Tata Technologies Ltd Management Discussions

Management Discussion and Analysis

Global economy

The global economy displayed resilience through calendar year 2025 despite an external environment marked by geopolitical tensions, policy uncertainty, and evolving trade arrangements. Economic activity was supported by continued household consumption, technology- led capital expenditure, and relatively stable labor market conditions, even as businesses navigated tariff- related changes, supply chain disruptions, and cautious investment cycles. Global inflation moderated during the year, and multiple major economies benefited from softer price pressures than initially anticipated. World GDP expanded by 3.4% in 2025, with advanced economies growing at 1.9% and emerging market and developing economies growing at 4.4%. The United States grew at 2.1%, the Euro area at 1.4%, Japan at 1.2%, India at 7.6%, and China at 5.0%.

Consumer demand remained an important support to global growth. Household spending expanded across major markets, aided by wage growth, technology- related spending, and improving financial conditions in key economies. Labor markets also remained relatively robust, with the technology and services sectors continuing to add jobs even as manufacturing activity remained uneven in several regions. These trends helped sustain income growth and prevent a sharper slowdown in overall economic momentum.

At the same time, the macroeconomic environment remained far from benign. Rising tensions in West Asia and the continuing Russia-Ukraine conflict disrupted trade routes, increased volatility in commodity and crude oil prices, and created additional stress on logistics and global supply chains. These developments resulted in higher procurement and freight costs, delayed cargo movement, and continued uncertainty over the availability of critical materials and services. For global industrial companies, including manufacturing-oriented customers of Tata Technologies, this produced a more cautious operating environment and pushed several decision cycles deeper into the year.

Global trade volumes improved during 2025, growing by 5.1% against 3.6% in the previous year. This improvement was supported by easing trade frictions, including the US- China trade truce, reduced tariffs on selected categories, and improved availability of electronics components and critical minerals. Financial markets remained generally supportive, although intermittent volatility persisted. Central banks undertook calibrated policy actions, including interest rate reductions in the United States and the United Kingdom, helping preserve financial stability while avoiding a sharp demand slowdown.

Looking ahead, the global economy is expected to moderate slightly to 3.1% in 2026 before improving modestly to 3.2% in 2027. This outlook is supported by productivity gains from artificial intelligence and digital technologies, but remains tempered by continued geopolitical uncertainty, tariff adjustments, and changing policy regimes. For Tata Technologies, the long-term demand drivers for engineering and digital services remain intact, but the near-term environment will continue to require agility, execution discipline, and sharper focus on high-value programs.

(Source: World Economic Outlook (IMF), WEO- April (IMF))

Indian economy

India remained one of the fastest-growing major economies during FY 2025-26, supported by resilient domestic demand, public capital expenditure, and continued structural reform. Real GDP growth stood at 7.6% for FY 2025-26, following 7.1% in FY 2024-25, with a projected range of 6.8% to 7.2% for FY 2026-27. Gross Value-Added growth also remained strong, reflecting the breadth of the domestic expansion.

Domestic demand remained the central pillar of this growth. Strong agricultural output supported rural incomes and consumption, while urban demand benefited from job creation and easing inflationary pressures. Public capital expenditure of Rs.12.2 lakh crore in the Union Budget 202627 is expected to support infrastructure development and stimulate the manufacturing, construction, and energy sectors. Government-led initiatives directed toward capability building, self-reliance, and industrial competitiveness further strengthened the foundation for long-term growth.

Indias macroeconomic environment remained relatively supportive. Average headline CPI inflation was 1.7% during the first nine months of FY 2025-26, with an inflation estimate of 3.4% as of March 2026. Lower inflation supported consumer purchasing power and improved cost visibility for businesses. It also reinforced Indias relative attractiveness as a location for manufacturing, engineering, and digital service delivery in a turbulent global environment.

For Tata Technologies, the Indian context remains strategically important on multiple counts. India is not only a key domestic market, but also a critical talent and delivery base for global engineering, embedded systems development, digital manufacturing, and product lifecycle services. As global OEMs and industrial companies diversify supply chains and seek cost- efficient engineering capacity, Indias role as a global product engineering and digital transformation hub is expected to grow further. India is increasingly emerging as a manufacturing and digital transformation hub, and that shift is highly relevant to the Companys long-term delivery model and growth outlook.

Industry overview

Engineering, Research and Development (ER&D)

Engineering, Research and Development (ER&D) is a critical enabler of product innovation and cost-efficient engineering for multinational enterprises. Growing product complexity, rapid digitalization, increasing embedded software intensity, and broader adoption of outsourced engineering and design models continue to drive demand. Global enterprises are increasingly partnering with external engineering providers to accelerate time-to-market, optimize costs, and access specialized capabilities across software, embedded electronics, systems engineering, and digital validation.

Embedded System Industry

The embedded systems market in India is also an important growth area, driven by smart devices, industrial equipment, automotive electronics, healthcare instruments, and connected infrastructure. For Tata Technologies, this segment is strategically important as embedded engineering becomes increasingly central to value creation across automotive, aerospace, and industrial product development. The acquisition of ES-Tec, along with the growing industry focus on software-defined vehicles, further strengthens the Companys positioning in this domain.

Automotive

For Tata Technologies, the automotive sector remains its strongest domain vertical. The segment continued to account for the largest share of the Indian ER&D market in 2025, supported by growing investments in advanced driver assistance systems (ADAS), e-powertrain development, and next-generation mobility engineering. Software engineering and embedded engineering also remain structurally important service lines, reflecting the industry shift toward software-defined products, connected platforms, and intelligent electronics. These trends directly support Tata Technologies capabilities in full vehicle development, embedded software, HIL and SIL testing, ECU virtualisation, digital validation, and connected vehicle technologies.

Industrial Heavy Machinery (IHM)

Industrial heavy machinery is a foundational sector benefiting from infrastructure investment, factory automation, energy efficiency needs, and modular machine design. Growing adoption of predictive maintenance, smart manufacturing, and digital engineering is increasing demand for the digital continuity, industrial systems, and engineering capabilities that Tata Technologies has been building in this vertical.

Aerospace and Defense Industry

Aerospace is an increasingly important sector for engineering outsourcing and digital transformation. Sustained investments in new platforms, advanced technologies, cabin interiors, digital twins, predictive maintenance, and safety-critical engineering continue across the industry. Sustainability also remains a key focus area, including fuel-efficient aircraft design, alternative propulsion systems, and sustainable aviation fuel initiatives. These industry trends are well aligned with Tata Technologies growing aerospace business and its capabilities in airframe design, cabin engineering, systems integration, robotics, and model-based systems engineering.

Company overview

Tata Technologies Limited (referred to as TTL or the Company), is a global product engineering and digital services company serving OEMs and Tier 1 suppliers across automotive, aerospace, and industrial heavy machinery sectors. The Company operates through two main segments, Services and Technology Solutions, and had a workforce of more than 12,600 employees across 20 delivery centers in India, North America, Europe, and Asia- Pacific. The Company also operates across more than 27 countries, enabling close proximity to customers in major manufacturing and innovation hubs.

The Services segment delivers outsourced engineering and digital transformation support across product development, manufacturing, and digital customer experience. The Technology Solutions segment comprises products and education solutions, including software platforms, upskilling, reskilling, competency centers, and the iGET IT learning platform. The Company has also developed a set of proprietary frameworks and platforms including Chromosome.Al, WATT-Sync, SIRI, RightWeighting 5R, TRACE, and Power of 8, signaling a deliberate shift from pure services delivery toward differentiated IP-enabled execution.

The Company maintains long-term relationships with leading global OEMs and clients across the automotive, aerospace, and industrial heavy machinery sectors. The BMW TechWorks India joint venture and partnerships with companies like Emerson and National Instruments further underscore the Companys collaborative approach to solving increasingly complex engineering and testing needs.

SCOT Analysis

End-to-End OEM DNA and Turnkey FVP Capability: The Companys differentiated positioning lies in its end-to-end vehicle engineering DNA, enabling it to operate as a strategic turnkey partner rather than a task- based engineering vendor. The Company has successfully delivered more than 35 Full Vehicle Programs (FVPs) and remains among the first Indian engineering service providers to execute a complete turnkey program for a global automotive OEM. This capability allows the Company to integrate across the entire product lifecycle and expand into embedded software, manufacturing engineering, and digital continuity solutions.

BMW TechWorks JV as a Strategic Competitive Advantage: The BMW TechWorks India joint venture continues to strengthen the Companys positioning within the global automotive ER&D ecosystem. The partnership has scaled significantly, contributing meaningfully to both capability depth and profitability. It has further enhanced the Companys brand positioning and enabled multiple direct framework engagements with BMW across Europe, North America, and China.

Embedded Engineering Capabilities Strengthened through ES-Tec Acquisition:

The acquisition of Germany-based ES-Tec has significantly enhanced the Companys capabilities in advanced automotive electronics, ADAS, and Software-Defined Vehicle (SDV) engineering.

The acquisition also provided strategic access to Volkswagen programs, strengthening the Companys presence in high-value software-led and electronics engineering engagements.

Aerospace Emerging as a High-Growth Vertical:

The Aerospace business has become a key growth pillar for the Company, with revenues increasing significantly over the last four years. The Companys engineering capabilities have further strengthened through specialized certifications, including Airbus Design Organisation Approval Technical Approvers, enabling participation in safety-critical aerospace engineering work packages.

Al-Ready Workforce and Proprietary Al Framework: The Company has developed its proprietary Al orchestration framework, Chromosome. AI, to integrate Al-led capabilities across the automotive product introduction value chain. More than 50% of the engineering workforce has been designated as Al-ready, supporting, enhanced engineering productivity, manufacturing / throughput, and operational efficiency. /

Client Concentration: The Top 5 clients contribute a significant share of the Companys total revenues. Any reduction in business volumes, delays in programs, or changes in sourcing strategies by key clients may impact revenue visibility.

Margin Sensitivity to Global OEM Investment Cycles: The Companys margins remain susceptible to operational deleverage during periods when global OEMs defer, pause, or resequence product development programs due to macroeconomic or geopolitical uncertainties. Exposure to Global Decision Pauses: The Company remains exposed to short-term revenue volatility arising from delays, re-phasing, or recalibration of product development investments by global OEMs in response to changing regulatory policies, tariffs, and broader macroeconomic uncertainties.

Rising Voluntary Attrition: The Company continues to operate in a highly competitive engineering talent market, particularly across specialized digital and technology domains. Increased hiring demand from Global Capability Centres (GCCs) and global engineering organizations may continue to exert pressure on / voluntary attrition and talent retention. /

Opportunities

Software-Defined Vehicle (SDV) and EVTransition:

The ongoing transition toward Software-Defined Vehicles and electric mobility is expected to create long-term opportunities across embedded software, OTA platforms, digital validation, DevOps, and digital twin engineering solutions.

Al-Enabled Engineering Opportunities: Increasing adoption of Al-led engineering, generative Al, intelligent automation, and software-defined product development across the automotive, aerospace, and industrial sectors is expected to create new opportunities across embedded engineering, digital validation, and smart manufacturing solutions.

Digital Transformation: Global OEMs and industrial companies continue to accelerate investments in connected platforms, digital manufacturing, automation, and engineering transformation programs, creating long-term demand for integrated ER&D and digital solutions.

Expansion across Global Automotive Engineering Markets: The acquisition of ES-Tec in Germany and recent Full Vehicle Program wins with leading global OEMs provide the Company with strategic access to advanced automotive ER&D markets and global engineering ecosystems.

Leveraging Tata Group Ecosystem Opportunities: The Company remains well-positioned to benefit from engineering and digital transformation opportunities emerging across the broader Tata Group ecosystem, including electric mobility, battery manufacturing, aviation, and commercial vehicle platform development initiatives.

Airbus Supply Chain Integration Opportunities: Through its participation in the exclusive EMES3 program, the Company is well-positioned to strengthen its engagement with Airbus and expand its presence across high-value aerospace engineering and propulsion-related supply chain programs.

Positioning around Speed, Cost Efficiency, and Quality: Global OEMs are increasingly seeking engineering partners capable of delivering "Chinalike" speed and cost efficiency while adhering to stringent Western quality, safety, and governance standards. The Company continues to strengthen its positioning within this evolving demand environment.

Recovery in the Industrial Heavy Machinery (IHM) Segment: The Industrial Heavy Machinery vertical continues to witness improving demand, supported by increasing adoption of predictive maintenance, smart manufacturing, and digital transformation / solutions across industrial operations.

Threats

Macroeconomic and Geopolitical Uncertainties:

Global geopolitical developments, tariff-related uncertainties, and changes in industrial and climate-related regulations may impact OEM investment cycles and delay product development decisions across key markets.

Rising Competitive Pressure from Chinese OEMs: The rapid innovation cycles and aggressive market expansion by Chinese automotive OEMs continue to reshape the competitive landscape, potentially influencing R&D priorities and investment strategies of global automotive manufacturers.

Supply Chain Disruptions: Ongoing geopolitical tensions in the Middle East continue to pose indirect risks to the global automotive supply chain, particularly across critical raw materials such as aluminum and plastics. Prolonged disruptions or cost escalations may impact OEM spending priorities and tighten discretionary ER&D investments.

Cybersecurity and Infrastructure Risks:

Increasing dependence on digital engineering ecosystems exposes the Company to cybersecurity, data protection, and infrastructure-related risks. Disruptions caused by cyber incidents at customer locations or within connected systems may affect project / execution and revenue continuity.

Business segments overview

• Services Segment

The Services segment constitutes the core of the Companys operations. It offers full engineering and digital solutions to global manufacturing clients. The segment combines traditional engineering skills with new digital technologies to meet customer needs in key industries.

A Engineering Research and Development

ER&D services stand at the center of the Companys offerings. They help global OEMs and their partners design, engineer, manufacture and deliver better products. ER&D covers the full product development cycle from concept and design through manufacturing validation and production support.

The Company provides future-ready, sustainable product design across the automotive, aerospace, and industrial heavy machinery sectors. Capabilities include full vehicle development, embedded systems, electrification and software-defined vehicles.

In the automotive industry, the Company delivers turnkey vehicle development, embedded software, connected vehicle technologies, and testing services. These include Hardware-in-the-Loop (HIL), Software-in-the-Loop (SIL), and ECU virtualization. These services speed up product development and improve vehicle performance.

For aerospace clients, the Company offers airframe design, cabin interiors, passenger-to-freighter conversions, electrical systems, robotics, and model- based systems engineering. These meet modern aerospace needs for innovation and efficiency.

In industrial heavy machinery, the Company develops full solutions for construction equipment, mining machinery, agricultural vehicles and industrial engines. Special skills cover cab development, hydraulic systems, powertrain integration and embedded software for heavy-duty reliability.

• Digital Enterprise Solutions

Digital Enterprise Solutions (DES) helps clients manage their shift to digital operations. The Company uses next-generation technologies to solve complex industry problems. Solutions cover digital manufacturing, data analytics, predictive maintenance, artificial intelligence and machine learning as companies move to Industry 4.0.

The DES portfolio includes digital transformation in product development, digital manufacturing in production processes, digital customer experience, and enterprise-wide change. Key areas include cloud computing, loT, Al and machine learning, digital thread and digital twin technologies.

These tools give manufacturers better visibility, faster, data-driven decisions, and smoother customer interactions.

• Embedded Systems and Solutions (ESS)

Embedded Systems and Solutions (ESS) enable clients to build intelligent, software-defined products across automotive, aerospace, and industrial sectors. With the industrys shift toward software-defined vehicles and connected devices, ESS plays a central role in integrating hardware and software to deliver smarter, safer, and more sustainable products.

The ESS portfolio includes embedded software engineering, systems integration, validation and testing, and full lifecycle support for intelligent product development. Solutions cover firmware and middleware development, advanced driver- assistance systems (ADAS), connected and cloud- native applications, and Al- and GenAI-enabled functionality. Recent capability expansion through acquisitions and partnerships has enhanced the Companys ability to deliver end-to-end product engineering solutions for global OEMs. These capabilities help manufacturers accelerate product innovation, enable real-time functionality, and deliver seamless user experiences in increasingly connected and autonomous environments. The Company brings together electronics, embedded software, and systems engineering capabilities to address the growing complexity of next-generation products.

• Technology Solutions

The Technology Solutions segment focuses on value-added software solutions supporting digital transformation in product development and upskilling for industry relevant capabilities.

• Education

Education solutions meet the need for skilled workers in manufacturing. The Company works with colleges, universities, and governments to train the next- generation of engineers and technicians. Programs build in-demand skills and improve employability in fast-changing technology.

The Company offers upskilling training and programs for the latest engineering and manufacturing technologies. The portfolio includes upskilling competency centers and the iGET IT online learning platform.

To connect academia and industry, the Company partners with state governments in India. These create phygital learning models that mix infrastructure with digital content. This aligns education with the manufacturing sectors needs.

• Software Products

Software products add value to service offerings through reselling and integration of top engineering tools. They help customers improve digital engineering, optimize design and speed up innovation.

The Company partners with industry leaders for PLM, CAD, CAM and simulation technologies. Beyond reselling, it provides consulting, implementation, customization, and training. This full approach helps clients get the most from software while meeting business goals.

• Outlook

The global macroeconomic environment continues to witness uncertainty driven by geopolitical developments and evolving regulatory frameworks. In the US automotive market, OEMs are maintaining investments across internal combustion engine, hybrid, and electric vehicle platforms as they align product strategies with shifting consumer demand and policy developments. The transition toward electrification is therefore expected to remain gradual, supported by a balanced approach across propulsion technologies.

In Europe, uncertainty surrounding tariffs and evolving industrial policies continues to delay key investment decisions, alongside rising competitive pressures from Chinese automotive players. At the same time, early signs of recovery are emerging through foundational investments and gradual improvement in market sentiment. While near-term caution is expected to persist, the medium- to longterm outlook for ER&D investments in the automotive sector remains favorable. Continued advancements

In the US automotive market, OEMs are maintaining investments across internal combustion engine, hybrid, and electric vehicle platforms as they align product strategies with shifting consumer demand and policy developments in electric, autonomous, and sustainable mobility technologies are expected to support future growth across the industry.

The Companys strong domain expertise, together with its expanding software-defined vehicle capabilities and Al-led solutions across the product lifecycle, positions it favorably to address evolving industry requirements. These capabilities enable OEMs and suppliers to manage the ongoing mobility transformation more effectively while supporting innovation, product development, and digital integration across automotive platforms.

Demand in the Aerospace and Industrial Heavy Machinery sectors remains strong. The aerospace business exhibited significant revenue growth in FY 2025-26 from FY 2024-25. This growth came from a healthy order book and strong execution. The Company expects this momentum to continue into FY 2026-27.

Financial review

This section discusses the consolidated financial statements for the year ended March 31, 2026. The consolidated financial statements of Tata Technologies Limited (the Company) are prepared in accordance with the Indian Accounting Standards (Ind AS) under Section 133 of the Companies Act, 2013, and the related Rules. Key accounting policies appear in the notes to these statements.

The Company and its subsidiaries consolidate on a line-by-line basis. This adds together matching assets, liabilities, income and expenses. It eliminates intra-group transactions and unrealized gains or losses per Ind AS 110 on Consolidated Financial Statements. The Company completed the acquisition of ES-Tec GmbH and its subsidiaries on November 27, 2025, and accordingly, their financial results have been consolidated from the acquisition date, resulting in four months of consolidation in FY 2025-26, with detailed disclosures provided in Note 43(b) to the consolidated financial statements

In FY 2025-26, the Company continued to build on its growth momentum despite a challenging global environment, reflecting the inherent resilience of its business and the strength of its market relationships. Short-term operating performance was influenced by geopolitical developments and deliberate investments, while reported profitability absorbed one-time costs linked to regulatory changes and strategic acquisitions.

The next section gives an overview of the consolidated financial results.

Segmental performance

The Companys reportable segments consist of Services and Technology Solutions. The table below summarizes segmental revenue and the corresponding margin percentages.

	(Amount in Rs. crore)
Segmental Revenue	FY 2025-26	FY 2024-25
Total	5,505.57	5,168.45
Services	4,256.30	4,027.36
Tech Solutions	1,249.27	1,141.09

 

Segmental Margins	FY 2025-26	FY 2024-25
Total	26.6%	29.3%
Services	28.9%	32.4%
Tech Solutions	18.6%	18.2%

Geographical revenue distribution The Company saw revenue growth across its key markets in India, Europe and North America. Revenue in the rest of the world declined.

Revenue in India grew by 7.4%. This came from increased work with non-anchor clients and expansion in the Technology Solutions business.

North America and the rest of Europe both recorded healthy revenue increases of 16.4% and 20.0%, respectively. Stronger client relationships and deeper engagements drove growth in automotive and non-automotive sectors.

The UK saw a minor decline of 0.2%, and the rest of the world saw a drop in revenue of 34% on a lower base.

Consolidated Financial Review

			(Rs. in Crore)
Particulars	FY 2025-26	FY 2024-25	Change%
Revenue from	5,505.57	5,168.45	6.5%
Operations
Operating EBITDA	852.96	934.05	-8.7%
Profit/(loss) Before	764.72	921.40	-17.0%
Tax
Tax Expenses	218.13	244.45	-10.8%
Net Profit /(loss)	546.59	676.95	-19.3%

The following table shows revenue by geography as a percentage of total revenue from operations.

Geographical Revenue	FY 2025-26	FY 2024-25
India	40.5%	40.1%
The United Kingdom	26.9%	28.7%
North America	23.2%	21.2%
Rest of Europe	7.4%	6.5%
Rest of the World	2.0%	3.5%

Services segment performance

The Services segment, comprising Engineering and Design Services and Digital Enterprise offerings, caters to automotive and non-automotive customers across geographies. During the year, the Company continued to secure new engagements from anchor accounts as well as non-anchor customers, reinforcing the strength of its service portfolio.

Revenue from the Services segment rose 5.7% to Rs. 4,256.30 crore in FY 2025-26 from Rs. 4,027.36 crore in FY 2024-25. The segment margin contracted to 28.9% from 32.4%. The Services Segment margin contracted primarily due to geopolitical-led demand softness, higher delivery and transition costs on select programs, and continued investments in talent, capabilities, and strategic initiatives to support long-term growth.

In product engineering, demand for software-defined products and services remained strong throughout the year. Digital Engineering also witnessed healthy traction across digital thread, smart manufacturing, and customer experience solutions. Clients are increasingly focused on achieving seamless integration across the product lifecycle to improve operational visibility and efficiency. In parallel, smart manufacturing solutions supported production optimization and greater operational flexibility, while customer experience platforms enabled more personalized and seamless user interactions.

Technology solutions performance

The Technology Solutions business covers academia, upskilling, reskilling and value-added software reselling. During the year, the Company secured large deals with state governments in India.

Revenue from this segment increased 9.5% to Rs. 1,249.27 crore in FY 2025-26 from Rs. 1,141.09 crore in FY 2024-25. The segment margin rose to 18.6% from 18.2%. Gains came from better products business margins and cost improvements.

Growth remained strong due to higher demand for products business and execution of the growing education order book.

Expenses management

In an environment shaped by heightened geopolitical uncertainty, the Company remained focused on strengthening operational discipline and cost efficiency. While the Services segment margins were impacted by program mix and continued investments, actions such as improved delivery utilization and tighter cost controls helped moderate the impact. Continued investments

in automation, talent reskilling and digital delivery capabilities support productivity improvements and longterm value creation through the global delivery model.

Purchase of technology solutions covers IT equipment, software and products for academia, upskilling, reskilling and third-party software licenses for reselling. This amounted to Rs. 967.19 crore in FY 2025-26, up 7.5% from Rs. 899.71 crore last year. The increase was in line with revenue growth in the Technology Solutions segment.

Outsourcing and consultancy charges include costs for direct and agency contractors to support business growth. These totaled Rs. 425.19 crore in FY 2025-26, up 8.9% from Rs. 390.42 crore in FY 2024-25. This increase was primarily driven by higher demand to support business expansion in strategic growth areas.

Employee benefits expense covers salaries, wages, bonuses, provident fund contributions, share-based payments, and staff welfare. This reached Rs. 2,737.42 crore in FY 2025-26, up 10.0% from Rs. 2,488.93 crore in FY 2024-25. The increase was primarily driven by higher onsite headcount and wage revisions.

Finance costs include interest on borrowings and lease liabilities. These amounted to Rs. 34.12 crore in FY 2025-26, up 73.8% from Rs. 19.63 crore in FY 2024-25. The rise was primarily driven by borrowings undertaken to fund the acquisition, as well as the consolidation of interest- bearing debt on the acquired entitys balance sheet.

Depreciation and amortization expenses totaled Rs. 144.95 crore in FY 2025-26, compared with Rs. 121.21 crore in FY 2024-25. Depreciation on right-of-use assets was Rs. 59.49 crore, up from Rs. 50.95 crore last year. Intangible asset amortization reached Rs. 37.63 crore, up from Rs. 22.06 crore. Depreciation increased primarily due to the amortization of acquisition-related intangible assets and capital expenditure incurred during the year.

Other expenses include rent, repairs, maintenance, travel, software, AMC charges, professional fees, office expenses and miscellaneous items. These stood at Rs. 522.82 crore in FY 2025-26, up 14.8% from Rs. 455.34 crore in FY 2024-25. The increase was primarily driven by higher travel, software and AMC expenses, along with increased professional fees.

Other income

Other income includes interest income, other gains and losses and non-operative income.

Interest income mainly comes from interest on bank deposits and intercompany deposits.

Other gains and losses cover changes in the fair value of investments, derivatives and contractual financial assets. Other non-operative income includes credits from foreign exchange gains or losses, lease income gains or losses on investment disposal and deferral income from unwinding liability on fair valued financial assets.

The Companys other income rose 40.6% to Rs. 174.55 crore in FY 2025-26 from Rs. 124.13 crore in FY 2024-25. Fair value gains on options related to the BMW Joint Venture, foreign exchange gains and other non-operating income drove this growth.

Exceptional items

During the year, exceptional items were recognized primarily on account of the notification of the four Labor Codes by the Government of India on November 21,2025, which resulted in an incremental financial impact arising mainly from changes in wage definitions, including gratuity of Rs. 56.82 crore and long-term compensated absences of Rs. 26.92 crore. In addition, acquisition related costs of Rs. 23.99 crore were classified as exceptional items, considering their materiality and non-recurring nature.

Tax expenses

Tax expenses decreased by 10.8% to Rs. 218.13 crore in FY 2025-26 from Rs. 244.45 crore in FY 2024-25, mainly due to changes in profit mix across jurisdictions. The effective tax rate increased from 26.5% to 28.5%. The effective tax rate reflects factors such as differential tax rates, nondeductible expenses, exempt non-operating income, overseas taxes, prior-period reversals and provisions.

Profitability overview

Operating EBITDA stood at Rs. 852.96 crore in FY 2025-26 compared to Rs. 934.05 crore in FY 2024-25. The Operating EBITDA margin was 15.5% versus 18.1% last year.

The share of profit from the equity-accounted investee represents the BMW Joint Ventures profit, which stood at Rs. 24.02 crore for FY 2025-26, compared to Rs. 4.06 crore in FY 2024-25.

Profit after tax declined by 19.3% to Rs. 546.59 crore in FY 2025-26 from Rs. 676.95 crore in FY 2024-25. The Profit After Tax margin was 9.9%, down from 13.1% last year.

Liquidity position

The Company maintains strong liquidity, primarily from cash generated by operations, to meet working capital and capital expenditure needs. During the year, the Company raised borrowings to fund the acquisition, and the acquired entity also carried borrowings on its balance sheet. Detailed disclosures relating to these borrowings are provided in Note 18 to the consolidated financial statements.

As of March 31, 2026, the Company has sufficient cash reserves and liquid assets for short-term obligations and future growth.

Billed days sales outstanding stands at 59 days, and unbilled DSO at 36 days. While overall DSO witnessed an increase during the year, the Company remains committed to maintaining a healthy cash conversion cycle through disciplined receivables management and continued focus on timely collections.

Key financial ratios

Particulars	Unit	FY 2025-26	FY 2024-25
Employee benefit expenses / Revenue from operations	%	49.7	48.2
Total Expenses (excluding interest & depreciation) / Revenue from operations	%	84.5	81.9
Operating EBITDA (Before Other Income) / Revenue from operations	%	15.5	18.1
Effective Tax Rate -Tax expenses / Profit Before Tax	%	28.5	26.5
Profit for the year / Revenue from operations	%	9.9	13.1
Days Sales Outstanding (DSO)	Days	95	81
Current Ratio	Times	1.53	1.74
Debt (excluding lease liabilities) Equity Ratio	Times	0.18	-
Return on Net Worth (%)	%	14.6	19.9
Earnings Per Share (EPS)- Basic	Rs.	13.47	16.69
Dividend Per Share	Rs.	11.70*	11.70

*Proposed final dividend of f 8.35 per share and special dividend of % 3.35 per share, subject to approval by shareholders in the AGM.

Key operating highlights

FY 2025-26 was a year in which Tata Technologies executed with discipline in a cautious market while continuing to invest for the next phase of growth. Management consciously prioritized protection of delivery capacity and long-term capability building during a global decision pause by automotive OEMs, rather than maximizing shortterm margins. It reflects managements confidence in underlying demand, its desire to preserve customer delivery readiness, and its willingness to absorb near- term margin pressure to emerge stronger as customer programs resume or scale.

A second major element of the Companys strategy was diversification. Tata Technologies continued to reduce concentration risk and strengthen positioning beyond automotive. Aerospace has emerged as a high-integrity growth pillar, with revenues growing almost 8x in the last four years and reaching a run rate of approximately $ 40 million during FY 2025-26. This is not just a growth highlight. It is evidence of deliberate portfolio diversification, better balance across verticals, and improved medium- term resilience.

The acquisition of Germany-based ES-Tec was another strategically important move during the year. The acquisition strengthened the Companys capabilities in embedded software and software-defined vehicle engineering and provided a strategic entry into the Volkswagen ecosystem. This acquisition is particularly relevant because it advances more than one strategic objective at once. It strengthens capability in a high- growth engineering domain, expands access to European OEM programs, improves the Companys credibility in software-led automotive work, and supports long-term margin expansion by moving the mix toward higher-value embedded engineering.

Deal momentum improved over the course of the year. The Company moved from a relatively muted start in the first quarter to a stronger finish in the fourth quarter, with several significant deals secured during the year and milestone wins after year-end. A notable strategic win was the Full Vehicle Program (FVP) with a leading Japanese OEM, marking entry into the Japanese automotive market. The order book is also materially stronger than the previous year, supported by a probability-adjusted pipeline and improving conversion rates. This strengthens the credibility of the FY 2026-27 growth outlook because it is anchored in secured and visible opportunities rather than a broad assumption of macro recovery.

The Company also advanced its Al agenda during the year. Tata Technologies continued its transition toward a System of Intelligence-led organization through investments in Al, talent, and partnerships. Chromosome. Al is the Companys proprietary Al orchestration layer built to embed intelligence across the automotive new product introduction value chain. This is strategically significant because it frames Al not as a side initiative but as an operating lever expected to reduce delivery cost, improve engineering productivity, and compress product development timelines.

Capability building accompanied this transition. TechVarsity delivered more than 796 technical modules covering nearly 85% of the workforce, and more than 50% of the engineering workforce has now been designated as Al-ready. The BMW TechWorks India (BTI) joint venture scaled significantly, further strengthening the Companys positioning across global BMW engineering programs. The partnership also contributed to securing multiple direct framework agreements with BMW across key international markets. Together, these developments point to an organization that is investing simultaneously in talent- readiness, delivery capacity, customer proximity, and intelligent execution.

Human resources

The Company continued to view its employees as a critical "talent engine" during FY 2025-26, reinforcing its commitment to protecting delivery capacity and invest in workforce development even amid macroeconomic volatility and sectoral uncertainties. This people-centric approach remained integral to the Companys operational resilience and long-term growth strategy, with continued focus on strengthening future-ready capabilities, enhancing employee engagement, and building a high- performance engineering workforce.

The Company maintained a calibrated and disciplined talent acquisition strategy during the year, with hiring focused on high-impact areas such as digital engineering, embedded systems, software-defined vehicles (SDV), Ailed transformation, and cybersecurity. Alongside talent acquisition, Tata Technologies significantly expanded its learning and development initiatives to strengthen future-ready capabilities across the organization. By the end of the fiscal year, more than 50% of the engineering workforce had been designated as "Al-ready", reflecting sustained investments in advanced technologies and digital capability building.

TechVarsity, the Companys in-house technical learning platform, continued to play a central role in workforce development and capability enhancement. During the year, the platform delivered more than 796 technical modules to over 11,000 unique employees, covering nearly 85% of the workforce. The platform supported continuous learning, talent repurposing, internal mobility, and improved workforce utilization across projects and geographies. In a single quarter alone, the Company trained more than 7,200 employees, including over 1,200 employees in generative and agentic Al technologies, further strengthening its digital engineering capabilities.

Talent retention and employee progression remained key focus areas during the year. The Company continued to strengthen leadership development initiatives and internal career pathways to support employee growth and manage industry-wide attrition. It also implemented annual compensation revisions to maintain competitiveness within the talent market.

Employee engagement and organizational culture continued to receive focused attention during the year. Tata Technologies received a Gold award at the 2025 Brandon Hall Group Excellence Awards for its Employee Recognition Program, highlighting the Companys emphasis on fostering a culture of collaboration, engagement, and performance excellence.

Risk management and response Strengthening enterprise resilience through ERM 2.0 In an era characterized by heightened geopolitical volatility, economic uncertainty, evolving climate risks, and rapid technological disruption, Tata Technologies has continued to strengthen its enterprise risk management approach. The Companys ability to foresee, evaluate, and respond to risks remains central to protecting stakeholder value, enabling sustainable growth, and ensuring longterm resilience.

Recognizing the needs of a changing environment, Tata Technologies has strengthened its Enterprise Risk Management (ERM) framework through the refinement of ERM 2.0, guided by ISO 31000:2018 and COSO 2017 principles, to enhance the effectiveness, depth, and maturity of its risk management processes. ERM 2.0 builds on the Companys strong foundation and introduces a more agile, structured, and technology-enabled framework. It improves visibility of risks across functions, key accounts, and enterprise levels, while embedding risk awareness deeply into business planning, operational decision-making, and governance oversight.

As part of ERM 2.0, risk identification occurs systematically at the enterprise, functional, and account levels, supported by centralized Enterprise Risk Register (ERR) digitization, structured assessment criteria, and strengthened ownership.

Strategic & Forward-Looking Approach to Risk

Risk management at Tata Technologies is not viewed as a compliance activity but as a strategic enabler that provides early warning signals, guides proactive decision-making, and supports innovation. Organisations that actively manage risks are better positioned to anticipate challenges, respond to crises, and leverage emerging opportunities.

Through ERM 2.0, the Company aims to:

• Build a strong culture of risk management across all functions, delivery units, and geographies

• Protect and expand business achievements by ensuring continuity and stability

• Create value by using risk insights to enhance sustainability and performance

To further strengthen ERM execution, the Company rolled out ERM training programs, conducted an ERM survey, and deployed the Risk Management Maturity Indicator (RMMI) for key accounts and functions. These efforts have deepened risk understanding, clarified expectations, and improved the consistency of risk practices across levels.

In line with SEBI LODR requirements, Tata Technologies has constituted a Risk Management Committee (RMC) that provides structured oversight and governance of the ERM framework, reinforcing transparency, accountability, and Board-level involvement.

Corporate social responsibility

The Company remains committed to its responsibilities towards society and the environment. Guided by the Tata Groups enduring legacy of purpose-driven business practices, the Company advances its vision of engineering a better world through innovative solutions, active community engagement, and comprehensive sustainability initiatives.

Corporate Social Responsibility (CSR) constitutes a fundamental pillar of the Companys long-term strategy. The Companys CSR approach emphasizes creating meaningful, sustainable impact across critical areas, including education, skill development, environmental sustainability, and community welfare.

During the year, the Company made contributions to initiatives that promote equitable access to opportunities, enhance employability, and support environmental stewardship. These targeted efforts ensure regulatory compliance while delivering tangible benefits to the communities served by the Companys operations.

Internal control systems & their adequacy

The Company has aligned its internal financial control systems by adopting industry-standard practices and in line with key principles of the globally accepted risk- based framework issued by the Committee of Sponsoring Organisations (COSO). These robust controls are set up commensurate with the size and nature of its business.

The internal control systems, comprising policies and procedures, are designed to ensure that operations are efficiently managed and aligned with the Companys strategic objectives, and to address various aspects of governance, compliance, audit, control, and reporting.

The company has also adopted well-thought-out and structured delegation of authorities and segregation of duties for its operations to provide reasonable assurance regarding the recording and provision of reliable financial and operational information, compliance with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with corporate policies.

The company uses a globally deployed enterprise resource planning (ERP), iPMS (integrated project management system), RippleHire (Resource planning), Opportunity management (SFDC) and other business management software for enterprise business process management with specific objectives that connect all parts of the organization to record data for accounting, consolidation and management information purposes in alignment with acceptable global best practices.

B S R & Co. LLP, the statutory auditors of Tata Technologies, have audited the financial statements included in this annual report and have issued an attestation report on the companys internal control over financial reporting.

M/s. Genpact Enterprise Risk Consulting LLP and the Companys internal auditor team have reviewed and audited internal controls and processes of financial reporting as per the audit committee-approved audit plan to ensure adequate control against the regulatory requirements, preventing fraud and errors, safeguarding the Companys assets and finances, and preserving the accuracy and reliability of financial transactions and reporting.

The Companys internal audit committee periodically reviews the adequacy of the internal control systems. Key observations and recommendations are communicated to the management, and the management takes effective and time-bound corrective measures to maintain the efficiency and effectiveness of the internal controls.

Cautionary statement

The Management Discussion and Analysis may contain certain statements outlining the Companys objectives, plans, projections, outlook, estimates, and expectations, which may qualify as forward-looking statements under applicable securities laws and regulations. These statements reflect informed judgments and estimates concerning future developments. Actual results could differ materially from those expressed or implied due to external and internal factors beyond the Companys control. The Company assumes no obligation to publicly amend, modify, or revise any forward-looking statements based on subsequent developments, information, or events.