Regulatory Filing Details

Subject: Annual Report for the financial year 2025-26 submitted pursuant to Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015

Financial Performance Summary (₹ in lakh)

Income Statement Highlights

  • Revenue from Operations: ₹20,856.43 lakh (FY25: ₹22,832.16 lakh), decrease of 8.7%
  • Other Income: ₹105.29 lakh (FY25: ₹144.22 lakh)
  • Total Income: ₹20,961.72 lakh (FY25: ₹22,976.39 lakh)
  • Total Expenses: ₹20,430.82 lakh (FY25: ₹22,887.38 lakh), decrease of 10.7%
  • Profit Before Tax: ₹530.90 lakh (FY25: ₹89.01 lakh), increase of 496.4%
  • Tax Expenses: ₹144.75 lakh (comprising ₹13.89 lakh for earlier years and ₹130.87 lakh deferred tax)
  • Profit After Tax: ₹386.15 lakh (FY25: ₹53.68 lakh), increase of 619.4%
  • Basic & Diluted EPS: ₹1.95 (FY25: ₹0.28)

Segment Performance

  • Machinery Division: Revenue ₹194.91 crore (FY25: ₹150.38 crore), PBIT ₹28.94 crore (FY25: ₹14.57 crore)
  • Components Division: Revenue ₹14.70 crore (FY25: ₹79.41 crore), PBIT ₹0.32 crore (FY25: ₹6.66 crore)
  • EBITDA: ₹38.25 crore with margin of 18.34% (FY25: ₹28.50 crore with 12.48% margin)

Balance Sheet Position (as of March 31, 2026)

  • Total Assets: ₹495.89 crore (FY25: ₹427.87 crore), increase of 15.9%
  • Net Worth: ₹228.30 crore (FY25: ₹212.82 crore), increase of 7.3%
  • Total Borrowings: ₹169.43 crore (FY25: ₹133.73 crore), increase of 26.7%
  • Inventories: ₹169.18 crore (FY25: ₹136.92 crore), increase of 23.6%
  • Trade Receivables: ₹69.21 crore (FY25: ₹40.39 crore), increase of 71.3%

Cash Flow Statement

  • Net Cash from Operating Activities: (₹13.39) crore outflow (FY25: ₹20.91 crore inflow)
  • Net Cash from Investing Activities: (₹15.68) crore outflow (FY25: (₹37.02) crore)
  • Net Cash from Financing Activities: ₹29.11 crore inflow (FY25: ₹16.08 crore)

Key Operational Metrics

  • Order Book Position: ₹147.2 crore as of March 31, 2026 (increase of 147.8% from ₹59.4 crore)
  • Order Book Composition (as of August 12, 2026): General Purpose Machines (38.0%), Defence (36.2%), Special Purpose Machines (13.7%), Forgings (11.1%), Job Works (1.1%)
  • Employee Strength: 545 permanent employees (reduction from 647 in FY25)
  • R&D Expenditure: ₹46.50 lakh (0.22% of revenue)

OFAC Sanctions Update

Chronology of Events

  • October 30, 2024: Designated on OFAC SDN List under Executive Order 14024
  • November 2, 2024: Company intimates stock exchanges, contests designation basis
  • June 6, 2025: OFAC issues first questionnaire
  • August 20, 2025: Company files comprehensive responses
  • September 23, 2025: OFAC issues second questionnaire
  • November 5, 2025: Company files responses to second questionnaire
  • June 30, 2026: OFAC removes company from SDN List
  • July 8, 2026: Ministry of External Affairs confirms delisting

Impact Assessment

  • Revenue for FY25 was lower by approximately 22.18% compared to previous year
  • Inability to undertake foreign currency transactions throughout FY26
  • Suspension of business with certain customers including Mahindra & Mahindra in Auto Component Division
  • Restricted access to U.S. financial system and correspondent banking relationships

Legal Counsel Engaged

  • Cyril Amarchand Mangaldas and CMS INDUSLAW (India)
  • Blank Rome LLP (United States)
  • Total document production: ~27,000 documents in first production

Capital Structure Changes

Preferential Allotment (May 6, 2026)

  • Equity Shares: 13,00,000 shares of ₹10 each at premium of ₹171.71 per share to non-promoters
  • Convertible Warrants: 27,77,919 warrants of ₹10 each at premium of ₹171.71 to promoters/promoter group and non-promoters
  • Warrant Conversion: 5,00,000 warrants converted to equity shares on July 11, 2026

Share Capital

  • Authorized Capital: ₹25,00,00,000 divided into 2,50,00,000 equity shares of ₹10 each
  • Paid-up Capital: ₹1999.67 lakh as of March 31, 2026
  • Promoter Holding: 53.60% (10,717,817 shares)

Corporate Governance

Board Composition

  • Total Directors: 9 (4 Executive, 3 Independent, 2 Non-Executive including 1 Woman Director)
  • Key Changes:
  • Mr. K V Sanil Babu appointed as Independent Director effective November 11, 2025
  • Mr. S.S. Raman resigned as Independent Director effective April 29, 2025
  • Mr. Gurprit Singh resigned as Company Secretary effective August 14, 2025
  • Mr. P. Kodanda Rami Reddy appointed as Company Secretary effective August 15, 2025

Committee Structure

  • Audit Committee: M Yugandhar (Chairperson), D Balaji, M Srinivas
  • Nomination & Remuneration Committee: D Balaji (Chairperson), M Yugandhar, M Likhitha
  • Stakeholders Relationship Committee: D Balaji (Chairperson), B Kishore Babu, M Srikrishna
  • CSR Committee: M Yugandhar (Chairperson), M Lokeswara Rao, M Srinivas, M Srikrishna, M Likhitha

Director Remuneration

  • Managing Director (M Lokeswara Rao): ₹60.00 lakh
  • Whole-time Directors (B Kishore Babu, M Srinivas, M Srikrishna): ₹72.00 lakh, ₹96.00 lakh, ₹96.00 lakh respectively
  • Sitting Fees to Independent Directors: ₹1.40 lakh (D Balaji), ₹1.30 lakh (M Yugandhar), ₹0.40 lakh (K V Sanil Babu)

SEBI Non-Compliance

  • Regulation 17(1) regarding appointment of Independent Director not met from April 30, 2025 to November 10, 2025
  • Fines paid: ₹6,13,600 (including GST) to both BSE and NSE

Auditor Appointments

  • Statutory Auditors: Brahmayya & Co., Chartered Accountants (remuneration ₹5,00,000 per annum)
  • Cost Auditors: Naval & Associates (proposed remuneration ₹1,00,000 plus expenses for FY27)
  • Secretarial Auditors: LD Reddy & Co., Company Secretaries
  • Internal Auditors: KS Rao & Co., Chartered Accountants

Credit Ratings

  • ACUITE: BBB- (Stable)/A3, removed from Rating Watch
  • CARE: BBB- (Stable)/A3

Related Party Transactions

Transactions with related parties are disclosed in Note 40 of financial statements, approved by Audit Committee and found to be at arm's length basis. Key transactions include:

  • Rent for Land & Building: ₹51.60 lakh
  • Unsecured Loans from Directors: Received ₹647.00 lakh, Repaid ₹100.50 lakh

CSR Expenditure

  • Required Spending: ₹24.02 lakh (2% of average net profit)
  • Actual Spending: ₹5.00 lakh
  • Unspent Balance: ₹19.02 lakh transferred to Unspent CSR Account

Contingent Liabilities

  • Bank Guarantees: ₹2,385.39 lakh
  • Letters of Credit: ₹908.85 lakh
  • Tax Disputes:
  • Income Tax: ₹1,928.39 lakh (AY 2016-17 to 2020-21)
  • GST: ₹145.62 lakh (FY 2017-19)
  • Service Tax: ₹83.59 lakh (FY 2008-13)
  • Excise Duty: ₹83.18 lakh (FY 2017-18, 2012-13, 2013-14)

Subsequent Events

  • OFAC delisting effective June 30, 2026
  • Order received from Ministry of Defence (Army) for ₹58.21 crore on July 15, 2026 for 7.62 mm medium machine gun upgradation kits
  • Order book reached ₹271.00 crore by August 12, 2026

Dividend Policy

No dividend recommended for FY26 as the company is prioritizing expansion plans and reinvesting profits into the business.