Aditya Forge Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

ECONOMIC OVERVIEW

Global Economy

The global economy continues to show resilience despite facing an increasingly complex and changing environment. According to the IMFs April 2026 World Economic Outlook, global growth is expected to reach 3.1% in 2026 and 3.2% in 2027. While growth remains stable, it is still below historical long-term averages. Economic activity is being affected by geopolitical tensions, including the ongoing conflict in the Middle East, as well as growing geoeconomic fragmentation. These developments are reshaping global trade, investment flows, and industrial activity.

For the infrastructure and manufacturing sectors, demand remains moderate. Government-led infrastructure spending and supportive industrial policies continue to drive activity, while private capital expenditure remains selective due to tighter financing conditions.

Commodity markets continue to experience volatility, particularly in energy and industrial raw materials. Oil prices are expected to remain relatively high in 2026 before gradually moderating, while metal prices remain vulnerable to supply disruptions. These trends could increase input costs and put pressure on margins for forging and machining companies.

Global inflation remains uneven and is projected to decline from 4.4% in 2026 to 3.7% in 2027. However, fluctuations in energy, logistics, and raw material costs are likely to continue creating cost pressures for industrial manufacturers.

Emerging markets are expected to experience higher inflation of around 5.5% in 2026, which could influence infrastructure demand, project execution timelines, and equipment replacement cycles.

Global infrastructure investment continues to provide long-term support for demand for heavy engineering products and precision components. However, elevated debt levels and interest rates may limit the pace of new investments.

The realignment of global supply chains and increasing geoeconomic fragmentation are transforming manufacturing ecosystems. This is creating opportunities for exporters that can offer competitive costs, reliable quality, and strong technical capabilities.

Across the mobility, off-highway, oil & gas, and industrial machinery sectors, demand is expected to remain relatively stable, supported by infrastructure development, the transition toward cleaner energy, and ongoing equipment replacement cycles.

India Economy

In 2025 26, India continued to exhibit strong macroeconomic resilience, supported by robust domestic fundamentals despite a volatile global economic environment. According to official estimates, real GDP growth is expected to be around 7.6%, placing India among the fastest-growing major economies globally. This growth has been supported by sustained domestic consumption, continued government-led infrastructure investment, and steady expansion across the services and manufacturing sectors.

Public capital expenditure on roads, railways, ports, power, and logistics continued to drive infrastructure development and enhance Indias industrial competitiveness. Manufacturing activity remained robust, supported by sustained growth in the automotive, industrial equipment, engineering, and renewable energy-related sectors. Ongoing investments in infrastructure development, logistics, and the energy transition are expected to further strengthen demand across key end-user industries, including commercial vehicles, agricultural equipment, industrial machinery, railways, and wind energy.

Financial Performance

(Rs. in Lakhs)

In the financial year 2025-26, the Company has not generated any revenue from operations compared to Rs. 326.06 Lakhs to that of previous financial year 2024-25. The Company has earned profit after tax of Rs. 13.05 Lakhs during the financial year 2025-26 as compared to profit of Rs. 699.34 Lakhs in the financial year 2024-25.

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.

OPPORTUNITIES

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.

THREATS

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.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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

HUMAN RERSOURCE

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. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.

CAUTIONARY STATEMENT

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.