DCM Ltd Management Discussions

ENGINEERING DIVISION Industry Structure and Developments

The Indian automotive industry continues to be one of the key pillars of the countrys manufacturing sector and remains a significant contributor to industrial growth, employment generation and exports. India continues to be among the worlds largest automobile markets, supported by favourable demographics, rising urbanization, increasing disposable incomes, infrastructure development and continued policy support for domestic manufacturing. The sector is expected to play an important role in Indias long-term economic growth.

The foundry and engineering industry forms an integral part of the automotive value chain by manufacturing critical cast iron components used in passenger vehicles, commercial vehicles and industrial applications. These include engine components such as cylinder heads, cylinder blocks and gear housings, braking system components including brake drums and housings and transmission components such as clutch housings and flywheel housings.

The Indian foundry industry comprises more than 6,000 foundry units, with approximately 90-95% of the units falling within the Micro, Small and Medium Enterprises (MSME) category, while the balance comprises medium and large- scale enterprises. The industry continues to play an important role in supporting Indias engineering and manufacturing ecosystem while contributing to employment generation and regional industrial development. (Source: Foundry Informatics Centre)

Opportunities and Outlook

The casting and forging industry continues to offer long-term growth opportunities, supported by increasing demand from the automotive, railways, defence, infrastructure and capital goods sectors. Government initiatives aimed at strengthening domestic manufacturing, improving infrastructure and promoting self-reliance are expected to support the engineering industry over the medium to long term.

At the same time, the industry continues to face several structural challenges, including rising input costs, increasing energy prices, shortages of skilled manpower and the need for continuous investment in modern manufacturing technologies. These factors require sustained capital investment and operational efficiency to remain competitive.

The increasing adoption of electric vehicles (EVs) is also reshaping the traditional casting industry. The transition towards lightweight vehicle designs and advanced manufacturing technologies, including giga casting, is expected to reduce the requirement for several conventional cast components used in internal combustion engine vehicles. While these developments present opportunities for technologically advanced manufacturers capable of developing new products and processes, they also pose challenges for conventional foundries in adapting to evolving customer requirements.

In the Companys casting unit, however, has remained under lockout since 2019 due to industrial unrest. Consequently, the Company could not participate in the operational growth witnessed by the foundry industry during this period.

Financial and Operational performance

The performance of the Engineering Division of the Company for the year ended March 31, 2026 is as follows:

*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 continues as on date of this report. As a result of said lockout, no production activities were carried out during the year.

Risks and Concerns

The Companys long-term success depends upon its ability to manufacture quality products that meet customer specifications while maintaining cost competitiveness, operational efficiency and timely deliveries.

The Engineering Division continues to remain under lockout following prolonged industrial unrest. Since the declaration of lockout with effect from October 22, 2019, manufacturing operations have remained suspended. As a result, the Division has not been able to undertake production activities, which has continued to adversely impact its operational and financial performance.

The Company is evaluating and pursuing various options concerning its Engineering business/operations. In the interim, the Company is continuing with its endeavors to upkeep the factory and to rationalize the workmen force.

Internal Control Systems and their Adequacy

The Company has in place adequate internal control systems commensurate with the nature, size and complexity of its business. The internal control framework is designed to safeguard assets, ensure the accuracy and reliability of financial reporting, maintain compliance with applicable laws and regulations and promote operational efficiency.

The effectiveness of these controls is periodically reviewed by the Internal Auditors and Statutory Auditors. The Audit Committee of the Board regularly reviews the adequacy and effectiveness of the internal control systems and monitors the implementation of audit recommendations, wherever considered necessary.

Industrial Relations

The Engineering Division continues to remain under lockout with effect from October 22, 2019, following prolonged industrial unrest.

Accordingly, manufacturing operations remained suspended throughout the financial year under review, and the lockout continued as at March 31, 2026.

Human Resource Development

As on March 31, 2026, the total number of employees on the rolls of the Engineering Division was 211.

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 THEREFOR:

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.ef October 22, 2019, the key financials of the company continue to remain adversely affected. Previous year figures have been re-grouped/re-classified wherever necessary to correspond with current year classification/disclosure.

Cautionary Statement

Statements contained in this Management Discussion and Analysis Report describing the Companys objectives, expectations, estimates, projections or outlook may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations.

Actual results may differ materially from those expressed or implied in such statements due to various risks and uncertainties. Factors that could influence the Companys operations include, among others, changes in customer demand and procurement policies, market conditions, government policies and regulations, taxation laws, economic developments in India and overseas, industrial relations, availability and cost of raw materials and energy, and other factors beyond the Companys control.