Aditya Forge Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS ECONOMIC OVERVIEW

Global Economy

In FY 2024-25, the global economy witnessed moderate growth amid persistent inflationary pressures, geopolitical tensions, and cautious monetary policies. According to the IMF, global GDP grew by approximately 3.2%, driven by resilience in emerging markets, especially India, which remained a key growth engine.

Advanced economies experienced slower growth due to high interest rates and subdued demand, while global trade faced headwinds from supply chain disruptions and protectionist trends. Inflation showed signs of easing, prompting central banks to adopt a more data-driven approach to interest rate decisions.

The focus on sustainability, energy transition, and digital transformation continued to reshape global economic priorities. Looking ahead, the global outlook remains cautious, with growth likely to remain subdued in the near term amid ongoing uncertainties.

India remained one of the fastest-growing major economies in FY 2024-25, with GDP growth estimated at around 7.2%, driven by strong domestic demand, government infrastructure spending, and resilient services and manufacturing sectors. Despite global headwinds, the Indian economy demonstrated robust fundamentals, supported by prudent fiscal management and targeted policy interventions.

Inflationary pressures moderated during the year, enabling the Reserve Bank of India (RBI) to maintain a balanced monetary policy stance. The governments continued focus on digitalization, ease of doing business, and public-private partnerships contributed to a favorable investment climate.

Looking ahead, Indias economic outlook remains positive, underpinned by structural reforms, demographic dividends, and sustained consumption. However, external risks such as global market volatility, energy prices, and geopolitical developments may pose challenges in the near term.

The global forging industry plays a critical role in supporting core sectors such as automotive, aerospace, railways, oil & gas, construction, and industrial machinery. In recent years, the industry has witnessed significant technological transformation, driven by automation, advanced materials, and sustainable manufacturing practices. The shift towards lightweight components, closed-die forging, and near-net shape technologies is helping improve efficiency and reduce waste.

Geographically, Asia-Pacific dominates global forging output, with China, India, and Japan being major players. While mature markets like Europe and North America continue to innovate in high-precision forging for aerospace and defense, emerging economies are focusing on capacity expansion and cost competitiveness.

Rising global demand for electric vehicles (EVs), renewable energy infrastructure, and defense modernization is expected to drive future growth. However, the industry faces challenges in terms of raw material price volatility, environmental compliance, and skilled labor availability.

India is the second-largest producer of forgings globally, with a strong presence in the automotive sector, which accounts for over 60% of domestic forging demand. The industry comprises approximately 400+ forging units, including large, medium, and small-scale enterprises, predominantly clustered in Maharashtra, Tamil Nadu, Punjab, and Gujarat.

In FY 2024-25, the Indian forging industry showed resilience amid fluctuating demand and rising input costs. Growth was supported by a revival in the commercial vehicle segment, continued investment in infrastructure, and increasing exports. With the governments push for "Make in India", PLI schemes, and defense indigenization, the sector is poised for further expansion.

Key trends shaping the Indian forging industry include automation, digitization (Industry 4.0), focus on value-added products, and strategic partnerships with global OEMs. However, challenges remain in terms of energy costs, working capital constraints, and adoption of green manufacturing technologies.

With growing demand across automotive, railways, defense, and renewable sectors, the long-term outlook for the forging industry remains positive, both domestically and globally.

In the financial year 2024-25, the Company earned Rs. 326.06 Lakhs from revenue from operations compared to Rs. 2,507.17 Lakhs to that of previous financial year 2023-24. The Company has earned profit after tax of Rs. 699.34 Lakhs during the financial year 2024-25 as compared to profit of Rs. 211.77 Lakhs in the financial year 2023-24.

The Board of Directors expects a growth in the Revenue from Operations and ultimately an increase in the Net Profit over the upcoming Financial Years.

The forging industry in India presents significant growth opportunities due to its integral role in key sectors such as automotive, railways, aerospace, defense, oil & gas, and heavy engineering. With India emerging as a global manufacturing hub, the demand for high-quality forged components is on the rise. The Indian forging industry benefits from its role in supplying critical components to the oil and gas sector, which is shifting away from less reliable Chinese suppliers. Increased infrastructure investment, is expected to drive demand for forging products in construction and heavy machinery. Additionally, growth in aerospace and defense sectors, supported by government initiatives like Make in India, will further boost the industry. With rising domestic consumption, strong export demand, and policy support, the Indian forging industry is poised for robust expansion and technological transformation.

However, Indian forgers face competition from countries with lower labor costs and are vulnerable to geopolitical tensions affecting raw material prices. Companies must stay updated on market trends and adopt proactive strategies to navigate these challenges and remain competitive.

The Company has an efficient system of internal controls for achieving the following business objectives of the Company:

Efficiency of operations

Protection of resources

Accuracy and promptness of financial reporting

Compliance with various laws and regulations

Compliance with the laid down policies and procedures

Equipping the Company with an engaged and productive workforce is essential to our success. We look for commitment, skills and innovative approach in people. In assessing capability, we consider technical skills and knowledge that have been acquired through experience and practice, along with mental processing ability, social process skills and their application. We continue to invest in developing a pipeline of future talent and nurture them. As part of this process, we provide development and training opportunities to our workforce, which motivates and encourages them to grow in their work. No employees were employed in the Company. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.