DIRECTORS' REPORT

Your Directors take pleasure in presenting the Fortieth Annual Report for the financial year ended on March 31,2026. The standalone
financial performance is presented below prepared in accordance with the Ind AS notified under the Companies (Indian Accounting
Standards) as amended.

Performance Review and operating results

Standalone Revenue from Operations increased to H3,251.80 crore
from H1,946.13 crore in the previous year, registering a growth
of 67.1%. Total Expenditure increased to H2,211.38 crore from
H1,610.02 crore, primarily on account of higher business volumes
in Kavach contracts. However, the increase in expenditure
was significantly lower than the growth in revenue, resulting
in improved operational efficiency and profitability. EBITDA
increased sharply to H1,160.50 crore from H417.10 crore, recording
a growth of 178.2%, while EBITDA margin improved to 35.7% from
21.4% in the previous year, reflecting better operating leverage
and improved cost efficiencies. Profit after tax stood at H796.79
crore, compared to H267.50 crore in the previous financial year,
representing impressive growth. Consequently, the Company's
Diluted Earnings Per Share (EPS) increased to H28.76 from H9.63,
reflecting the strong growth in earnings and enhanced value
creation for shareholders.

Please refer to the Management Discussion & Analysis Report
section of the annual report for detailed analysis.

Dividend (Interim and Final)

During the fourth quarter of reporting period the Board has
declared and paid an interim dividend of 200% (i.e. H2.00 per
equity share of H1 each fully paid up). The total cash outflow was
H55.44 Crores.

Your Directors are pleased to recommend a final dividend of
100% (i.e. H1.00 per equity share of H1 each fully paid up) for the
Financial Year 2025-26 subject to the approval of the members at
the ensuing annual general meeting. The proposed final dividend,
if approved by the members, would involve cash out flow of
H27.72 Crores and will be paid subject to deduction of applicable
tax pursuant to Finance Act, 2020.

Pursuant to Regulation 43A of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the Board of Directors of the Company had
formulated a Dividend Distribution Policy ('the Policy'). The Policy
is available on the Company's website at https://hbl.in/reports/
HBL-Policies.pdf.

The details of book-closure and record date for entitlement of
members to receive dividend, if approved, for the financial year
March 31, 2026 is given in the notes to the notice of annual
general meeting of this annual report.

Consolidated Financial Statement

The Consolidated Financial Statements of the Company, its
subsidiaries and associates, prepared in accordance with the
Companies Act, 2013 and applicable Indian Accounting Standards
along with all relevant documents and the Auditors' Report form
part of this Annual Report. The Consolidated Financial Statements
presented by the Company include the financial results of its
subsidiaries and associates.

The Consolidated Revenue from operations increased to H3,302.83
crore from H1,967.20 crore in the previous year, registering a
growth of approximately 67.9%. Total income stood at H3,361.82
crore, as against H1,992.56 crore in the previous financial year.
After providing for tax, the Company reported a Profit after Tax
of H814.64 crore, compared with H276.07 crore in FY 2024-25,
representing an increase of approximately 195%. Earnings per
equity share (basic and diluted) also improved significantly to
H29.39 per share from H9.96 per share in the previous year.

A statement containing the salient features of the Financial
Statement of the subsidiary companies is attached to the Financial
Statement in Form AOC-1 pursuant to Section 129(3) of the
Companies Act, 2013.

Additionally, the Company will make available the said financial
statement of the subsidiary companies pursuant to the provisions
of Section 136 upon request by any Member of the Company or
its subsidiary(ies) including associate companies. These financial
statements of the Company, the subsidiary(ies) and associate
companies would be available on the website of the Company at
https://hbl.in/Investors-Details.php.

Subsidiary and Associate Companies (as on March 31,
2026)

As per the notification issued by the Ministry of Corporate
Affairs on July 27, 2016 with regard to Companies (Accounts)
Amendment Rules, 2016, the report of the Board shall contain
highlights of performance of subsidiaries, associates companies
and their contribution on overall performance of the company.

Accordingly, we hereby furnish the following:

The Consolidated Financial Statements presented by the Company
include the financial results of its subsidiary and associates
companies prepared in accordance with the Companies Act,
2013 (Act) and applicable Ind AS notified under the Companies
(Indian Accounting Standards) Rules 2015 and Companies (Indian
Accounting Standards) Amendment Rules, 2016 as amended.

There has been no material change in the nature of the businesses
of the subsidiaries except as disclosed hereunder.

Performance of subsidiaries and associates and their
contribution on overall performance of the Company:

The details with respect to contribution to assets and other
information are provided in Form AOC-1 attached to the financial
statements of the Company.

Share Capital

There is no change in the share capital of the Company. Company
has not issued different class of securities except equity. There is
no change in the share capital of the Company.

Material changes and commitments affecting the
financial position of the Company between the end of
the financial year and the date of the report.

There were no material changes and commitments affecting the
Company's financial position between the end of the financial
year and the date of this Report.

Directors and Key Managerial Personnel (KMP)

Pursuant to the provisions of Section 152 of the Companies Act,
2013 and the Articles of Association of the Company, Mr. MSS
Srinath (DIN 00319175) will retire by rotation at the 40^th AGM and
being eligible, has offered for re-appointment. Brief profile of the
appointee has been provided elsewhere in the annual report.

In the opinion of the Board, all the Independent Directors possess
requisite qualifications, experience, expertise and integrity for the
purpose of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014.

During the year, none of the non-executive directors of the
Company had any pecuniary relationship or transactions with the
Company except for the sitting fee paid for attending the Board
and the Committee meetings.

Change in Key Managerial Personnel

During the year under review, there were no changes Key
Managerial Personnel.

Number of meetings of the board

Five meetings of the board were held during the reporting year.
For details of the meetings of the board, please refer to the
Corporate Governance Report section, which forms part of this
report.

Committees of the Board

As required under the Companies Act, 2013 and the SEBI Listing
Regulations, your Company has constituted various Statutory
Committees. Additionally, the Board has formed other governance
committees and sub-committees to review specific business
operations and governance matters including any specific items
that the Board may decide to delegate. As on March 31,2026, the
Board has comprised the following committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Stakeholders' Relationship Committee

5. Risk Management Committee

Details of composition, terms of reference and number of
meetings held for respective committees are given in the Report
on Corporate Governance, which forms a part of this Report.
Further, during the year under review, all recommendations made
by the various committees have been accepted by the Board.

Board evaluation

The Board of Directors has carried out an annual evaluation of
its own performance, board committees, and individual directors
pursuant to the provisions of the Act and SEBI Listing Regulations.
The performance of the board was evaluated by the Board after
seeking inputs from all the directors on the basis of criteria such
as the board composition and structure, effectiveness of board
processes, information and functioning, etc.

The performance of the committees was evaluated by the Board
after seeking inputs from the committee members on the basis
of criteria such as the composition of committees, effectiveness
of committee meetings, etc. The above criteria are broadly
based on the Guidance Note on Board Evaluation issued by the
Securities and Exchange Board of India. In a separate meeting
of independent directors, performance of non-independent
directors, the Board as a whole and Chairman of the Company was
evaluated, taking into account the views of executive directors
and non-executive directors.

The Board and the Nomination and Remuneration Committee
reviewed the performance of individual directors on the basis of
criteria such as the contribution of the individual director to the
board and committee meetings like preparedness on the issues
to be discussed, meaningful and constructive contribution and
inputs in meetings, etc.

At the board meeting that followed the meeting of the independent
directors and meeting of Nomination and Remuneration
Committee, the performance of the Board, its Committees, and
individual directors was also discussed. Performance evaluation
of independent directors was done by the entire Board, excluding
the independent director being evaluated.

Policy on directors' appointment and remuneration
and other details

The Company's policy on Directors' appointment and
remuneration and other matters provided in Section 178(3) of
the Act has been disclosed in the Corporate Governance Report,
which forms part of the Directors' report.

Audit committee

The details pertaining to composition of Audit Committee are
included in the report on corporate governance, which forms
part of this report. The Board of Directors has accepted the
recommendations of the Audit Committee placed at respective
meetings.

Risk Management

The Board of Directors of the Company has formed a Risk
Management Committee to frame, implement and monitor
the risk management plan for the Company. The Committee is
responsible for monitoring and reviewing the risk management
plan and ensuring its effectiveness. The Audit Committee has
additional oversight in the area of financial risks and controls.
The major risks identified by the businesses and functions
are systematically addressed through mitigating actions on a
continuing basis. All the identified risks are managed through
continuous review of business parameters by the management
and the board of directors is also informed of the risks and
concerns.

Internal financial controls

Pursuant to Section 134 of the Companies Act 2013, the Directors
state that the Board, through the operating management has laid
down Internal Financial Controls to be followed by the Company
and such policies and procedures were adopted by the Company
for ensuring the orderly and efficient conduct of its business,
including adherence to Company's policies, the safeguarding
of its assets, the prevention and detection of frauds and errors,

the accuracy and completeness of the accounting records, and
the timely preparation of reliable financial information. The
Audit Committee evaluates the internal financial control system
periodically. To the best of their knowledge and ability and
inputs provided by various assurance providers confirm that
such financial controls are adequate with reference to the size and
operations of the Company and no reportable material weakness
or deficiency in the design or operation of internal financial
controls was observed.

Particulars of loans, guarantees and investments

On March 25, 2026, HBL signed a Joint Venture Agreement with
Cochin Shipyard Limited to develop electric mobility technology
and energy storage solutions in the marine space to cater to
both domestic and global markets. As per the agreed terms of
the JV agreement, HBL will hold 60% of the shareholding in the
JV Company with right to nominate three Directors on the Board
of the JV Company. On June 11, 2026, the JV Company namely
Green Maritime Propulsion Private Limited was incorporated with
a authorized and subscribed capital of H9 crores with its registered
office at Hyderabad.

During the reporting period, the Company has not made any
other investment, given guarantee to any of its subsidiaries and
associates companies and other body corporates and people
except as disclosed in the financial statements.

Transactions with related parties

All contracts/ arrangements/ transactions entered by the
Company during the FY 2025-26 with related parties were on
an arm's length basis and in the ordinary course of business and
approved by the Audit Committee. Certain transactions, which
were repetitive in nature, were approved through omnibus route.

As per the SEBI Listing Regulations, if any Related Party
Transactions ('RPT') exceeds H1,000 crore or 10% of the annual
consolidated turnover as per the last audited financial statement
whichever is lower, would be considered as material and would
require members' approval. In this regard, the Company has
obtained necessary approval of the members in the previous
years. However, there were no material transactions of the
Company with any of its related parties as per the Act. Information
on transactions with related parties pursuant to Section 134(3)(h)
of the Act read with rule 8(2) of the Companies (Accounts) Rules,
2014 are given in Annexure I in Form AOC-2.

The details of RPTs during FY 2025-26, including transaction with
person or entity belonging to the promoter/ promoter group
which hold(s) 10% or more shareholding in the Company are
provided in the accompanying financial statements.

During the FY 2025-26, the Non-Executive Directors of the
Company had no pecuniary relationship or transaction with the
Company other than sitting fees, commission and reimbursement
of expenses, as applicable.

Pursuant to the requirements of the Act and the SEBI Listing
Regulations the Company has formulated a policy on RPTs and is
available on Company's website URL: https://hbl.in/reports/HBL-
Policies.pdf

Corporate Social Responsibility

The Company has a Board level committee that supervises its
Corporate Social Responsibility (CSR) activities. The brief outline
of the CSR Policy of the Company and the initiatives undertaken
by the Company on CSR activities during the year are set out
in Annexure II of this report in the format prescribed in the
Companies (Corporate Social Responsibility Policy) Rules, 2014.

Secretarial Standards

The Company has devised proper systems to ensure compliance
with the provisions of all applicable Secretarial Standards issued
by the Institute of Company Secretaries of India and that such
systems are adequate and operating effectively.

Business responsibility and sustainability report

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations,
the Business Responsibility and Sustainability Report ('BRSR') on
initiatives taken from an environmental, social and governance
perspective, in the prescribed format is available as a separate
section in the Annual Report.

Management discussion and analysis

Management Discussion and Analysis Report of the Company for
year under review as required under Listing Regulations is given
as a separate Statement in the Annual Report.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
Directors, to the best of their knowledge and ability, confirm that:

i. in preparation of the annual accounts, the applicable Ind AS
accounting standards have been followed and there are no
material departures;

ii. they have selected such accounting policies as per Ind AS
and applied them consistently and made judgments and
estimates that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at
the end of the financial year and of the profit of the Company
for that period;

iii. they have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance

with the provisions of the Act for safeguarding the assets of
the Company and for preventing and detecting fraud and
other irregularities;

iv. they have prepared the annual accounts on a going concern
basis;

v. they have laid down internal financial controls to be followed
by the Company and such internal financial controls are
adequate and operating effectively;

vi. they have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems
were adequate and operating effectively.

Based on the framework of internal financial controls and
compliance systems established and maintained by the Company,
work performed by the internal, cost, statutory and secretarial
auditors and external consultants and the reviews performed by
management and the relevant board committees, including the
audit committee, the board is of the opinion that the Company's
internal financial controls were adequate and effective during the
financial year 2025-26.

Extract of annual return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies
Act, 2013, the extract of Annual Return is placed on the website
of the Company in the prescribed Form MGT-9 at https://hbl.in/
Investors-Details.php .

Information regarding employees and related disclosures

Your Company consistently believes in concerted efforts in
talent management and succession planning practices, strong
performance management and learning and training initiatives.
Rewards and recognition are commensurate with performance
and that employees have the opportunity to develop and grow.
During the year, there were no complaints relating to child labor,
forced labor, involuntary labor, sexual harassment in the last
financial year and pending as on the end of the financial year.

Disclosure as required under Section 22 of Sexual
Harassment of women at workplace (Prevention,
Prohibition and Redressal) Act, 2013

Your Company believes in providing a healthy environment to
all HBL Employees and does not tolerate any discrimination or

harassment in any form. The Company has in place a gender
neutral, Prevention of Sexual Harassment (POSH) policy in line
with the requirements of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. This
policy is frequently communicated in assimilation programs and
at regular intervals to all HBL employees. Following are some of
the awareness programs imparted to train HBL Employees and
Internal complaints committee (ICC).

1. It is mandatory for every new joiner to undergo a program
on 'Prevention of Sexual Harassment ' during induction
program.

2. The Internal Complaints Committee is trained by external
agency when the committee members are on-boarded to
the committee.

3. Policy of 'Prevention of Sexual Harassment' at workplace is
available on internet for HBL employees to access as and
when required.

4. The 'Prevention of Sexual Harassment' policy is placed in
conspicuous places for better visibility and communication
of the policy. The posters are also displayed in regional
languages at all HBL offices.

HBL has setup an Internal Complaints Committee (ICC) both at the
Head office / Corporate office and at every major location where
it operates in India. ICC has equal representation of men and
women. ICC is chaired by Ms. Sucharita Palepu, external women
representation.

ICC investigates the case(s) and provides its recommendations
to the apex authority . The apex authority upon receiving the
recommendations from ICC arrives at the conclusion and acts
upon such recommendations.

Penal Consequences of Sexual Harassment ("SH") and the
constitution of the ICC is displayed at conspicuous places.

Human resources

Please refer to the paragraph on Human Resources / Industrial
Relations in the Management Discussion & Analysis section for
detailed analysis.

Diversity and inclusion

Diversity and inclusion at workplace helps nurture innovation, by
leveraging the variety of opinions and perspectives coming from
employees with diverse age, gender and ethnicity. The Company
assists the employees through awareness drives or personal
interactions, to build an approach of open mindedness, express
of thoughts and culture. The Company employed 7.82% women
employees in FY 2025-26 vis- a-vis 7.57% in FY 2024-25.

Particulars of employees

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are given below:

a. The ratio of the remuneration of each Non-Executive director to the median remuneration of the employees of the Company for
the financial year: Not Applicable as none of the Non-Executive Director was paid any remuneration.

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in
the financial year:

c. The percentage increase in the median remuneration of employees in the financial year: 14%

d. The number of permanent employees on the rolls of Company: 2,455 (as at 31 March 2026)

e. Comparison of the remuneration of the key managerial personnel against the performance of the Company:

f. Comparison of remuneration of each the key managerial personnel (March 31,2026):

g. The key parameters for any variable component of
remuneration availed by the directors:

Commission on net profits was paid to Chairman and
Managing Director only in addition to the monthly
remuneration as disclosed elsewhere in this report.

h. The ratio of the remuneration of the highest paid director
to that of the employees who are not directors but receive
remuneration in excess of the highest paid director during
the year: Not applicable.

Disclosure requirements

As per listing Regulations, corporate governance report with
auditors' certificate thereon and management discussion and
analysis are attached separately, which form part of this report.

Vigil Mechanism / Whistle blower policy

The Company has formulated a vigil mechanism /whistle blower
policy to provide a vigil mechanism for employees including
directors of the Company to report genuine concerns. The
provisions of this policy are in line with the provisions of the
Section 177(9) of the Act and the Regulation 22 of the SEBI (LODR)
Regulations, 2015.

Deposits from public

The Company has not accepted any deposits from public and as
such, no amount on account of principal or interest on deposits
from public was outstanding as on the date of the balance sheet.

Conservation of Energy, Technology Absorption and
Foreign Exchange Earnings & Outgo

Information relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo, as required
under Section 134(3)(m) read with Rule 8(3) of the Companies
(Accounts) Rules, 2014 is given in the Annexure hereto.

Corporate governance report

Pursuant to Schedule V of the SEBI (Listing Obligations and
Disclosure Requirements), Regulations 2015, a separate section in
Annexure VI titled "Report on Corporate Governance" is attached
to the Annual Report.

Prevention of insider trading

Your Company has adopted a code of conduct for prevention
of "Insider Trading" as mandated by the SEBI and the same is
available on the website of the Company: https://hbl.in/reports/
HBL-Policies.pdf. Your Company's Audit Committee monitors
implementation of said Policy.

Statutory Auditors

M/s LNR Associates, Chartered Accountants (FRN 05381S)
Visakhapatnam who are the Statutory Auditors of the Company
have been appointed by the members at the 36^th Annual General
Meeting (AGM) of the Company held on September 27, 2022 for a
period of five years to hold office till the conclusion of AGM in 2027
subject to ratification of members at every year AGM. Accordingly,
ratification of their appointment is being recommended at the
ensuing AGM.

The Report given by M/s. LNR Associates, Chartered Accountants
on the financial statements of the Company for the year 2024¬
25 is part of the Annual Report. There has been no qualification,
reservation or adverse remark or disclaimer in their Report. During
the year under review, the Auditors had not reported any matter
under Section 143 (12) of the Act. Therefore, no detail is required
to be disclosed under Section 134 (3)(ca) of the Companies Act,
2013.

Cost Auditors

As per Section 148 of the Act, the Company is required to have
the audit of its cost records conducted by a Cost Accountant.
Your Board, on the recommendation of Audit Committee has
appointed M/s. Sagar & Associates, Cost Accountants, Hyderabad
(Firm Registration No 000118) in place of M/s K. Narashima Murthy
& Co., Hyderabad, Cost Accountants (FRN 000042) as Cost Auditors
of the Company for conducting the audit of cost records of the
Company for the financial year 2026-27 at a remuneration of H12
lakhs per annum plus applicable taxes and reimbursement of
expenses.

Disclosure under Section 148(1) of the Companies Act,
2013

The Company has been maintaining required cost records as
specified under Section 148(1) of the Companies Act, 2013 read with
Companies (Accounts) Rules, 2014 as mended from time to time.

Secretarial Auditors, reports and certificates

CS Vinay Babu Gade, Practicing Company Secretary issued
Secretarial Auditor for the financial year 2025-26 and his secretarial
audit report is attached to this report in Annexure III. There are
no qualifications, adverse comments and observations in the
secretarial audit report for the year 2025-26.

Pursuant to the provisions of Section 204 of the Companies
Act, 2013 read with rules made thereunder the Company has
appointed CS Vinay Babu Gade, Practicing Company Secretary to
undertake the secretarial audit of the Company for the year ended

March 31,2025. Your Company has complied with the Secretarial
Standards issued by the Institute of Company Secretaries of India
on Board Meetings and Annual General Meetings.

The Secretarial Audit Report is given in Annexure to this Report.
There are no qualifications, adverse comments and observations
in the secretarial audit report for the year 2025-26 except for the
details of payment of the outstanding SOP fine by the Company.

Pursuant to Regulation 24(A) of SEBI Listing Regulations, the
Company has obtained annual secretarial compliance report from
CS Vinay Babu Gade, Practicing Company Secretary (ICSI M No.:
A20592 and COP No 20707) and the same submitted to the stock
exchanges. There are no qualifications, adverse comments and
observations in the secretarial audit report for the year 2025-26.

As required under SEBI (LODR) Regulations, Your Company has
obtained a certificate from the Practicing Company Secretary that
none of the Directors of the Board of the Company have been
debarred or disqualified from being appointed or continuing as
Directors by MCA/SEBI and other Statutory Authorities. The said
Certificate is forming part of this Report.

In accordance with the provisions of Section 204 of the Companies
Act, 2013 and Regulation 24A of the SEBI listing regulations, the
Board of Directors, at its meeting held on May 24, 2025, approved
the appointment of CS Vinay Babu Gade, Practicing Company
Secretary (ICSI M No.: A20592; COP No 20707 and Peer Review
no. 3047/2023, as the Secretarial Auditor of the Company for a
fixed term of five financial years from FY 2025-26 to FY 2029-30.

Dematerialisation of shares

As of March 31, 2026, 99.29% of the Company's paid-up Equity
Share Capital exists in dematerialized form, with the remaining
0.71% in physical form. Your Company has issued three reminders
to all relevant shareholders, urging them to convert their physical
shares into dematerialized form. The Company's Registrars are
Kfin Technologies Limited, Karvy Selenium Tower B, Plot 31-32,
Gachibowli, Financial District, Nanakramguda, Hyderabad - 500 032.

General

Your Directors state that no disclosure or reporting is required in
respect of the following matters as there were no transactions on
these items during the year under review:

V There are no significant material orders passed by the
Regulators or Courts or Tribunal, which would impact
the going concern status of the Company and its future
operation. However, Members attention is drawn to the
Statement on Contingent Liabilities and Commitments in
the Notes forming part of the Financial Statement.

V No fraud has been reported by the Auditors to the Audit
Committee or the Board.

V There has been no change in the nature of business of the
Company.

Cautionary Statement

Statements in this Annual Report, particularly those relate to
Management Discussion and Analysis, describing the Company's
objectives, projections, estimates and expectations, may constitute
'forward-looking statements' within the meaning of applicable
laws and regulations to enable shareholders and investors to
comprehend our prospects. Although the expectations are
based on reasonable assumptions, the actual results might differ
materially from those expressed in the statement. Important
factors that could influence the Company's operations include
global and domestic demand and supply conditions affecting
selling prices of finished goods, input availability and prices,
changes in government regulations, tax laws, economic
developments within the country and other factors such as plant
breakdowns, industrial relations etc.

Acknowledgements

Your Directors place on record their sincere appreciation towards
the Company's valued customers and shareholders for the
support and the confidence reposed by them in the management
of the company and look forward to the continuance of this
mutually supportive relationship in future. Your Directors take
this opportunity to thank all the Company's Bankers, concerned
Central and State Government Departments, Agencies for their
support and co-operation to the Company. The Board has special
appreciation for the employees for their dedicated services and
their ability to deliver good results in the future.

For and on behalf of the Board

Place: Hyderabad Dr. Aluru Jagadish Prasad

Date: August 00, 2026 Chairman and Managing Director