XPRO India Ltd Management Discussions

This report gives an overview of the Companys businesses for the year ended March 31, 2026.

The Reserve Bank of India ("RBI") recently characterised the global economy as navigating elevated uncertainty and mounting downside risks. The unresolved West Asia conflict continues to disrupt energy infrastructure and supply chains. Global trade is being reshaped by tariffs, policies, and strategic restrictions; even as global growth may hold up, input cost pressures and supply-side constraints can erode that resilience. Nonetheless, RBI noted that Indias macro fundamentals are on a strong footing, placing it in a better position to withstand shocks.

FY 2025 - 26 was a year of positive transition. A defining development was the film line at Barjora, which entered commercialproductiononMarch27,2026. With the new line now operational, the Company enters FY 2026 27 with materially expanded capacity and a stronger platform for volume and export growth. Its commercial ramp-up is underway, and its full contribution will be reflected commensurately.

Dielectric film volumes were broadly in line with the previous year given the late-year commissioning. In the Coex business, volumes moderated reflecting a temporary slowdown in refrigerator production, partly attributed to early monsoon conditions; revenues were affected by both volume decline and softer raw material prices.

Aggregate production volume declined 5% to 31,335 MT (33,014 MT). Net revenues were INR 505.49 crores, down 5.6% from INR 535.28 crores. Total exports were INR 22.45 crores (INR 14.20 crores). Profitability was impacted by competitive pricing, input cost volatility, exchange movements, and pre-operating costs associated with expansion. PBDT (before non-operating forex differences) was INR 63.72 crores (INR 67.02 crores). The foreign exchange loss was INR 11.04 crores, of which INR 11.14 crores was unrealised resulting from accounting standards requirements, versus a gain of INR 1.49 crores in the prior year (realised: INR 0.95 crores; unrealised: INR 0.53 crores), translating into PBT of INR 41.31 crores (INR 58.00 crores).

The balance sheet remains healthy, with all long-term debt limited to suppliers credit for the expansion; no term borrowings on existing operations. Interest costs declined to INR 3.72 crores (INR 4.38 crores). Key ratio changes: PBT margin reduced from 10.83% to 8.17%; debt service coverage ratio from 3.28 to 2.27; debt : equity ratio improved from 0.19 to 0.16. Detailed ratios are given in the Notes to the Accounts.

The Companys operations are organised around polymer processing and coextrusion, structured into three self-sufficient operating units, with centralised marketing, finance, and legal functions.

* under advanced implementation

The polymer processing industry is structurally fragmented - large-scale commoditised players at one end, niche operations at the other. Competitive advantage in the latter rests on application expertise, quality consistency, and reliability of supply, particularly in advanced segments with meaningful entry barriers. With polymer inputs largely commoditised and globally priced, capability-led positioning in specialised segments is the basis for durable differentiation. Primary raw materials are thermoplastic resins: olefinic polymers- polypropylene, including special dielectric grades, and LD/LLDPE - and styrenic polymers, comprising polystyrene and ABS.

The Company maintains integrated management systems across its manufacturing locations. Key certifications include ISO 9001:2015, ISO 14001:2015, ISO 45001:2018 (Barjora and Ranjangaon); ISO 9001:2015 and ISO 14001:2015 (Greater Noida); IATF 16949:2016 for automotive quality (Barjora); and ISO 50001:2018 for energy management (Barjora and Greater Noida). The Coex divisions hold GreenCo ratings and the Ranjangaon unit has an Ecovadis assessment, with Extended Producer Responsibility compliance maintained across facilities.

During the year, the Company received the 50th ELCINA Award (Second Prize) for Excellence in Environment Protection and Sustainable Development 2024 25. At the 11th Machinist Super Shop Floor Awards, the Company was recognised with the Super Shop Award for Excellence in Manufacturing 2025 (First Prize), and Runner-up positions in Innovation in Product/Process 2025 and Excellence in Human Capital Management.

(Net of inter unit adjustments; Production includes sheet for captive consumption for forming)

The physical and revenue performances denote fairly stable operations, with the variations being market-led.

The Biax Division at Barjora operates in a product-and-process space that is fundamentally different from BOPP for conventional uses. Polypropylene dielectric film, mainly for capacitor applications, is specification-intensive and precision-driven, and the industry is limited globally among a select number of producers. Building credible scale and reputation in this space requires technical capability, process discipline, and consistent product quality - attributes the Division has developed systematically, earning a strong standing among discerning clients.

The Company has been the first-mover domestic producer of dielectric films, and is expected to remain the largest capacity producer in India for the foreseeable future. Dedicated, state-of-the-art manufacturing lines, high-purity electrical-grade resins, and deep process know-how underpin a product portfolio spanning low to high voltage applications - standard and high-temperature grades, in ultra-thin gauges from 2 to 16 microns. Films are engineered for reliable metallisation and efficient impregnation across diverse capacitor technologies, including large-format and high-stress designs. The outcome is strong capacity utilisation and a growing presence in quality-sensitive markets where performance is non-negotiable.

The demand backdrop is structural, not cyclical. Electrification, renewable energy buildout, grid modernisation, electric mobility, and traction systems all place a direct and growing premium on film durability and dielectric performance long-term capital deployment cycles that consistently reinforce end-use demand.

Product development is deliberately directed at the highest-value end: ultra-thin, hazy, and semi-rough films for power capacitors, EV systems, and railway applications. These are high-entry-barrier segments - technically demanding, relationship-driven, and margin-supportive.

Capacity additions sharpen the Companys trajectory. The new dielectric film line commissioned in March 2026 meaningfully expands domestic capacity while extending reach into premium, performance-critical variants, including ultra-thin gauges where differentiation is sharpest. The next line - at the subsidiary in Ras Al Khaimah, UAE - is at an advanced stage of installation and expected to commission during the current year, adding scale, flexibility, and proximity to global customers. geographic

Downstream integration and advanced technical development, outlined in the Directors Report, remain active priorities for management.

Coextruded sheets and thermoformed refrigerator liners are manufactured at Ranjangaon and Greater Noida in ABS, polystyrene, and polypropylene, primarily serving refrigerator OEMs, with select presence in packaging and automotive applications. Long-standing supply relationships with leading OEMs reflect consistent product quality and execution reliability.

The Indian consumer durables sector is supported by important tailwinds - rising income levels, increasing non-urban penetration, and a shift towards premium and energy-efficient appliances. FY 2025 26, however, saw a temporary moderation in refrigerator production, driven by early monsoon conditions following a strong prior-year phase. This weighed on Coex volumes, compounded by competitive pricing pressures and selective backward integration by certain customers, including under PLI-supported schemes. The Company rationalized capacities (integrating acquired lines) and optimized operations during the year. These measures are expected to enhance efficiencies as demand conditions normalise.

Cast coextruded films are manufactured at Ranjangaon for medical disposables, hygiene products, and specialised packaging, with a portfolio focused on high-clarity and application-specific -use segments - hygiene, medical disposables, and adult incontinence - continue to record annual growth in excess of 10%. The release film segment for the tyre industry saw steady growth during the year. Efforts remain directed at further operational efficiency and product optimisation across this business.

India is expected to remain among the fastest-growing major economies, supported by macroeconomic stability, policy continuity, and sustained public investment. Domestic demand continues to underpin the growth outlook, with recovering private consumption and improving business confidence as reinforcing factors. The external environment - as outlined in the Global Economic Context above - remains a source of meaningful uncertainty, and its evolution will bear watching.

The Company is focused on scaling its strategic core, improving product mix towards higher-value applications, and expanding global presence. Realising these opportunities will depend, in part, on a conducive operating environment - sustained growth in end-user segments and reasonable stability in global trade conditions.

No atypical risks are currently in evidence. Core manufacturing processes are well established, and internal control systems are adequate and under continuous review. Priorities for the period ahead encompass capacity scale-up, processandefficiency impro vements, and accelerated product and application development. Expansion of export markets remains a key focus area alongside sustained domestic growth. The overall outlook is one of measured optimism. This is grounded in structural demand drivers, and the Companys strategic positioning. Uncertainties will be managed proactively, with continued attention to liquidity and operational discipline.

Safe and healthy working conditions are integral to how we operate, alongside production, quality, and productivity. Our policies ensures that health, safety, environment, and natural resource conservation are built into all activities, not retrofitted. We adhere to environmental laws at each location and are responding proactively to evolving plastic waste management regulations. None of the Companys product ranges have the nature of single-use plastics or related environmental concerns that affect partsof the broader plastics industry.

Employees are our greatest asset. Motivated, skilled, and business-minded teams are central to our performance. We remain committed to a culture of involvement, teamwork, continuous skill development, trust, and mutual respect. Permanent employment stands at 239 (230 in the previous year). We are grateful to all our employees and teammates for their commitment, and to our bankers, stakeholders, authorities, and customers for their continued support and confidence.

Statements in this Report describing the Companys objectives, expectations, projections, or assessments of external circumstances may constitute forward-looking statements within the meaning of applicable securities laws. Actual results may differ materially from those expressed or implied. Factors that could cause a difference include, but are not limited to: public-health related impacts, demand-supply conditions, extraordinary policy actions, geopolitical developments, supply chain disruptions, feedstock availability and pricing, power tariffs, cyclical market conditions, changes in government regulations, tax and tariff regimes, economic developments in India and other relevant markets, and other factors including natural events, litigation, and labour matters.