Voltas Ltd Management Discussions

Economic Overview

Global Economy

The global economy in 2025 and 2026 operated within an increasingly complex and evolving macroeconomic landscape, characterised by moderate growth, persistent inflationary pressures and heightened geopolitical uncertainty. GDP growth remained in the range of ~2.8%-3.2%, below long-term averages, reflecting stable yet subdued expansion. Growth divergence persisted, with advanced economies at ~1.3%-1.7% and emerging markets outperforming at ~3.8%-4.5%, reinforcing their importance in driving global demand.

Geopolitical tensions, particularly in West Asia, continued to exert pressure on energy markets, disrupt global supply chains, drive inflation in energy and commodity prices, trigger currency volatility, and weigh on global trade flows. Supply risks across key transit routes such as the Strait of Hormuz led to increased volatility in crude oil prices.

While Brent averaged in the ~USD 65/bbl. range in 2025, prices experienced intermittent spikes in 2026, crossing USD 100/bbl., partially reversing the earlier disinflation trend.

Global inflation moderated to ~4.0%-4.5% in 2025 but has shown signs of stickiness, driven by energy and supply chain pressures. Inflation in advanced economies, including the Eurozone (~2.5%-3.0%), remains above target, limiting room for policy easing. Central banks have therefore maintained a cautious, data-dependent stance,

with policy rates staying relatively elevated 4.0%-5.0%

in the US and ~2.0%-3.0% in the Eurozone - resulting in tighter liquidity and higher cost of capital.

Global trade remained constrained, with growth of ~2.5%, reflecting geoeconomic fragmentation, protectionism, and supply chain realignment. Businesses are increasingly prioritising resilience and diversification, accelerating regionalisation and multi-geography sourcing strategies.

Strategically, four key shifts are emerging:

Supply Chain Reconfiguration - Organisations are redesigning supply networks to mitigate geopolitical and logistics risks, with greater emphasis on diversified sourcing and selective nearshoring.

» Capital Allocation Discipline - Elevated interest rates and uncertainty are driving more selective and phased investments, with stronger focus on return visibility, cash efficiency and execution certainty.

» Emerging Market Rebalancing - Strong growth outlooks and favourable economic fundamentals are positioning emerging markets as key manufacturing and consumption hubs, attracting incremental capital flows and long-term investments.

» Acceleration of Energy-Efficiency and

Sustainability - Across industries, regulatory changes, rising energy costs and increasing consumer awareness are accelerating the shift towards energy-efficient and environmentally responsible products and technologies. This is creating new opportunities for companies that can combine innovation, scale and sustainability-driven solutions.

Overall, while the global economy continues to remain volatile, characterised by elevated costs, tighter financial conditions and cautious investment sentiment, these structural shifts in supply chains, technology adoption, sustainability priorities and capital flows are also creating meaningful medium- to long-term opportunities for agile, resilient and diversified businesses.

Indian Economy

Against a backdrop of global volatility and elevated geopolitical uncertainty, the Indian economy in FY 2025-26 continued to demonstrate strong resilience, supported by robust domestic demand and sustained public investment. India remained the fastest-growing major economy, with GDP growth of ~7.3%, driven by consumption- led expansion and continued government focus on infrastructure and capital expenditure.

However, the external environment posed increasing challenges, given Indias high dependence on imported energy, with crude import reliance at ~88%. Periodic spikes in global crude prices, particularly during geopolitical disruptions, pushed oil above USD 100/bbl., exerting upward pressure on input costs across sectors and contributing to inflationary risks. Elevated logistics and freight costs, along with intermittent disruptions in crude and LNG supply chains, further added to operating uncertainties.

Higher energy import costs also impacted macro stability, contributing to a widening current account deficit (~1.5%-2.0% of GDP) and exerting pressure on the Indian rupee. These external factors translated into cost pressures across industries, requiring tighter cost management and calibrated pricing strategies.

Despite these headwinds, Indias macroeconomic fundamentals remained stable, supported by proactive policy measures. The Reserve Bank of India maintained a balanced and data-driven monetary stance, with CPI inflation moderating to ~3.5%-3.8% in recent periods, albeit with sensitivity to commodity price movements. At the same time, continued government emphasis on infrastructure development and capital formation sustained economic momentum.

Structural reforms, including GST rationalisation further supported demand recovery. The GST rationalisation undertaken in September 2025, including a reduction in tax rates on select consumer durables, helped offset the impact of higher raw material and logistics costs, thereby maintaining price competitiveness and supporting consumption.

Overall, while external risks - particularly energy price volatility and global uncertainty - remain key concerns, Indias growth outlook continues to be supported by strong domestic fundamentals, policy stability, and sustained investment momentum. The medium-term outlook remains constructive, driven by infrastructure expansion, consumption growth, and ongoing structural reforms.

Gulf Cooperation Council (GCC)

The GCC region continues to exhibit structural resilience, underpinned by robust hydrocarbon revenues and sustained government-led investments in economic diversification. However, the operating environment has become increasingly complex amid elevated geopolitical tensions in West Asia, including the ongoing Iran-related conflict and a prolonged regional stalemate, which have materially reduced near-term economic visibility.

Disruptions across critical energy and trade corridors, most notably the Strait of Hormuz, have heightened risks to crude oil and LNG supply chains. These developments have resulted in elevated crude prices, increased freight and insurance costs, and extended transit timelines, contributing to inefficiencies across regional and global supply chains.

As a result, businesses across the GCC are experiencing input cost inflation, supply chain disruptions, execution delays, and capacity constraints, particularly within infrastructure and industrial sectors. Although governments remain committed to long-term investments in infrastructure, diversification, and energy transition initiatives, near-term growth is being moderated by geopolitical uncertainty and external macroeconomic headwinds.

Saudi Arabia and the UAE continue to demonstrate relative resilience, supported by strong non-oil sector performance and ongoing strategic investments. Saudi Arabias growth (approximately 3.0%-3.2%) remains anchored by Vision 2030 initiatives; however, geopolitical disruptions are extending procurement cycles, increasing project costs, and affecting execution timelines. The UAE, as a key global trade and logistics hub, remains particularly sensitive to supply chain dislocations, resulting in higher freight costs and greater execution risks across sectors.

While structural demand drivers - including investments in smart cities, sustainability, and energy transition - remain intact, the near-term outlook is characterised by cost pressures, supply chain uncertainties, and execution timing risks. In the event of prolonged disruptions, project implementation across the region may progressively shift towards phased or deferred execution approaches.

Indian Consumer Durables Industry

2025-26: Navigating Volatility and Progressive Recovery

2025-26 illustrated the sectors inherent sensitivity to seasonal and macroeconomic variables. The first half was materially disrupted by irregular seasonal patterns and unseasonal rainfall across multiple key markets, which compressed the traditional cooling demand cycle, resulting in purchase deferrals and an accumulation of channel inventory. The second half, however, witnessed a meaningful recovery, catalysed principally by the September 2025 GST rationalisation, which improved product affordability and released pent-up demand across consumer segments.

The business witnessed a strong recovery in the second half of the year, driven by improved festive demand and healthy pre-summer momentum, which helped offset the challenges experienced earlier in the year. Looking ahead, the outlook for 2026-27

remains positive, supported by Indias underlying growth trajectory and favourable structural drivers. Rising cooling requirements, low penetration of room air conditioners, continued infrastructure development, expansion in domestic manufacturing and increasing consumer preference for energy-efficient solutions are expected to create sustained opportunities across our portfolio.

Product-Led Transformation and Premiumisation

A significant and positive structural shift is underway in consumer preferences, with demand progressively migrating towards feature-rich, energy-efficient, and AI-enabled products. Revised Bureau of Energy Efficiency (BEE) norms, effective from, 01 January, 2026, mandate higher ISEER standards, with five-star air conditioners now delivering approximately 10% higher efficiency compared to prior-generation models, reinforcing an upgrade cycle and expanding the premium segment addressable market.

Premiumisation is being driven by rising aspirational incomes, improving consumer awareness of lifecycle cost benefits, and expanding access to consumer financing.

This trend is most pronounced in urban and semi-urban markets. The mass segment, however, continues to exhibit high price sensitivity. Elevated manufacturing costs stemming from regulatory upgrades may pressure affordability for first-time buyers in lower income segments - an important driver of volume growth - necessitating careful calibration by industry participants.

Structural Demand Drivers Household Penetration

Room air conditioner penetration stands at approximately 10% of Indian households, providing a substantial and multi-decade structural growth runway. First-time buyers constitute approximately 70% of incremental demand, with adoption concentrating in Tier 2, Tier 3, and rural markets as electrification deepens and disposable incomes rise. Urbanisation, consumption power, infrastructure

reliability, and consumer financing accessibility will be key enablers of this potential.

Policy Support and Government Initiatives

The Union Budget 2026-27 significantly expanded the Electronics Components Manufacturing Scheme (ECMS) allocation to ?40,000 crores, signalling the governments intent to develop domestic supply chain capabilities and reduce dependence on imported components. Alongside PLI schemes and the Make in India framework, these initiatives provide a favourable long-term policy backdrop for manufacturers. The benefits of such policy support typically accrue progressively and require consistent implementation to be fully realised.

Consumer Financing

The widespread availability of point-of-sale credit, zero- cost EMI schemes, and Buy Now Pay Later platforms has materially reduced the upfront cost barrier for consumer durables purchases, supporting first-time adoption and accelerating replacement cycles. This structural enabler, while significant, is sensitive to broader credit conditions; any sustained tightening of consumer credit availability, particularly for mass-market segments, could moderate its contribution to demand growth.

Supply Chain Localisation and Backward Integration

Accelerated localisation and backward integration across the industry have reduced import dependence to below 30% in several product categories, improving resilience to currency depreciation and global supply chain disruptions. Achieving deeper localisation will require continued capital investment in domestic manufacturing infrastructure and sustained attention to the quality and cost-competitiveness of domestically sourced components.

Key Industry Challenges

» Persistent inflation in key raw materials, particularly copper, aluminium, and polymers, continues to compress gross margins across the value chain

» Rupee depreciation against the US dollar amplifies imported component costs and limits pricing power for manufacturers reliant on globally sourced inputs

» Increasingly unpredictable seasonal and weather patterns create structural demand volatility in cooling product categories

» Escalating regulatory compliance costs from evolving energy efficiency and quality standards are increasing product development investment requirements

» Intensifying competition from domestic players and global OEMs limits the industrys collective ability to sustain price increases

Indian Infrastructure Sector

Indias infrastructure sector is in an active investment and execution phase, underpinned by a capital outlay of ?12.22 lakh crores in 2026-27 and a National Infrastructure Pipeline (NIP) encompassing projects exceeding ?213 trillion across approximately 14,500 initiatives. This represents a substantial and well-diversified pipeline of project opportunities for Voltas domestic engineering and Electro-Mechanical Projects and Services (EMPS) businesses across multiple high-growth verticals.

Key Infrastructure Developments

	Aviation Infrastructure	Road and Tunnel Connectivity
		i
Indias urban transit infrastructure is expanding rapidly, with metro networks exceeding 1,000 km in operation and under construction, anchored by complex projects such as Mumbai Metro Lines 3 and 2B. Major expansion programs are underway across key cities, including Delhi NCR (Phase IV and RRTS integration), Bengaluru (Namma Metro Phase 2), Hyderabad (airport extension), and Chennai (large-scale Phase II rollout).	Development of Navi Mumbai International Airport (NMIAL), envisaged with an ultimate capacity of approximately 90 million passengers per annum (MPPA), along with the Chennai Airport expansion project and ongoing capacity augmentation at Delhi, Lucknow and Bengaluru airports, reflects the continued scale-up of Indias aviation infrastructure to meet rising air traffic demand.	Road and tunnel connectivity is expanding rapidly, driven by highway development and tunnel- based solutions for urban mobility and difficult terrains. Some of the major projects include the Mumbai Trans Harbour Link (Atal Setu), spanning 21.8 km; the Mumbai- MMRDA Katainaka Tunnel; and the Thane-Borivali twin tunnel, extending approximately 11.8 km. Other key developments include the Mumbai Coastal Road Project, a multi-lane coastal corridor with substantial underground tunnelling components; the Bangalore Twin Tunnel Project; the Zojila and Z-Morh tunnels in Jammu & Kashmir, which provide strategic all-weather connectivity; and the Chenani- Nashri Tunnel and associated corridor upgrades in Jammu & Kashmir.

		Industrial Ecosystems
		i
Multiple high-speed rail corridors at design speeds of 300-350 km/h, with continued investments in multimodal logistics integration.	Indias data centre capacity, expanding at a CAGR exceeding 20%, driven by AI adoption, 5G network rollout, and data localisation policy requirements.	Indias industrial ecosystem is accelerating through the ECIC and National Industrial Corridor Programme, supported by investments in semiconductors, electronics, and renewable manufacturing. Key hubs include Dholera (semiconductors), Tirunelveli (solar manufacturing), and Hosur (electronics and EV components), driving large-scale industrialisation.

Water and Urban Services	Electrical Distribution Infrastructure under RDSS, Solar Projects and Battery Energy
AMRUT 2.0 and the Jal Jeevan Mission, sustaining national-scale investments in water supply and wastewater infrastructure	Storage systems are expected to offer significant business opportunities over the next five years, supported by large-scale government investments, grid modernisation initiatives, and Indias accelerating transition towards renewable energy.

Structural financing enablers, including the Infrastructure Risk Guarantee Fund (IRGF) and institutional support from NaBFID and NIIF, are improving project viability and long-term capital access. At the same time, the ongoing shift towards larger and more complex projects introduces heightened execution risk, greater working capital intensity, and extended cash conversion cycles. Input cost volatility in energy and base metals, labour availability constraints, and exposure to geopolitical developments affecting energy markets remain sector-wide headwinds that require disciplined project and financial management.

(Source: Union Budget 2026-27,

Ministry of Finance;

DPIIT/NIP Official Database, 2026 update)

Business Overview

Voltas Limited, a Tata Group enterprise, is Indias leading provider of cooling solutions and a diversified engineering and project solutions enterprise. The Company has maintained its No. 1 market share position in the Room Air Conditioner segment and continues to strengthen its presence across Commercial Air Conditioning, Commercial Refrigeration, Home Appliances, and Engineering Services. Voltas operates across three reportable business segments: Unitary Cooling Products (UCP), Electro-Mechanical Projects and Services (EMPS), and Engineering Products and Services (EPS).

During 2025-26, the Company navigated a challenging environment shaped by weather-induced demand disruption in H1, commodity-driven input cost inflation, currency depreciation, geopolitical disruptions affecting international project execution, and competitive pricing pressures across segments. These headwinds resulted in Consolidated Total Income of W14,483 crores compared to W15,737 crores in 2024-25, and a Net Profit after Tax of W370 crores compared to W834 crores in the previous year. Whilst these results reflect a year of financial pressure, they also need to be understood in the context of deliberate and necessary structural transformation investments in manufacturing capacity, brand positioning,

channel infrastructure, and technology, whose benefits are expected to accrue progressively through 2026-27 and beyond. The decline reflects a combination of externa headwinds and underscores the need for sustained operational and cost discipline.

Notwithstanding the financial headwinds, 2025-26 yielded important operational milestones. Voltas sustained its market leadership in RAC, delivered a strong H2 recovery in the cooling business with March 2026 among the highest-ever sales months in the Companys history, improved manufacturing utilisation at Chennai and Pantnagar, progressed key international projects including the completion of Uptown Dubai Phase 1, and strengthened UMPESLs strategic reorientation towards quality-led project execution. These outcomes provide a foundation for improved performance, subject to macroeconomic conditions, competitive dynamics, and consistent execution.

Unitary Cooling Products (UCP)

The Unitary Cooling Products business encompasses Room Air Conditioners, Commercial Air Conditioning, Commercial Refrigeration, Air Coolers, and Water Heaters. It constitutes the largest revenue contributor within the Companys portfolio, accounting for ?9,501 crores in 2025-26 revenue, and provides the broadest consumer franchise, serving residential, commercial, and institutional markets across India.

Room Air Conditioners (RAC)

Voltas Room Air Conditioner business maintained its No. 1 market share position in 2025-26, sustaining its leadership margin over the nearest competitor despite a significantly disrupted operating environment. This leadership was maintained in a subdued demand environment and does not fully reflect the pressure on underlying profitability.

The Company launched the refreshed Summer 2026 portfolio anchored by the Al-enabled Vertis Split AC series, incorporating features including Al adaptive cooling, Al Geo Fencing, and Al Energy Manager, alongside the repositioned Har Ghar Voltas brand campaign and new celebrity ambassador partnerships. March 2026 was among the strongest sales months in the Companys history, reflecting the strength of the H2 demand recovery.

The full-year financial performance, however, was materially impacted by a difficult first half. A mild summer season and early monsoon onset compressed the peak demand window, resulting in inventory accumulation and lower channel offtake. Whilst the second-half recovery, catalysed by the GST rationalisation and better secondary offtake, partially offset these headwinds, full-year revenue declined on a year-on-year basis and operating margins were constrained by sustained increases in commodity costs and by rupee depreciation. As a result, both volume growth and margin expansion remained constrained for the full year despite the second-half recovery. A comprehensive cost reduction and value engineering programme, encompassing improved sourcing, deepened localisation, and manufacturing productivity initiatives, mitigated a portion of these pressures, though not in full. Sustaining and improving margins in 2026-27 will require further cost efficiency progress, disciplined pricing, and a supportive commodity environment.

Manufacturing investments at Chennai and Pantnagar are delivering improved capacity utilisation relative to the previous year, and continued investment in factory automation, warehouse rationalisation, and integrated inventory planning is expected to yield further operational benefits. The Company enters the current season with an enhanced product portfolio, stronger distribution reach, and a more sharply defined market segmentation strategy, well-positioned to capitalise on the structural growth opportunity, whilst managing the near-term headwinds of competitive intensity and input cost volatility.

Channel and distribution expansion:

» Increased monitoring of retail touchpoints across high-growth markets, with deepened penetration in Tier 2 and Tier 3 geographies

» Strengthened dealer and distributor network coverage and engagement

Structured Network Acquisition Plan (SNAP) programme enabling data-driven, hyper-local targeting of high-potential micro-markets

» Enhancement of the D2C digital platform and expansion of strategic e-commerce partnerships

Opportunities:

» Indias RAC household penetration of under 10% provides a sustainable structural growth runway underpinned by improving electrification and rising disposable incomes

» Increasing frequency of extreme heat events is

accelerating the transition of residential cooling from a discretionary to an essential purchase category

» Premiumisation trends, Al-enabled product features, and energy efficiency improvements support value-led growth

» Expansion of digital channels enables targeted consumer engagement and supports higher-margin direct-to-consumer revenues

» Confluence of aspirational consumption and income growth within the middle class

Principal risks and challenges:

Structural exposure to weather and seasonal volatility - a recurrence of adverse H1 climatic conditions would materially impact performance

Persistent commodity cost inflation, particularly copper and aluminium, and currency depreciation, particularly USD and CNY, exerts sustained pressure on gross margins

Successive BEE energy efficiency norm upgrades increase product development and manufacturing costs, with attendant affordability implications for entry-level buyers

Intensifying competition from domestic manufacturers and global OEMs, including competitively priced imports, constrains pricing power

Commercial Air Conditioning (CAC)

The Commercial Air Conditioning business is structurally less correlated with the seasonal cooling cycle and a high-margin, high-growth contributor within UCP, serving large commercial buildings, data centres, healthcare facilities, and manufacturing infrastructure. The business benefits directly from Indias accelerating infrastructure investment cycle and the rapid expansion of data centre capacity, driven by AI adoption, 5G network deployment, and data localisation requirements. The Annual Maintenance Contract (AMC) business provides predictable, recurring revenues and deepens long-term client relationships.

The strategic opportunity in data centres and the government-led push for domestic semiconductor manufacturing are substantial and well-aligned with Voltas electromechanical capabilities, including the delivery of high-efficiency centrifugal chillers, oil-free magnetic bearing chillers, and district cooling solutions. These are technically demanding markets with extended sales cycles and stringent performance requirements. Continuous investment in engineering talent and technology capability is essential, and the competitive presence of established global HVAC specialists means that differentiation must be actively maintained.

Opportunities:

* Strong pipeline of industrial and infrastructure developments likely to accelerate demand for Commercial Air Conditioning solutions

» Rapid expansion of high-density data centres, driven by AI investment, 5G rollout, and data localisation policy, creates significant, high-value demand for advanced and precision cooling solutions

» Growing adoption of LEED-certified and sustainable building design drives demand for advanced VRF systems and district cooling infrastructure

» Government-led domestic semiconductor manufacturing initiatives generate technically demanding precision cooling requirements

Principal risks and challenges:

» Extended and uncertain sales cycles in large commercial projects constrain cash flow visibility and predictability

* Intense competition from established global HVAC players, coupled with increasing technology requirements, necessitates sustained investment in engineering and technical capabilities

» Scarcity of skilled HVAC engineering talent creates retention risk and potential operational dependency on key personnel

Commercial Refrigeration (CR)

The Commercial Refrigeration segment occupies a strategically important position within UCP, providing a distinct demand profile and thereby contributing to the diversification of the Companys revenue base. The business has built a growing presence across institutional segments, including organised retail, food service, quick-commerce, healthcare, cold chain logistics, and markets characterised by structural, multi-year expansion.

2025-26 saw the segment navigate early headwinds from unseasonal weather and a compressed traditional selling window, responding through deeper institutional engagement and the introduction of new product lines, including low Global Warming Potential (GWP) refrigerant options, upgraded Chest Freezers and Medical Refrigeration solutions. Expansion into specialised verticals, including medical refrigeration and cold rooms, represents meaningful long-term opportunity.

Opportunities:

The ongoing expansion of organised retail formats, quick-commerce platforms, and cold chain logistics infrastructure creates a multi-year growth runway

Emerging market opportunities with differentiated margin profile verticals, including medical refrigeration, retail refrigeration units, and cold rooms, represent high-value market opportunities with differentiated margin potential

A localised manufacturing base at Waghodia enhances supply chain resilience and supports operational responsiveness

Principal risks and challenges:

Intense price competition across commoditised product segments from domestic and international manufacturers

Volatility in the cost of key raw materials, including insulation chemicals, sheet metals and silver brazing, affects margin predictability

The transition to low-GWP refrigerant technologies necessitates sustained capital investment in manufacturing capability and specialist technical expertise

Air Coolers and Water Heaters

Air Coolers and Water Heaters are key contributors to Voltas consumer portfolio, addressing peak summer and winter demand respectively. Both categories leverage the Companys strong distribution network, brand equity, and rising consumer preference. In air coolers, Voltas maintains a robust market presence and continues to benefit from the ongoing shift from unorganised to branded offerings.

2025-26 presented meaningful headwinds for both categories. Unseasonal weather patterns compressed the peak selling window for air coolers, resulting in a channel inventory overhang that required targeted liquidation measures. Management responded proactively through calibrated product portfolio refreshes, deeper distribution penetration across high-potential Tier 2 and Tier 3 markets and strengthened digital channel engagement, initiatives aimed at reinforcing the long-term strategic positioning of both businesses. Both categories, however, remain exposed to pronounced seasonal demand variability

and competitive intensity, necessitating continued

management focus and execution discipline.

Opportunities:

» The ongoing shift from unorganised to branded product formats supports sustained market share expansion for organised players

» Growing consumer demand for energy-efficient, technologically advanced appliances supports value-led growth

» Ongoing distribution network expansion strengthens penetration in underserved markets

Principal risks and challenges:

» Pronounced seasonal demand variability creates structural inventory management challenges

» Competition from the unorganised air cooler segment exerts sustained downward pressure on pricing and margins

» Rising input costs, currency depreciation, and accelerating technology shifts in the water heater segment present ongoing cost and product development challenges

Voltbek Home Appliances Private Limited

Voltbek Home Appliances Private Limited, the strategic joint venture between Voltas and Argelik - a leading European home appliance manufacturer, continues to build its position in the Indian home appliances market, leveraging the complementary strengths of Voltas established domestic distribution and service infrastructure and Argeliks global research, development, and manufacturing expertise. The venture sold approximately 3.3 million units in 2025-26, achieving volume growth through a value-for-money product positioning and consumer-relevant innovations, including hard water wash technology. Voltbek holds its No. 2 position in the semi-automatic washing machine category and has recorded an estimated year-to-date market share of approximately 8.6% in washing machines and 6.2% in refrigerators. It is present across Modern Trade and e-commerce channels.

Operational improvements at the Sanand manufacturing facility, including the reduction of import dependence to below 30% through localisation, have strengthened

supply chain resilience and reduced foreign exchange cost exposure. Cost Value Engineering (CVE), improved product mix, and the ongoing scale-up of manufacturing are being pursued as the primary levers for margin progression. The venture is progressing towards EBITDA break-even, with the financial trajectory contingent on continued gains in scale, deeper localisation, and portfolio mix improvement in an intensely competitive market environment.

The Company acknowledges that the home appliances market is led by well-entrenched multinational players with significantly greater brand equity, distribution scale, and marketing investment capacity. Gaining share in mature segments often requires aggressive pricing or elevated promotional expenditure, which constrains near-term margins. The business continues to operate at sub-scale profitability levels and will require sustained improvement in product mix, operating leverage, and cost structure to meet its financial objectives.

Opportunities:

Rising middle-class income levels and expanding consumer financing availability support premiumisation across appliance categories

Under-penetrated premium categories, including frost-free refrigerators and front-load washing machines, offer meaningful room for value-led share growth

Manufacturing scale at the Sanand facility supports continued cost efficiency improvement and product development velocity

Principal risks and challenges:

» The home appliances market remains highly

competitive, dominated by strong multinational brands, with market share gains in mature categories like direct-cool refrigerators requiring aggressive pricing and higher promotions, impacting margins

* Dependence on global supply chains for critical components, including inverter compressors and microcontrollers, exposes operations to semiconductor availability risk and logistics disruptions

Electro-Mechanical Projects and Services (EMPS) - International Projects

The International Operations Business Group (IOBG) is Voltas principal platform for project execution across GCC markets, with an established track record spanning the UAE, Saudi Arabia, and other regional markets. The business has delivered landmark projects including the DEWA Headquarters in Dubai, recognised internationally as a leading smart net-zero energy government building, alongside significant projects such as the Qiddiya Water Theme Park, Saudi Arabia, and the completion of Uptown Dubai Phase 1 during 2025-26. IOBG provides a stable, year-round revenue stream, reinforcing Voltas portfolio diversification strategy and helping mitigate earnings volatility inherent in the seasonal cooling business.

2025-26 was, however, operationally complex for IOBG. Escalating geopolitical tensions in the Middle East caused disruptions across site access, logistics, project execution

timelines, and commercial settlements. The Company responded with commendable organisational resilience, deploying crisis management teams, implementing enhanced safety protocols, and establishing rigorous operational monitoring frameworks. Resolution of legacy commercial claims provided support to profitability, and the business maintained a disciplined approach to new order intake, prioritising projects with secured funding, assured margin profiles, and counterparties of established credit quality. The carry-forward order book remained broadly stable.

Opportunities:

* GCC economic diversification programmes, led by Saudi Arabias Vision 2030, continue to generate a substantial pipeline of high-value infrastructure and engineering projects

» Ongoing mega-project execution across tourism, industrial, and public infrastructure drives sustained demand for advanced MEP and district cooling solutions

» The regional focus on sustainable, net-zero development aligns with Voltas capabilities in delivering energy-efficient and intelligent building solutions

Principal risks and challenge:

» Geopolitical disruptions, including constraints on Red Sea and Strait of Hormuz maritime access, increase logistics costs, extend procurement timelines, and elevate broader operational risk

» Heightened client credit risk in conflict-affected markets, with the potential for receivables accumulation and collection delays

» Elevated insurance premiums, freight costs, and currency depreciation directly compress project margin realisations

» Increasing localisation mandates and complex

regulatory frameworks across GCC jurisdictions add compliance cost and administrative complexity

Zayed National Museum, Abu Dhabi

Universal MEP Projects & Engineering Services Limited (UMPESL)

Universal MEP Projects & Engineering Services Limited (UMPESL), a wholly owned subsidiary of Voltas, is a diversified engineering solutions provider operating across Infrastructure Solutions, the Textile Machinery Division (TMD), and Mining & Construction Equipment (M&CE).

Domestic Infra Projects

Within UMPESL, Domestic Projects is building a well- diversified infrastructure solutions platform with capabilities spanning MEP, Water Solutions, Solar, and Electrical Solutions. The business has established a strong execution track record across complex national infrastructure projects, including metro rail, aviation, data centres, and industrial facilities, and is actively broadening its portfolio into high-growth segments such as hyperscale data centres, district cooling plants, industrial projects, semiconductor manufacturing, zero-liquid-discharge water solutions, and utility-scale Battery Energy Storage Solutions (BESS).

During 2025-26, domestic projects under UMPESL completed a significant strategic reorientation, transitioning from volume-driven revenue growth towards quality-led, risk-calibrated project execution, governed by a structured evaluation framework incorporating rigorous bid qualification criteria, systematic customer credit assessment, and GenAI-assisted contract risk review.

Early indicators from this transition are encouraging, with a strengthened Central Project Management Office, deployment of digital governance tools including Power BI and BIM, and improved execution discipline across the portfolio.

The domestic infrastructure solutions order book is substantive at ?4500+ crores. Stakeholders should note that order book scale provides revenue visibility, but does not preclude execution risk, margin pressure, or receivables management complexity, factors inherent in large-scale, long-duration infrastructure contracts, all of which require consistent management attention.

Opportunities:

Indias broad-based infrastructure expansion, spanning data centres, semiconductor manufacturing, green energy, and urban infrastructure, provides a well-diversified domestic project pipeline

An established track record in complex, large-scale projects including metro rail and aviation infrastructure supports competitive positioning as a preferred execution partner

Digital governance tools and a strengthened project management framework are enhancing execution discipline, risk oversight, and operational efficiency

Principal risks and challenges:

Long and inherently uncertain execution cycles on large infrastructure projects increase exposure to schedule slippage, cost overruns, and scope evolution

Input cost volatility across energy, base metals, and logistics, poses sustained risk to margin realisation on fixed-price or lump-sum contract structures

» Complex tendering processes and slow cash conversion in municipal project contracts place persistent pressure on working capital management

» Disciplined control of receivables, unbilled revenue, and commercial claims management remains critical to maintaining financial performance and balance sheet integrity

UMPESLs Water Project

Textile Machinery Division (TMD)

TMD serves as a key technology and solutions partner to Indias textile sector, providing advanced capital machinery and comprehensive lifecycle services spanning spinning and post-spinning value chains. TMD has an established presence across the Indian textile industry, a nationwide service network, and long-standing relationships with manufacturers across spinning, weaving, processing, and apparel segments. The divisions post-spinning expansion initiative, encompassing weaving, knitting, processing, finishing, and apparel machinery, through partnerships with Tajima, Caron, Shima Seiki, and others, is broadening its addressable market and building resilience against the cyclicality of the core spinning segment.

2025-26 was, however, a materially challenging year for the division. The imposition of a 50% US tariff on select Indian textile exports created acute disruption for textile manufacturers, particularly MSMEs, resulting in production curtailments and a significant deferral of capital expenditure. The division responded by prioritising the execution of pending legacy orders and sustaining aftersales service and spare parts revenues. The subsequent revision of tariffs to a uniform 15% US tariff and various Free Trade Agreements including the India EU-FTA has introduced cautious optimism regarding a gradual recovery in customer capex sentiment.

Opportunities:

» Post-spinning segment offers a more favourable growth profile with structurally lower exposure to upstream tariff disruptions

» Expansion of advanced after-sales services, including smart compressed air monitoring and real-time remote diagnostics, supports recurring revenue stream development

» Potential benefits from Free Trade Agreement developments and easing US tariff pressures could support export competitiveness and a textile sector capex recovery

* Mega Textile Parks and growing adoption of man-made fibres are expected to support a medium-term capex cycle recovery

Principal risks and challenges:

» The division remains structurally exposed to the

cyclicality of global textile trade and unpredictability of international tariff regimes

» Intense price competition from subsidised Asian

manufacturers and low-cost equipment imports exerts sustained downward pressure on margins

» Effective expansion across fragmented post-spinning market segments requires sustained strategic alignment and disciplined partner development

Mining and Construction Equipment Division (M&CE)

The Mining and Construction Equipment Division is a well-established business providing capital equipment, operations and maintenance services, and lifecycle support across India and Africa, principally through the African operations and Powerscreen brand for crushing and screening applications. The division delivered steady revenue growth in 2025-26, underpinned by continuity in Operations & Maintenance (O&M) contract execution, which provides a degree of revenue predictability, and by infrastructure-driven demand for crushing and screening equipment. Strategic partnerships have expanded the divisions capability and geographic service reach.

Indias ongoing mining sector reforms, commercial coal sector expansion, and infrastructure-driven aggregates demand provide a constructive medium-term outlook for the division. The introduction of hybrid machinery, aligned with rising customer emphasis on fuel efficiency, lower operating costs, and ESG compliance, reflects a forwardlooking approach to the evolving market. The divisions strategy, building a more predictable, annuity-based service and O&M revenue base to complement inherently cyclical equipment sales, is progressing, and expanding long-term O&M contracts remain a key strategic priority.

Opportunities:

Indias mining sector reforms and sustained infrastructure-driven aggregates demand support medium-term equipment and O&M growth

Expanding long-term O&M contracts and service annuity revenues provide earnings diversification and reduce dependence on equipment sales cyclicality

Hybrid machinery introduction positions the division favourably against rising customer demand for fuel-efficient and ESG-compliant solutions

Exploring different geographies across the globe for potential incremental revenue earning

Principal risks and challenges:

» The inherent cyclicality of capital equipment sales creates variability in order inflows and revenue predictability

» African operations, particularly in Mozambique, are closely tied to commodity price cycles and subject to local execution and geopolitical risks

» Broader geopolitical uncertainties and uneven global economic growth may adversely affect demand visibility and the capital expenditure decisions of key customers

» Competition from established global equipment manufacturers requires sustained differentiation through service quality, application expertise, and localisation

Financial Overview: Consolidated

The consolidated and standalone financial statements and supporting schedules for 2025-26 are presented separately in the Annual Report. Key consolidated financial metrics are summarised below for contextual reference:

Consolidated Total Income: ?14,483 crores in 2025-26 compared to ?15,737 crores in 2024-25, a year-on-year decline of approximately 8%, attributable principally to H1 demand disruption in the cooling segment.

Profit Before Tax: ?557 crores in 2025-26 compared to ?1,191 crores in 2024-25, a decline of approximately 53%, reflecting the combined impact of revenue reduction and sustained gross margin pressure from commodity inflation, currency depreciation, and increased investment-phase costs

Profit After Tax: ?370 crores in 2025-26 compared to ?834 crores in 2024-25, a decline of approximately 56%

Segment Performance: Segment A (Unitary Cooling Products), Revenue ?9,501 crores; Segment B (Electro-Mechanical Projects and Services), Revenue ?4,053 crores; Segment C (Engineering Products and Services), Revenue ?599 crores

Financial Performance: Consolidated

(a) GROSS SALES/INCOME FROM OPERATIONS (SEGMENT REVENUES) ( in crores)

	2025-26	2024-25	Change	Change(%)
Segment A (Unitary Cooling Products)	9,501	10,614	(1,113)	(10.5)
Segment B (Electro-Mechanical Projects & Services)	4,053	4,157	(104)	(2.5)
Segment C (Engineering Products & Services)	599	569	30	5.3
Total	14,153	15,340	(1,187)	(7.7)

FY 2025-26 was characterised by volatile weather, including a subdued summer and an early monsoon, which adversely impacted the Unitary Cooling Products segment leading to short-term pressures on Voltas top line and margin. The Electro-Mechanical Projects & Services segment remained largely resilient, while Engineering Products continued its steady growth trajectory.

(b) EMPLOYEE BENEFITS EXPENSE ( in crores )

	2025-26	2024-25	Change	Change(%)
Employee Benefits Expense	939	890	49	5.5

Employee benefits expenses comprise salary, wages, and commission to the Directors and Companys contribution to Provident Fund and other funds, gratuity, and staff welfare expenses. Employee costs were in line with the Companys continued investments in talent and capability building.

(c) finance cost

( in crores)

	2025-26	2024-25	Change	Change(%)
Interest	87	62	25	40.3

Finance costs are interest paid on bank credit facilities availed for the execution of overseas projects, capex loans for Chennai and Waghodia factories and certain working capital demand loans during the year. Finance costs increased during the year due to higher working capital deployed to support business operations in H1.

(d) profitability

	2025-26	2024-25	Change	Change(%)
Profit before Exceptional Items and Tax	584	1,191	(607)	(50.9)
Exceptional Items	26	-	26	NA
Profit before Tax	557	1,191	(634)	(53.2)
Profit after Tax	370	834	(464)	(55.6)

Profitability impacted due to the underperformance in H1 in Unitary Cooling Products Segment linked to unseasonal rains and erratic summer.

Financial Position: Consolidated

(a) BORROWINGS (non-current AND current) ( in crores)

	2025-26	2024-25	Change	Change(%)
Borrowings	966	863	103	11.9

Borrowings represent working capital and term loan facilities availed for Overseas Projects business and term loans taken for capital expansion projects for the Room Air Conditioner Plant in Chennai and the Commercial Refrigeration manufacturing facility in Waghodia.

(b) INVESTMENTS ( in crores)

	2025-26	2024-25	Change	Change(%)
Non-Current Investments	2,485	2,845	(360)	(12.7)
Current Investments	277	399	(122)	(30.6)
Total	2,762	3,244	(482)	(14.9)

I nvestments include debt mutual funds, investment in bonds, preference shares and strategic equity instruments in Tata Group companies, joint ventures and associates. The decrease in the value of investments was on account of the deployment of funds in the inventory built-up and working capital requirement to fuel the growth in the upcoming season. Further, the investments are restated at fair market value as of the year-end.

(c) INVENTORIES ( in crores)

	2025-26	2024-25	Change	Change(%)
Raw Materials and Components	1,769	1,321	448	33.9
Work-in-Progress	0.5	15	(14.5)	(96.6)
Finished Goods	1,197	796	401	50.4
Stock-in-Trade	466	583	(117)	(20.1)
Total	3,433	2,715	718	26.4

Inventory levels increased to meet upcoming seasonal demand.

(d) trade receivables

	2025-26	2024-25	Change	Change(%)
Trade Receivables	3,035	2,232	803	36

Trade receivables increased due to higher sales in cooling segment at year-end.

(e) OTHER ASSETS ( in crores)

	2025-26	2024-25	Change	Change(%)
Other Current Financial Assets	464	843	(379)	(44.9)
Other Non-Current Financial Assets	454	237	217	91.6
Contract Assets	1,867	1,579	288	18.2
Other Current Assets	470	431	39	9
Other Non-Current Assets	67	77	(10)	(13)

Other financial assets (current and non-current) comprise security deposits, deposits with customers and fixed deposits. Other assets (current and non-current) primarily include balances with Government authorities and capital advances. Contract assets represent contract revenues recognised in the project business, in excess of the certified bills. In the Projects business, revenues are recognised based on the percentage of completion method, in line with the accounting standards.

00 LABLTES AND P ROVSONS ( in crores)

	2025-26	2024-25	Change	Change(%)
Current Liabilities	7,554	6,006	1,548	25.8
Non-Current Liabilities	557	606	(49)	(8.1)

Current liabilities include contract liabilities, borrowings, trade payables, short-term provisions, income tax liabilities, other current liabilities. Non-current liabilities consist of long-term provisions, trade payables and deferred tax liabilities. Provisions (longterm and short-term) are towards employee benefits - gratuity, pension, medical benefits and compensated absences, and contingencies, among others.

(g) rati ° analysis ( i n C rores)

Key Ratios	As of 31 March, 2026	As of 31 March, 2025	Change	Reason for Variance (for more than 25%)
Current ratio	1.37	1.48	(7.43%)
Debt-Equity Ratio	0.15	0.13	15.38%

Key Ratios	As of 31 March, 2026	As of 31 March, 2025	Change	Reason for Variance (for more than 25%)
Debt Service Coverage Ratio	5.80	12.13	(52.18%)	Decrease is due to a decline in profitability during the year.
Return on Equity Ratio	0.06	0.13	(53.85%)	Decrease is due to a decline in profitability during the year.
Return on Networth Ratio	0.06	0.13	(53.85%)	Decrease is due to a decline in profitability during the year.
Inventory Turnover Ratio	2.60	3.61	(27.98%)	Decrease is due to an increase in inventory.
Trade Receivable Turnover Ratio	3.27	4.35	(24.83%)
Trade Payable Turnover Ratio	2.78	3.47	(19.88%)
Net Capital Turnover Ratio	5.04	6.37	(20.88%)
Operating Profit Ratio	0.05	0.08	(37.50%)	Decrease is due to a decline in profitability during the year.
Net Profit Ratio	0.03	0.05	(40.00%)	Decrease is due to a decline in profitability during the year.
Return on Capital Employed Return on Investment	0.10	0.18	(44.44%)	Decrease is due to a decline in profitability during the year.
Mutual Funds Investments	0.06	0.08	(25.00%)	Decrease is on account of fluctuation in market prices.
Fixed Income Investments	0.08	0.08	0.00%
Quoted Equity Instruments Investments	(0.25)	(0.04)	525.00%	Decrease is on account of fluctuation in market prices.

(a) GROSS SALES/INCOME FROM OPERATIONS (SEGMENT REVENUES) ( in crores)

	2025-26	2024-25	Change	Change (%)
Segment-A (Unitary Cooling Products)	9,501	10,614	(1,113)	(10.5)
Segment-B (Electro-Mechanical Projects & Services)	907	568	339	59.7
Total	10,408	11,182	(774)	(6.9)

2025-26 was characterised by volatile weather, including a subdued summer and an early monsoon, which adversely impacted the cooling segment leading to short-term pressures on Voltas top line and margin. However, the Electro-Mechanical Projects & Services segment remained largely resilient.

(b) OTHER INCOME ( in crores)

	2025-261	2024-25	Change	Change(%)
Other Income	299	401	(102)	(25.4)

Other income comprises gains on the sale and fair valuation of financial assets measured at FVTPL, rental income, dividends from investments, interest income and profit from the sale of investments.

(c) EMPLOYEE BENEFITS EXPENSE ( in crores)

	2025-26	2024-25	Change	Change(%)
Employee Benefits Expense	597	545	52	9.5

Employee benefits expense comprises salary, wages, and commission to the Directors and the Companys contribution to Provident Fund and other funds, gratuity and staff welfare expenses.

(d) FINANCE COSTS (? in crores)

	2025-26	2024-25	Change	Change(%)
Interest	65	35	30	85.7

Finance costs are interest paid on bank credit facilities availed for the execution of overseas projects, capex loan taken for Chennai and Waghodia factories and some support for working capital management during the year.

(e) DEPRECIATION and AMORTISATION EXPENSES ( in crores)

	2025-26	2024-25	Change	Change(%)
Depreciation and Amortisation Expenses	79	56	23	41.1

The depreciation charge for 2025-26 increased due to the capitalisation of assets at the Manufacturing Plants.

(f) OTHER EXPENSES

	2025-26	2024-25	Change	Change(%)
Other Expenses	1,315	1,143	172	15.1

Other expenses include repairs and maintenance, travel and communication costs, service maintenance charges, other selling expenses, external services/contract labour charges, subscriptions, e-auction charges, C&F charges, moving and shifting expenses, staff selection expenses, brand equity expenses and commission paid to Non-Executive Directors.

(g) PROFITABILITY ( in crores)

	2025-26	2024-25	Change	Change (%)
Profit before Exceptional Items and Tax	445	1,036	(591)	(57.0)
Exceptional Items	(16)	-	(16)	NA
Profit before Tax	429	1,036	(607)	(58.6)

Profitability was impacted due to H1 challenges in the cooling segment, linked to unseasonal rains and an erratic summer.

Financial Position: Standalone

(a) borrowings (non-current and current) ( in crores )

	2025-26	2024-25	Change	Change(%)
Borrowings	790	565	225	39.8
Lease Liabilities	21	24	(3)	(12.5)
Total	811	589	222	37.7

Borrowings were primarily towards term loans taken for capital expansion projects for Room Air Conditioners in Chennai and Commercial Refrigeration Products in Waghodia, and include fund-based credit facilities availed for new overseas projects in the Middle East and working capital requirements for product business.

(b) INVESTMENTS ( in crores)

	2025-26	2024-25	Change	Change(%)
Non-Current Investments	5,075	5,087	(12)	(0.2)
Current Investments	75	303	(228)	(75.2)
Total	5,150	5,390	(240)	(4.5)

Non-current investments comprise investments in subsidiaries, joint ventures, associates and investments in Mutual Funds, Bonds, Debentures and Preference Shares. Current investments comprise investments in Mutual Funds and Bonds/Debentures. Further, the investments are re-stated at fair market value as of the year-end.

(c) INVENTORIES

	2025-26	2024-25	Change	Change(%)
Raw Materials and Components	1,767	1,318	449	34.1
Work-in-Progress	0.5	6	(6)	(100.0)
Finished Goods	1,197	796	401	50.4
Stock-in-Trade	413	515	(102)	(19.8)
Total	3,377	2,635	742	28.1

Inventory levels increased to meet upcoming seasonal demand.

(d) TRADE RECEIVABLES ( in crores)

	2025-26	2024-25	Change	Change(%)
Trade Receivables	2,079	1,570	509	32.4

Trade receivables increased due to higher sales in Unitary Cooling Product Segment at year-end.

(e) OTHER ASSETS ( in crores)

	2025-26	2024-25	Change	Change(%)
Other Current Financial Assets	439	758	(319)	(42.1)
Other Non-Current Financial Assets	435	204	231	113.2
Contract Assets	578	388	190	49.0
Other Current Assets	351	247	104	42.1
Other Non-Current Assets	57	61	(4)	(6.6)

Other financial assets (current and non-current) comprise security deposits, deposits with customers and fixed deposits. Other assets (current and non-current) primarily include balances with Government authorities and capital advances. Contract assets represent contract revenues recognised in the project business, in excess of the certified bills. In the Projects business, revenues are recognised based on the percentage of completion method, in line with the accounting standards.

(f) LIABILITIES AND PROVISIONS ( in crores)

	2025-26	2024-25	Change	Change(%)
Current Liabilities	5,507	4,007	1,500	37.4
Non-Current Liabilities	516	572	(56)	(9.8)

Current liabilities include contract liabilities, borrowings, trade payables, short-term provisions, income tax liabilities, other current liabilities & Other financial liabilities. Non-current liabilities consist of long-term provisions, trade payables and deferred tax liabilities. Provisions (long-term and short-term) are towards employee benefits - gratuity, pension, medical benefits and compensated absences, and contingencies and other non-current financial liabilities, among others.

(g) ratio analysis

Ratio	As at 31 March, 2026	As at 31 March, 2025	Change	Reason for Variance (for more than 25%)
Current Ratio	1.34	1.59	(15.72%)
Debt- Equity Ratio	0.10	0.07	42.86%	Increase is on account of increase in borrowings.
Debt Service Coverage ratio	5.74	13.57	(57.70%)	Decrease is due to a decline in profitability during the year.
Return on Equity Ratio	0.04	0.10	(60.00%)	Decrease is due to a decline in profitability during the year.
Return on Net Worth Ratio	0.04	0.09	(55.56%)	Decrease is due to a decline in profitability during the year.
Inventory Turnover Ratio	2.54	3.59	(29.25%)	Decrease is due to an increase in inventory.
Trade Receivable Turnover Ratio	4.57	5.79	(21.07%)
Trade Payable Turnover Ratio	2.99	3.78	(20.90%)
Net Capital Turnover Ratio	4.93	5.49	(10.20%)
Operating Profit Ratio	0.05	0.09	(44.44%)	Decrease is due to a decline in profitability during the year.
Net Profit Ratio	0.03	0.07	(57.14%)	Decrease is due to a decline in profitability during the year.
Return on Capital Employed	0.06	0.12	(50.00%)	Decrease is due to a decline in profitability during the year.
Return on Investment	-	-
Mutual Funds Investments	0.06	0.08	(25.00%)	Decrease is on account of fluctuations in market prices.
Fixed Income Investments	0.08	0.09	(11.11%)
Quoted Equity Instruments Investments	(0.25)	0.04	(725.00%)	Decrease is on account of fluctuations in market prices.

Risk and Concerns

Voltas operates an Enterprise Risk Management (ERM) framework aligned with ISO 31000 and COSO standards, supported by advanced risk monitoring tools including GenAI-driven scenario modelling and the Projects business Contra Vault system. These capabilities enhance the Companys foresight and decision-making precision and contribute to the proactive identification and management of emerging risks across the portfolio.

Erratic climate patterns pose a structural risk to cooling demand visibility. Additionally, elevated commodity prices continue to pressure margins. While import dependence has reduced to below 30% in key categories, residual imports still create vulnerability to forex movements. Moreover, rising regulatory requirements (BEE, quality, environmental norms) are increasing

compliance costs, with limited pricing flexibility in mass segments. Despite disciplined project execution, geopolitical disruptions continue to elevate logistics costs, execution risks, and working capital pressures in international projects.

However, Voltas ERM framework is designed to mitigate the above risks at every level of the organisation, ensuring resilience in an ever-evolving business environment. The Company is enhancing risk visibility through advanced analytics and scenario planning, enabling more proactive management of emerging risks, including supply chain disruptions. During the year the Company revisited its ERM framework aligned with diversified businesses verticals and future growth prospects.

Human Resources

People capability and organisational resilience are critical enablers of Voltas strategic agenda. The Company has maintained a strong focus on building a high-performance, future-ready workforce, investing systematically in capability development, career frameworks, talent mobility, and employee engagement. In 2025-26, the people

agenda evolved from establishing foundational practices towards deepening these foundations and building the organisational depth required to support the next phase of growth.

Capability:	Career:	Culture and	Extended
Institutionalising	Strengthening	Engagement:	Workforce:
Execution	the Internal	Fostering	Enhancing
Strength	Talent Pipeline	an Inclusive Workplace	Frontline Capability
The Voltas Academy	& Increased emphasis on	Structured employee	r> Safety, 5S, and
continues to drive	internal talent mobility	listening through the	assembly process
enterprise-wide	across roles and	Great Place to Work	training programmes
functional capability	business functions	survey, leadership	across manufacturing
development	Talent councils	townhalls, and digital	facilities
The Core 7 behavioural	enabling data-driven	engagement platforms	Skill matrices
framework has	succession planning	Project Belong, a	deployed to improve
been introduced	and critical role	dedicated initiative to	productivity and
to standardise and	coverage	strengthen inclusion	systematically address
reinforce a	^ The VoltEdge Careers	and workforce diversity	capability gaps
high-performance culture	platform improving	Employee recognition	Clearer internal
	internal visibility and	through the VoltStars	career pathways and
Tiered leadership	access to career	and High5 programmes	promotion frameworks
development journeys are being designed to build leadership bench strength	opportunities Continued investment in campus recruitment programmes and structured career pathway frameworks	Employee wellbeing supported by the Saathi initiative	to improve frontline talent retention

As the Company advances into a phase of accelerated manufacturing scale-up, distribution expansion, and project portfolio growth, the attraction, development, and retention of specialised technical talent, particularly in HVAC engineering, data analytics, and large-scale project management, remains a key strategic and operational priority. The total workforce strength as on 31 March 2026 is disclosed in the Business Responsibility and Sustainability Report.

Internal Control Systems

The Companys internal financial control framework is robust and commensurate with the scale, complexity, and geographic reach of its operations, aligned with the requirements of Section 134(5) of the Companies Act, 2013. The framework is structured in accordance with the COSO framework, operating across entity and process levels to provide reasonable assurance regarding financial integrity, operational effectiveness, and regulatory compliance.

The Board of Directors maintains overall oversight of the internal control environment, supported by the Board Audit Committee (BAC), which provides focused supervision of financial reporting standards, internal and external audit processes, the Whistleblower mechanism, and the tracking of audit observations and corrective actions. The Internal Audit function operates as an independent assurance mechanism, employing a risk-based approach to assess control design and operating effectiveness. It is supported by SAP-based governance tools, automated approval workflows, and analytics-driven fraud risk detection systems.

During 2025-26, focus was directed towards strengthening controls in areas of elevated operational risk, including management of receivables in international project markets, working capital discipline within the domestic projects business, and supply chain cost monitoring. The Company continues to invest in digital governance infrastructure to enhance real-time operational visibility and management information quality. The framework is anchored in the Tata Code of Conduct and a comprehensive policy architecture that sets clear standards for ethical conduct across all operations.

Cautionary Statement

This Management Discussion and Analysis Report contains statements that may be characterised as forward-looking in nature, including statements relating to the Companys objectives, projections, estimates, expectations, and forecasts. Such statements are based on managements current assumptions and its assessment of anticipated

future developments. They are subject to inherent risks and uncertainties and do not constitute guarantees of future performance. Actual results may differ materially from those expressed or implied, as a consequence of various factors, both internal and external, beyond the Companys control. These include, without limitation: changes in global and domestic macroeconomic conditions; movements in commodity prices and exchange rates; variability in weather and climatic conditions; geopolitical developments; revisions to government regulations, tax legislation, and policy frameworks; competitive market dynamics; and operational, execution, and financial risks specific to the Companys businesses.

The Company undertakes no obligation to publicly update, amend, or revise any forward-looking statements contained herein to reflect subsequent developments, events, or new information. Readers are advised that the risk factors identified in this report are not exhaustive and are encouraged to exercise independent judgement in evaluating the Companys operations and future performance.

Voltas Office Building at Chennai