Veljan Denison Ltd Management Discussions

The global hydraulic market was valued at USD 39.40 billion in 2025 and is anticipated to grow at a CAGR of 2.4% by 2030.The global hydraulic market is expected to reach USD 44.26 billion by 2030. The major factors for the growth of the industry are the demand for material handling equipment, cutting-edge agricultural equipment and growing adoption of hydraulic equipment by various industries. The demand for hydraulic and pneumatic cylinders is also increasing in number of manufacturing and other sectors, which is expected to propel the cylinder market. Your company manufactures niche hydraulic pumps, valves and motors which are used in both industrial and mobile systems.

Geographically, Asia-Pacific remains the strongest demand centre for hydraulic components, supported by high industrial output, infrastructure growth, and capital investments in manufacturing. North America and Europe continue to shift toward smarter, energy-efficient hydraulic solutions, creating opportunities for product lines that offer performance with reduced energy consumption and maintenance. Latin America and Africa present growing, albeit fragmented, opportunities in the agriculture and construction sectors.

OUTLOOK:

Market Growth: The hydraulic sector is experiencing steady growth. This is largely due to increased industrial automation, rising infrastructure projects, and expanding manufacturing sectors worldwide. Further, new product development efforts are gradually allowing your company access to customers in new segments within the hydraulics space. The growth of the Indian infrastructure industry and increased government allocations to the infrastructure sector are positive signs for the demand for the companys products in India. Your company has a strong balance sheet that is capable of flexibly investing in both IP and machinery to tap into this growth.

Technological Advancements: Innovations in hydraulic system technologies are enhancing system efficiency and performance. Developments include smart sensors, advanced control systems, and more durable materials, which are making systems more reliable and cost-effective. The company strives to stay in tune with the latest developments in the industry and dedicates resources to both new product development and research, design and development activities.

Energy Efficiency: There is a strong push towards improving energy efficiency within these systems. Companies are investing in technologies that reduce energy consumption and lower operating costs, such as variable frequency drives and energy-efficient pumps. In both these areas, your company has dedicated R&D resources.

Sustainability: Environmental regulations and sustainability goals are pushing the industry towards greener technologies. Companies are focusing on reducing emissions, improving recyclability of components, and developing eco-friendly fluids. Your company monitors these trends regularly and ensures that its products are adaptable to the latest fluids and is not expected to be impacted by these changes in the medium term.

Hybrid Systems: The development of hybrid systems that combine hydraulic, electric technologies could lead to more versatile and efficient solutions. These systems can offer the benefits of both hydraulic power and the precision of electric drives.

Customization and Flexibility: There will be an increasing demand for customized and flexible solutions to meet specific industrial requirements. Modular and adaptable systems will likely become more common to accommodate a wide range of applications.

Emerging Markets: Growth in emerging markets, particularly in Asia-Pacific and Latin America, will drive demand for hydraulic systems. Expanding industrialization and infrastructure development in these regions will offer new opportunities for industry players.

OPPORTUNITIES:

Veljan Denison Ltd, with its strong technology base and extensive manufacturing and operational expertise, is located ideally to be a part of the India growth story. It remains a strong brand recognized for high quality products, which allows new products to be developed and accepted by customers. Consistent investment in products and processes, coupled with well priced solutions give it opportunities to actively grow in its enduring customer relationships.

RISKS AND CONCERNS:

Safety Hazards: The hydraulic industry often deals with high pressures, fast-moving components, and heavy machinery. Accidents involving hydraulic systems can result in severe injuries or fatalities if not properly managed. Hydraulic fluid leaks, explosions, and unexpected movements of hydraulic components can all pose significant safety risks.

Fluid Leakage and Environmental Impact: Hydraulic systems use fluids to transmit power. Leaks in hydraulic systems can lead to fluid contamination and spillage, which can have negative environmental consequences. Hydraulic fluids can be harmful to the environment and water sources if not handled and disposed of properly Maintenance and Inspection: Hydraulic systems require regular maintenance and inspection to ensure they are functioning properly and safely. Neglecting maintenance can lead to equipment failures, unexpected downtime, and safety hazards.

Component Wear and Tear: Hydraulic components like pumps, valves, and hoses undergo wear and tear over time due to the high pressures and forces involved. This can lead to inefficiencies, reduced performance, and increased risk of system failure.

Energy Efficiency: Hydraulic systems have historically been criticized for their energy inefficiency, as hydraulic fluid leaks, internal friction, and pressure losses can reduce overall system efficiency. As environmental concerns and energy costs rise, there is a growing demand for more energy-efficient hydraulic solutions.

Geopolitical Impacts: The prevailing global uncertainty, and continuous reorganization of supply chains both in India and in other countries has the potential to impact the companys revenues.

Technology Risks: In todays fast paced world, technologies are ever evolving. There is always the risk of changing preferences in pumping technologies, novel technologies arriving to displace existing ones, and increasing competition for existing markets especially from copycat products.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate Internal Control Procedures commensurate with the size of the Company.

FINANCIAL PERFORMANCE REVIEW:

The analysis ofperformance ofthe Company is givenbelow:

• Sales Turnover:

The Comparative position of sales turnover achieved by the Company is as under:

(Figures in Rs Lakhs) Product	2024-25	2023-24
Revenue from Operations (Net)	14158.01	12,425.46
Changes in inventories of Finished goods and Work-in-process	(599.06)	(573.31)
Total	14757.07	12,998.77

• Key Performance Indicators

An analysis of the key indicators as percentage to revenue is given below:

S.No	Particulars	2024-25	2023-24
1.	Revenue from Operations (Net)	14757.07	12,998.77
2.	Cost of materials consumed	5766.65	5009.33
	-% of revenue from operations	39.08%	38.54%
	Employee Benefit Expense	1335.94	1219.71
	-%of revenue from operations	9.05%	9.38%
4.	Other Expenses	4310.78	3733.32
	-%of revenue from operations	29.21%	28.72%
5.	Finance Costs	43.85	101.53
	-%of revenue from operations	0.30%	0.78%
6.	Depreciation Expense	503.31	475.45
	-%of revenue from operations	3.41%	3.66%
7.	Profit Before Tax	3074.10	2730.97
	-%of revenue from operations	20.83%	21.01%
	Profit After Tax	2247.51	2036.53
O.	-%of revenue from operations	15.23%	15.67%

HUMAN RESOURCES / INDUSTRIALRELATIONS:

A cordial environment prevailed in the manufacturing unit and offices of the Company during the year. The Company has been continuously training its employees in the newer technologies. Industrial relations continued to be cordial. The number employees as on March 31,2025 stood at 288.

CAUTIONARY STATEMENT:

Cautionary Statement in this Management Discussion & Analysis may be considered being forward looking statements within the meaning of applicable securities law so regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.

DISCLOSURE WITH RESPECT TO ACCOUNTING TREATMENT:

The Financial Statements does not contain any treatment which differs from any standard prescribed in any Accounting Standard.