Tembo Global Industries Ltd Management Discussions

Global Economy

The global economy remained resilient in 2026 despite heightened geopolitical uncertainties and supply-side disruptions. According to the International Monetary Fund (IMF), global growth is projected at 3.0% in 2026, before improving to 3.4% in 2027, reflecting the economys ability to navigate the combined effects of geopolitical tensions and rapid technological advancements. While the ongoing conflict in the Middle East created pressure on global supply chains and commodity markets, accelerating adoption of artificial intelligence (AI) and a strong technology investment cycle continued to support economic activity across many regions.

Global inflation, which had been moderating since early 2024, experienced renewed pressure during the year. The IMF forecasts world consumer inflation to rise from 4.1% in 2025 to 4.7% in 2026, before easing to 3.9% in 2027. In response, major central banks are expected to maintain a cautious monetary policy stance, balancing inflation control with economic growth objectives.

Despite these challenges, global trade and industrial activity continued to be supported by technology- led investments, infrastructure spending and resilient demand across key economies. Emerging markets, particularly in Asia, remained important growth engines, with India projected to grow by 6.4% in 2026, continuing to be among the fastest-growing major economies globally. The IMF also highlights that economies benefiting from technology investments, digital infrastructure development and manufacturing expansion are expected to outperform global averages.

Looking ahead, the global economic outlook remains constructive, supported by easing energy market disruptions, continued technology adoption, infrastructure investments and improving trade activity. While geopolitical risks and inflationary pressures warrant close monitoring, the gradual recovery in global growth and sustained industrial investment are expected to create favourable opportunities for businesses operating in engineering, industrial products, infrastructure-related solutions and manufacturing value chains

Indian Economy

India continued to demonstrate strong economic resilience in FY26, supported by robust domestic demand, rising investments and sustained industrial activity despite an uncertain global environment. According to the Reserve Bank of India (RBI), the Indian economy is estimated to have grown by 7.6% in FY2025-26, improving from 7.1% in the previous year, making it one of the fastest-growing major economies globally.

Growth was primarily driven by healthy private consumption and strong capital expenditure. On the supply side, the manufacturing and services sectors emerged as key contributors, helping offset moderation in agricultural growth caused by weather-related disruptions. The services sector remained the largest growth engine, contributing nearly 69% of overall real GVA growth, while manufacturing witnessed broad-based expansion across industries.

The industrial sector recorded a robust 9.5% growth in GVA during FY26, supported by favourable policy initiatives, increasing industrial credit availability and continued focus on domestic manufacturing. Manufacturing GVA grew by an impressive 11.5%, led by sectors such as basic metals, motor vehicles and transport equipment.

Macroeconomic fundamentals remained favourable during the year. Headline inflation moderated sharply to 2.1% in FY2025-26 from 4.6% in the previous year, supported by lower food inflation and stable commodity prices. With inflation remaining under control, the Monetary Policy Committee reduced the policy repo rate by 100 basis points during the year, improving liquidity conditions and supporting business investment and economic activity.

Going forward, Indias growth outlook remains favourable, supported by expanding manufacturing activity, continued infrastructure investments, urbanisation, renewable energy development and policy- led industrialisation initiatives. With improving ease of doing business, strong domestic demand and sustained government focus on manufacturing and capital expenditure, the Indian economy is well positioned to support long-term growth across industrial engineering, metal products, HVAC, pipe support and infrastructure-linked industries.

Government Initiatives

Key Manufacturing & Infrastructure Initiatives

• National Manufacturing Mission: Launched to strengthen manufacturing through policy support, technology adoption, skill development and ease of doing business reforms.

• Strategic Sector Focus: The Union Budget has prioritized seven sectors, including electronics, semiconductors, chemicals, textiles and capital goods, to boost domestic manufacturing capabilities.

• PLI & Green Manufacturing: Continued support under PLI schemes and PM E-DRIVE is expected to encourage localization, clean technologies and industrial growth.

• Capital Expenditure Support: The Union Budget 2026-27 has maintained a strong focus on public investment, with capital expenditure budgeted at Rs. 12.2 lakh crore Specific Measures and Initiatives

• Enhanced Credit Guarantee: Credit guarantee cover for Micro and Small Enterprises increased from RS. 5 crore to Rs. 10 crore, expected to facilitate an additional Rs. 1.5 lakh crore in credit over the next five years

• MSME Classification Revision: Investment and turnover limits for MSMEs increased by 2.5x and 2x, respectively, enabling businesses to expand while continuing to avail MSME benefits.

Overall Impact

• MSME Development: MSMEs contribute approximately 30% of Indias GDP, 36% of manufacturing output and nearly 45% of exports. Continued policy support and improved access to finance are expected to enhance productivity, capacity expansion and employment generation in the sector.

• Technology Advancement: Government emphasis on advanced manufacturing, automation, AI and digital technologies is expected to accelerate technology adoption, improve operational efficiency and support higher value-added manufacturing.

• Employment Generation: Expansion of manufacturing activities, industrial clusters and infrastructure projects is expected to create additional employment opportunities while supporting workforce skilling and upskilling initiatives.

Source: Reserve Bank of India, Budget 2026, PIB

Industry Overview

Tembo Global Industries operates across engineering products, pipe support systems, fasteners, EPC, infrastructure solutions, defence manufacturing, and renewable energy businesses. Industry fundamentals remained favourable during FY26, supported by sustained government infrastructure spending, growing industrial investments, increasing defence localisation, and rising demand from sectors such as oil & gas,

Textile Industry

The Indian textile and apparel industry continued to strengthen its position as one of the countrys largest manufacturing sectors, supported by favourable policy initiatives, expanding domestic demand and sustained investments in capacity creation. The sector remains a significant contributor to Indias economy, generating large-scale employment and supporting the countrys export earnings across diverse textile segments. During FY26, the Government continued its focus on enhancing global competitiveness, promoting domestic manufacturing and developing a robust textile value chain through targeted interventions and infrastructure investments.

The industry witnessed significant policy support during the year, including GST rationalisation across garments, man-made fibre (MMF) fibres and yarns, extension of export incentive schemes such as RoDTEP and RoSCTL, and revisions to the Production Linked Incentive (PLI) Scheme aimed at encouraging fresh. The Government also accelerated the development of the seven PM MITRA Mega Textile Parks with a total outlay of Rs.4,445 crore, creating an integrated ecosystem for textile manufacturing and exports.

The country recorded record MSP cotton procurement of 525 lakh quintals during the year, providing stability to cotton farmers and strengthening the domestic fibre ecosystem. Simultaneously, initiatives under technical textiles, MMF products and advanced manufacturing are creating new opportunities in high-value-added textile applications across infrastructure, automotive, industrial and healthcare sectors.

Continued emphasis on domestic manufacturing and supply-chain development is helping India strengthen its position as a preferred global sourcing destination. With policy reforms and growing demand for value-added textile products, the industry is well placed to achieve sustainable growth and strengthen its position in global textile and apparel markets in the coming years.

Engineering & Capital Goods

Indias engineering and capital goods sector continued to demonstrate strong momentum during FY2025-26, supported by sustained infrastructure investments, rising industrial activity and a favourable policy environment. The sector remains a key enabler of the countrys investment-led growth strategy, playing a critical role in infrastructure creation, capacity expansion and technological advancement.

Growth in the sector was reflected in the Index of Industrial Production (IIP), where the capital goods segment recorded an 8.1% year-on-year increase in December 2025. Rising investments across infrastructure, energy, transportation and manufacturing sectors continued to support demand for engineering products and industrial equipment. Domestic production of capital goods increased to Rs.2,05,194 crore in FY25 from Rs.1,85,858 crore in the previous year, while exports also recorded healthy growth, demonstrating the sectors increasing competitiveness and manufacturing strength.

The Union Budget 2026-27 further reinforced the sectors growth outlook through higher public capital expenditure of Rs.12.2 lakh crore and continued emphasis on expanding manufacturing capacity across strategic sectors.

Looking ahead, continued infrastructure spending, industrial investments and policy-led manufacturing growth are expected to support sustained demand across the engineering and capital goods sector, creating a favourable environment for long-term growth.

Source: Union Budget 2026, PIB

Manufacturing Sector

Manufacturing emerged as one of the key growth drivers, recording GVA growth of 7.72% in the first quarter and further accelerating to 9.13% in the second quarter. The momentum was also reflected in the Index of Industrial Production, where manufacturing output registered 8.1% growth in December 2025, supported by strong expansion across automobiles, electronics and transportation equipment.

Indias manufacturing capabilities continued to move up the value chain, with medium and high- technology industries contributing 46.3% of total manufacturing value added. Business confidence remained healthy throughout the year, highlighted by the Manufacturing PMI remaining firmly in expansion territory since March 2023, indicating sustained improvement in production activity and demand conditions.

Several core manufacturing industries reported strong growth during the year. India remained the worlds second-largest crude steel producer, with crude steel output increasing by 11.7% during April- October FY2025-26. Cement production continued to expand in line with infrastructure and construction demand, while coal production crossed 1,047 million tonnes in FY25. The chemicals and petrochemicals sector also maintained growth momentum, supported by strong domestic demand and diversified industrial applications.

Policy support continued to play an important role in strengthening the manufacturing ecosystem. The PLI-Auto scheme attracted investments of Rs.35,657 crore and generated significant employment opportunities, while the Advanced Chemistry Cell (ACC) scheme continued to support localisation of battery manufacturing and strengthen Indias electric mobility ecosystem.

In addition, the National Manufacturing Mission aims to enhance manufacturings contribution to the economy through improved ease of doing business, workforce readiness, technology adoption and MSME development.

With strong policy support, rising investments, growing domestic demand and increasing global supply chain integration, Indias manufacturing sector remains well positioned for sustained long-term growth, creating opportunities across industrial, infrastructure and engineering-linked businesses.

Source: Union Budget 2026, PIB

Defence Manufacturing

Indias defence manufacturing sector continued to witness strong growth during FY2025-26, supported by increased government spending, policy-led indigenisation initiatives and rising private sector participation. The sector has emerged as a strategic pillar of the countrys self-reliance agenda, creating significant opportunities for domestic manufacturers across defence equipment, engineering systems and related supply chains.

The Government of India has consistently strengthened its focus on defence modernisation and indigenous manufacturing. The defence budget increased to Rs.7.85 lakh crore in FY2026-27 from Rs.2.53 lakh crore in FY2013-14, while capital expenditure rose to Rs.2.19 lakh crore during the same period. These investments are aimed at enhancing military preparedness, accelerating technology adoption and reducing dependence on imported defence equipment.

The sector has also achieved remarkable progress in exports, with defence exports increasing to a record Rs.38,424 crore in FY2025-26 from Rs.686 crore in FY2013-14. Today, defence products manufactured in India are being exported to more than 80 countries, reflecting the growing global acceptance of Indias defence manufacturing capabilities.

Initiatives such as the Defence Acquisition Procedure (DAP) 2020, Positive Indigenisation Lists and the Innovations for Defence Excellence (iDEX) programme have encouraged localisation, technology development and participation by private enterprises, MSMEs and start-ups. By March 2026, iDEX had engaged 676 innovators and facilitated the signing of 551 design and development contracts, highlighting the rapid expansion of Indias defence innovation ecosystem.

Additionally, the Uttar Pradesh and Tamil Nadu Defence Industrial Corridors continue to attract significant investments, supporting the development of domestic manufacturing infrastructure and integrated supply chains. Going forward, sustained government support, rising defence exports, increasing localisation and continued investments in indigenous capabilities are expected to position India as a globally competitive defence manufacturing hub, creating long-term growth opportunities for the sector.

Source: Union Budget 2026, PIB

Solar & Renewable Energy Industry

Indias renewable energy sector is witnessing rapid expansion across solar, wind, and energy storage segments, supported by favourable policies, growing domestic manufacturing capabilities, and accelerating adoption of clean energy solutions.

The solar energy segment remained a key growth driver during the period. The country added 2.7 GW of solar open access capacity in Q1 2026, representing a 55% quarter-on-quarter increase, supported by conducive state policies, higher consumer awareness, and improved project execution. As of March 31, 2026, India had commissioned approximately 118.7 GW of utility-scale solar power capacity, while an additional 58.2 GW is under various stages of implementation following completed auctions. The Ministry of New and Renewable Energys (MNRE) enforcement of the ALMM List-II framework from June 2026 is expected to strengthen domestic manufacturing capabilities and improve long-term supply chain resilience. Battery Energy Storage System (BESS) installations reached 4.6 GWh during Q1 2026, recording a substantial increase over the previous quarter and taking cumulative installed capacity to 5.9 GWh. During FY2026, India commissioned 2,569 MWh of BESS capacity and 2,430 MWh of Pumped Hydro Storage (PHS) capacity, highlighting the growing role of energy storage in supporting the countrys clean energy ambitions.

The wind energy sector also demonstrated robust progress. Installed wind power capacity increased from 21.04 GW in March 2014 to 56.09 GW as of March 2026, representing a 2.66-fold expansion over the period. India achieved a record annual wind capacity addition of 6.05 GW during FY2026, surpassing the previous years addition of 4.15 GW. Further, around 17.36 GW of auctioned wind projects and nearly 28 GW of additional capacity are currently under implementation, providing strong growth visibility for the sector. Indias wind manufacturing ecosystem continues to strengthen, with manufacturing capacity increasing to approximately 24 GW as of March 2026 from about 10 GW in 2014. The industry has achieved 70-80% indigenisation across key components, supported by a well- developed domestic supply chain for blades, towers, gearboxes, and other critical equipment.

Rising renewable capacity additions, expanding energy storage infrastructure, increasing localisation of manufacturing, and supportive policy measures are expected to accelerate the countrys transition towards a cleaner and more sustainable energy ecosystem. Strong project pipelines across solar and wind, coupled with growing investments in energy storage and grid modernization, are likely to create significant opportunities across the renewable energy value chain over the coming years.

Source: India Renewable Energy Market Trends, PIB (June 2026)

Company Overview

Tembo Global Industries Limited is an engineering-driven industrial solutions provider serving sectors such as oil & gas, chemicals, construction, power, shipbuilding, nuclear, HVAC and OEM installations, manufacturing specialised metal products including Pipe Support Systems, Fasteners, Anchors and HVAC solutions. The Companys diversified operations span four verticals — Engineering Solutions & EPC, Textiles (processing and supply of fibres and yarn), Defence Products (following its foray in FY25 and rapid scale-up in FY26) and Solar Power.

During FY 2025-26, Tembo commissioned its new, significantly expanded manufacturing facility at Vasai, taking integrated capacity to 1,00,000 MTPA (from 18,000 MTPA), commissioned in January 2026 at a capital outlay of approximately Rs.75 crore. The Companys products continue to carry UL and FM approvals, and its production facilities remain certified to ISO 9001:2015. Tembos global reach extended further during the year, with exports to over 30 countries including the USA and the Middle East, and new market inroads such as a strategic agency agreement in Kuwait.

Diversified Business Segments

• Engineering Solutions & EPC: Specialised metal products and EPC/project delivery for infrastructure, refinery, marine and industrial applications — the Companys primary growth driver.

• Textiles: Processing and supply of high-quality fibres and yarn — a legacy, capex-light business contributing steady profitability.

• Defence Products: Small arms and ammunition manufacturing through Tembo Defence Products Pvt. Ltd., which during FY26 secured a Defence Manufacturing Licence from the Government of Maharashtra and a Government of India licence for ammunition manufacturing.

• Solar Power: 120 MW Power Purchase Agreement with Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL), with commissioning targeted by Q2 FY27 and a 25-year PPA tenure thereafter.

Business Strengths

• Diversified business model across engineering, textiles, defence and solar, reducing dependence on any single market or segment.

• Robust order book of approximately Rs.1,548 crore as on 31st March 2026, supported by an order bidding pipeline (including L1 bids) of over Rs.2,256 crore, providing strong revenue visibility.

• Established brand reputation, underpinned by UL and FM approvals and ISO 9001:2015 certification.

• Experienced management team with approximately 40 years of collective industry experience, supported by a seasoned, professionally diversified Board.

• Significantly expanded and integrated manufacturing capacity of 1,00,000 MTPA following commissioning of the new Vasai facility in January 2026, alongside forward and backward integration benefits.

• Strong return ratios even during a phase of capital expenditure, with Return on Equity of 20.0% and Return on Capital Employed of 18.4% for FY 2025-26.

Weaknesses

• Elevated working-capital cycle, reflecting extended credit periods and cash-retention structures typical of LC-backed EPC project execution.

• Continued reliance on the Engineering Solutions segment for the bulk of profitability, with the Textiles segment operating at a comparatively lower EBIT margin (approximately 1.8% in FY26).

• Defence and Solar Power segments remain in an early, capital-intensive investment phase and are yet to make a meaningful contribution to consolidated revenue and profitability.

• Geographic revenue remains skewed towards the domestic market (approximately 88% of consolidated FY26 revenue), notwithstanding rising export contribution from the Engineering segment.

Opportunities

• Rapid progress in defence manufacturing — including the Defence Manufacturing Licence, an NDA with a leading defence PSU to explore indigenous design and development, and the technology tie-up with a European partner for arms and ammunition manufacturing at the upcoming Maharashtra facility (Rs.1,000 crore committed investment).

• New international project credentials, including qualification as the L1 bidder for an offshore revamp project in Kuwait valued at approximately Rs.300 crore, and further pursuit of over Rs.700 crore of port-construction and fuel-farm opportunities.

• Commissioning of the solar power project (targeted Q2 FY27) and commencement of commercial operations (targeted Q3 FY27) are expected to add a new, long-term annuity revenue stream backed by a 25-year PPA.

• Continued Government thrust under Make in India, Atmanirbhar Bharat, the National Manufacturing Mission and record defence and infrastructure budgetary outlays.

• Deepening international presence, including the Companys strategic partnership to pursue solar and defence opportunities in the Gulf Cooperation Council region.

Threats

• Volatility in raw material prices, particularly steel, which can affect production costs and margins.

• Global and Indian economic slowdown risk, including from elevated crude oil prices linked to the ongoing Middle East conflict, which could dampen demand in key end-user sectors such as oil & gas, infrastructure and construction.

• Continuing tariff and trade-policy uncertainty in key export markets, including elevated U S tariffs that affected the textiles sector for a substantial part of FY26.

• Regulatory and compliance risk across environmental, safety, export-import and defencelicensing frameworks.

• Intensifying competition, both domestic and international, across the Companys engineering, textile and emerging defence and solar businesses

Growth Outlook

Tembo Global Industries is well positioned to sustain its growth momentum, supported by a strong order book of over Rs.1,600 crore and a bidding pipeline exceeding Rs.2,400 crore, providing multi-year revenue visibility across engineering, EPC, infrastructure, marine, refinery, water, and industrial projects. The Company remains focused on executing its sizeable order pipeline while leveraging its expanded manufacturing capacity and strengthened execution capabilities to capitalize on emerging opportunities in high-growth sectors.

The Engineering & EPC business is expected to remain the primary growth engine, driven by increasing demand for integrated engineering solutions and infrastructure development. The commissioning of the Vasai facility has expanded manufacturing capacity to 1,00,000 MTPA, enabling the Company to address larger projects, expand its product portfolio, and improve operating efficiencies through enhanced scale and backward integration. The facility also strengthens Tembos ability to manufacture higher-value products such as ERW pipes and strut channels, supporting margin expansion and revenue growth.

In the renewable energy segment, Tembo is progressing with its 120 MW solar power project portfolio under long-term power purchase agreements. With four project sites already operational and the balance expected to be commissioned in Q2 FY27, commercial operations are scheduled to commence from Q3 FY27. The solar business is expected to create a stable and recurring revenue stream while enhancing the Companys presence in the rapidly growing clean energy sector.

The Company has also made significant progress in building a long-term defence and aerospace platform. Following the receipt of an ammunition manufacturing licence and the acquisition of land in Amravati, Maharashtra, construction of the defence manufacturing facility is underway, with commercial production targeted from Q1 FY28. Additionally, Tembos strategic UAV joint venture with global technology partners from Europe, Japan, Italy and the United States positions the Company to participate in the growing unmanned systems market, while supporting Indias indigenization and defence manufacturing objectives.

Backed by nearly four decades of industry experience, internationally recognized UL and FM certifications, a diversified business portfolio, and a growing base of engineering talent, Tembo remains committed to operational excellence, prudent capital allocation, technological advancement, and sustainable value creation. The Company will continue to pursue opportunities in margin-accretive businesses while strengthening its position as a diversified engineering, infrastructure, renewable energy, and defence solutions provider.

Operational Performance

Financial Year	Revenue (Rs. Crores)
FY22	176
FY23	250
FY24	439
FY25	743
FY26	1,090

EBITDA and EBITDA Margin (Consolidated)

Financial Year	EBITDA (Rs. Crores)	EBITDA Margin (%)
FY22	8	4.7%
FY23	13	5.4%
FY24	26	5.8%
FY25	92	12.3%
FY26	143	13.1%

PAT and PAT Margin (Consolidated)

Financial Year	PAT (Rs. Crores)	PAT Margin (%)
FY22	3	1.8%
FY23	6	2.3%
FY24	14	3.2%
FY25	55	7.4%
FY26	98	9.0%

 

Financial Year	Debt to Equity Ratio
FY22	1.62
FY23	1.03
FY24	0.75
FY25	1.24
FY26	0.77

Return Ratios and Diluted EPS (FY26)

Metric	FY26	FY25
Return on Equity (ROE)	20.0%	25.2%
Return on Capital Employed (ROCE)	18.4%	31.4%
Diluted EPS (Rs.)	51.23	31.13

Note: The year-on-year moderation in ROE/ROCE for FY26 reflects the expansion in the equity and capital base (including preferential allotment/warrants) ahead of full utilisation of the newly commissioned capacity, rather than a decline in underlying profitability, which grew strongly in absolute terms.

Order Book Break-up (as on March 31, 2026)

Category	Value (Rs. Crores)
Consolidated Order Book	1,548
Consolidated Order Bidding Pipeline (incl. L1)	2,256
Engineering & EPC Order Book	1,478
Textiles Order Book	70

Risks and Concerns

• Market Risk: The Companys performance remains linked to economic cycles in its key end-user sectors (oil & gas, infrastructure, real estate and construction); a broader slowdown, including one triggered by sustained high crude oil prices, could impact demand.

• Raw Material Risk: Fluctuations in steel and textile raw-material prices can affect profitability.

• Execution and Working Capital Risk: A growing, LC-backed EPC order book requires higher inventory and working capital, funded through a mix of short- and long-term borrowings and equity; delays in project execution or realisation of cash-retention receivables could affect liquidity.

• Regulatory Risk: Changes in environmental, safety, export-import and defence-licensing policies may pose operational challenges, particularly as the Company scales its newer defence and solar businesses.

• Geopolitical and Trade Risk: Exposure to export markets, including the Middle East, USA and Europe, remains subject to geopolitical uncertainty, tariff changes and logistics disruption.

Internal Control Systems and Their Adequacy

The Company has established a robust and appropriate internal control system commensurate with its size and the nature of its business, aimed at safeguarding assets from unauthorised use or loss and ensuring that transactions are properly authorised, recorded and reported. These internal controls are strengthened through regular internal audits, management reviews and the implementation of documented policies and procedures, designed to ensure the reliability of financial and other records and to maintain asset accountability. The Audit Committee of the Board of Directors regularly reviews and evaluates the adequacy and effectiveness of all financial and audit control systems.

Material Developments in Human Resources / Industrial Relations Front

The Company regards its workforce as its most valuable resource. During FY 2025-26, the Company continued to invest in training and development of its people to boost efficiency and foster innovation, while scaling up its specialised engineering talent base — engineering human capital headcount grew from 75 as on 31st March 2025 to 122 as on 31st March 2026, reflecting the ramp-up of the new Vasai facility, EPC project execution capabilities and the emerging defence business. The Company continued to maintain a harmonious relationship with its workforce throughout the year.

Cautionary Statement

Statements in this Management Discussion and Analysis of the Company describing the Companys objectives, expectations or predictions may be forward-looking within the meaning of applicable 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. The Company assumes no responsibility to publicly amend, modify or revise forwardlooking statements, based on any subsequent developments, information or events. Thus, the Companys actual performance/results could differ from the projected estimates in the forward-looking statements. The discussions on the Companys financial condition and results of operations should be read together with its audited, consolidated Financial Statements and the notes to those statements included in the Annual Report.