms are expected to support growth. Key risks include elevated energy prices, fiscal pressures, and global demand uncertainty. Overall, Indias strong macroeconomic fundamentals and expanding trade linkages continue to underpin its medium-term growth outlook.

(Source: Upstox, Economic Times, India Today, 5paisa, Livemint, The Logical Indian)

Global aerospace and defence sector overview

The global aerospace and defence (A&D) industry entered a new phase of scale in 2025, powered by record commercial aviation demand and an unprecedented defence backlog. For the first time, the top 100 A&D companies collective annual revenue crossed the $1 trillion mark, while the commercial aircraft backlog also surpassed $1 trillion, reflecting years of production visibility already locked in. Industry-wide operating profit grew by 46% in 2025, driven by a major production recovery, strong aftermarket growth among leading engine manufacturers, and broad gains across the sector.

Growth is being driven by demand consistently outpacing capacity across both commercial and defence segments. The commercial aircraft backlog reached nearly 15,000 units in 2025 and continues to grow, with both major commercial OEMs targeting double-digit delivery increases in 2026, even as supply chain performance and workforce capacity remain the binding constraints on converting backlog into output. On the defence side, the backlog has grown more than 50% over three years with no signs of peaking, as sustained conflict in Ukraine and the Middle East pushed defence procurement to record

levels and drove strong revenue growth across both US and European defence primes.

This broad-based growth is reflected across the underlying product segments that make up the sector.

On the aerospace side, the aircraft engine components market — covering fabrications, sub-assemblies, and hot-section parts — was valued at $92.7 billion in 2026 and is projected to reach $203.3 billion by 2034 at a 9.1% CAGR, underpinned by rising commercial production rates and sustained aftermarket demand across engine platforms in service. The global aerostructures market, valued at $65.53 billion in 2025, is set to reach $135.63 billion by 2035 at a 7.6% CAGR, with commercial aircraft accounting for over half of platform demand and defence and military aircraft procurement providing an incremental growth layer.

A notable shift within the global aerospace sector is the increasing emphasis on supply chain sovereignty and industrial resilience. Companies are prioritising supplier diversification, digital supply-chain visibility tools, and expansion of the defence industrial base to reduce exposure to single-source dependencies and geopolitical disruption, even as parts of the supply base remain fragile under the pace of current demand.

The sector is also witnessing consolidation and strategic repositioning through M&A. Deal value reached $29 billion in 2025, concentrated around digital transformation, supply network security, and defence capability expansion — trends directly aligned with the counter- drone, radar, and component-manufacturing segments driving activity across the industry.

On the defence side, the global guided missile market was valued at $20.3 billion in 2025 and is projected to reach $35.5 billion by 2034 at a CAGR of 6.3%, driven by rising precision-strike procurement and next-generation guidance integration, while within it the missile guidance systems segment — covering end-game packages and servo/amplifier sub-systems — alone is set to grow from $1.04 billion in 2025 to $1.79 billion by 2034. The military radar market, valued at $15.38 billion in 2025, is expected to reach $26.92 billion by 2035 at a 5.9% CAGR, driven by rising UAV and stealth-platform adoption, while the adjacent electronic warfare market — covering spoofers and effector systems — is projected to grow from $32.35 billion in 2026 to $64.66 billion by 2031, as defence organisations prioritise spectrum superiority and adopt AI-enabled, software-defined EW technologies. Military aircraft avionics, covering flight data recorders, cockpit displays, and flight-critical guidance systems, was valued at $35.4 billion in 2025 and is forecast to reach $67 billion by 2035 at a 6.7% CAGR, with mission avionics the fastest-growing sub-segment as platforms become more networked. The unmanned systems space is expanding even faster: the global counter-drone (C-UAS) market alone is projected to grow from roughly $4 billion in 2026 to $20 billion by 2033, a 25% CAGR, as detection and

mitigation technologies scale to meet rising UAV-based threats globally.

Given record backlogs, a proposed US defence budget set to reach a new all-time high, and OEMs targeting double-digit delivery growth, momentum in the global aerospace and defence sector is expected to continue through 2026 and beyond. Execution — not demand — is now the industrys defining challenge, with success increasingly dependent on hardening supply chains, scaling production capacity, and aligning workforce strategy to multi-year delivery commitments.

(Sources: PwC, Deloitte, Stratview Research, Fortune Business insights, Global Markets and Markets, Global Market insights, Coherent Market insights, Statistics MRC)

Indian aerospace and defence sector overview

Indias aerospace and defence (A&D) industry is gaining significant momentum in FY2025-26, powered by record budgetary support, an accelerating indigenisation drive, and a policy architecture explicitly aimed at reducing import dependence. The Indian A&D market was valued at $30.72 billion in 2025 and is projected to grow at a 7.10% CAGR through 2035. For the first time, domestic defence production crossed Rs. 1.78 lakh crore in FY2025-26 — a 15.6% increase over the previous fiscal year — while defence exports reached a record Rs. 38,424 crore, a 62.66% rise, reflecting years of indigenisation investment now translating into production and export scale.

Growth is being driven by capital expenditure consistently expanding faster than existing production capacity. The Ministry of Defences capital acquisition budget reached Rs. 2.19 lakh crore in FY2026-27, up nearly 22% year- on-year, with Rs. 1.39 lakh crore — around 75% of the capital acquisition budget — ring-fenced for domestic procurement under Aatmanirbhar Bharat. This is directly expanding order pipelines for platform manufacturers and their supporting sub-system and component suppliers, including public-sector anchors such as Hindustan Aeronautics Limited, whose order book has scaled sharply on the back of this capital acquisition push.

This broad-based growth is reflected across the underlying product segments that make up the sector.

On the aerospace side, Indias engine component ecosystem is scaling alongside the broader aircraft components market, tracking its 6.12% CAGR through 2034. The India aerospace parts manufacturing market, valued at $13.6 billion in 2023, is projected to reach $21.48 billion by 2030 at a 6.8% CAGR, with the commercial aircraft segment holding the largest share — relevant to airframe structural work on platforms.

On the defence side, the India drones market was valued at $1,316.48 million in 2025 and is projected to reach $2,731.54 million by 2034 at a CAGR of 8.45%, while the counter-drone segment is growing even faster, at approximately 28% annually through 2030 — among the fastest-growing globally — driven by border- security requirements and procurement rules that reward indigenous design. Indias missile ecosystem, spanning DRDO, Bharat Dynamics Limited, and a growing base of private component suppliers, is entering a transformative growth phase through 2030, driven by defence modernisation across the Army, Navy, and Air Force and the Make in India push for indigenous guidance, navigation, and control (GNC) sub-systems, end-game packages, and servo/amplifier components. Radar and electronic warfare capability is expanding under the same indigenisation push, with the Ministry of Defences Positive Indigenisation Lists covering thousands of radars, EW, and avionics sub-systems, and Bharat Electronics Limited positioned as a key supplier of radar seekers, RF systems, and electronic warfare components. Military avionics — flight data recorders, cockpit displays, and mission-critical guidance systems — sits within the India aircraft components market, valued at $17.3 billion in 2025 and projected to reach $31.3 billion by 2034 at a 6.12% CAGR, with avionics identified as the fastest- growing sub-segment.

A notable shift within the Indian aerospace and defence sector is the increasing emphasis on supply chain sovereignty and industrial resilience through the localisation of manufacturing. Customs duty exemptions on aircraft components and MRO raw materials, introduced in the Union Budget 2026-27, are expected to reduce exposure to single-source, single-geography dependencies and build a more resilient domestic industrial base.

The sector is also witnessing consolidation and strategic repositioning through joint ventures and inorganic growth, as Indian players seek direct access to global OEM programmes and defence primes. Private companies are increasingly entering joint ventures and strategic partnerships with European and global defence and aerospace OEMs, reflecting a broader trend of Indian suppliers moving up the value chain from components to sub-systems and integrated products, while widening access to European, UK, and NATO-aligned defence programmes.

Given the scale of budgetary commitment, growing order pipelines across public-sector anchors, and the pace of policy reform across every product segment, momentum in Indias aerospace and defence sector is expected to continue well beyond FY2026-27. Execution — scaling indigenous manufacturing capacity and completing the transfer of Tier-1 and Tier-2 work into India — is increasingly the sectors defining challenge, with success dependent on hardening domestic supply chains and aligning capacity build-out with multi- year order books across missile, radar, avionics, and aerostructure segments.

(Sources: Expert Market Research, PIB, IMARC Group, Drone Intelligence, Markets and Markets, IMARC Group, Grand View Research)

Growth drivers

Policy-led domestic procurement mandate: Around 75% of Indias Capital Acquisition budget has been reserved for domestic defence industries in FY 2026-27, with Rs. 1.39 lakh crore allocated for procurement from domestic defence industries. This structurally protects order pipelines for platform manufacturers and their sub- system and component suppliers rather than leaving them to compete for discretionary spending. Capital expenditure has risen to Rs. 2.19 lakh crore, a nearly 22% increase over the previous year, supporting fighter aircraft acquisitions, naval vessels and submarines, missile programmes, and unmanned platforms.

Twin engine of import substitution and export acceptance: Indigenous defence production hit an all- time high of Rs. 1.78 lakh crore in FY2025-26, while defence exports reached a record Rs. 38,424 crore, a 62.7% rise over the previous fiscal year, with the number of exporting firms growing to 145 from 128 and India now supplying to more than 80 countries. Notably, DPSU exports rose 151% year-on-year, reversing the usual pattern where private firms lead export growth, driven largely by increased orders for larger platforms such as helicopters and naval vessels. This dual scale-up in both domestic output and export acceptance signals growing global trust in Indian-made platforms, opening order books beyond the home market.

Modernisation cycle across missile, radar, EW and avionics: Army, Navy and Air Force modernisation, combined with the Ministry of Defences Positive Indigenisation Lists spanning thousands of line items, is systematically redirecting procurement toward domestic guidance, navigation, control, radar and avionics suppliers, creating multi-year order visibility rather than one-off contracts.

Rising battlefield relevance of counter-drone systems:

The global counter-drone market is expected to grow from USD 4 billion in 2026 to USD 20 billion by 2033, a 25% CAGR, driven by defense modernisation initiatives and homeland security investments. Escalating UAV-based threats and indigenous-design preference rules mean this demand accrues disproportionately to domestic players in Indias own fast-growing C-UAS segment.

Faster, cheaper technology transfer from legacy aerospace hubs: Delegated approvals for a few select Tier-1 suppliers now allow work transfer from the UK to India within 6 to 9 months, reducing timelines by more than 70%, while new customs duty exemptions on aircraft components and MRO raw materials lower the landed cost of localising that work, which together makes India a more attractive destination for engine and airframe component manufacturing relocation.

Shift from component supply to integrated sub- systems via JVs: Indian private players are increasingly forming joint ventures with global OEMs, moving up the value chain from parts supply to co-developed sub- systems and integrated products, deepening revenue per programme while opening access to NATO-aligned and European defence programmes previously closed to component-only vendors.

Execution and capacity as the binding constraint: With order books already outstripping current production capacity across both global and Indian markets, credible capacity expansion, through new facilities, workforce scale-up, or supply chain hardening, converts more directly into revenue growth than having to first create demand.

(Source: Trade Brains, Press information Bureau)

Company overview

Sigma Advanced Systems Limited is a Hyderabad- headquartered integrated aerospace and defence company with more than three decades of experience in designing, developing and manufacturing mission-critical systems, sub-systems and components. The Company has evolved from a focused defence manufacturer into a globally integrated aerospace and defence platform spanning defence technology, autonomous systems, aerospace manufacturing and resilient international supply chains, with an operating footprint across India and the United Kingdom and growing access to European and NATO-aligned markets.

Sigmas capabilities span the value chain from precision components and sub-assemblies to sub-systems, integrated products and intellectual property, with offerings across UAVs and counter-UAS, missile systems and guidance, radar and electronic warfare, avionics, naval systems and advanced ammunition, as well as aero-engine components, airframe structures and precision manufacturing. Through strategic partnerships and joint ventures, the Company is also expanding its participation in co-developed and integrated defence products, complementing its established Build-to-Spec engineering and manufacturing capabilities.

The Company has built deep, long-term relationships across the Indian defence ecosystem and global aerospace industry. Its customer base includes DRDO, HAL, Bharat Dynamics Limited and the Indian Air Force, alongside global names such as Rolls-Royce, BAE Systems, Airbus, Lockheed Martin, Safran, Boeing, MBDA and Rheinmetall. Many relationships are embedded in critical programmes, supported by high switching costs and long-life platforms.

Sigma has expanded its geographic, manufacturing and market-access footprint through targeted acquisitions and partnerships. The 100% acquisition of UK-based Nasmyth in 2025 added aerospace manufacturing capabilities in complex sub-assemblies, fabrications and precision- engineered components. The 51% acquisition of AS Strategic, completed in April 2026, strengthened access to European, UK and NATO-aligned defence programmes and to established joint ventures with European defence OEMs. In July 2026, Sigma further expanded its UK aerospace platform through the acquisition of Bromford Precision Solutions, adding complementary capabilities in complex aero-engine rings, casings, engine structures and advanced precision machining. These transactions support Sigmas stated strategy of building a globally embedded aerospace and defence platform rather than a location-specific manufacturing business.

As of FY2025-26, the Company had 700+ employees across eight facilities in India and the United Kingdom and served more than 10 international export markets. Its footprint has since expanded further through the Bromford acquisition and the commissioning of additional manufacturing capacity at Sri City. Sigma possesses a predominantly international order book, long-term programme visibility and a consolidated order book exceeding Rs. 8,000 crore by July 2026, supported by major aerospace and defence contract wins. With the recent Bromford acquisition it has also been able to increase its order book through a recently announced Rolls-Royce long-term agreement of Rs. 1,600 crore, taking the combined order book visibility to over Rs. 9,600 crore.

Sigmas growth strategy combines core programme growth, targeted capability and geographic expansion, and margin improvement through an integrated India-UK operating model. The Company is pursuing larger work packages by combining proximity, customer alignment and specialised manufacturing capability in the UK with scalable, cost-competitive production in India, including progressive work transfer to its Sri City facility. Its integrated R&D, engineering, manufacturing and lifecycle- support capabilities position Sigma to participate across the defence and aerospace value chains as demand for indigenisation, autonomy, advanced electronics and resilient global supply chains increases.

What makes Sigma unique

Integrated technology, engineering and manufacturing capabilities: Sigma spans components, sub-assemblies, sub-systems and products/IP, combining hardware, software and mechanical engineering with manufacturing capabilities across the aerospace and defence value chain. This enables Sigma to participate at multiple levels of customer programmes and progressively capture a greater share of programme value.

Deep and enduring customer relationships:

Multi-decade relationships with Indian defence organisations and global aerospace OEMs, combined with exposure to critical programmes, high switching costs and long-life platforms, provide a strong foundation for recurring business and customer stickiness.

Diversified, multi-geography platform: Sigma has exposure to Indian defence, autonomous defence and counter-UAS, global aerospace and international exports. Its Indian manufacturing footprint, together with Nasmyth and Bromfords UK capabilities in complex sub-assemblies, fabrications, aero-engine structures and precision components, and AS Strategics access to European, UK and NATO-aligned defence programmes and OEM relationships, creates a differentiated platform combining engineering expertise, manufacturing scale, market access and cost competitiveness.

Engineering, certification and quality capabilities:

Sigma has the engineering, quality systems and certifications required to participate in demanding aerospace and defence programmes, including DO-254, DO-178C, MIL-STD and AS 9102, alongside applicable aviation and regulatory certifications such as EASA and FAA approvals/certifications, where held by the relevant Sigma entities. These capabilities support qualification for safety- and mission-critical applications and create barriers to entry.

Lifecycle and aftermarket capabilities: Maintenance, AOG response, overhaul, spare parts and reverse engineering enable Sigma to support customers beyond initial product delivery, deepen relationships, participate in recurring aftermarket opportunities and increase the lifetime value of customer programmes.

Increasing participation in higher-value activities:

Sigma is evolving from a component and sub-assembly supplier towards larger work packages, integrated systems and co-developed products, while building proprietary intellectual property and increasing its content and share of customer programmes.

What opportunities does this enable us to pursue?

Global aerospace growth: Rising air travel, fleet modernisation and expanding aircraft production support sustained demand for aero-engine components, airframe structures, complex sub- assemblies and precision manufacturing. Sigmas expanded Indian and UK manufacturing platform positions it to participate in this growth across multiple programmes and geographies.

Indian defence indigenisation: Rising domestic defence procurement, policy support and increased private-sector participation create a structural opportunity for Indian defence technology and manufacturing companies. Sigmas established relationships, engineering capabilities and expanding product portfolio provide a platform to capture a growing share of domestic defence value chains.

Counter-UAS and autonomous defence: Rapid adoption of drones, counter-drone systems, AI and autonomous warfare creates opportunities across UAVs, C-UAS, radar, electronic warfare, embedded systems and mission-critical sub-systems. Sigmas strategic partnership with Indrajaal and subsequent counter-drone programme wins during 2026 provide commercial validation of this growth vertical and a platform for further expansion.

China+1, supply-chain resilience and dual-source manufacturing: Global aerospace and defence OEMs seeking resilient, diversified and cost-competitive supply chains create opportunities for Sigma to expand India-based precision manufacturing and component sourcing. Its India-UK operating model enables dual-source manufacturing and the progressive transfer of appropriate work to Indias cost-competitive manufacturing base, while its enlarged UK aerospace platform and European defence partnerships provide access to UK, European and NATO-aligned programmes.

Value-chain expansion and cross-selling: Sigmas integrated engineering, manufacturing and product capabilities create opportunities to move beyond individual components and sub-assemblies into larger work packages, integrated systems and co-developed products. The enlarged platform also enables Sigma to introduce its technologies and manufacturing capabilities to new customers and expand the scope of work with existing customers across the group, increasing content per platform, programme share and intellectual-property ownership.

Lifecycle and aftermarket growth: Sigmas maintenance, AOG, overhaul, spare-parts and reverse-engineering capabilities create opportunities to expand recurring revenue streams and increase the lifetime value of customer relationships across the product lifecycle.

Building an integrated global aerospace and defence platform: The combination of technology, engineering, manufacturing, certification, customer relationships, programme exposure and international market access provides Sigma with an opportunity to build a more integrated aerospace and defence platform, capturing greater value across multiple stages of the supply chain and the lifecycle of customer programmes.

Financial overview Profit and Loss analysis

Revenues: Total Revenue stood at Rs. 788 crore in FY2025-26, comprising Rs. 492 crore of revenue from operations and Rs. 296 crore of other income compared to a Total Revenue of Rs.150 Crore in FY2024-25, comprising Rs. 108 crore of revenue from operations and Rs. 42crore of other income. Revenue from operations reflects Sigmas expanding aerospace and defence business, supported by its growing product portfolio and international operations.

Expenses: Total operating expenses amounted to Rs. 479 crore in FY2025-26, comprising COGS of Rs. 185 crore, other expenditure of Rs. 259 crore, depreciation of Rs. 15 crore and interest of Rs. 20 crore. The Company also reported an exceptional item of Rs. 11 crore and share of profit from associates of Rs. 2 crore. Compared to this, FY 2024-25 reported Total operating expenses amounted to Rs. 118 crore in FY2024-25, comprising COGS of Rs. 73 crore, other expenditure of Rs. 20 crore, depreciation of Rs. 5 crore and interest of Rs. 20 crore. The Company also reported share of Loss from associates of Rs. 40 crore

Balance Sheet analysis

Total assets: As on 31 March 2026, the Companys total assets stood at Rs. 1,059 crore, funded by equity of Rs. 468 crore, non-current liabilities of Rs. 136 crore and current liabilities of Rs. 455 crore. Compared to this, FY 2024-25 reported that the Companys total assets stood at Rs. 468 crore, funded by equity of Rs. 204 crore, non-current liabilities of Rs. 154 crore and current liabilities of Rs. 110 crore.

Applications of funds: Fixed assets stood at Rs. 334

crore as on 31 March 2026, while financial assets stood at Rs. 28 crore, other non-current assets at Rs. 52 crore and current assets at Rs. 645 crore. Compared to this, FY 2024-25 reported Fixed assets stood at Rs. 202 crore as on 31 March 2025, while financial assets stood at Rs. 96 crore, other non-current assets at Rs. 36 crore and current assets at Rs. 135 crore

Margins: Sigma reported PBT of Rs. 301 crore and net profit of Rs. 268 crore in FY2025-26. Based on the reported revenue, the PBT margin was approximately 38.2%, and the net profit margin was approximately 34.0%. Compared to this, FY 2024-25 reported PBT of Rs. (7) crore and net profit of Rs. (14) crore in FY2025-26.

Risks management framework

The Company has a risk and opportunity management framework integrated into its operating and governance processes. Given Sigmas exposure to defence, aerospace, international markets and complex manufacturing programmes, the key areas of risk include technology obsolescence, programme execution, customer concentration, acquisition integration, geopolitical developments, working-capital requirements and regulatory/export controls. The Companys quality and risk architecture also covers product safety, counterfeit- part prevention and critical-component oversight.

Risk management initiatives

Technology risk: Rapid advances in AI, autonomous systems, electronics and defence technologies could result in technology obsolescence, shorten technology cycles and require continued investment in R&D, product development and upgrades.

Mitigation: Sigma maintains strong hardware and software R&D capabilities and continues to develop new-generation FPGA, SoC and autonomous- system capabilities to remain aligned with evolving technology requirements.

Programme and execution risk: Aerospace and defence programmes involve long development, qualification and approval cycles and stringent delivery requirements, which can delay product development, customer approvals and revenue conversion, while simultaneous geographic expansion and capacity build-out can increase delivery, cost and programme-management complexity.

Mitigation: The Company operates with established quality systems and certifications, while its long-standing customer relationships and participation in critical programmes support continued engagement through development and qualification cycles. Sigma is also taking a phased approach to scaling its India, UK and European operations, supported by established management teams, programme oversight and process alignment.

Customer concentration risk: Sigma serves large defence and aerospace customers, and its participation in critical programmes creates exposure to changes in customer procurement priorities, programme delays or cancellations.

Mitigation: The Company continues to diversify across Indian defence, autonomous defence, global aerospace and international markets, while deepening relationships across multiple platforms and customers and leveraging its enlarged international platform to broaden its customer base.

Integration risk: The acquisitions of Nasmyth, Bromford and AS Strategic expand Sigmas geographic reach, capabilities and customer base, while introducing integration requirements across operations, systems, teams, quality frameworks and markets.

Mitigation: Sigma is taking a disciplined, phased approach to integration, leveraging existing management and leadership teams to ensure continuity and oversight. Cross-business workshops, training, best-practice sharing and process alignment support knowledge transfer and operational integration, while preserving customer relationships and capturing synergies. The enlarged platform also creates opportunities for cross- selling and progressive India-UK work transfer.

Geopolitical and export-control risk: Sigmas growing exposure across India, the UK and Europe, together with its international supply chains and defence programmes, increases sensitivity to geopolitical developments, trade restrictions and export-control requirements, which may affect market access and programme execution.

Mitigation: The Company is building a diversified global footprint and supply chain, with manufacturing capabilities across India and the UK and access to multiple international markets. Sigma also maintains relevant processes, certifications and approvals to support compliance with applicable export-control and market-access requirements.

Supply-chain disruption risk: Global aerospace and defence programmes remain vulnerable to disruptions in specialised components, materials and international logistics, which could affect production schedules, costs and programme execution.

Mitigation: Sigmas diversified manufacturing footprint across India and the UK and its expanding international supplier and customer network provide greater flexibility in sourcing and production. The Companys India-UK operating model also supports dual-source manufacturing and supply-chain diversification where appropriate.

Working-capital risk: Growth across aerospace and defence programmes can increase working-capital requirements and place pressure on cash generation, particularly during periods of rapid expansion, capacity commissioning or programme ramp-up.

Mitigation: The Company actively monitors working- capital requirements and cash conversion while leveraging long-term contracts and a diversified international orderbook to support business planning and capacity decisions.

Regulatory and certification risk: Aerospace and defence programmes are subject to stringent regulatory, certification, quality and compliance requirements, which can affect programme qualification, market access and execution.

Mitigation: Sigma maintains relevant aerospace and defence certifications and approvals, including AS9100D, ISO 9001 and DRDO certifications, supporting compliance across its operating markets and participation in demanding aerospace and defence programmes.

Human resources

Sigma views its people as a critical enabler of its technology, engineering and manufacturing capabilities. As of FY2025-26, the Company had 700+ full-time equivalent (FTE) across eight facilities in India and the United Kingdom, comprising highly trained talent supporting defence technology, embedded systems, aerospace manufacturing, engineering, quality and programme management.

The Companys talent base includes systems, embedded, AI,RFandmechanical engineers,aerospace manufacturing specialists, quality engineers and programme managers. Sigmas culture emphasises ownership, high standards and long-term thinking, reflecting the mission-critical nature and long operating life of its products.

The Company also supports skill development through its in-house skill development centre, particularly at its Sri City manufacturing facility, helping build the specialised capabilities required for precision aerospace and defence manufacturing.

Internal control systems and their adequacy

The Company has adequate internal control systems, which include internal financial controls, the efficacy of which is continuously monitored and updated when required internally. The Companys internal control system ensures that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The internal auditors monitor the effectiveness of internal control procedures & compliance on quarterly basis and report to the Audit Committee of the Board of Directors of the Company. The Audit Committee reviews reports presented by the internal auditors on a routine basis. The committee makes notes of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectations and estimations which may be forward-looking statements 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 realised by the Company. Actual results could differ materially from those expressed in the statements or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.