Aaron Industries Ltd Management Discussions

Pursuant to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by

Companys competitive position) are given below:

A. Industry Structure and Developments:

Global Economic Overview:

Global economic growth is anticipated to range between 2.7% and 3.3% in 2025, according to various credible sources. While the growth rate is expected to stabilise at 3.3% in 2026, these projections remain below the historical average of 3.7% observed between 2000 and 2019.

Global inflation is expected to moderate, driven by decreases in fuel and commodity prices, as well as reduced inflation rates in advanced economies. Global headline inflation is projected to decrease to 4.2% in 2025 and 3.5% in 2026, with advanced economies reaching ahead of emerging markets and developing economies (EMDEs).

Further, energy commodity prices are predicted to fall by 2.6% in 2025, primarily due to subdued oil demand from China and strong supply from non-OPEC+ countries. Gas prices are likely to increase, influenced by adverse weather conditions and supply disruptions stemming from ongoing conflicts in the Middle East.

Major central banks monetary policy rates are expected to continue their downward trajectory, albeit at varying rates. Additionally, a tightening of fiscal policy is expected during 2025 2026, especially in advanced economies such as the United States.

According to the International Monetary Fund (IMF), global trade volume is projected to grow at a slower pace, with an estimated growth of 3.2% in 2025 and 3.3% in 2026. This estimation falls short of the historical average of 4.9%. The slowdown is primarily due to a significant increase in trade policy uncertainty, which is likely to affect investments in trade-intensive companies. However, the negative impact of this heightened uncertainty is expected to be transient. Additionally, some trade activities may experience a short-term acceleration in response to the uncertainty and the anticipation of stricter trade regulations, providing a temporary offset to the overall slowdown.

Indian Economic Review

As of April 2025, the Reserve Bank of India (RBI) projects a real GDP growth rate of 6.5% for the fiscal year 2025-26 (FY25 26), revised downward from the earlier estimate of 6.7%. This adjustment reflects concerns over global trade tensions, particularly the imposition of tariffs by the United States, which could impact Indias export sector and overall economic momentum.

The RBIs outlook suggests that while domestic demand remains resilient, external factors such as global trade disruptions and geopolitical tensions could pose challenges to Indias growth trajectory. The central bank emphasizes the importance of maintaining macroeconomic stability and implementing structural reforms to bolster the economys potential.

Monetary Policy Measures

In response to easing inflation and to support economic growth amid global headwinds, the

RBIs Monetary Policy Committee (MPC) reduced the policy repo rate by 50 basis points to 5.50% in June 2025. This marks the third consecutive rate cut, following a similar reduction in February & April. The MPC also shifted its policy stance from ‘accommodative to neutral, indicating that there is no strong bias for any rate action.

Elevator Market:

The global elevators market size was estimated at 6.58 lakh crore in 2024 and is anticipated to grow at a CAGR of 6.7% from 2025 to 2030. The market is experiencing significant growth, driven by urbanization, infrastructure development, and technological advancements. As cities expand and populations increase, the demand for efficient vertical transportation solutions in residential, commercial, and industrial buildings has surged. Moreover, the rise of smart buildings, which incorporate IoT and energy-efficient technologies.

Indias elevator and escalator market continues to grow steadily, driven by rapid urbanization, smart city developments, and increased investments in infrastructure, residential, and commercial real estate. The Indian elevator market is predominantly unorganized, with a few major global and domestic players. The focus is gradually shifting from conventional manual systems to technologically advanced, automated, and energy-efficient vertical mobility solutions.

Aaron Industries Limited, as a manufacturer of elevator cabins, auto door systems, elevator components and trading of traction machines, has strategically positioned itself in the mid-segment category, targeting small-to-medium developers across India. Additionally, the demand for hospital elevators and elevators in Tier 2/3 cities is gaining momentum, providing a broader market base for the Company.

Steel Polishing and Finishing Market:

The stainless-steel market size is expected to witness strong growth in the coming years. It is projected to reach approximately 20.61 lakh crore by 2029, growing at a compound annual growth rate (CAGR) of 8.7%. This growth can be attributed to factors such as rising industrialization in emerging markets, infrastructure development projects, global economic recovery, and a shift towards sustainable practices and regulations. Key trends expected to drive the market include technological advancements in manufacturing, overall economic growth, increasing demand for sustainable materials, rising automotive industry requirements, and innovations in automotive design.

The stainless-steel industry, particularly in the value-added segment like sheet polishing and finishing, has seen steady demand growth. However, it remains sensitive to fluctuations in global commodity prices, raw material availability, and government regulations such as BIS certification for imported steel. The

Companys backward integration through its steel polishing unit ensures better quality control and consistency in elevator production while reducing dependence on external suppliers.

B. Opportunity:

Growing Infrastructure and Real Estate: Increasing construction activities in residential and commercial sectors offer significant growth prospects for the elevator segment.

Import Substitution in Steel:

Government initiatives like "Make in India" and import restrictions present an opportunity to capture more domestic market share in stainless steel processing.

Export Potential: With upgraded production capacity and quality certifications (including fire door certification), Aaron is well-positioned to increase exports in both elevator and polished steel components.

Technological Advancements: Investment in advanced machines like Salvagnini and automation in fabrication processes enables cost efficiency and product quality enhancement.

Expansion of Distribution Network:

The Companys new branch offices in

Mumbai, Ahmedabad, and Kolkata will enhance customer outreach and service delivery.

C. Segment-Wise or Products-Wise

Performance:

The Company operates in two primary business segments:

i. Elevator Division:

This division includes manufacturing and sale of elevator cabins, auto doors, traction machines, and other elevator components. During the year, this segment contributed a major portion of the Companys revenue. Growth was driven by increasing domestic demand, successful execution of large orders, and strong order book.

The Company also obtained fire door certification in accordance with IS 17518: Part 2: 2021, ISO 3008-2:2017, and EN 81-58:2018, enabling entry into specialized elevator installations, including hospitals and fire-compliant buildings.

ii. Steel Polishing Division:

This segment undertakes stainless steel sheet polishing and finishing operations. It supports the elevator division and offers external job work services. While strategically important as a backward integration model, the segment continued to report operating losses due to underutilization, raw material constraints, and pricing pressures. Steps are being taken to rationalize costs, improve yield, and enhance utilization.

Segment	FY 2024-25	FY 2023-24
Elevator Division	6200.27	5332.21
Steel Polishing	1592.78	989.88
Division
Unallocated	0.00	0.58
Total	7793.05	6322.67

D. Outlook:

The Company remains optimistic about its growth trajectory and is well-positioned to capitalize on emerging opportunities while effectively navigating industry challenges. With a clear focus on operational efficiency, product innovation, and customer-centricity, Aaron Industries Limited aims to deliver sustainable growth and enhance long-term shareholder value.

In the coming years, the key strategic priorities include:

Strengthening the Balance Sheet: Continued focus on debt reduction to lower interest burden and improve financial resilience.

Enhancing Value Addition: The Company will continue to focus on improving internal efficiencies, product customization, and process optimization to enhance value addition.

Sustaining EBITDA Margins: Maintaining healthy profitability through cost optimization, backward integration, and operational efficiency.

Expanding Market Reach: Leveraging recently opened branches in Mumbai, Ahmedabad, and Kolkata to deepen market penetration and improve customer engagement across key regions.

Technology Adoption: Embracing global trends in elevator design and manufacturing, including energy-efficient, safe, and digitally integrated solutions, to stay ahead of evolving customer expectations and regulatory standards.

Growth in Certified Products: With certifications such as fire-rated elevator doors (as per IS 17518:Part 2: 2018, ISO 3008-2:2017, and EN 81-58, 2018), the Company is well positioned to serve high-compliance sectors like hospitals, commercial buildings, and exports more effectively.

Fully Operational Unit-3: Unit-3 became operational in April 2025, significantly enhancing production capacity, reducing turnaround times, and enabling the Company to cater to growing order volumes more efficiently.

Your Company is committed to delivering high-quality, innovative, and reliable products, and anticipates increased demand from both domestic and international markets. With a combination of strategic investments, product diversification, and a strong operational base, Aaron Industries aims to achieve consistent and profitable growth in the years ahead.

E. Risks, Concerns, and Threats:

The Company is exposed to a number of risks such as Economic Risk, Supply Demand Risk, Competition Risk, Input Risk, Regulatory Risk, Taxation, and Environmental Risks. Further, the following can be some of the risks and concerns the Company needs to be kept in mind:

Volatility in Steel Prices: Price fluctuations and limited availability of quality stainless steel in the domestic market can impact cost structures.

Intense Competition: Both local and international brands pose pricing and innovation pressures in the elevator segment.

Regulatory Risks: Regulatory Risks:

Changes in regulatory frameworks such as mandatory BIS certification for imported steel, revisions in import duties, and evolving environmental and compliance requirements may lead to supply chain disruptions, operational delays, or increased compliance costs, thereby impacting overall business efficiency.

Manpower Shortage & Skilled Labor: Recruiting and retaining technically skilled personnel remains a challenge in some geographies.

Economic Slowdown: Macroeconomic factors including interest rate volatility, inflation, or slowdowns in the construction sector may affect order inflows.

Supply Chain Disruptions: Any delay or unavailability of key raw materials, particularly imported stainless steel, can disrupt production timelines.

Technology Obsolescence: Failure to adopt new technologies or product upgrades could erode market competitiveness.

Some of the risks that may arise in the normal course of its business and impact its ability for future developments include inter-alia, Credit Risk, Liquidity Risk, Counterparty Risk, Regulatory Risk, Commodity Inflation Risk, Currency Fluctuation Risk, and Market Risk.

F. Internal Control System and their adequacy:

The Company maintains adequate and effective internal control systems commensurate with its size and complexity. It also ensures that they are recorded in all material respects to permit the preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss.

In the opinion of the Management, the Company has adequate internal audit and control systems to ensure that all transactions are authorized, recorded, and reported correctly. An independent internal audit function is an important element of the Companys internal control systems. This is supplemented through an extensive internal audit programme and periodic review by the management and the Audit Committee. The internal control systems comprise extensive internal and statutory audits. The Corporate Governance practices instituted by the Company are discussed in detail in the chapter on Corporate Governance which forms part of the Annual Report.

G. Discussion on Financial Performance with respect to Operational Performance:

The Total Income for the current year is 7815.03 Lakhs as compared to 6337.03 Lakhs in the previous year. It grew by 23.32% for the Financial Year 2024-25. The Profit before Tax for the year under review is 1186.36 Lakhs as against 849.92 Lakhs of the previous year. The Company has made a Net Profit after Tax of 824.33 Lakhs in the current year as against 633.09 Lakhs in the previous year.

The EBITDA margin of the Company increased to 19.29% against the previous year of 17.82%

H. Material developments in Human

Resources / Industrial Relations front, including the number of people employed:

At Aaron Industries Limited, human resource development continues to be a key driver of operational excellence and long-term success. During the year, the Company focused on reskilling and upskilling its workforce to align with evolving industry standards and technological advancements. Training programs were conducted across functions to enhance both technical capabilities and soft skills, supporting improved performance and adaptability across all levels.

As of March 31, 2025, the Company employed

192 permanent employees and workmen.

Industrial relations remained cordial throughout the year, supported by open communication and employee engagement initiatives. Welfare programs, feedback mechanisms, and recognition efforts contributed to a positive work culture. The Company remains committed to building a skilled, motivated, and future-ready workforce to support its growth journey.

I. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations, therefore, including:

Financial Ratio	FY 2024-25	FY 2023-24	% Change	Reason for Change
Debtor Turnover Ratio	17.80	20.83	(14.55%)	NA
Inventory Turnover Ratio	3.12	2.72	14.65%	NA
Interest Coverage Ratio	1.96	2.13	(7.96%)	NA
Current Ratio	1.28	1.47	(13.19%)	NA
Debt to Equity Ratio	0.92	1.08	(14.65%)	NA
Operating Profit Margin %	19.29%	17.82%	8.23%	NA
Net Profit Margin %	10.58%	10.01%	5.64%	NA

J. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with detailed explanations thereof:

Particular	FY 2024-25	FY 2023-24	% Change	Reason for Change
Return on Net Worth	19.14%	17.52%	9.23%	NA

K. Cautionary Statement:

Certain statements made in the Management Discussion and Analysis Report relating to the

Companys objectives, projections, outlook, expectations, estimates, and others may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make a significant difference to the Companys Operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic, and natural calamities over which the Company may not have any direct / indirect control.