Ador Welding Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS REPORT

OVERVIEW:

For over 73 (seventy three) years, we have been serving clients in India and around the world with end-to-end welding & cutting products and solutions. What makes us unique, is our willingness to make that extra effort for "Creating the best welding experience" to our Customers.

Our goal is to form a sustainable Organization that meets the needs of the welding community, while providing jobs to our citizens and generating wealth for our stakeholders. Achieving these goals is not simple and we face many obstacles. We have addressed some of these challenges in this reports "Risk Factors" section.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Welding Industry continues to be a cornerstone of Indias manufacturing sector, contributing significantly to GDR which is projected to be around 17%. Welding remains crucial for various manufacturing processes, directly influencing product quality.

The last financial year 2024-25 (F25) commenced with strong expectations of economic growth.

In F25, India sustained strong economic growth momentum despite global challenges. The country reaffirmed its role as a key economic and geopolitical player, exemplified by its presidency of G20. Emphasizing a rule-based international order, India advocated for global collaboration to address common challenges, thus enhancing its stature as a stabilizing force, amidst global uncertainties.

The global economic landscape remained volatile, marked by geopolitical tensions and economic uncertainties. India navigated these challenges, while focusing on infrastructural development and maintaining macroeconomic stability through moderate inflation and fiscal prudence. However, global headwinds, such as high interest rates and subdued global demand posed risks to Indias growth trajectory.

The manufacturing sector witnessed robust growth, bolstering demand for welding consumables, especially in the energy sector. Technological advancements, such as the adoption of dissimilar metal welding through fiber lasers in electric vehicle production, further fuelled market expansion. Additionally, investments in defence, shipbuilding, airports, roads, tunnels and drone technologies are expected to drive demand for welding equipment & consumables in the coming years.

In summary, F25 reflected continued resilience and growth opportunities for the Welding Industry in India, supported by strategic initiatives, technological advancements, and sustained demand across key sectors.

The Company continued to focus on product mix and cost reduction control measures to sustain growth and profitability.

The Capital goods segment witnessed some revival in activity over the previous year. New product launches continued to show encouraging results. The Company witnessed reasonably stable market conditions, despite the volatilities, to achieve growth in sales and profits.

During F25, Companies in the Welding Industry continued to prioritize product diversification and cost control measures to sustain growth and profitability. The Capital goods segment experienced a revival with notable new product launches, contributing to sales and profit growth, despite market volatilities. We have a sizable market share in both, the consumable and equipment markets (organized), and we are market pioneers in a variety of goods & geographies. We wish to cater to all the customer needs, with our solutions and products under one roof, through our Welding & Cutting Automation (WCA) division.

Indias gross fixed capital formation (GFCF) in the year 2024 was INR 94,341.903 billion and in the year 2025 GFCF is expected to be INR 105,249.815 billion. The Reserve Bank of India (RBI) expects GFCF to grow by 8.1% in F25, and real private final consumption expenditure (PFCE) to grow by 6.1%. RBI has also revised the real gross value added (GVA) growth projection for F25 to 6.3%. All this augurs well for the welding industry, which can be expected to grow @ CAGR of around 8-9%, over the period.

OPPORTUNITIES AND THREATS:

The Indian Welding Equipment & Consumables market continues to show strong growth momentum, with a projected CAGR of over 6.1% from the year 2023 to 2028. This growth is being driven by sustained infrastructure development and increasing demand across housing, healthcare, transportation and industrial sectors, supported by Indias expanding population and urbanization. In F25, a notable shift has been observed among end-users towards prioritizing product quality and reliability, with heightened emphasis on advanced technologies and equipment, that meet stringent industry standards. This has led to a rising demand for high- performance welding solutions capable of delivering superior efficiency, safety and durability across diverse applications.

Moreover, with the increasing number of welding equipment & consumables being used in various industries, the demand for repair and maintenance services is also increasing. This has led to an increase in the demand for welding equipment & consumables that are used to repair and maintain Machineries. In addition, India has a large pool of skilled and unskilled workers, which has led to increase in the availability of trained welders and welding technicians.

The mandatory requirement of BIS marking for products, used in Government Industries, has opened up the opportunities for "Made-in-India" products and manufacturers like ADOR, can obtain the BIS certification without any additional investment or efforts, since its products are already designed and manufactured in India with specifications, surpassing requirements of the standards.

OUTLOOK, RISKS AND CONCERNS:

OUTLOOK:

The Welding Industry remains integral to Indias manufacturing sector, which currently contributes around 17% to GDP and is projected to grow to 21% over the next 6-7 years. With the Governments ambitious target to triple manufacturing GVA to $1 trillion by F26 requiring a CAGR of approximately 12%, the sector is poised for significant expansion. F25 saw India navigating global economic headwinds with resilience, maintaining macroeconomic stability, while advancing infrastructure development. The welding market benefited from stable demand, new product launches, and revival in the capital goods segment. Rising needs in the energy, automotive, Defence, mining and infrastructure sectors—alongside advancements such as fiber laser welding in EV production continue to drive growth, positioning the Indian welding equipment and consumables market for robust future expansion.

Developing globally competitive manufacturing hubs, represent one of the biggest opportunities for India to spur economic growth and job creation in this decade.

McKinsey has identified 11 manufacturing value chains with strong potential:

• Pharmaceuticals & Medical Devices

• Electronics & Semiconductors

• Automobiles & Auto Components

• Textiles & Apparel

• Chemicals & Petrochemicals

• Food Processing & Agribusiness

• Machinery & Equipment

• Metals & Mining

• Renewable Energy & Storage

• Construction Materials & Infrastructure

• Consumer Goods & Appliances

These value chains can capitalize on Indias advantages in raw materials, manufacturing skills and entrepreneurship. They can tap into market opportunities such as export growth, import localization, domestic demand and contract manufacturing.

A focused approach to the industrial policy, aimed at lifting productivity, securing know-how, and providing access to capital, could help these value chains more than double their GDP contribution to $500 billion in 07 (seven) years, while creating extensive job opportunities.

RISKS AND CONCERNS:

• Infrastructure Challenges: Despite improvements, India still faces infrastructure gaps, including inadequate transportation networks, power supply, and logistics. These bottlenecks can hinder manufacturing growth.

• Labour Productivity: Enhancing labour productivity remains crucial. Skill development, vocational training and upskilling programs are essential to create a skilled workforce.

• Regulatory Environment: Cumbersome

regulations, bureaucratic hurdles and compliance complexities can deter investment and hinder ease of doing business.

• Global Competition: India competes with other manufacturing giants like China, Vietnam and Indonesia. Maintaining competitiveness is vital.

• Supply Chain Resilience: COVID-19 pandemic highlighted vulnerabilities in global supply chains. India must focus on building resilient supply networks.

• Environmental Sustainability: Balancing economic growth with environmental conservation is critical. Sustainable practices are essential for long-term viability.

In summary, Indias manufacturing sector has immense potential, but addressing challenges and seizing opportunities will be crucial for achieving its ambitious growth targets in the coming years.

INCOME STATEMENT ANYLISIS:

In F25, overall revenue from operations reached INR 1,11,683 Lakhs from INR 1,06,727 Lakhs of/in F24. This translates to about 5% increase from the previous year F24. Revenue from products business was at INR 89,591 Lakhs, as compared to INR 84,911 Lakhs in F24. Revenue from Services was at INR 8,392 Lakhs, as compared to INR 3,472 Lakhs in F24. Revenue from M & R division was at INR 13,700 Lakhs. Other income of INR 2,023 Lakhs, mainly consisted of forex gains, interest income, rental income and export incentive, etc.

BALANCE SHEET ANALYSIS:

During F25, overall working capital days were controlled at 89 days, compared to 103 days in the previous year, even after significant increase in business and undertaking a large scale project with longer lead time. The borrowings are under control and we are net debt free Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company continues to strongly believe that effective internal controls are critical for good corporate governance and that the operational freedom in conducting business should be exercised within the framework of appropriate checks & restraints, subject to adherence of applicable laws of the land.

The Company has robust Internal Financial Control System (IFCS), which covers all the critical aspects of business processes and reporting.

The Company has a well-defined Internal Audit System. The scope of Internal Audit is reviewed & finalized at the beginning of every financial year, in consultation with the Statutory Auditors and approved by the Audit Committee. The audit plan is focused, primarily, on the operations & processes.

The Audit Committee reviews the Internal Audit Reports on a quarterly basis and offers necessary guidance with respect to its coverage, scope & corrective measures.

Our ERP & IT system makes Finance & Accounts Management robust, data tracking easier and decision making faster.

The Company has developed a software which helps in centralizing its order processing, leading to better logistics/movement of goods. The Company has a very sound compliance track record with all the Legal and Statutory authorities in the Country, and there is a regular Management Audit mechanism to ensure that the Company, does not violate any known Legal or Statutory provisions, applicable to the Company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

In F25 we continued our focus on working towards achieving our Vision of "Creating the best Welding Experience" by imbibing three (03) core values of Enhancing Performance, Building Trust & Relationship and strive to give better Customer Experience.

All the key HR initiatives focused on enhancing employee productivity and retention through targeted efforts in Performance Management, Training & Development and Recruitment. We prioritized holistic employee wellbeing, supporting physical health via insurance and healthcare benefits and promoting mental wellness through stress management and work- life balance workshops. Recreational activities were conducted across all factory locations to encourage employee engagement and for boosting morale. These initiatives reflect our commitment to creating a positive, inclusive, and high-performing workplace culture, where employees feel valued and supported. We believe that investing in our people is key to driving sustainable organizational growth and success.

For skill enhancement and improving efficiency, we conducted various technical and soft skill programs throughout the year. Insights from the Annual Employee Feedback Survey provided valuable input on company culture and identified key areas for improvement to support future business performance.

The hiring process was revamped to promote diversity and fairness, with young engineers recruited from various campuses, across functions and locations. Strengthening of our teams contributed to lower employee attrition.

As we continue to grow, we remain committed to keeping our employees motivated, skilled and prepare to meet future challenges in our pursuit of excellence.

The employee strength as of 31^st March, 2025 stood at 862.

Disclaimer:

The information and opinion expressed in this section of the Annual Report may contain certain forward looking statements, which the Management believes are true to the best of its knowledge, at the time of its preparation. The Company and the Management shall not be held liable for any loss, which may arise, as a result of any action taken on the basis of the information contained herein.

	For and on behalf of the Board
	Ninotchka Malkani Nagpal
Place: Mumbai	Executive Chairman
Date: 06th May, 2025	(DIN: 00031985)