The Board of directors take pleasure in presenting the 44th (Forty-Fourth) Board's Report on the business and
operations of the Company For the financial year ended March 31, 2026.

RESULTS OF COMPANY'S OPERATIONS AND COMPANY'S PERFORMANCE

FINANCIAL POSITION

1. FINANCIAL PERFORMANCE
Revenue — Standalone

On a standalone basis in financial year 2025-26, our
Revenue From operations has shown an increase
of 12.06 % which resulted increase oF Revenue to
' 3542.03/- million in FY 2025-26 as compared to
previous FY 2024-25 which was ' 3,160.87/- million.

Revenue — Consolidated

On consolidated basis in financial year 2025-26, our
Revenue from operations has shown an increase
of 21.28 % which resulted increase of Revenue to
' 4066.28/- million in FY 2025-26 as compared to
FY 2024-25 which was ' 3,352.76 million.

Profits — Standalone

On a standalone basis in financial year 2025-26, the
profit before tax and exceptional items has shown an
increase of 34.04% and stood at ' 580.81/- million
and Profit after exceptional items and tax stood at
' 446.43/- million. Whereas, in FY 2024-25 the
profit before tax and exceptional items stood at
' 433.27/- million and Profit after exceptional items
and tax at ' 337.53/- million.

Profits — Consolidated

On consolidated basis in financial year 2025-26,
the profit before share of profit of Joint Venture,
tax and exceptional items has shown an increase

of 29.25 % and stood at ' 631.43/- million and
profit after exceptional items and tax is ' 504.10/-
million. Whereas, in FY 2024-25 the profit before
share of profit of Joint Venture, tax and exceptional
items stood at ' 488.55/- million and Profit after
exceptional items and tax at ' 360.41/- million.

EPS- Standalone

On Standalone basis, basic earnings per share
increased to ' 11.98/- per Equity share for financial
year 2025-26 as compared to basic earnings per
share of ' 9.02/- per Equity share for last financial
year 2024-25 and

Diluted earning per share increased to ' 11.98/- per
Equity share for financial year 2025-26 as compared
to diluted earnings per share of ' 9.02/- per Equity
share for last financial year 2024-25.

EPS- Consolidated

On Consolidated basis, basic earnings per share
increased to ' 13.50/- per Equity share for financial
year 2025-26 as compared to basic earnings per
share of ' 9.59/- per Equity share for last financial
year 2024-25 and

Diluted earnings per share increased to '13.50/- per
Equity share for financial year 2025-26 as compared
to diluted earnings per share of ' 9.59/- per Equity
share for last financial year 2024-25.

2. DIVIDEND

Your directors have recommended a final dividend
of ' 1.5 per Equity share For financial year 2025-26
subject to approval of Shareholders at the ensuing
44th Annual General Meeting of the Company to be
held on September 07, 2026.

3. BUSINESS DESCRIPTION AND STATE OF
COMPANY'S AFFAIRS

Diffusion Engineers Limited, incorporated
in 1982, operates in the field of engineering
solutions, serving customers in both domestic and
international markets. With over four decades of
industry presence, the Company has established
itself as a reliable provider of a diverse portfolio
of products and services. These include the
manufacture of specialized welding consumables,
wear plates, and heavy engineering equipment for
core sector industries, along with offering tailored
repair, refurbishment, and reconditioning services
for heavy machinery and equipment.

The Company's performance and operational
progress reflect steady growth and a continued focus
on innovation. Through strategic expansion into new
markets and the execution of pioneering projects,
Diffusion Engineers Limited continues to strengthen
its industry position and set new benchmarks. The
Company remains firmly committed to delivering
superior quality, dependable solutions, and high
levels of customer satisfaction. This commitment
has enabled Diffusion to maintain long-standing
relationships with clients and to remain a trusted
partner for organizations seeking efficient and
forward-looking engineering solutions in an evolving
business environment.

4. SHARE CAPITAL STRUCTURE

The Equity Shares of the Company were listed on
Stock Exchanges with effect from October 04, 2024
and the Company's shares are compulsorily tradable
in electronic form.

The Authorized Share Capital of the Company is
' 40,00,00,000/- [Rupees Forty Crores Only]
consisting of 4,00,00,000 [Four Crores] Equity
Shares having face value of ' 10/- [Rupees Ten Only]
each. During the year there has been no change in
the Authorised Share Capital of the Company.

The paid-up share capital of the Company is
' 37,42,62,590 [Rupees Thirty-Seven Crore forty-
two lakh sixty-two thousand five hundred and
ninety only] consisting of 3,74,26,259 [ Three Crore
seventy-four lakh twenty-six thousand two hundred
and fifty-nine] Equity Shares having face value of
' 10/- [Rupees Ten Only] each. The paid-up share
capital remained unchanged during the year under
review.

Employee Stock Option Scheme

The Company grants share-based benefits to
eligible employees with a view of attracting and
retaining the best talent, encouraging employees
to align individual performances with the Company
objectives and promoting their increased
participation in the growth of the Company.

The Company had implemented Diffusion Engineers
Limited — Employee Stock Option Scheme 2025
("ESOP 2025" or "Scheme") during the Financial Year
2025-26.

Diffusion Engineers Limited — Employee Stock
Option Scheme 2025 was approved by the Board at
its Meeting held on May 15, 2025 and was further
approved by the Shareholders through postal ballot
on June 29, 2025. During the reporting year the
Company has granted Employee Stock Options
under the scheme to the identified employees on
December 27, 2025.

The aforementioned scheme is in compliance
with the terms of SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021
("SBEB Regulations"). The Company has obtained
certificate from the Secretarial Auditor of the
Company stating that the aforementioned scheme
has been implemented in accordance with the SBEB
Regulations and the resolutions have been passed
by the members approving the aforementioned
scheme. The certificate is available for inspection by
members in electronic mode. The details as required
under Part F of Schedule I pursuant to Regulation
14 of the SBEB Regulation, are available at the
Company's website athttps://diffusionengineers.
com/ . Further details of the aforementioned ESOP
Scheme during the reporting financial year 2025-26
are as follows:

5. TRANSFER TO RESERVES

The Company has not transferred any amount to
the general reserve account during the reporting
period.

6. CAPITAL EXPENDITURE ON ASSETS

During financial year 2025-26 the company
incurred capital expenditure oF ' 475.39/- million as
compared ' 142.29/- million in the last financial year
2024-25.

7. CHANGE IN THE NATURE OF BUSINESS

During the year, the company has not changed its
business and the activity of the company continues
to be the same.

8. ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act
2013 and Rule 12 of the Companies (Management
and Administration) Rules, 2014, the Annual Return
for FY 2025-26 is available on Company's website
https://www.diFFusionengineers.com/investors-
relation

9. PARTICULARS OF LOANS, GUARANTEE AND
INVESTMENT

Loans, guarantees and investments covered under
Section 186 of the Companies Act, 2013 forms part
of the Notes to the Financial Statements provided in
this Annual Report.

10. PARTICULARS OF LOAN TO DIRECTORS OR
TO ENTITIES IN WHICH DIRECTORS ARE
INTERESTED UNDER SECTION 185 OF THE
COMPANIES ACT, 2013

During the period under review, your Company has
not given any loan to any Director or to entities in

which Directors are interested under section 185 of
Companies Act, 2013

11. PUBLIC DEPOSITS

The Company has not accepted deposits within
the meaning of the provision of Chapter V of the
Companies Act, 2013 read with the relevant Rules.

12. MAINTENANCE OF COST RECORDS

Company has maintained cost records as per section
148 (1) of Companies Act, 2013.

13. PARTICULARS OF CONTRACTS OR
ARRANGEMENTS MADE WITH RELATED
PARTIES

All contracts/ arrangements/transactions entered
by the Company with the related parties during the
financial year 2025-26 were in its ordinary course oF
business and at arm's length basis.

Suitable disclosure as required by the Indian
Accounting Standards (IND AS 24) has been made
in the notes to the Financial Statements which forms
part of the Annual Report.

As per the provisions of Regulation 23 of SEBI
(Listing Obligations and Disclosure Requirements)
Regulations, 2015, (‘Listing Regulations') the
Company has formulated and adopted Policy on
Related Party Transactions; details of the same are
provided in Annexure-6 to the Board's Report.

Further, the Company during the reporting year,
has not entered into a contract/ arrangement/
transaction which is considered material in
accordance with the definition of materiality as
included in the Company's Related Party Transaction
Policy read with Regulation 23 of Listing Regulations
as amended from time to time.

The disclosure of Related Party Transactions as
required under Section 134(3)(h) of the Companies
Act, 2013 in Form AOC-2 is appended as Annexure-2
to this Board's Report.

14. MATERIAL CHANGES AND COMMITMENTS,
AFFECTING THE FINANCIAL POSITION OF
THE COMPANY WHICH HAVE OCCURRED
BETWEEN THE END OF THE FINANCIAL YEAR
OF THE COMPANY TO WHICH THE FINANCIAL
STATEMENTS RELATE AND THE DATE OF THE
REPORT:

There have been no material changes or
commitments affecting the financial position of the
Company that have occurred between the end of
the financial year to which the financial statements
relate and the date of this Report.

15. BOARD POLICIES

The details of the policies approved and adopted by
the board as required under Companies Act, 2013
and Listing Regulations are provided in Annexure-6
to the Board's Report.

16. RISK MANAGEMENT

The Board had constituted the Risk Management
Committee. The composition of Risk Management
Committee is given in the Corporate Governance
Report, forming part of the Annual Report. Further,
pursuant to Section 134(3)(n) of the Companies Act,
2013 and Regulation 17(9) of SEBI Listing Regulations,
the Company has formulated and adopted the Risk
Management Policy inter-alia including the details/
process about identification of elements of risks if
any, which in the opinion of the Board may threaten
the existence of the Company. The aforesaid Risk
Management Policy establishes the philosophy of
the Company towards risk identification, analysis and
prioritization of risks, development of risk mitigation
plans and reporting on the risk environment of the
Company. This Risk Management Policy is applicable
to all the functions, departments and geographical
locations of the Company. The purpose of this
policy is to define, design and implement a risk
management framework across the Company to
identify, assess, manage and monitor risks. Aligned
to this, purpose is also to identify potential events
that may affect the Company and manage the risk
within the risk appetite and provide reasonable
assurance regarding the achievement of the
Company's objectives and business continuity.

17. HUMAN CAPITAL MANAGEMENT

At Diffusion Engineers Limited, our employees
remain the cornerstone of our success, and we
strongly believe in creating meaningful engagement
with them. The Company is dedicated to nurturing
employee potential through empowerment, ongoing

learning opportunities, and the exchange of
knowledge and experiences across the organization.

Our policies and management practices are
structured to align the aspirations of our employees
with the broader goals of the Company. We place
significant importance on training and development
initiatives, enabling our workforce to adopt and
implement industry best practices. In addition, we
encourage a culture of self-driven learning, allowing
employees to enhance their skills and capabilities at
a pace and in a learning environment that suits them
best.

The Company is equally committed to building
and maintaining a workplace that is fair, inclusive,
and diverse. As an Equal Opportunity Employer,
we uphold principles of non-discrimination across
all employment practices. This commitment
strengthens our workforce while providing a distinct
advantage in attracting and retaining talented
professionals.

We also remain dedicated to upholding and
promoting human rights within our operations. Our
efforts focus on encouraging responsible practices
throughout our wide and diverse supply chain and
fostering a corporate culture that actively supports
diversity and inclusion.

Through these initiatives, the Company continues
to attract and retain highly qualified and skilled
professionals who contribute to its sustained growth
and progress.

As of March 31, 2026, our workforce numbered 524
employees and 174 workers.

18. MANAGEMENT DISCUSSION AND ANALYSIS

In terms of the provisions of Regulation 34 read
with Schedule V of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 the
Management's Discussion and Analysis Report is
presented in a separate section forming part of this
Annual Report.

19. SUBSIDIARIES INCLUDING MATERIAL
SUBSIDIARIES

Your Company as on March 31, 2026 have following
Subsidiaries: -

i. Diffusion Super Conditioning Services Private
Limited

ii. Nowelco Industries Private Limited

iii. Diffusion Hernon Adhesive and Sealant Private
Limited

iv. Diffusion Engineers Singapore Pte. Ltd.

v. Diffusion Wear Solutions Philippines Inc.

vi. Diffusion Eurasia Muhendislik Sanayi Ve Ticaret
Anonim Sirketi

vii. Diffusion Wear Solutions Middle East for
Welding Wire Rods Electrodes and Similar
Products Manufacturing LLC — S.P.C

Following are Associates of our company: -

i) LSN Diffusion Limited (United Kingdom)

ii) Mecdiff SDN BHD (Malaysia)

None of the company ceased to be the subsidiary,
joint venture or associate company of Diffusion
Engineers Limited during the reporting year.

The company does not have any material
subsidiary in terms of Regulation 16(1)(c) of SEBI
(Listing Obligations and Disclosure Requirements)
Regulations, 2015

Pursuant to provisions of Section 129(3) of the
Companies Act, 2013, the Company has prepared
Consolidated financial statements of the Company
and its subsidiary, which form part of the Annual
Report. Further, a statement containing the salient
features of the financial statement of the Company's
subsidiaries in the prescribed format AOC-1 is
appended as an Annexure-1 to the Board's Report.

In accordance with the third proviso of Section
136(1) of the Companies Act, 2013, the Annual
Report of the Company, containing therein its
Standalone and Consolidated financial statements
have been placed on the website of the Company at
https://www.diffusionengineers.com/investors-
relation

20. CORPORATE GOVERNANCE

The Company is committed to maintaining high
standards of corporate governance and has
implemented practices that reflect transparency,
accountability, and integrity in its operations. The
Board of Directors recognizes that sound corporate
governance plays a vital role in achieving sustainable
growth and maximizing long-term value for all
stakeholders. Accordingly, the Board reiterates its
continued dedication to upholding these governance
principles.

Corporate governance within the Company is guided
by strong ethical values and responsible business
practices, which contribute to strengthening the
Company's credibility and reputation. The Company
strives to ensure that its decisions and actions
are conducted with fairness and integrity while
addressing the expectations and interests of its
stakeholders.

A comprehensive report on Corporate Governance
forms an integral part of this Annual Report and is
provided in a separate section.

21. AUDIT REPORTS AND AUDITORS

a) Statutory Auditor

The members at the 41st Annual General Meeting
held on 25th September, 2023 appointed PGS
& Associates, Chartered Accountants (Firm
Registration No. — 122384W) as Statutory
Auditors of the Company to hold office for
a period of five [5] years commencing from
conclusion of 41st Annual General Meeting till
the conclusion of Annual General Meeting to be
held in the year 2028. PGS & Associates have
confirmed their eligibility and that they are not
disqualified under the Companies Act, 2013, for
their continuance as Statutory Auditors of the
Company.

The Auditors' Report for FY 2025-26 provided
by PGS & Associates, Chartered Accountants,
Statutory Auditors of the Company on
Standalone and Consolidated Financial
Statements (‘Financial Statements') does not
contain any qualification, reservation or adverse
remark. The statements made by the Auditors
in their report are self — explanatory and do not
call for any further comments. The Auditor's
Report is enclosed as separate section with the
financial statements in this Annual Report.

Statutory Auditors have also provided their
independent report on effectiveness of Internal
Financial Controls over Financial Reporting
which does not contain any qualification,
reservation or adverse remark. The Auditor's
Report is enclosed as separate section with the
financial statements in this Annual Report.

b) Secretarial Auditors

Pursuant to the provisions of Section 204 of
the Companies Act, 2013 read with Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014 and Regulation 24A
of the SEBI (Listing obligations and Disclosure
Requirements) Regulations, 2015, the members
at the 43rd Annual General Meeting held on
July 22, 2025 appointed Mr. Madhav Kawde,
Peer Reviewed Practicing Company Secretary
(FCS-3251, CP No. 1892), as the Secretarial
Auditor of the Company for a term of five
consecutive years, to hold office from the
conclusion of 43rd Annual General Meeting till
the conclusion of 48th Annual General Meeting
to be held in the year 2030, covering the period
from the financial year ending 31st March 2026
till the financial year ending 31st March 2030.
Mr. Madhav Kawde has confirmed his eligibility
and that he is not disqualified under the

Companies Act, 2013, For his continuance as
Secretarial Auditor of the Company.

In terms oF provisions oF sub-section 1 oF
section 204 of the Companies Act, 2013,
the Company has annexed to this Board's
Report as Annexure-4, a Secretarial Audit
Report given by the Secretarial Auditor. The
Secretarial Auditors' Report for FY 2025-26
does not contain any qualification, reservation,
or adverse remark. The statements made by
the Secretarial Auditor in his report are self¬
explanatory and do not call for any further
comments.

The Secretarial Auditor's certificate on the
implementation of share-based schemes in
accordance- with SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021,
will be made available on request at the AGM,
electronically.

As required under Listing Regulations the
Practicing Company Secretary's Certificate on
Corporate Governance and non-disqualification
of directors including KYC requirement is
appended as Annexure-8. The appended
certificate does not contain any qualification,
reservation or adverse remarks.

c) Internal Auditors

The Company's Internal Audit is being conducted
by Independent Auditors on quarterly basis
and they furnish their quarterly report on their
observations to Audit Committee for review.

As per the provisions of Section 138 of
the Companies Act, 2013 and Rules made
thereunder, the Company has appointed
Chitaley Mehta & Associates, Chartered
Accountants, (Firm Registration No- 127021W)
as Internal Auditors for the Financial Year 2026
- 2027.

d) Cost Auditors

As per Section 148 of the Companies Act, 2013,
the Company is required to have the audit of its
cost records conducted by a Cost Accountant
in practice. The Board on the recommendation
of the Audit Committee has appointed M/s
A. B. Verma & Co., Cost Accountants, Nagpur
(Firm Registration No. 102527/ Membership No.
31367), as the Cost Auditors of the Company
for FY 2026 - 2027 under Section 148 and all
other applicable provisions of the Companies
Act, 2013 read with the Companies (Cost
Records and Audit) Amendment Rules, 2014.
M/s A. B. Verma & Co., have confirmed that
they are Free From disqualification specified
under Section 141(3) and Section 148(3)
read with Section 141(4) of the Act and that
the appointment meets the requirements of
Section 141(3)(g) of the Act.

The remuneration payable to the Cost Auditors
is required to be placed before the members
in a general meeting For their ratification.
Accordingly, a Resolution for seeking members'
ratification for the remuneration payable to
M/s A. B. Verma & Co. is included in the Notice
convening the Annual General Meeting.

The Cost Auditors' Report for FY 2025-26 does
not contain any qualification, reservation, or
adverse remark.

22. REPORTING OF FRAUD BY AUDITORS

During the year under review, none of the Auditors
have reported to the audit committee, under Section
143 (12) of the Companies Act, 2013, any instances
of fraud committed against the Company by its
officers or employees, the details of which would
need to be mentioned in the Board's report.

23. REVISION OF FINANCIAL STATEMENTS AND
BOARD REPORT

There was no revision of financial statements and
Boards' Report of the Company during the financial
year under review.

24. SEGMENT REPORTING

The company has only one operating segment i.e
‘'Welding Fabrication Technology and Engineering"
as per Ind AS 108 which includes Manufacturing,
Trading and Job Work.

25. BOARD OF DIRECTORS AND ITS MEETING

The Company has a professional Board with right mix
of knowledge, skills and expertise with an optimum
combination of Executive, Non-Executive and
Independent Directors including Woman Director.
The Chairman of the Board is an Executive Director.
The Board provides strategic guidance and direction
to the Company in achieving its business objectives
and protecting the interest of the stakeholders. The
Board met Five (05) times during the financial year.
The maximum interval between any two meetings
did not exceed 120 days, as prescribed under
Companies Act, 2013. The details pertaining to the
composition, terms of reference, etc. of the Board of
Directors of the Company and the meetings thereof
held during the financial year are given in the Report
on Corporate Governance section forming part of
this Annual Report.

26. INVESTOR EDUCATION AND PROTECTION
FUND (IEPF)

During the year, the Company was not required
to transfer any amount to Investor Education and
Protection Fund (IEPF) as per the requirements of
the IEPF Rules.

27. DIRECTORS' RESPONSIBILITY STATEMENT

The Standalone and Consolidated financial
statements For the financial year ended March
31, 2026 are prepared in accordance with Indian
Accounting Standards (Ind AS) under the historical
cost convention on accrual basis, the provisions of
the Companies Act 2013 (to the extent notified) and
guidelines issued by SEBI, Ind AS as prescribed under
section 133 of Companies Act, 2013, read with Rule
3 of the Companies (Indian Accounting Standards)
Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016. Accounting
policies have been consistently applied except
where a newly issued accounting standard is initially
adopted or the revision to an existing accounting
standard requires a change in the accounting policy
hitherto in use.

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. I n the preparation of the annual accounts, the
applicable accounting standards have been
followed and there are no material departures;

II. They have selected such accounting policies
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.

28. INTERNAL FINANCIAL CONTROLS WITH
REFERENCE TO FINANCIAL STATEMENTS

The Company has internal financial control systems
to commensurate with the nature of its business, size
and complexity of its operations. Internal financial
control systems include policies and procedures
which are designed to ensure reliability of financial

reporting, compliance with policies, procedure,
applicable laws and regulations and that all assets
and resources are acquired economically, used
efficiently and adequately protected.

Based on the framework of internal financial controls
and compliance systems established and maintained
by the Company, audit performed by the Internal,
Statutory and Secretarial Auditors and the reviews
performed by the relevant board committees,
including the audit and management committee, the
board is of the opinion that the Company's internal
financial controls were adequate and effective
during the financial year 2025-26. For more details,
refer to the ‘Internal control systems and their
adequacy' section in the Management's discussion
and analysis, which forms part of this Annual Report.

29. DECLARATION OF INDEPENDENCE BY
INDEPENDENT DIRECTOR

Independent Directors of the Company have provided
declarations under Section 149 (7) of the Companies
Act, 2013 and Regulation 25 (8) of Securities and
Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015, that
he/she meets with the criteria of independence, as
prescribed under Section 149 (6) of the Companies
Act, 2013 and Regulation 25 of Securities and
Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015.

Your Company has received declarations from all
Independent Directors confirming that:

(i) They meet the criteria of independence
as prescribed under Section 149(6) of the
Companies Act, 2013 and Regulation 16(1)(b) of
the SEBI (LODR) Regulations, 2015.

(ii) They have complied with the code for
independent directors prescribed under
Schedule IV to the Act;

(iii) They have registered themselves with the
independent director's database maintained
by the Indian Institute of Corporate Affairs
in compliance with Rules 6(1) and 6(2) of the
Companies (Appointment and Qualification of
Directors) Rules, 2014;

(iv) They are not aware of any circumstance or
situation, which exists or may be reasonably
anticipated, that could impair or impact their
ability to discharge their duties.

30. BOARD EVALUATION

The Board of Directors carried out an annual
evaluation of its own performance, Board
Committees and individual Directors pursuant to
the provisions the Companies Act, 2013 and SEBI
Listing Regulations. The evaluation parameters

and the process have been explained in Corporate
Governance Report.

31. FAMILIARIZATION PROGRAM FOR BOARD
MEMBERS

The Directors are provided with relevant documents,
reports, internal policies, and reference materials
to help them gain a clear understanding of the
Company's operations, procedures, and governance
practices.

From time to time, the Board is also presented
with detailed updates on the Company's business
performance, operational developments, strategic
initiatives, and associated risks. These presentations
assist the Directors in effectively discharging their
roles and responsibilities.

In addition, the Directors are regularly informed
about significant regulatory developments,
amendments in applicable laws, and important
judicial pronouncements to ensure that the Board
remains well-informed and compliant with the
prevailing legal and regulatory framework.

32. POLICY ON DIRECTORS APPOINTMENT,
REMUNERATION AND OTHER DETAILS

The Nomination and Remuneration Committee
(‘NRC') has adopted the policy and procedures with
regard to identification and nomination of persons
who are qualified to become directors and who

may be appointed in senior management and the
same is available on the website of the company at
https://www.diffusionengineers.com/investors-
relationThis policy is framed in compliance with the
applicable provisions of Regulation 19 read with Part
D of the Schedule II of the SEBI (Listing Obligations
and Disclosures Requirements) Regulations, 2015
(‘the Regulations') and Section 178 and other
applicable provisions of the Companies Act, 2013.

The details as required under Section 197 (12) of the
Act read with Rule 5 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules,
2014, are provided in the Annexure-3 of the Boards'
Report.

33. DIRECTORS AND KEY MANAGERIAL
PERSONNEL OF THE COMPANY
(i) The present composition of the Board of the
Company is as under:

The Company has eminent individuals from
diverse fields as Directors on its Board, who
bring in the required skill, integrity, competence,
expertise and experience that is required for
making effective contribution to the Board.
The Board comprise of six (6) Directors with an
appropriate mix of Non-Executive Directors,
Executive Directors and Independent Directors.

Appointment/Resignation of Key Managerial
Personnel (KMP) during the financial year under
review: During the financial year 2025-26,
Mr. Ramesh Kumar N (PAN: ABOPN4848E) tendered
his resignation and ceased to be the Chief Executive
Officer (Key Managerial Personnel) of the Company
with effect from February 06, 2026.

34. COMMITTEES OF THE BOARD

As on March 31, 2026, the Board has seven
committees:

i. Audit Committee

ii. Nomination and Remuneration Committee

iii. Corporate Social Responsibility Committee

iv. Stakeholders Relationship Committee

v. Risk Management Committee

vi. Management Committee

vii. Finance Committee

The details of the powers, functions, composition
and meetings of the Committees of the Board held
during the financial year 2025-26 are given in the
Report on Corporate Governance section forming
part of this Annual Report.

35. CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO

The particulars as prescribed under Sub-section
(3) (m) of Section 134 of the Companies Act, 2013,
read with the Companies (Accounts) Rules, 2014,
are given separately as Annexure-7 to the Board's
Report.

36. CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to conduct its business
in a socially responsible, ethical and environmental
friendly manner and to continuously work towards
improving quality of life of the communities in
its operational areas. The Board of Directors at
its meeting held on August 26, 2024 had re¬
constituted Corporate Social Responsibility (CSR)
Committee in accordance with Section 135 of
Companies Act, 2013 read with rules formulated
therein. The CSR agenda is planned in consultation
with the CSR committee members through a
systematic independent need assessment. Your
Company believes in positive relationships that are
built with constructive engagement which enhances
the economic, social and cultural well-being of
individuals and regions connected to the Company's
activities. Your Company has adopted a detailed
policy on Corporate Social Responsibility. The brief
outline of the Corporate Social Responsibility (CSR)
Policy of the Company including the annual report

on the Company's CSR activities are set out in
Annexure-5 of this report in the format prescribed
in the Companies (Corporate Social Responsibility
Policy) Rules, 2014.

37. SECRETARIAL STANDARDS

The Company duly complies with all applicable
secretarial standards issued by the Institute of
Company Secretaries of India.

38. VIGIL MECHANISM (WHISTLE BLOWER POLICY)

In terms of the section 177(9) of companies act,
2013 and rules framed thereunder read with
Regulation 22 of Listing Regulations, your Company
has established a ‘Vigil Mechanism Policy' and it
provides a channel to the employees to report to the
appropriate authorities concerns about unethical
behaviour, actual or suspected fraud or violation of
the Company's code of conduct policy and provides
safeguards against victimization of employees
who avail the mechanism and also provide a direct
access to the Chairman of the Audit Committee in
exceptional cases. Protected disclosures can be
made by a whistle blower through an e-mail, or
dedicated telephone line or a letter to the concerned
authorities. The details of the vigil mechanism
(whistle blower policy) are given in Annexure-6 of
this Board Report.

39. PREVENTION OF INSIDER TRADING

The Board has formulated Code of Conduct and Fair
Disclosure for Prevention of Insider Trading Policy
in accordance with Regulation 8 & 9 of Securities
and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015 for regulating, monitoring
and reporting of Trading of Shares by Insiders. The
Code lays down guidelines, procedures to be followed
and disclosures to be made while dealing with shares
of the Company. The details of the Code of Conduct
and Fair Disclosure for Prevention of Insider Trading
are given in Annexure-6 of this Board's Report.

40. CODE OF CONDUCT

The Directors, Key Managerial Personnel (KMPs),
and Senior Management of the Company have
affirmed their compliance with the Code of Conduct
applicable to them for the year ended March 31,
2026. Details of the Code of Conduct for Directors,
KMPs, and Senior Management are provided in
Annexure-6 to this Board's Report.

The Annual Report of the Company also includes a
certificate issued by Mr. Prashant Garg, Chairman
and Managing Director (DIN: 00049106),
confirming compliance based on declarations
received from the Members of the Board, KMPs, and
Senior Management. This certificate forms part of
Annexure-9.

41. LEGAL, GOVERNANCE AND BRAND
PROTECTION

The Company continues to Focus on the key areas
and projects within the Legal, Compliance and
Corporate Affairs functions.

42. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its members are its
most important stakeholders. Accordingly, your
Company's operations are committed to the pursuit
of achieving high levels of operating performance
and cost competitiveness, consolidating and
building for growth, enhancing the productive asset
and resource base and nurturing overall corporate
reputation.

43. DISCLOSURE REQUIREMENTS

As per Listing regulations, Corporate Governance
Report with the Auditors Certificate thereon and
the Management Discussion and Analysis Report are
attached herewith and forms part of this Report. The
Company has devised a proper system to ensure
compliance with the provisions of all Secretarial
Standards issued by the Institute of Company
Secretaries of India and that such systems are
adequate and operating effectively.

44. SIGNIFICANT AND MATERIAL ORDERS PASSED
BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN
STATUS OF THE COMPANY

There are no orders passed by the Regulators or
Courts or Tribunals which would impact the going
concern status and the Company's future operations.

45. CREDIT RATING OBTAINED

During the year under review the Company had
obtained the Credit rating from CRISIL Ratings
Limited For the loans and credit Facilities From Banks.
The details of Ratings are provided in Corporate
Governance Report forming part of this Annual
Report.

46. SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE:

The Company has zero tolerance towards sexual
harassment at the workplace and has adopted
a Policy on Prevention of Sexual Harassment of
Women at Workplace (Prevention, Prohibition and
Redressal) in line with the provisions of the Sexual
Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and the Rules
thereunder.

The details of the policy are given in Annexure-6 of
this Board's Report. The Company has complied with
provisions relating to the constitution of Internal
Complaints Committee under the Sexual Harassment

of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013. The details of complaints
filed, disposed of and pending during the financial
year pertaining to sexual harassment is provided in
Corporate Governance Report of this Annual Report.

Your company has been certified as "Great place
to work". The Great Place to Work Assessment is
considered a ‘Gold Standard' in workplace Culture
assessment.

47. COMPLIANCE WITH THE MATERNITY BENEFIT
ACT, 1961

The Company has complied with the provisions of the
Maternity Benefit Act, 1961, including all applicable
amendments and rules framed thereunder. The
Company is committed to ensuring a safe, inclusive,
and supportive workplace for women employees.
All eligible women employees are provided with
maternity benefits as prescribed under the Maternity
Benefit Act, 1961, including paid maternity leave,
nursing breaks, and protection from dismissal during
maternity leave.

48. GREEN INITIATIVES

Electronic copies of Annual Report for FY 2025-26
and the Notice of 44th Annual General Meeting shall
be sent to all the members whose email addresses are
registered with the company/ depository participant.
Physical copies of Annual Report will be sent only to
those members who request the Company for the
same once dispatch of Annual Report and Notice of
AGM through electronic means is completed.

49. BOARD DIVERSITY

The Board comprises oF adequate number oF
members with diverse experience and skills, such
that it best serves the governance and strategic
needs of the Company. The Directors are persons
of eminence in areas such as business, industry,
finance, law, administration, economics etc. and
bring with them experience and skills which add
value to the performance oF the Board. The
Directors are selected purely on the basis of merit
with no discrimination on race, colour, religion,
gender or nationality. A brieF profile oF the Directors
is available on the website of the Company at
https://diFFusionengineers.com/leadership-team/

50. PROCEEDING PENDING UNDER THE
INSOLVENCY AND BANKRUPTCY CODE, 2016.

No application has been made under the Insolvency
and Bankruptcy Code; hence the requirement to
disclose the details of application made or any
proceeding pending under the Insolvency and
Bankruptcy Code, 2016 during the year along with
their status as at the end oF the financial year is not
applicable.

51. CEO/MD/CFO CERTIFICATION

As required under Regulation 17(8) read with
Schedule II of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the
CEO/MD/CFO certification is attached with this
Annual Report as an Annexure-10.

52. THE DETAILS OF DIFFERENCE BETWEEN THE
AMOUNT OF THE VALUATION DONE AT THE
TIME OF ONE-TIME SETTLEMENT AND THE
VALUATION DONE WHILE TAKING LOAN FROM
THE BANKS OR FINANCIAL INSTITUTIONS
ALONG WITH THE REASONS THEREOF.

There has been no settlement made with any Bank
or Financial institution by the Company during the
Financial Year, thus the requirement to provide
details is not applicable to the Company.

53. ACKNOWLEDGEMENT

Your Directors place on record their sincere
gratitude to the Government of India, the Securities

and Exchange Board of India, the Stock Exchanges,
and other regulatory authorities for their continued
guidance and support extended to the Company.

The Board also acknowledges the valuable support
received from the Company's bankers, investors,
rating agencies, customers, suppliers, and other
business associates for their continued trust and
confidence in the Company.

Your Directors further commend the dedication,
commitment, and professionalism demonstrated
by all employees of the Company. Their collective
efforts, teamwork, and unwavering focus have been
instrumental in driving the Company's growth and
success.

The Board expresses its gratitude to the shareholders
for their continued confidence and trust in the
Company and its management.

For and on behalf of Board of Directors

Sd/-

Prashant Garg

Place: Nagpur Chairman and Managing Director

Date: August 11, 2026 (DIN: 00049106)