TIPCO Engineering India Ltd Management Discussions

Global Economy- Performance & Outlook

The global economy demonstrated resilience during CY25 despite geopolitical uncertainties and evolving trade dynamics. According to the International Monetary Fund, global economic growth is projected at 3.1% in CY26, while the OECD estimates growth at 2.9%, supported by continued industrial activity and investment across major economies. Manufacturing investment remained healthy, driven by technology-led capital expenditure, infrastructure development and expansion across advanced manufacturing sectors.

Process-intensive industries such as paints and coatings, speciality chemicals, pharmaceuticals and food processing maintained robust investment activity, with manufacturers focusing on capacity expansion, productivity improvement and process modernisation. Supply chain diversification continued as a structural trend, encouraging businesses to establish broader manufacturing footprints and invest in production infrastructure across multiple regions.

The global economy is expected to remain on a stable growth trajectory during CY27, supported by easing inflationary pressures, improving financial conditions and sustained industrial activity. Manufacturing investment is expected to be supported by increasing focus on productivity enhancement, automation, operational resilience and localisation strategies across regions. Process-oriented industries are expected to continue investing in advanced production technologies, quality enhancement and efficiency-led upgrades to meet evolving market and regulatory requirements.

As manufacturing industries become increasingly sophisticated in their process requirements, investments in production efficiency and quality- focused manufacturing infrastructure are expected to remain an important feature of the global industrial landscape. These trends provide a supportive external backdrop for Indian engineering and process equipment manufacturers, with growing international participation.

Indian Economy—

FY26 Performance & Outlook

Macroeconomic Fundamentals

India remained one of the fastest-growing major economies during FY26, registering a GDP growth of 7.7%, supported by resilient domestic demand, strong public investment and sustained activity across key sectors. Inflation remained broadly within the RBIs tolerance band. Healthy foreign exchange reserves, a stable banking system and prudent fiscal management continued to underpin macroeconomic stability. The RBI has projected GDP growth of approximately 6.5% for FY27 as well, supported by continued infrastructure investment and improving private sector participation.

Manufacturing Sector Growth

Indias manufacturing sector demonstrated structural strength during FY26. Manufacturing PMI readings remained consistently above the expansion threshold of 50, reflecting sustained growth in output, new orders and business confidence. The Index of Industrial Production indicated continued expansion across manufacturing industries and capital goods segments. Government initiatives aimed at strengthening domestic manufacturing — including Make in India, the Production Linked Incentive scheme and the National Manufacturing Mission — continued to support sectoral development, strengthen domestic value chains and attract investment into strategic sectors.

Industrial Investment Environment

Industrial investment activity remained robust during FY26. The Union Budget allocated D11.21 lakh crore towards capital expenditure, reinforcing the Governments commitment to infrastructure creation. Cumulative FDI inflows into the manufacturing sector reached D14.34 lakh crore over the past decade, an increase of approximately 69%. Total FDI inflows during FY25 rose 15% year- on-year to D4.22 lakh crore. Rising investment across industrial corridors, logistics networks and manufacturing facilities reflects growing confidence in Indias industrial growth potential. Supported by a favourable policy environment and expanding manufacturing capabilities, industrial investment is increasingly becoming a structural component of Indias growth trajectory.

These fundamentals are expected to sustain momentum through FY27. As capacity creation expands into emerging production hubs, Indias strengthening industrial ecosystem provides a favourable operating environment for process equipment manufacturers serving the domestic manufacturing sector.

Global Sector—

CY25 Performance & Outlook

Process Equipment Industry

The global process equipment industry continued to benefit from sustained industrial investment during CY26. Process equipment — encompassing mixing, dispersion, milling and homogenisation systems — forms a critical component of manufacturing operations where product consistency, process efficiency and quality control are essential. Investment activity reflected a dual objective: expanding production capacity while enhancing operational performance through technology adoption, automation and process modernisation.

End-Market Dynamics

The global paints and coatings market was valued at approximately USD 219.9 billion in 2025 and is expected to reach USD 231.1 billion in 2026, with a projected CAGR of 5.4% through 2033, driven by urbanisation, infrastructure development and demand for sustainable and high-performance coatings. As formulations become increasingly sophisticated, manufacturers are investing in larger facilities, improved process efficiency and advanced formulation capabilities.

The global speciality chemicals market was estimated at approximately USD 1.02 trillion in 2025 and is projected to reach USD 1.53 trillion by 2033, growing at a CAGR of 5.2%. The industry is shifting towards higher- value formulations, performance-driven applications and increasingly complex manufacturing processes. Construction chemicals, performance additives and formulation-intensive segments are among the fastest- growing categories globally.

The global pharmaceutical manufacturing market was valued at approximately USD 616 billion in 2025 and is projected to grow at a CAGR of approximately 5.9% through 2033. Several of the worlds largest pharmaceutical companies have collectively committed in excess of USD 200 billion towards manufacturing capacity expansion through 2030, spanning new megasite construction, sterile injectable facilities, biologics production and API localisation programmes. The industrys focus on process validation, contamination control and precision manufacturing continues to support demand for specialised production systems.

Food processing continued to benefit from changing consumption patterns and growing demand for packaged and value-added products. While a comparatively long- duration opportunity, increasing automation, hygiene and consistency requirements continue to support investments in specialised process equipment.

Modernisation and Equipment Replacement

Manufacturing industries worldwide continued to prioritise process optimisation, automation and technology integration. The global industrial automation market is estimated at approximately USD 238 billion in 2026, with a projected medium-term CAGR of around 7.6%. Industrial investment increasingly reflected the requirements of modernisation and technology upgradation, alongside capacity creation.

Rising quality standards, productivity considerations and sustainability objectives are encouraging manufacturers to upgrade existing facilities and replace legacy equipment. Equipment replacement and process enhancement have emerged as demand drivers independent of greenfield investment, providing a more resilient source of demand across industrial cycles.

Competitive Landscape

The global process equipment market remains fragmented across premium international manufacturers, low-cost suppliers and regional engineering companies. Between these segments lies a significant opportunity where manufacturers seek a combination of performance, reliability, customisation capability, engineering support and cost competitiveness.

As industries continue to prioritise process optimisation and quality consistency, demand is shifting towards specialised engineering solution providers capable of delivering application-specific solutions and responsive service support. Increasing process complexity and higher performance expectations are expected to elevate the importance of technical capability and lifecycle value in procurement decisions.

Indian Sector—

FY26 Performance & Outlook

Industrial Capex Cycle

Indias industrial investment cycle maintained strong momentum during FY26. Capital goods IIP growth reached 10.4% in November 2025 and accelerated to 16.0% in April 2026.[1] The sector has nearly doubled in size over the past decade, with output reaching approximately D4.29 lakh crore in FY24. [1] PLI schemes attracted realised investments exceeding D2 lakh crore as of September 2025. [1] Growth across infrastructure, construction goods and capital goods production confirms that industrial investment is increasingly structural rather than cyclical.

Paints and Coatings

Indias paints and coatings industry is expected to grow from approximately USD 11.45 billion in 2025 to USD 12.51 billion in 2026, expanding at a CAGR of 9.28% through 2031 — significantly above the global average.

[2] Industry-wide capex is estimated at approximately D20,000 crore, with nearly 2.5 million kilolitres of capacity expected to be added over the next three years.[2] Rising formulation complexity and demand for high-performance coatings are driving investments in advanced process technologies. For a process-equipment manufacturer, this is one of the most concentrated demand cycles in any single end-market.

Speciality Chemicals

Indias speciality chemicals market was valued at approximately USD 67.0 billion in 2025 and continues to benefit from the global China+1 diversification trend.

[3] FDI in chemicals (excluding fertilisers) reached approximately D1,48,744 crore between April 2000 and December 2025.[3] The sectors transition towards higher-value, formulation-intensive products creates sustained demand for sophisticated processing equipment.

Pharmaceuticals

Indias pharmaceutical industry was valued at approximately USD 60 billion in 2025 and is expected to reach nearly USD 130 billion by 2030.[4] Exports increased to approximately USD 31.1 billion in FY26, with the sector supplying nearly 20% of global generic drug volumes across more than 190 countries.[4]

Policy initiatives aimed at strengthening domestic API manufacturing are expected to support long-term investments in process control technologies and precision manufacturing solutions.

Import Substitution

Imports of advanced machinery and capital goods increased by approximately 13.4% during Q3 FY26 —reflecting both the strength of industrial investment and continued dependence on overseas suppliers in high- specification categories.[5] Historically, premium process equipment for paints, chemicals and pharmaceuticals has largely been supplied through imports. This is changing. Stronger domestic capabilities, improving quality standards and a growing focus on lifecycle value over acquisition cost are reshaping procurement preferences. [5] Domestically manufactured solutions offering reliable performance, engineering support and competitive economics are becoming credible alternatives.

Industrial Modernisation

Indias industrial automation market was valued at approximately USD 8.22 billion in 2025 and is projected to reach USD 16.67 billion by 2034.[6] Beyond greenfield capacity creation, investment is increasingly directed towards upgrading existing facilities — improving efficiency, reducing waste and strengthening process control. Equipment replacement and technology upgrades are emerging as demand drivers independent of new capacity, providing a more resilient source of demand across cycles.

Engineering Exports

Indias engineering exports reached a record USD 116.67 billion in FY25, with momentum continuing into FY26.

[7] Growing global acceptance of Indian engineering products provides an additional avenue for growth beyond the domestic investment cycle.

Relevance to Tipco Engineering India Limited

The convergence of these trends — a structural capex upcycle, concentrated capacity additions across paints, chemicals and pharmaceuticals, accelerating import substitution and rising demand for industrial modernisation — creates a favourable operating environment for specialised process-equipment manufacturers. Tipcos capabilities across mixing, milling, dispersion and homogenisation, its end-to-end in-house execution model and its positioning as a domestic alternative to imported systems place it at the intersection of these demand drivers. The sections that follow outline how the Company is organised, where it competes and how it intends to build on this opportunity.

Company Overview

Tipco Engineering India Limited is an integrated process- equipment manufacturer engaged in the design, fabrication, assembly and supply of industrial machinery for mixing, milling, dispersion and homogenisation applications. The Company operates from its manufacturing facility in Sonipat, Haryana. It follows an end-to-end in-house execution model that covers product design, precision machining, fabrication, assembly, quality testing and dispatch. It is ISO 9001:2015- and ISO 45001:2018-certified.

The Companys product portfolio spans four core series — Mill Series (bead mills, attritor mills, basket mills and pug mills), Disperser Series (high-speed, twin-shaft, triple-shaft and vacuum dispersers) and Homogeniser Series (in-line, in-tank, high-shear homogenisers and liquid-powder mixing machines). These products serve formulation-intensive industries, including paints and coatings, speciality chemicals, pharmaceuticals, food processing, cosmetics, printing inks, adhesives and construction chemicals.

The Company has delivered turnkey process solutions for clients across the coatings, speciality chemicals and construction chemicals sectors, with project scope extending from process design and SCADA- based automation to civil works, pipeline execution, commissioning and project management consultancy. It serves clients across 26 States and Union Territories and exports to Austria, Nepal, the UAE, Uganda and Russia.

The Company has entered into a technology collaboration with LexaMix, a German process-equipment manufacturer, under which Tipco provides manufacturing and installation services under the LexaMix brand within India and holds exclusive distribution rights for select international markets.

Separately, the Company has secured its first defence project and obtained DRDO vendor registration, establishing a foundation for participation in higher- specification engineering applications. Both the LexaMix and defence verticals are expected to have margin profiles meaningfully above those of the Companys standard product business.

Progress is underway on a proposed manufacturing facility in Pune, which is expected to significantly enhance manufacturing capacity, improve proximity to key industrial clusters in western India and support participation with larger and more complex customers.

Business Performance

FY26 was a transition year for Tipco Engineering. The Company, listed on the BSE SME platform, advanced its capacity expansion programme, added two new margin- accretive business verticals and delivered its strongest operational and financial performance since inception.

Operational Performance

The existing Sonipat facility operated at approximately 89% of rated capacity during the year, reinforcing the need for manufacturing expansion. The Company continued to execute projects across paints and coatings, construction chemicals, cement, speciality chemicals and allied sectors, with marquee engagements spanning end-to-end plant design, SCADA-based process automation, pipeline execution and commissioning for leading coatings, cement and construction chemicals manufacturers.

The scope of these engagements — where Tipco delivers equipment, consultancy, design engineering and turnkey execution as a single-source solution — reflects the Companys evolution from an equipment supplier to an integrated process solutions provider. Management noted on the earnings call that no other domestic competitor currently offers this combination at a comparable scale.

The Company deepened relationships with several of Indias largest paint, coatings and construction chemicals manufacturers during the year, with advanced discussions underway for significantly larger engagements. The order book remained healthy at approximately D60-70 crore, with execution timelines ranging from 30-45 days for standard equipment to 3-6 months for larger turnkey projects.

New Growth Verticals

Two strategic initiatives during the year are expected to reshape the Companys revenue mix and margin profile over the medium term. The technology collaboration with LexaMix, a German process-equipment manufacturer, provides Tipco with manufacturing and installation rights under the LexaMix brand in India and exclusive distribution rights for select international markets, including the Middle East, Europe and South America.

The Pune facility, which will house the LexaMix collaboration, is designed to open new verticals in cosmetics, adhesives and personal care — sectors where the European partner already serves global manufacturers and where Tipco will hold exclusive rights for the Indian market. These products are positioned at the higher end of the market and are expected to have margin profiles meaningfully above those of the standard business.

Separately, the Company made tangible progress in defence. Tipco completed R&D trials with the High Energy Materials Research Laboratory (HEMRL) under DRDO for the nano-dispersion of rocket fuel (nitrocellulose) and has been working with DRDOs Earth

Science Division on lithium-ion and solid-state battery applications. DRDO has approved Tipcos equipment and is now recommending the Company to its vendor ecosystem.

While the initial contract value is modest, the strategic significance is substantial: DRDO vendor status is a prerequisite for participation in Indias expanding defence procurement ecosystem and cannot be shortcut by new entrants. The Management has indicated that Defence and LexaMix together are to contribute approximately 40% of revenue by FY29.

Capacity Expansion

The existing Sonipat facility is operating near its rated ceiling. The Company is advancing two parallel expansion initiatives. The proposed Pune facility, with planned capex of approximately D40 crore, is expected to commission 25% of capacity in FY27, reach approximately 75% in FY28 and achieve full production within two years.

The facility will also include a customer experience and trial centre — a significant commercial asset in an industry where customers typically conduct equipment trials before placing orders. Punes location improves proximity to the Maharashtra cluster of paint, pharmaceutical and chemical manufacturers and strengthens coverage of southern and western India.

Additionally, the Company is expanding on a 4-5- acre site adjacent to the existing Sonipat factory, with approximately D20 crore in investment planned. Both facilities will operate as units of the Company under a single corporate platform. Capex is expected to be funded approximately 75% through term borrowings and 25% from internal accruals.

Outlook

Management has guided for revenue of D180 crore or above in FY27, supported by contributions from both existing operations and the initial phase of the Pune facility. The Company enters FY27 with a listed- entity platform, a dual-facility expansion programme, two margin-accretive verticals gaining traction, a growing client roster across Indias largest industrial manufacturers and a strengthening balance sheet. The focus remains on disciplined capacity enhancement, margin improvement and building a scalable process- equipment manufacturing platform from India.

Financial Performance with Key Ratios

FY26 represented the Companys strongest financial performance since the commencement of commercial operations, with improvement across every key metric.

Total income for FY26 was D146 crore, up from D133 crore in FY25, representing approximately 10% growth. The second half of the year demonstrated significantly stronger momentum, with H2 FY26 revenue of D95 crore representing a 66% increase over H2 FY25. This acceleration reflects both the ramp-up of larger project engagements and improved execution throughput at the Sonipat facility.

EBITDA for the year was D38.9 crore compared with D23.85 crore in FY25, an increase of 63.10%. EBITDA margins expanded by 867 basis points, from 17.95% in FY25 to 26.63% in FY26. The margin expansion is structurally driven — reflecting the Companys shift towards customised engineered systems, higher-value turnkey projects, technology-linked applications and improving operating leverage as employee costs and fixed overheads are spread across a growing revenue base. Management has indicated that current margin levels are sustainable and may improve further as defence, LexaMix and export contributions scale.

Net profit for FY26 was D25.31 crore compared with D15.26 crore in FY25, an increase of 65%. Net profit margins improved by 588 basis points, from 11.44% to 17.32%. Diluted EPS on a weighted-average basis was D16.44, compared with D9.96 in FY25.

The balance sheet strengthened materially during the year. The debt-equity ratio improved from 1.13x in FY25 to 0.41 in FY26, supported by IPO proceeds directed towards debt repayment. As of March 2026, approximately D48 crore of IPO proceeds remained available for utilisation towards debt repayment and working capital funding. Working capital management showed improvement on the inventory side, with inventory declining from D31 crore to D21 crore. Trade receivables were elevated at year-end, primarily reflecting higher H2 sales volumes, with management confirming that realisations are proceeding on schedule.

Key ratios

Particulars	FY26	FY25	% Change	Reason for Change (as stated)
Current Ratio	2.04	1.29	58.68%	Due to IPO Fund is lying in bank account.
Debt-Equity Ratio	0.41	1.13	-67.58%	Due to Initial Public offer been made.
Debt Service Coverage Ratio	5.53	2.4	130.65%	Due to repayment of long term loan and increase in profits and public offer fund helped in equity increases.
Return on Equity (%)	38.00%	67.18%	-43.44%	Due to Initial Public offer, equity of company increased.
Net Profit Ratio (%)	17.32	11.44	51.92	Margins has improved as there are some services rendered with low cost.
Return on Capital Employed (%)	27.10%	31.50%	-13.70%	Not Applicable

Human Resources

Tipcos human resources function supports recruitment, onboarding, performance management, training, payroll and compliance across the organisation. The workforce brings together engineering, manufacturing, sales, service and corporate capabilities, supporting the Companys integrated execution model from design to delivery. As Tipco expands its manufacturing footprint, building technical capability and strengthening its talent base will remain central to supporting its next phase of growth.

Internal Control and its Adequacy

The Company maintains a structured internal control framework commensurate with its scale and complexity of operations. Standardised procedures govern project costing, procurement, inventory management, revenue recognition and regulatory compliance across the Sonipat facility.

Internal audits are conducted by an independent agency, with findings reported periodically to the Audit Committee.

The primary objective is to assess the adequacy of existing controls, identify process gaps and recommend corrective measures. As the Company scales operations with the commissioning of the Pune facility and entry into new verticals, the internal control framework will be extended to cover the expanded manufacturing footprint and the LexaMix collaboration.

Risk Management

Tipco Engineering operates in a project-driven industrial equipment business where demand is linked to customer capex cycles, raw material costs fluctuate and execution timelines vary across project sizes and complexity levels.

The Companys risk management approach is built around diversification of end-markets and customer relationships, operational discipline across the project execution cycle, technology partnerships that strengthen product relevance and continuous investment in manufacturing capability.

As the Company transitions to a listed-entity platform and enters a phase of multi-facility expansion, new verticals and international market development, the scope of risk oversight is being expanded to reflect the evolving complexity of the business.

Risk Area	Mitigation Strategy
Dependence on industrial investment cycles	Presence across paints and coatings, speciality chemicals, pharmaceuticals, food processing, cosmetics, adhesives, construction chemicals and defence reduces dependence on any single end-market or capex cycle. The Companys turnkey capability and equipment replacement demand provide a source of orders independent of greenfield investment alone.
Customer and sector concentration risk	Paints and coatings has historically accounted for 58-88% of revenue and the top ten clients have contributed 76-79%. The Company is actively diversifying through entry into defence, cosmetics, personal care and adhesives via the LexaMix collaboration, expanding the export customer base and deepening relationships across cement, construction chemicals and specialty chemicals segments.
Project execution risk	Structured project planning, in-house execution across design, fabrication, assembly and quality testing and integrated commissioning capability support timely delivery and operational reliability. The end-to-end manufacturing model reduces dependence on external vendors for critical execution milestones.
Raw material and supply chain risk	Materials consumed constitute a significant component of operating costs. The Company mitigates input cost volatility through vendor diversification, a domestically sourced raw material base (approximately 100% domestic procurement), structured supplier evaluation and procurement planning aligned to project timelines.
Technology obsolescence risk	The LexaMix collaboration provides access to European engineering know-how across the full product range, strengthening product capability and relevance in higher-specification applications. Ongoing investment in process R&D — including nano-dispersion for defence fuels and solid-state battery applications with DRDO — supports alignment with evolving customer and industry requirements.
Competitive risk	The Company operates between premium-priced European manufacturers (NETZSCH, Buhler, WAB Group) and low-cost domestic and Chinese suppliers. Tipco mitigates this risk by positioning on engineering capability, customisation, turnkey execution and lifecycle value — offering comparable performance to imported systems at approximately 60% of the European price point, while maintaining a premium over commoditised domestic alternatives.
Export and high- specification application risk	The Company mitigates this risk through technology collaborations, customer-specific engineering, quality testing and gradual market development across select international and specialised application segments. Continued focus on process expertise, product reliability and application understanding supports participation in higher-value opportunities.
Capacity and scalability risk	The existing Sonipat facility operates at approximately 89% utilisation. The Company is advancing a dual expansion programme — a new Pune facility (approximately D40 crore capex, phased commissioning over two years) and a Sonipat extension on adjacent land (approximately D20 crore). Both facilities will operate under the existing corporate platform.
Working capital risk	The project-driven business model involves significant inventory commitments and extended receivable cycles. The Company manages this through continuous monitoring of receivables, inventory optimisation (inventory reduced from D31 crore to D21 crore during FY26), structured project execution timelines and utilisation of bank working capital facilities.
Human capital risk	The Companys ability to deliver customised engineering solutions is dependent on specialised technical and engineering talent. Talent development, knowledge-sharing initiatives, employee engagement and the establishment of the Pune facility in a strong engineering talent market support capability building and retention.
Regulatory and compliance risk	Established governance frameworks, periodic compliance reviews and adherence to applicable statutory requirements support regulatory compliance. The Company has constituted a team comprising chartered accountants, a company secretary and a cost accountant dedicated to compliance monitoring.
Listed-company governance transition risk	The Company is strengthening governance systems, disclosure practices, internal controls and compliance processes in line with listed-entity requirements. Implementation of SAP is underway to enhance internal controls and reporting. The Company is in discussions with leading audit firms to further strengthen the governance framework.