Bharat Forge Ltd Management Discussions

India recorded a GDP growth of 6.5% in FY2025, lower than the 8.2% growth achieved in FY2024, according to IMF estimates. The nation stands out as a bright spot amid global economic challenges and geopolitical upheavals. Growth is being driven by rapid infrastructure development, a strong push for manufacturing, supportive policy reforms, and resilient consumer confidence. Looking ahead, the Indian economy is expected to grow at 6.6% in FY2026 and 6.7% in FY2027, according to forecasts by the United Nations (UN). Continued investments in infrastructure development and digital transformation, favorable monsoon, higher rural consumption, and easing inflation will accelerate growth.

The Union Budget 202526 reinforces Indias commitment to sustainable development, aligning with the Viksit Bharat@2047 vision. Infrastructure expansion remains a priority, with an increased allocation of C11.2 lakh crore, up from C11.1 lakh crore in the previous year, propelling the Make in India initiative. With a strong focus on tax relief, fiscal consolidation, and strategic sectoral investments, the budget aims to stimulate growth, boost consumption, and strengthen social welfare.

(Source: Union Budget 202526 Highlights)

BUSINESS ENVIRONMENT

Automobile Business Global Automotive Industry Overview

The global automotive industry expanded in CY 2024, albeit on a relatively limited scale. As per S&P Global Mobility estimates, global light vehicle sales reached 88.2 million units in CY 2024, a 1.7% increase from CY 2023, driven by ongoing inventory restocking as supply chains stabilize. The European automotive market recorded the slowest growth among major markets in CY 2024, increasing by 0.9%, with the EU market growing by 0.8%. Looking ahead to CY 2025, Western Europe is expected to continue its subdued performance, with a projected growth of 1%. While reductions in policy interest rates and new EV model launches may provide some support, pressures on CO₂ targets and reduced incentive programs will likely temper overall market expansion.

The United States auto market experienced a 2.2% increase in light vehicle sales in CY 2024, reaching 15.9 million units. However, growth in CY 2025 is expected to be more modest, at 1.5%, amid policy uncertainties under the new administration. While interest rates are expected to decline slightly, vehicle pricing remains high, and shifting trade policies, particularly around tariffs, could impact sales. China produced 31.3 million and sold 31.4 million lightduty vehicles in CY 2024, reflecting a growth of 3.7% and 4.5%, respectively. The market remains supported by government incentives, competitive pricing of locally manufactured EVs, and robust NEV growth.

China continues to outpace the rest of the world in electrification, with EVs comprising over 40% of total new car sales in CY 2024. The country remains aggressive in pushing EV subsidies to boost consumer demand, leveraging its welldeveloped EV supply chain. Europe faced stagnation in electrification in CY 2024 compared to CY 2023, as several countries scaled back fiscal support. With over 60% of global EV sales originating from China, the global EV market share is anticipated to reach 25% in CY 2025, with battery electric vehicles (BEVs) accounting for 17%.

Outlook

The global automotive industry enters CY 2025 with cautious optimism, with S&P Global Mobility forecasting 89.6 million new vehicle sales, reflecting a 1.7% growth. Key factors such as broader economic uncertainties, changing regulatory landscapes, and evolving consumer preferences will shape market dynamics. Despite policy support uncertainty, BEVs remain a major growth sector. S&P Global Mobility projects global BEV sales to reach

15.1 million units in CY 2025, accounting for 16.7% of total light vehicle sales. While electrification continues its upward trajectory, the rate of adoption and the viability of BEV strategies will depend heavily on government policies and infrastructure development.

The Commercial Vehicles business bore the brunt of a weak economic recovery in Europe. As the economic recovery remained anemic, demand for inland transport in Europe was muted. Post a tough year in FY2025 for our European CV exports, we expect the business to remain stable in FY2026. However, a welldirected capital expenditure push from major European economies can spur some demand for heavyduty trucks in Europe, thereby aiding recovery. In contrast, our North American business saw moderate growth despite flattish production volumes. FY2025 revenue from the CV business was C20,152 million registering slight degrowth of 4.6% YoY. The hallmark of our CV business growth has been market share gains in our core geographies of North America and Europe. We have always prioritized safetycritical components over other opportunities within the CV segment. This approach has made us a critical supplier to major OEMs and Tier I suppliers across our major end markets. Over the years, we have increased our valueadd for all the components we supply. This has helped us increase our content per vehicle in value terms.

From a policy perspective, a pause to the emission norms change in North America is likely to keep demand on an even keel in CY 2025 and CY 2026 instead of a prebuy in CY 2025 and a dip thereafter. However, the unpredictability of the United States trade policy will create challenges in the marketplace. We expect the policy in its current form to build inflationary pressures in the United States and impact overall demand. In the event of a drop in consumption demand, transport cargo growth may be impacted. This will lead to a decline in demand for Commercial vehicles in North America.

Passenger Vehicles (PV)

Post the stupendous growth of the PV export business in FY2024, the segment saw some degrowth in FY2025 with annual revenue of C11,167 million, implying a 12% degrowth compared to last year. A combination of factors, like slower demand for platforms, plateauing of demand in general in some geographies for a brief period, drove the weaker performance.

Over the last 8 years, PV exports have recorded a 21.9% Compounded Annual growth per annum in revenue. Seen in the perspective of total exports, PV exports have grown from 12% to 24% of total exports over FY2017FY2025. This has made our growth more broadbased and improved capacity utilization. The strong performance has been a combination of deepening product portfolio, increasing valueadd, and diversifying across markets and OEMs. As a testament to the valueadd, a large proportion of our components are shipped in fully machined condition.

As outlined in the earlier edition, we have adopted the LastMan standing strategy for the PV segment. This implies our willingness to supply engine components to all PV OEMs by the time the Last ICE gets built. Our strategy is rooted in the belief that the EV transition will be gradual and provide ample scope for ICE & hybrid technology to compete in markets where development of charging infrastructure and affordability are key issues. In addition to these market dynamics, our strong balance sheet provides sufficient headroom to invest in capacity if needed. We believe our financial strength and our reputation as a reliable supplier will be construed positively by existing OEM customers as well as potential new ones. In the mediumlong term, our target would be to diversify across OEMs, geographies and increase our market share with our existing and new customers.

The Indian auto industry sales grew by 7.3% in FY2025. Within the industry, the export basket registered a healthy 19% growth driven by passenger car and twowheeler exports to Latin America and Africa. The domestic market saw strong sales momentum as infrastructure investments and capex thrust by the government continued post the general election.

Despite a high base, passenger vehicles registered a 2% sales growth, resulting in sales of 4.3 million units. Utility vehicles continue to dominate the industry landscape with a 500 bps increase in share to reach 65% of total sales. New model launches with better features and modern design resonated with customer aspirations. Strategic discounting and promotional offers helped in sustaining volume growth.

Commercial vehicles had a tough start to the year as infrastructure investments slowed in the H1 FY2025 due to ongoing elections. However, a strong recovery in Q4 helped the industry close the year with a modest 1.2% decline in volumes. Fleet operators continued with their preference for higher tonnage trucks as better connectivity and augmentation in the expressway network curtailed logistics costs.

Indications of a good monsoon in FY2026, income tax rate cuts, and stable macroeconomic conditions augur well for vehicle demand in the upcoming year.

Outlook

The Indian automotive industry is poised for a transformative 2025, marked by growth in the light & medium commercial vehicles segment, steady momentum in twowheelers, and an expanding EV sector. Fundamental factors such as infrastructure investment, strong replacement demand, and the expansion of core industries like coal, steel, and cement are expected to drive the sectors growth. The governments capital expenditure push, backed by robust tax collections and manageable fiscal deficits, will further stimulate demand. Increased allocation of C11.2 lakh crore for infrastructure development, particularly in roads and transportation, coupled with agricultural growth, will fuel demand for commercial vehicles.

The growing electrification trend underscores the necessity of enhancing charging infrastructure to support the transition to electric vehicles (EVs). While electric twowheelers and threewheelers are expected to witness rapid adoption, electric cars remain a niche segment due to challenges like high upfront costs and charging infrastructure constraints.

Aligned with the Viksit Bharat vision and building on past reforms, the Union Budget 202526 enforced several measures to strengthen Indias automotive sector. The budget aims to promote a greener automotive ecosystem, offering attractive incentives to propel domestic manufacturing and green mobility. The budget brings a significant boost for manufacturing, with an allocation of C7,000 crore for various central and state schemes, aimed at supporting the auto industry.

The Domestic Commercial vehicles division recorded a turnover of C9,627 million in FY2025, which was 6.9% lower YoY. The drop was driven by slower capex in the first half of the fiscal year due to the general elections. However, a pickup in capex spending by the government in the second half helped stimulate demand and drove our CV business revenue higher in the last quarter. As witnessed over the last few years, the share of heavier trucks like tractortrailer and tippers has increased substantially. New generation platform launches by OEMs have created opportunities for suppliers like us to participate in the market growth.

After a challenging FY2024, the domestic passenger vehicles business witnessed robust growth in FY2025. Revenue rose by 20.9% to reach C3,622 million. The growth was driven by an array of factors new business wins, market share gains and higher volumes at our OEM clients. The stellar performance was a function of sustained efforts to target newer components for ICE engine vehicles. Our efforts to broaden our portfolio yielded positive outcomes. In FY2026, we expect the growth levels to gravitate to the underlying market.

Utility vehicles now account for almost 2/3rd of the overall market sales. We expect this trend to create opportunities for us in the medium term.

The governments continued focus on strengthening physical and digital infrastructure unlocks significant opportunities for the industrial sector. With a massive capital outlay of C11.2 lakh crore, infrastructure development is set to gain momentum, acting as a key driver of growth. The construction sector is projected to expand by 8.6% in FY2025, supported by higher infrastructure projects, rapid urbanization, and increasing investments in housing and industrial developments. This sustained momentum reinforces the sectors role as a cornerstone of Indias economic expansion.

Bharat Forges industrial exports stood strong despite a weak performance in some of our endmarkets. Our business supplies components and some assemblies across a range of sectors like construction & mining, aerospace, oil & gas, steel, cement, sugar, railways and capital goods. Our strategy in the industrial segment is driven by diversification. This ensures individual sector volatilities do not cloud the outlook of the entire industrial division. To illustrate the point, aerospace has grown from 3% of Industrial Export topline in FY2019 to 14% in the current year. We expect this segment to post a strong performance over the next 45 years.

The oil & gas business grew in FY2025 post the challenges of inventory correction and technology change in FY2024. Our endeavor is to expand the product bouquet gradually and increase our share in the fracking industry in North America. The expansion will be a combination of increasing our valueadd as well as augmenting our product range. Both these changes should play out over the next 23 years. In FY2026, we expect this segment to register flat to slightly positive growth. Construction & Mining posted a sluggish performance due to inventory pile up in the supply chain. We expect this to gradually get corrected and come back to steady growth.

The domestic side of industrial business saw demand for heavyhorse power engines grow at a robust pace. Driven by increased needs for standby power from data centers, this segment reported positive performance. After a sluggish year in FY2024, agriculture segment recorded positive performance driven by strong growth in rural India. We expect this segments performance to be in line with Tractor OEM growth.

Recognizing the vast potential in Indias industrial ferrous casting sector, Bharat Forge made a strategic move in FY2023 by acquiring JS Auto Cast (JSA). Leveraging its deep metallurgical expertise and forging experience, this acquisition marked Bharat Forges entry into the ferrous castings space unlocking opportunities across wind energy, hydraulics, construction, mining, and more.

JSA enhanced its operational capacity, increasing its liquid metal output to 130,000 MT per annum. Further, the Company has enhanced its machining capacity with additional CNC Machines, which include dedicated machining cells for high volume products. JSA has dedicated machines for new product development to fasten the development activities, which is a benchmark in the casting industry.

FY2025 saw organic growth across the board, with revenues reaching C697 crore and an EBITDA margin of 14.9% which clearly exhibits JSAs ability to deliver strong YoY growth. JSA has a diversified customer base, reducing dependency on any single industrial sector or customer. The revenue split between domestic and export markets is also more balanced.

Looking ahead, with the opportunities available in the market, JS Auto Cast is set to significantly scale up its foundry and machining capabilities to meet the growing demand for fully machined castings. The Company is driving several initiatives across productivity improvements, value addition, operational efficiency, capacity expansion, and new product development all aimed at building a stronger future.

The overseas business had a tough year in FY2025. European aluminum business showed improvement in pricing to reflect the higher cost of energy and manpower. Better realization per piece in Europe was offset by a slight decline in utilization rates in the aluminum business. In general, a weak consumer sentiment across Western Europe impacted demand, resulting in both the steel forging and the aluminum forging business facing negative operating leverage.

On the contrary, the United States business showed progressive reduction in operational losses across quarters, with the final quarter of the year recording a small EBITDA profit. Our continued effort towards improving operational efficiency in the United States is gradually yielding success. Our next frontier would be to sustain the momentum and commission the second phase of our aluminum forging unit in the US by H2 FY2026.

Both our European and the United States units cater to the local needs of their respective OEM customers and have limited export exposure. Given the limited crossborder trade these businesses engage in, we estimate the direct impact from the global trade tensions to be marginal in the short run. However, if the global trade policy remains rigid for a prolonged period, inflation may inch up, impacting discretionary spend. This is likely to hit the underlying demand and our business outlook.

Indias defence sector has made unprecedented strides over the past decade, driven by a strong policy push towards selfreliance and domestic manufacturing. Central to this is the expansion of Indias defence manufacturing industry, driven by the Make in India initiative and supportive policy reforms. This shift towards domestic production is aligned with Indias Atmanirbharta (selfreliance) vision, positioning the nation as an emerging hub for advanced military technology and equipment. The Union Budget 202526 has placed a significant emphasis on defence modernization and indigenous manufacturing, with an increased allocation of C6.81 lakh crore, marking a 9.5% increase over the previous year. The total modernization budget, including capital outlay, stores, repairs, refits, and infrastructure development, stands at C2.66 lakh crore.

Defence exports surged from C21,083 crore in FY2024 to C23,622 crore in FY2025, marking a significant rise in Indias global defence footprint. As the nation aims for C3 lakh crore in defence production and C50,000 crore in exports by 2029, these achievements highlight Indias emergence as a reliable defence partner worldwide. India is poised to emerge as a key global defence manufacturer by leveraging innovation, strategic partnerships, and indigenous capabilities.

FY2025 was a watershed year for Bharat Forges defence business. Your Company received its biggest ever defence order worth nearly C4,000 crore for the supply of 184 ATAGS platforms. This is indeed a big moment for the private defence industry in India, where a product designed and developed indigenously involves the private sector as a production partner. In the year gone by, our whollyowned subsidiary Kalyani Strategic Systems Ltd (KSSL) acquired a 25% stake in Italian design company EdgeLab SpA. EdgeLab specializes in the design and manufacture of Autonomous Underwater Vehicles.

Our product strategy follows a solutions provider approach where development priorities are determined basis global requirements as well as potential IP creation inside India. We aim to house the entire intellectual property inside the Bharat Forge Group. This grants us a free hand to market our products in many geographies subject to Government of India approvals. Fostered by a culture of continuous product evolution, we have multiple products in various stages of their development life cycle. KSSLs new stateoftheart manufacturing facility spread over 400,000 square feet at Jejuri near Pune will commence operations in H1 FY2026. Our capacity to manufacture artillery guns, vehicles and other defence products would receive a significant boost once this plant comes online.

Our defence portfolio spans across land systems artillery guns, protected vehicles, small arms, consumables and naval systems underwater autonomous platforms for mine detection as well as underwater vehicles for crew training in antisubmarine warfare. In the next 23 years, we aim to have a healthy mix of short and long life cycle products across land and naval, ensuring a faster time from product development to revenue generation. Our portfolio is well structured to cater for war as well as peace times needs of our customers.

Through our product development initiatives, we aim to insulate our revenue stream from any potential cyclicality and ensure steady returns for the business over the next 34 years.

FY2025 marked significant growth for the aerospace business, with notable achievements in customer acquisition, product development, and technological advancements that have further strengthened the divisions market position and capabilities. The business focuses on the aeroframe, landing gear and critical engine components.

During FY2025, customers recognized Bharat Forge for zerodefect deliveries of critical rotating engine components. Building on this success, the Company secured new contracts for critical engine components with global customers, including the supply of rings manufactured from superalloys. This achievement demonstrates the Companys growing capability in advanced metallurgical applications.

A significant milestone was achieved with the AS9100D certification of the Companys Turbomachinery Assembly and Design facility, validating the quality management systems and processes to international aerospace standards. This certification enhances customer confidence and opens doors to new business opportunities with tier1 aerospace manufacturers.

The division successfully rolled out a comprehensive range of fully tested Micro Jet Engines specifically designed for UAV applications. This product launch positions the Company at the forefront of the rapidly growing unmanned aerial vehicle market, addressing both civilian and defence applications.

Additionally, the Company has developed robust MRO (Maintenance, Repair, and Overhaul) capabilities for turbomachinery equipment serving defence, aerospace, and industrial requirements. This strategic expansion into the aftermarket services sector has the potential to create recurring revenue streams and strengthening customer relationships throughout the product lifecycle.

To augment our production capabilities, the Company has embarked on capital investment for creating a stateof theart production facility for aerospace rings and machining of landing gears. The ring mill and machining units should come online in CY 2027. These investments position the Company to serve larger and complex assignments.

The aerospace division operates entirely on a digital platform leveraging IoT and Industry 4.0 standards. This ensures seamless integration from design to manufacturing, testing, and complete life cycle management.

The Company continues to prioritize investments in its people and technology. Talent upgrade, reskilling, and upskilling have been key areas of focus, fostering robustness and agility within the divisions operations and positioning the business for sustained future growth.

EMobility Business

Kalyani Powertrain Business Overview (KPTL)

Our emobility business, housed under Kalyani Powertrains operates in two business verticals: repowering business & electronic components business.

The repowering business vertical achieved a significant milestone with the development of products that demonstrated a strong productmarket fit, leading to commercial introductions across both truck and bus segments. These launches were underpinned by successful

partnerships and a wellestablished supporting ecosystem. Conversion rates have remained modest, highlighting the need for expanded market outreach, stronger collaborations with leading logistics service providers, and expedited certification processes for key vehicle models. What began with cautious interest in repowering has now evolved into growing customer confidence. The launch of realworld product trials in January 2025 showcased compelling value through optimized vehicle configurations, battery sizing, and charging solutions. The business also identified the State Transport undertakings as an ideal candidate for repowering old buses (> 7 years) and rejuvenating their life without impacting the existing employee & depot ecosystem. The business has signed ProofOfConcept MoUs with 2 states.

The electronic components business had a transformative year in FY2025, characterized by both significant challenges and key milestones. A major achievement during the year was the commencement of revenue from operations. It also won its 1st global order for DCDC converter. Recognizing the operational metrics of the BuildtoPrint business, and a better scope in the telecom server segment, KPTL has pivoted towards server solutions with the objective of “Make in India" Servers. The Company has signed two strategic MoUs with Global Industry leaders in Processor & Server Hardware Value Chain, cementing its entry in this segment. The Company also enhanced its technical capabilities by onboarding domain experts and establishing a dedicated System Integration domain.

In the medium term, KPTL is focused on structured revenue growth by targeting 34 highimpact sectors,

1. Repowering of Trucks for Smaller Intercity Distances

2. RePowering of Bus at State Transport Undertaking

3. Launch and establish Make in India Server Business

4. Strengthen Automotive Electronics Business by Acquiring New Customers

Additionally, the Company is targeting to achieve bestin?class product robustness with 100% uptime and selective backward integration to optimize cost.

Talent Performance Management System (PMS):

Our performance management system was strengthened through the implementation of SMART goals, annual appraisals and PIPs using SAP Success Factors. These initiatives aligned employee objectives with the Balanced Scorecard (BSC) and the digital PMS platform, fostering transparency, accountability and continuous improvement.

We conducted a leadership competency assessment for SBU heads, which will be followed by tailored coaching interventions. High potential talent and critical roles were mapped and IDPbased development journeys were initiated. Internal job rotations enhanced agility and career growth. We placed greater emphasis on career development through internal opportunities that support talent growth.

Comprehensive training efforts resulted in 2.49 mandays per employee across technical, behavioral, safety and mandatory training. A Technical Skill Matrix with 8 core skills & 158 subskills was deployed to assess and address skill gaps. It was designed to compare desired and actual competencies across roles, enhancing our preparedness for future and niche technical skills. Our bluecollar Skill Enhancement Program has assessed 1,355 employees with tailored upskilling interventions underway. The Behavioral Competency Matrix was established and Training Needs Analysis was captured for over 925 employees.

The cultural festival held on January 11 & 12, 2025, saw participation of over 1,800 employees showcasing their talents, culminating in the prize distribution ceremony on February 18, 2025, honoring outstanding contributions. The Family Day at Baramati featured fun activities and recognitions, reinforcing a culture of appreciation. Further, intercompany cycling and cricket tournaments fostered camaraderie. We recognized 29 individuals for long service milestones of 15 and 25 years.

Our continued focus on positive industrial relations ensured stable operations and workforce harmony throughout the year. There were no industrial relations issues that resulted in loss of production, reflecting mutual trust and collaboration.

^ Female Representation: Increased from 1.6% to 2.6%, reflecting our DEI efforts

^ Women Empowerment: Conducted Selfdefence training during Womens Day

^ Health & Safety: Installed ECG and AED machines at our biggest manufacturing facility, Mundhwa. Yoga Day was celebrated with 100+ participants promoting holistic wellbeing

FY2025 was a year of balancing competing priorities. On one hand, as the defence business scaled new heights with significant expansion in size and scope, there was a need to strengthen the security posture while establishing robust systems and processes to ensure smooth functioning. On the other hand, efforts were made towards driving efficiency across the legacy Forging division, where the focus was on equipping leaders with near realtime insights to trigger transformational actions that enhance operational performance. AI served as a strong enabler throughout this journey.

Key interventions included:

(a) Digitalization of sales process with customer relationship management (CRM) exploitation to bring advanced capabilities;

(b) Analytics package to enable near realtime visibility of costs, production KPIs & efficiency driving overall productivity enhancements across business operations;

(c) Sophisticated part cost estimation solution for efficient quotes for customer inquiries;

(d) Manufacturing & sales AI agents delivering dynamic heatmap for senior management.

The next phase of work is progressing around themes such as:

(i) planning and supply chain optimization & transparency;

(ii) Inventory optimization;

(iii) Engineering transformation using upgraded platform and digital enablement.

Key interventions included:

(a) Adoption of digital design methodology enabled via product lifecycle management (PLM) solution;

(b) ERP and PLM integration for seamless engineering and manufacturing digital thread driving product quality improvement, reduce product complexity and efficient design for manufacturability;

(c) Defence IT Infrastructure segregation for robust cybersecurity posture.

The next phase of work is progressing around themes such as:

(i) adoption of generative design principles;

(ii) AR/VR integration for design validation, manufacturability evaluation and assembly instruction;

(iii) project management software evaluation.

Process improvements were implemented across multiple areas to enable smoother operations, supported by IoT deployments that provide realtime insights into operational performance.

AI and robotics continued to be strategic focus areas, with multiple pilots executed throughout the year aimed at mainstream value creation and future adoption. Key developments included the adoption of agentic AI architectures, development of AI agents for select group functions, and progress in building Robot Operating Systems and AIbased core capabilities for humanoid and quadruped robotic platforms for largescale robotic adoption in manufacturing environments.

Technology will continue to play a pivotal role in further optimizing the variable costs and thereby driving efficiency in cost per piece. Bharat Forge will continue to invest significantly in AI and roboticsrelated areas to foster innovation, compete on scale across all its businesses.

Our CSR approach is anchored in inclusive rural transformation, aligned with the UN SDGs and focused on longterm community resilience. We work across priority areas such as water conservation, clean energy, environmental sustainability, skill development, healthcare, education, women empowerment, and sports. Our integrated initiatives span droughtprone villages, underserved geographies, and urban slum communities ensuring access to essential services, futureready learning, and sustainable livelihoods. By collaborating with local institutions and leveraging innovation, we continue to improve quality of life and create meaningful impact at scale.

Read more about our CSR intervention on page 38 onwards

Bharat Forges ESG journey formally began with the establishment of the Boardlevel ESG Committee in FY2022. The Company has developed a structured ESG framework comprising 7 objectives and 25 measures aligned to its material ESG priorities. This framework enables the organization to identify, assess, and address key risks and opportunities, with regular monitoring by the management team ensuring steady progress. Consistent advancements have been made across stakeholder engagement, resource efficiency, climate action, supply chain sustainability, customer partnerships, risk management, and ethical compliance.

The ESG considerations are embedded into strategic decisions, including mergers and acquisitions. The Companys sustainability reporting aligns with the GRI framework, and yearonyear improvements in ESG ratings reflect its improved performance and commitment.

The Company has implemented a structured risk management process to identify, prioritize, mitigate, and monitor risks. The principal risks affecting its business encompass economic, foreign exchange, raw material, technology, funding, talent, and cybersecurity. The Company has taken adequate steps to address and mitigate these risks.

Some aspects have been highlighted below:

^ Persistent global challenges with inflation and supply chain disruptions continue to significantly impact macroeconomic conditions, crucial for the Companys growth

^ Proper functioning of all equipment is imperative; any shortcomings may disrupt the Companys ability to fulfill customer requirements

^ The growing shortage of skilled labor poses a major risk to retaining workers in the Company

^ Ensuring worker safety remains a crucial operational concern across all the plants

^ Adapting to a rapidly changing technological landscape to address dynamic customer needs is necessary to remain relevant and sustain growth

^ With business operations interconnected via secured networks, cybersecurity has become very critical for Bharat Forge. Any attacks on secured networks or data theft can lead to financial/reputational losses

^ The global nature of the Companys business means that any disruption in the movement of goods to customers due to any exigencies is a significant operational risk

The Company earns significant revenue through exports. Even though it prudently hedges the foreign currency revenues, it is exposed to sudden fluctuations in foreign exchange rates for the unhedged portion.

Read more on our risks and mitigations in page 44 and onwards of the Risk Management section.

The Company has a robust internal control system designed to authorize, record, and report transactions to safeguard assets and prevent unauthorized use or disposition. These internal controls ensure the accuracy and effectiveness of data and financial information to maintain accountability of assets. These internal controls are strengthened through rigorous internal audits, management oversight, and welldocumented policies, guidelines, and procedures.