Cosmic CRF Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT:

India has the 4th largest railway system in the world, behind only US, Russia and China. India aims to become largest green railway network in the world. In its mission of 100% Electrification and becoming the largest green railway network in the world-58,812 Route Kilometers (RKMs) till March 31, 2023, which is about 90% of the total broad-gauge network (65,300 RKMs) of Indian Railways has been achieved. Inaddition tothe focus on electrification,the Indian Railways has also been working onanumber of other initiatives to modernize its infrastructure and improve efficiency. These include the adoption of new technologies such as high-speed rail and the implementation of measures to improve safety and security on trains. Under the Union Budget 2025-26, the government allocated Rs. 3.02 lakh crore (USS 34.7 billion) compared to Rs. 2.52 lakh crore (USS 30.3 billion) in 2024-25 to the Ministry of Railways. 400 new generation Vande Bharat Trains to be manufactured during the next three years. 100 PM Gati Shakti Cargo terminals for multimodal logistics to be developed during the next three years. In the next five years, the Indian railway market is expected to be the third largest, accounting for 10% of the global market. The government has announced two key initiatives for seeking private investments-running passenger trains by private operators across the railways network and redevelopment of railway stations across the country. According to Indian Railways, these projects have the potential of bringing an investment of over USS 7.5 billion in the next five years. Introducing 3,000 new trains over the next four to five years to increase the current passenger capacity of the railways from 800 crore to 1,000 crore, with a focus on meeting the needs of the expanding population. Overall, the Indian governments focus on the modernization and electrification of the countrys railway infrastructure is expected to have significant benefits in terms of reducing emissions, improving efficiency, and boosting economic growth. The infrastructure sector plays a pivotal role in driving Indias economic growth and overall development. As the country continues on its path towards becoming a global economic powerhouse, the need for robust infrastructure becomes increasingly apparent. Private sector partnerships have emerged as crucial enablers in this endeavour, bringing in much-needed investment, innovation, and efficiency. Our Company is primarily engaged in the business of manufacturing Cold Rolled Form, Engineering Solutions, Sheet, Piles and Railway Components which is required by leading Railway Wagon manufacturing companies including Indian Railways.

2. OPPORTUNITIES:

Government Initiatives to promote the infra and railway industries gives a sectoral tailwind to the industry. Cosmic CRF Limited(CCL)in the previous Financial Year 2023-2024, the Company acquired M/s. N.S. Engineering Projects Private Limited (NSEPPL). CCL currently owns around 74% stake in NSEPPL. Further, CCL also acquired around 92% stake in Cosmic Springs & Engineers Limited (CSEL). During the year, manufacturing unit of the Company installed capacity increased to 45,000 MTPA. NSEPPL manufacturing unit installed capacity is around 65,000 MTPA (subject to completion of implementation of Expansion). CSEL manufacturing unit installed capacity is around 10,800 MTPA. Out of 65,000 MT installed production capacity of NSEPPL, around 85% of capacity can be utilised. NSEPPL production portfolio include CRF section, Sheet Piles, High Mast, Octagonal Pole, Crash Barrier and other engineering products. This will help our Company to cater to the demand of various industries other than railways.

CRF sections can be used in following industries:

• Railway Coaches: Floor Panel (Trough Floor) in stainless steel, Sectional members (Sole Bar, Cant. Rail, Waist Rail, Longitudinal Beam, Light Rail, Roof Panel, Side Sill, Key Stone Plate etc.)

• Building Industry: Channels, C Purlins, Z Purlins, Sigma Purlins, Deck Sheets, Roofing Sheets

• Automobile Sector: Floor & Side Panels for LCVs & HCVs, various sectional members for LCVs & HCVs Doors

• Pollution Control Sector: Electro-static precipitators a) Collecting Electrodes b) Discharge electrodes, Structures for ESPs

• Road Safety Systems: Guardrails (W-Beam), Posts Spacers

• Sheet Piles: Cofferdams

The product portfolio of CSEL include manufacture of helical springs, casnub springs and forging components. These acquisitions will help the Company to achieve maximum operational efficiency, strengthen and expand product portfolio. During the year, CCL received RDSO approval for Rehabilitation and Manufacturing cum Supply of end wall, side wall arrangement, door and other components of BOXN & BOXNR Wagons and Conversion from BOXN to BOXNRM Wagons. Protypes for Vande Bharat and all other new wagons like BOSM and BCFC are under development. CRF Section for bogie covers fly cement wagon Bogie open high sided with airbrakes and axle load wagon designed for efficient operation on dedicated freight corridors. The Company procured land for setting up manufacturing unit of forged components to add value to railway wagons integration and supply to the same to railway wagon builders. The Company along with its group companies shall continue to become a leading manufacturer of cold rolled form items in India and the global markets within the coming times.

3. THREATS:

Present Government initiatives promote the infra and railway industries. In case there is stable political environmentin the country post elections results are declaredthen in coming years our Companydo not foresee any threat in doing business.

4. SEGMENT-WISE PERFORMANCE:

The substantial part of the revenue of the Company is from Cold Rolled Form(CRF) products and Sheet piles both of which are manufactured from Iron and Steel. Therefore, segment wise reporting is not applicable. Details of financial performance have been provided in the Directors Report.

5. OUTLOOK:

The Company is in continuous look out for organic and inorganic growth exploring sectors to help the company expand its wings for supplies in railway/defence/infra industries. There is healthy growth in the order book, with the present order book standing at around %550 crores. The diversified order book into Railway and Infra will ensure that the company cater to both the growing sectors - railways & infra. NSEPPL acquisition has helped the Company to increase its top line and gross margins due to in-house strength of galvanising. The product portfolio of NSEPPL include CRF section, Sheet Piles, High Mast, Octagonal Pole, Steel Tubular Poles, Crash Barrier and other engineering products including galvanisation. The Company anticipates capturing 15-16% of the market share for cold-rolled form products, projected at 2.25 million MT over the next three years. With acquisition of NSEPPL, the Company will be able to grow its capacity and establish itself as a leading manufacturer of cold-rolled form products in India and globally. The acquisition of CSEL will enable the Company to significantly grow its capacity and enter into the business of manufacturing springs & forged products. CASNUB (Cast Steel Non-Unit Bogie) bogies utilize nested helical springs in their suspension system to provide vertical load transfer and damping. These springs are arranged in two groups, acting between the floating bolster and the side frames, to absorb impacts and reduce oscillation. The product portfolio of CSEL include manufacture of helical springs, casnub springs and forging components. These acquisitions will help the Company to achieve maximum operational efficiency, strengthen and expand product portfolio.

Cosmic CRF Limited along with its Group Companies has its own Forging, Casting, Die Casting, Cutting & Rolling Unit which can manufacture around 75% of Coach body building (other than interiors) deliverables. The Company is Leading Indian Manufacturer of BOSM & Box NHL CRF with Cutting-Edge Technology and the capacity is interchangeable (fungible)to manufacture Sheet Piles or Wagons. Beyond steel, the Company has emerged as an integrated Engineering Solutions Provider. The Company has also secured indirect orders from Irrigation Department and Infra Giants like L&T.

6. RISK MANAGEMENT:

Risk Management is an integral part of our Companys business strategy. A dedicated team is a part of the management processes governed by the senior management team. This team reviews compliance with risk policies, monitors risk tolerance limits, reviews and analyses risk exposure related to specific issues and provides oversight of risk across the organization. The team nurtures a healthy and independent risk management function to avoid any kind of misappropriations in the Company.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Companys internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations. The internal control system is supported by an internal audit process for reviewing the adequacy and efficiency of the Companys internal controls, including its systems and processes and compliance with regulations and procedures. Internal Audit Reports are discussed with the Management and are reviewed by the Audit Committee of the Board which also reviews the adequacy and effectiveness of the internal controls in the Company. The Companys internal control system is commensurate with the size, nature and operations of the Company.

8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: Share Capital:

During the Financial Year 2024-2025, the Company experienced significant developments in its share capital structure. During the Financial Year 2024-2025, the Company raised to %15,972.84 Lakhs by issuing 9,89,643 Equity Shares of at a face value of %10/- each, amounting to 98.96 Lakhs as Share Capital and Share Premium of 1604/- per share aggregating to 15,873.87 Lakhs to 10 allottees under Non-Promoters Category on preferential basis. Reserves and Surplus: The Reserves and Surplus of Company is 37,438.91 Lakhs for the year ended on March 31, 2025, including Revaluation Reserve of %4,074.43 Lakhs as compared to Reserves and Surplus of 19,694.79 Lakhs, including Revaluation Reserve of %4,273.74 during the Financial Year 2023-24. Total Income: The Company has earned total Income of $30,180.36 Lakhs for year ended on March 31, 2025, as compared to

% 25,363.92 Lakhs during the Financial Year 2023-24.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED: Talent Management is a key people planning tool that provides an integrated means of identifying, selecting, developing and retaining top talent within our organization. Attrition has been managed well and has been below industry benchmarks. The Company employed 37 Employees in the Financial Year 2024-2025. The Company has kept a sharp focus on Employee Engagement. We follow 360-degree feedback to ensure the satisfaction of our people. We have a strong system of grievance handling too. No concern of our people goes without addressing. We strive for excellence in Human Resource management.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS

THEREOF:

Tl. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS

FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Return on Net Worth is (1.26%) after comparing with previous Financial Year.

The Company have raised 15,972.84 Lakhs by issuing 9,89,643 Equity Shares to 10 allottees under Non- Promoters Category on preferential basis. The Allotment of Equity Shares completed on 10th March, 2025. The money raised through preferential issue for the purpose of acquisition of companies for inorganic growth of the Company. Moreover, the issue proceeds shall be used for new expansion/capex purpose along with making investments in subsidiary(ies) of the Company by way of debt or equity or any other instrument or combination thereof. Further, the Company issued 3,15,000 Convertible Warrants each convertible into or exchangeable for 1(One) fully paid-up equity share of the Company of face value of Rs. 10 at a price of Rs.1,614/- each aggregating to 5,084.10 Lakhs for cash upon receipt of 25% of the warrant subscription amount i.e. 1,271.02 Lakhs to the 5 persons belonging to the promoters and promoters group on preferential basis, in accordance with the provisions of Companies Act, 2013, SEB] ICDR Regulations. The Allotment of Convertible Warrants was completed on 10th March, 2025. Since the money received in the last month of the Financial Year and Trading Approval for 9,89,643 Equity Shares was received on June 18, 2025, the same could not utilised for the objects of issue mentioned in the offer letter of the preferential issue. Thus, it has no impact on profitability of the Company in the Financial Year ended 3ist March, 2025. Further during the Financial Year ended 31st March, 2024, the Company revalued its Fixed Assets including Land, Building, Plant & Equipment in order to bring it at Fair Value. As a result of revaluation of Fixed Assets, Revaluation Reserve of %4,273.74 Lakhs net of reduction of \200.21 Lakhs, being Depreciation expense on revalued assets has been created. There was increase in Net Worth due to inclusion of Revaluation Reserve amounting to $4,273.74 Lakhs. Similarly, during the Financial Year ended 31st March, 2025, Revaluation Reserve of $4,074.43 Lakhs net of reduction of $199.31 Lakhs, being Depreciation expense on revalued assets has been included in New Worth. This has no impact on profitability of the Company. Therefore, negative Return on Net Worth ratio (1.26%) after comparing with previous Financial Year has been seen. Further, the Company has shown improvement in Return on Net Worth ratio (33.28%) compared to its previous Financial Year 2023-24. Due to present efforts of the management for acquisition of companies for inorganic growth, new expansion/ capex for enhancing capacity and infrastructure in its factories and investments in subsidiary(ies) of the Company, the Company is positive about improvement in profitability in upcoming Financial Year.

12. CAUTIONARY STATEMENT:

This report contains forward- looking statements based on the perceptions of the Company and the data and information available with the company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements and they reflect Companys current views of the future events and are subject to risks and uncertainties. Many factors like change in general economic conditions, amongst others, could cause actual results to be materially different.