DCM Ltd Management Discussions

Industry Structure and Developments

e Indian automotive industry stands as a pillar of the manufacturing sector and provides employment to a large pool of people. Being the fourth-largest automotive market globally, the sector plays a vital role in Indias aspiration to become a USD 5 Trillion economy. Increasing urbanization, a large working-age population, rising incomes, and a strong impetus on infrastructure and construction sectors have been driving the industrys growth over the years. e industry produces major cast iron components for vehicles, including essential engine parts like cylinder heads, cylinder blocks, and gear housings. It also manufactures crucial braking system elements such as brake drums and housings, as well as components for the transmission system like clutch and ywheel housings.

e Indian foundry industry is a dynamic sector, currently comprising over 6,000 units. While a signicant majority, estimated at around 90-95%, are classied as Micro, Small, and Medium Enterprises (MSMEs), the remaining 5-10% consist of Medium and Large-Scale units. is structure reects the industrys widespread presence and its crucial role in regional economies. (Source: Foundry Informatics Center)

Opportunities and Outlook

Casting and forging are vital engineering segments supplying components to diverse industries like auto, railways, and defense. e Indian sector is well-positioned for increased revenue from the automotive industry. is growth is signicantly driven by extensive manufacturing unit expansion, through both organic and inorganic means.

Despite promising opportunities, the industry faces critical challenges requiring immediate attention. A primary concern is the acute lack of resources for technological infrastructure upgrades. Furthermore, a signicant dearth of readily available skilled manpower poses a substantial hurdle to advancement. Electric vehicles (EVs), are impacting traditional casting units. e shift towards EVs favors light weighting and advanced casting techniques like giga casting, which can create larger, integrated parts, potentially reducing the need for numerous smaller castings. is transition is leading to a decrease in demand for certain casting methods used in traditional combustion engine vehicles, aecting smaller foundries that may not have the resources to adapt to the new technology. While EVs oer environmental benets, the production of their components, including batteries, raises new environmental concerns.

Financial and Operational performance

e performance of the Engineering Division of the Company for the year ended March 31, 2025 is as follows:

(Rs. in lacs)

*Due to continued situation of industrial unrest at the Engineering Division, the Company was forced to declare a lockout of its Engineering operations w.e.f. October 22, 2019, which remain continues as on date. As a result of said lockout, no production activities were carried out during the year.

Risk & Concerns

e Companys success depends on its ability to oer products as per customers requirements in a timely manner and maintaining competitiveness/quality. Since 2016, the Division has faced a hostile environment in which production of good quality products in a cost-eective way could not be achieved due to the continued situation of labour unrest. In view of said situation of industrial unrest the Board of Directors of the Company in their meeting held on October 21, 2019 had approved declaration of lockout at the Engineering Division w.e.f. October 22, 2019. I nternal Controls

e Division has maintained adequate internal control systems commensurate with the nature of its business and size and complexity of its operations. ese are regularly tested for their eectiveness by Statutory as well as Internal Auditors. e Audit Committee reviews the adequacy and eectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, if any.

Industrial relations

In February 2016 after the wage settlement, certain disgruntled workmen started their nefarious activities. e workmen indulged in repeated instances of go slow, tool down, stoppage of work/ strikes besides violence and threatening/ beating the sta/supervisors. Due to continued situation of industrial unrest at the Engineering Division, the Company was forced to declare a lockout of its Engineering Operation w.e.f. October 22, 2019. e said lockout continued as on the date of close of Financial Year 2024-25.

Manpower Development

e Companys Engineering Division was operating a training center called gurukul. However, the operations of the said training center were discontinued due to the lockout of Engineering Division w.e.f. October 22, 2019, on account of ongoing labour unrest. e said lockout continues till date.

e total number of people on the rolls of Engineering Division are 274 as on March 31, 2025.

DETAILS OF SIGNIFICANT CHANGES (i.e. CHANGE OF 25% LESS OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN FOLLOWING KEY FINANCIAL RATIOS, ALONG WITH EXPLANATIONS THEREFORE:

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

Note:

Due to continued situation of lockout of the operation of Engineering Business Undertaking w.e.f. October 22, 2019, the key nancials of the company continue to remain adversely aected.

Previous year gures have been re-grouped / re-classied wherever necessary to correspond with current year classication / disclosure.

Cautionary Note

Statements in the Management Discussion & Analysis report describing the Divisions objectives, estimates or projections may be forward looking statements within the meaning of applicable securities law and regulations. Actual results may materially dier from those expressed or implied. Important factors that can make a dierence to the Divisions operations include change in the main clients purchase procedures, changes in Government regulations, tax regimes, economic outlook in India and the USA and other incidental factors.