The Anup Engineering Ltd Management Discussions

(a) Industry structure and developments:

The Company caters to wide range of process industries including and not limited to, Oil & Gas, Petrochemicals, LNG, Fertilizers, Chemicals, Power, Hydrogen, Water and Paper & Pulp with its extensive product range of Heat Exchangers, Reactors, Pressure Vessels, Columns & Towers, Industrial Centrifuges, Silos & tanks. India is surely playing a very dominant role in the manufacture and supply of critical process equipment globally through its improved capacities, capabilities and a strong reputation on Quality. Hydrogen, especially Blue hydrogen, as an energy source is also witnessing a strong push on the energy transition road map. Many projects are under execution globally and many more being announced which presents multiple opportunities for manufacturers like us. Focus on Green ammonia, which would be a route for green fertilizer and green hydrogen also presents sizable opportunities in the future. Petrochemicals, fertilizer, Gas, hydrogen and specialty chemicals are showing good macro level indicators on growth. Domestic market has been slow over the last 3 qtrs, but now seeing some PSU expansion projects and also petrochemical greenfield projects hitting the ground. We expect good movement in domestic market in the coming quarters. Natural Gas projects especially in middle east are landing with good opportunities.

Opportunities: Self-sufficiency goals will continue to drive investments in these sectors, especially energy. The drive towards cleaner energy mix for de-carbonization, especially in the western countries, is presenting opportunities added to the demand for conventional energy mix in the developing countries. We are seeing good traction especially on Petrochemicals, Gas, hydrogen, Fertilizer and specialty chemicals segment. The successful commissioning of our PHASE 1 expansion of our new state of the art facility at Kheda, Gujarat, with the ongoing phase 2 expansion to be commissioned in Qtr3 of this financial year, provides us that added opportunity to improve our share. Our 100% subsidiary Mabel Engineers Private Limited having plant in Tamil Nadu with its added products like Silos, storage tanks and vessels provide a wider bandwidth to address our customer requirements.

Threats: The current trade tariff uncertainties, the developments on geopolitics globally, and conflicts between countries, is something that every manufacturer with substantial export/ import contribution will need to monitor closely. Moreover, being into custom built equipment business where every product is designed and made to order, labor skills play an important role especially skilled Operators. The availability of skilled workforce to fuel the growth aspirations is always going to be a challenge. Hence high focus on Automation & Productivity improvements, both on the shop floor and office, is the key.

Over the years we have been dominant in the Shell & Tube heat exchangers which formed almost 70% of our annual revenue. Now with our new manufacturing plant at Kheda with close proximity to the National highway provides us that opportunity to address larger sized equipment. Therefore, our product range would improve more on Reactors, Vessels, Columns and other larger sized equipments in future. But Heat exchanger will still continue to be the dominant product. We expect the Heat exchanger to be 60% of our revenue for this year.

Our good record on ONTIME DELIVERY performance in line with the benchmark, sets us apart as a Reliable & Trusted supplier, globally. Other noteworthy developments last year have been, the Acquisition of Mabel Engineers Private Limited a manufacturing company in Tamil Nadu helping us spread geographically south of India and also adds products like Silos, tanks and vessels to our existing product lines. In terms of Industry segment, we are seeing good growth on petrochemical and Natural gas side.

We continue to see traction globally on Capex into capital goods especially focused on Petrochemicals, Gas, Fertilizer, Hydrogen, Specialty chemicals and Power. The focus on self-sufficiency, have led to countries announcing new green field & brown field projects to expand capacities. The goal in India to double the refining capacity and also be a leader in petrochemicals, will manifest into good projects hitting the ground. We are already seeing PSU investments in expansion and new greenfield petrochemical projects by large private conglomerate. Climate change is a serious concern globally, and the shift to low carbon emitting energy mix will be the way forward. Hydrogen forms a very important part of this new energy mix, and it offers a big opportunity for manufacturers like us, both for Blue hydrogen to start with and Green hydrogen in the near future. Moreover, GDP growth aspirations announced by developing countries meant Oil & Gas and Petroleum products will continue to be an important part of their energy mix driving the growth, in addition to the focus on cleaner energy mix.

Good macro indicators on the sectors we work with, provides a reasonable confidence to continue our growth momentum, providing opportunity both in domestic and also improving our Exports. A more certain trade tariff structure with a large economy will surely helps businesses to make Investment decisions and boost business opportunities.

The Company has in place a mechanism to identify, assess, monitor, and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The Company internal control encompasses various managements systems, structures of organization, standard and code of conduct which all put together help in managing the risks associated with the Company. With a view to ensure the internal controls systems are meeting the required standards, the same are reviewed at periodical intervals. If any weaknesses are identified in the process of review the same are addressed to strengthen the internal controls which are also in turn reviewed at frequent intervals.

The Company has a Risk Management Committee of the Board of Directors and Risk Management Policy consistent with the provisions of the Act and SEBI Listing Regulations. The Internal Audit Department facilitates the execution of Risk Management Practices in the Company, in the areas of risk identification, assessment, monitoring, mitigation and reporting. The Company has laid down procedures to inform the Audit Committee as well as the Board of Directors about risk assessment and related procedures & status.

The framework defines the process for identification of risks, its assessment, mitigation measures, monitoring and reporting. While the Company, through its employees and Executive Management, continuously assess the identified Risks, the Audit Committee reviews the identified Risks and its mitigation measures annually.

The Risk Management Policy which is available on the website of the Company at https://www.anupengg.com/policies/.

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has an Internal Audit department with adequate experience and expertise in internal controls, operating system and procedures.

The system is supported by documented policies, guidelines and procedures to monitor business and operational performance which are aimed at ensuring business integrity and promoting operational efficiency.

The Internal Audit Department reviews the adequacy of internal control system in the Company, its compliance with operating systems and laid down policies and procedures. Based on the report of internal audit function, process owners undertake corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board of Directors from time to time.

This discussion covers the financial results and other developments during the Financial Year 2024-25 in respect of the Company. Published result is as prepared on Indian Accounting Standards (IND AS). Highlights below given only for comparison.

*Consolidation has become applicable from FY 2024-25

Overall revenues for the year stood at 73,278.60 Lakhs. Sales and Other income for the year ended 31st March 2025 were 73,792.01 Lakhs. The net profit stood at 11,830.27 Lakhs.

Strong order pipeline of 700.00 Crores as on Q4 end to provide good execution visibility.

At The Anup Engineering Limited, we firmly believe that our people are the cornerstone of our success. We prioritize talent acquisition, engagement, development, retention, and reward initiatives to drive organizational growth and prosperity.

An integral aspect of our HR strategy is our responsiveness to evolving trends shaping the future of work. By embracing agility and productivity enhancements, we continuously refine our HR systems and processes to elevate the employee experience.

Our concerted efforts are evident in our emphasis on effective recruitment practices and the cultivation of our employer brand. We actively promote internal mobility, align organizational structures with business imperatives, and institute robust rewards and recognition frameworks.

Central to our employee-centric approach is our commitment to facilitating growth opportunities. We prioritize internal mobility initiatives, enabling employees to explore diverse functional roles and ascend to higher positions within the company.

In the realm of learning and development, we are steadfast in our digitalization efforts. By offering e-learning courses encompassing managerial and functional competencies, we equip our workforce with the requisite skills for success in an increasingly digital landscape.

At the heart of our HR philosophy lies a culture of open communication and support. Regular dialogues between managers and team members foster an environment where concerns can be voiced, improvements can be initiated, and individuals feel empowered to contribute their best.

Our performance management approach is multifaceted, combining accountability with continuous development opportunities. We champion a holistic view that nurtures talent, aligns with our compensation framework, and fuels career progression.

Through these concerted efforts, we endeavor to create a workplace where our employees thrive, excel, and contribute to the enduring success of The Anup Engineering Limited.

As on 31st March 2025 there were 309 permanent employees of Management Staff on role of the Company.

Statements in this report on describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could however differ materially from those expressed or implied.

The Company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.

*Consolidation has become applicable from FY 2024-25