Storage Technologies & Automation Ltd Management Discussions

1. Overview

Consolidated: Revenue from operations declined 15.4% year-on-year to Rs 849.70 Mn (FY25: Rs 1,003.79 Mn). The Company recorded an EBITDA loss of Rs 6.30 Mn (FY25: EBITDA Rs 94.38 Mn) and a net loss attributable to shareholders of Rs 32.74 Mn (FY25: profit Rs 35.51 Mn). The performance deterioration was more pronounced at the consolidated level, reflecting both domestic and cross-border headwinds.

Standalone: Revenue from operations declined 10.18% to Rs 848.00 Mn (FY25: Rs 944.16 Mn). The Company posted an EBITDA loss of Rs 5.23 Mn (FY25: EBITDA Rs 89.66 Mn) and a net loss after tax of Rs 31.27 Mn (FY25: profit Rs 32.19 Mn).

At the EBITDA level, the shortfall was heavily concentrated in H2: H1 FY26 was modest EBITDA-positive at the consolidated level (Rs 8.11 Mn; standalone f7.08 Mn), whereas H2 FY26 turned sharply EBITDA-negative (consolidated: Rs (14.43) Mn; standalone: Rs (12.30) Mn). The weakness reflects: (a) order cancellations and deferrals from a key customer on account of competitiveness concerns and project scrapping; (b) geopolitical disruption - war-related supply chain disruptions and gas-supply problems in production.

2. Financial Performance - Consolidated

Consolidated Profit & Loss Summary

3. Results of Operations Revenue

Consolidated: Consolidated revenue of Rs 849.70 Mn declined 15.4% YoY (FY25: Rs 1,003.79 Mn), with the larger proportionate decline vs. standalone reflecting the higher FY25 consolidated base and incremental order losses at the subsidiary level. H2 FY26 consolidated revenue of Rs 377.56 Mn fell 25.9% YoY and 20% sequentially (H1: 472.14 Mn), with the subsidiary (UAE) losing several orders in Q4 FY26 - partially related to geopolitical disruptions and gas-supply issues in the production and cancelled project commissioning.

Standalone: Standalone revenue of Rs 848.00 Mn was down 10.2% YoY. The decline was second-half weighted: H2 FY26 revenue of Rs 377.47 Mn fell 19.8% sequentially and 25.7% YoY. Multiple factors drove the shortfall:

1. Order cancellations and scrapping by one corporate client and project reassessment - a key customer relationship that contributed meaningfully to prior-year revenues.

2. Project deferrals/postponement from other customers, where projects were delayed rather than cancelled, deferring billing into FY27.

3. March revenue suppressed due to production management and logistics challenges related to dispatching and assembly, limiting the full-year outturn.

4. Geopolitical disruption (war situation) impacting export market pipeline, particularly in GCC markets.

5. The outstanding order book as of 31 March 2026 stood at approximately Rs 200Mn, with the book building to ~Rs 350Mn by May 2026 and a further ~Rs 50Mn expected to close in the near term - providing improved revenue visibility entering FY27.

4. Margins and Profitability

Consolidated: Full-year consolidated gross margin was 36.51 % (FY25: 37.28%), with the compression driven by revenue de-leverage and adverse mix as higher-margin domestic installation work was partially substituted by lower-absorption export activity. Despite resilient gross-level performance, EBITDA turned negative at (0.74%) margin (FY25: 9.40%), as operating overheads ~ particularly employee costs (Rs 117.00 Mn) and operating expenses (Rs 113.53 Mn) ~ did not scale down commensurately. Consolidated net loss attributable to shareholders was Rs 32.75 Mn vs. profit of Rs 35.51 Mn in FY25.

Standalone: Full-year gross margin contracted to 36.4% (FY25: 38.2%) ~ the optically high H2 gross margin of 47.4% is distorted by inventory-change timing and is best read annually. EBITDA turned negative at (0.6%) margin (FY25: 9.5%), as employee benefits rose to Rs 117.01 Mn and contractual manpower, machinery-rental, and subcontracting costs on the delayed installation project persisted. The installation segment, which historically contributed Rs 60Mn in margin, is expected to recover to Rs 120Mn in FY27 as the deferred project completes and order-booking margins ~ which have already improved in FY26 ~ flow through to execution. Depreciation increased to Rs 23.14 Mn; finance costs eased to Rs 19.04 Mn, producing a pre-tax loss of Rs 42.21 Mn and, after deferred-tax credit, a net loss of Rs 31.28 Mn.

5. Outlook for FY2027

For FY2027, the Company expects a stronger operating footing as: (a) deferred projects complete and bill; (b) contractual manpower and rental overhangs normalise; (c) the mix tilts toward higher-margin automated and GCC work; and (d) order-booking margin improvements flow through to reported P&L.

Under current circumstances management is expecting FY27 Revenue to grow upwards of 20%. There could be further 10-15% upside potential in this Topline contingent on export market acceleration.

With revenue scaling and the fixed-cost overhang normalising, EBITDA margin is targeted to return to positive territory in FY27, marking a decisive improvement over FY26.

Near-term profitability remains sensitive to steel-price movements, the pace of collections and project- conversion timing, and geopolitical developments in GCC markets.This Management Discussion & Analysis should be read together with the audited financial statements and accompanying notes for the year ended 31 March 2026. Figures have been rounded to Rs million.