Adarsh Mercantile Ltd Management Discussions

[Pursuant to Regulation 34 read with Part B Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

Dear Stakeholders,

SMT Engineering Limited

(Formerly Adarsh Mercantile Limited)

This Management Discussion and Analysis report has been prepared in compliance with the requirements of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and contains expectations and projections about the strategy for growth, product development, market position, expenditures and financial results. The Companys actual results, performance or achievements could differ from those projected in such forward-looking statements on the basis of any subsequent development, information or events for which the Company do not bear any responsibility.

a) Industry structure and developments

The Company was previously engaged primarily in trading activities within the Commodity and Capital Markets, sectors that are highly influenced by global economic conditions, regulatory policies, and market volatility. In recent years, these markets have experienced increased fluctuations due to geopolitical tensions, inflationary pressures, and shifts in monetary policy. As a result, trading volumes and profitability in the commodity segment saw a substantial decline, particularly during the financial year 2024-25, due to a slackened domestic and global economy.

Recognizing the challenges and limited growth opportunities in the existing line of business, the Company undertook a strategic review of its operations. Pursuant to shareholder approval through a postal ballot on May 12, 2025, the Company amended its main object clause to diversify into manufacturing activities, specifically in the sectors of metal fabrications, machine tools, turbines, furnaces, castings, forgings, and steel-based components.

The new sectors present strong growth potential, supported by increasing infrastructure spending, industrial expansion, and policy support under initiatives like Make in India and the National Steel Policy. This transition positions the Company to participate in the evolving industrial manufacturing ecosystem, offering more stable and scalable growth avenues compared to the inherent volatility of trading-based operations.

b) Opportunities and threats/Risk and concerns:

Your Companys growth and profitability are closely linked to the performance of the Commodity and Capital Markets. Looking ahead, the Company anticipates a favorable market environment. To capitalize on emerging opportunities, the Company has strategically amended its main object, as detailed under the section "Segment-wise or Product-wise Performance," positioning itself to respond proactively to future developments.

c) Segment wise or product wise performance:

The Company is engaged primarily in the business of trading activities. Accordingly, there are no separate reportable segments. In view of the slackened economy there has been a substantial decline in the commodity trading.

Subsequent to the closure of the financial year 2024-25, the members of the Company through postal ballot on May 12th, 2025, approved an amendment to the main object clause of the Memorandum of Association of the Company. Pursuant to this approval, the main objects of the Company have been revised as follows:

1. To carry on the business as manufacturers of metal fabrications machine tools, turbines, engines furnaces, accessories & fittings of any plant and machineries and also to manufacture, repair, develop, sell purchase of plants & machineries, fittings & accessories thereof.

2. To carry on the business as manufacturers of and dealers of forgings Castings and forged components and to instal steel scrap melting electric furnace and foundry equipments for making steel castings, grinding media, and ingots of ordinary carbon steel and alloy steel and to carry on the business or iron founders, from workers steel makers, steel founders, non-ferrous metal founders, furnace proprietors, and operaters, arc and metal workers, manufacturers of grinding medias, pipes and tubes, mill wrights, and steel converters and rerollers, smiths.

Your Directors are optimistic about the future growth prospects in the newly approved business sectors and believe that the strategic shift, as endorsed by the members, will enable the Company to explore new opportunities and enhance long-term value creation.

d) Outlook:

Your Company is making all efforts to accelerate the growth of its business. In spite of the market risk faced by your Company, your Directors are optimistic about the future prospects of the Company. The company is taking appropriate steps to keep the costs under control. The outlook for the current year remains positive.

e) Internal control systems and their adequacy:

Your company has an adequate system of internal control, which provides reasonable assurance with regard to safeguarding the companys assets, promoting operational efficiency and ensuring compliance with various statutory provisions. The Audit Committee of the Board plays a significant role in the internal control system and reviews the scope of internal audit work and internal audit reports, financial performance of the company and suggests improvements in the internal control systems wherever required.

f) Discussion on financial performance with respect to operational performance:

The discussions in this section relate to the consolidated financial results pertaining to the year that ended March 31, 2025. The financial statements of SMT Engineering Limited and its Subsidiaries/ Associate (collectively referred to as ‘the Company) are prepared in accordance with the Indian Accounting Standards (referred to as ‘Ind AS) prescribed under section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the consolidated financial statements.

The following table gives an overview of the consolidated financial results of the company: (Rs. in hundred)

Particulars	FY 2024-25		FY 2023-24
	Amount	% of Revenue	Amount	% of Revenue
Revenue from operations	21,01,845	100	256,249	100
Earnings before interest, tax, depreciation and amortization (EBITDA)	2,70,970	12.89	159,701	62.32
Profit Before Tax (PBT)	2,65,620	12.63	(1,85,568)	72.42
Profit after tax attributable to shareholders of the company	2,95,624	14.04	50,680	19.78
Earnings per share	6.35	-	(4.57)	-

g) Developments in Human Resources

The Company believes that its human resources as core strength. While the technology and product is fairly standardized in the present scenario, the results achieved by the Company are related primarily to the talent, spirit, commitment and contribution of its employees at all levels. The Company consistently nurtures a transparent and empowered work environment, which fosters meritocracy and incentivizes employees for high levels of delivery.

h) Changes (Change of 25% Or More) in significant key financial ratios and return on net worth:

The 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 the detailed explanations thereof, are as follows:

S.No.	Particulars	March, 31, 2025	March 31,2024	%Change in Ratio	Reason for Significant Change
1.	Inventory Turnover	2,109.42	13.96	15011.24	Increased in sale during the year
2.	Operating / Net Profit Margin (%)	2.42	(67.81)	(103.57)	Increased in profit during the year
3.	Current Ratio	96	22.83	319.68	Loan has been given to subsidiary company
4.	Interest / Debt Service Coverage Ratio	-	(6.79)	(100)	No interest expense incurred during the year
5.	Return on Equity Ratio	0.57	(26.55)	(102.16)	Increased in profit during the year
6.	Trade Receivables / Debtors Turnover ratio	6 .49	2	225.06	Increased in sale during the year
7.	Trade payables turnover ratio	200.72	0.05	443639.61	Increased in purchases during the year
8.	Net capital turnover ratio:	0.42	1.25	-66.28	Reduced due to increase in net working capital
9.	Return on Net Worth / Capital employed (%)	0.33	(24.74)	(101.34)	Profit made during the year

i) Disclosure of Accounting Treatment:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act,20213, read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), and other relevant provisions of the Companies Act, 2013, as applicable. The accounting policies have been consistently applied and are in line with those adopted in the previous financial year. There have been no deviations in the accounting treatment prescribed under the applicable Ind AS or any other regulatory requirements.

j) Cautionary statement:

Statement made in this section of the report is based on the prevailing position in the market conditions. Actual results could however differ materially from those expressed or implied with regard to Companys Outlook and Performance.

	For SMT Engineering Limited
	(Formerly known as Adarsh Mercantile Limited)
Date: 02.09.2025	Vishal Jaiswal	Ajay Jaiswal
Place: Indore	Wholetime Director	Managing Director
	DIN: 01741062	DIN: 01754887