Duncan Engineering Ltd Management Discussions

1. Economic Review Global Economic Trends

The global economy in FY2025 demonstrated resilience amid a complex mix of challenges, with growth moderating to 3.1% as trade barriers, policy shifts, and geopolitical tensions weighed on sentiment. Advanced economies like the US and Eurozone posted modest gains, while emerging markets - led by India, Vietnam, and the Philippines - remained the primary engines of expansion.

However, persistent inflation, delayed monetary easing, and ongoing disruptions in global supply chains, particularly through the Red Sea, continued to create volatility. Chinas slowdown, driven by real estate concerns and weaker domestic demand, added another layer of uncertainty to the global outlook.

Looking ahead, the global economic landscape remains fragile but not without opportunity. The acceleration of digitalization and the transition to green technologies are expected to drive new investment and innovation. However, risks from geopolitical conflicts, volatile commodity prices, and climate-related disruptions will require businesses to remain agile and adaptive. While the path forward may be uneven, the global economys demonstrated ability to adjust to new realities provides a foundation for cautious optimism in the years to come.

Indian Economic Overview

Indias economy in FY2025 demonstrated remarkable resilience, achieving a growth rate of 6.5% despite global challenges. This performance solidifies Indias position as the fastest-growing major economy, outpacing both global and emerging market averages. The growth trajectory was supported by robust domestic demand and strategic policy initiatives, including infrastructure spending and tax cuts designed to boost domestic demand and attract foreign investment. However, challenges such as high food inflation and stagnant job growth persisted, underscoring the need for sustained policy support.

Looking ahead, Indias economic outlook remains positive, though it will need to navigate geopolitical uncertainties and global trade tensions to maintain its growth momentum. The governments focus on manufacturing through initiatives like the Production-Linked Incentive (PLI) scheme continues to drive growth, while investments in renewable energy and sustainable development are expected to play a pivotal role in future expansion.

As India aims to integrate into global supply chains and leverage technological advancements, its growth story is increasingly linked to these strategic initiatives. India is projected to maintain a strong growth rate supported by favourable fiscal and monetary policies, rising rural incomes, and moderating inflation. Despite risks from foreign portfolio outflows and currency volatility, Indias economic resilience and strategic planning position it well to capitalize on emerging opportunities in the global economy.

2. Industry Overview & Developments Global Industry Trends

The global pneumatic components and valve automation market continues its strong growth trajectory, with the sector expected to reach USD 15 billion in 2025, expanding at a CAGR of 6.8%. Growth is propelled by rapid industrial automation, increased adoption of Industry 4.0, and demand for reliable, energy-efficient solutions across manufacturing, oil & gas, power, steel, pharma, and other process industries. Key trends include the AI-based predictive maintenance, cloud-based control systems, and the shift toward eco-friendly, sustainable pneumatic solutions.

Valve automation systems, integrating components like solenoid valves and limit switches, are increasingly being adopted to optimize process control and reduce downtime. This segment alone is projected to grow at 6.7% CAGR, driven by investments in LNG, green hydrogen, and smart manufacturing along with the rising demand for advanced, customizable automation products.

Indian Market Dynamics

Indias pneumatic and valve automation sector is experiencing robust growth, underpinned by rapid industrialization, government-led infrastructure investments, and a strong push for automation in manufacturing. The Indian pneumatic equipment market is forecast to grow at a 6.9% CAGR from 2025 to 2033, reaching ~USD 2 billion. This growth is driven by escalating demand from automotive, electronics, food processing, steel, and construction industries, all seeking to enhance productivity, precision, and energy efficiency through automation.

The industrial valves market in India is also expanding, projected to grow at a 7.9% CAGR between 2025 and 2030, supported by large-scale investments in water infrastructure, oil and gas pipelines, power generation, and public sector projects with governments "Make in India" initiative.

The push toward smart factories and digital integration is accelerating the uptake of advanced pneumatic cylinders, directional control valves, 2-way and 3-way valves, and valve automation systems. Continued focus on sustainability, local manufacturing, and technological innovation is expected to keep the sector on a high-growth path, even as the industry addresses challenges around standardization, skilled workforce, and supply chain management.

3. Opportunities

? Industrial Automation Surge - Indias manufacturing sector is accelerating automation to boost productivity and safety, driving strong demand for pneumatic cylinders, valves, and valve automation systems. The shift to Industry 4.0 and smart factories is opening new markets for intelligent, reliable automation solutions.

? Infrastructure and Project Pipeline - Indias ongoing infrastructure boom—including smart cities, transportation, power, cement, and water management—continues to generate strong demand for pneumatic and valve automation products. These projects require robust and customizable solutions for HVAC (Heating, Ventilation, and Air Conditioning), water treatment, and process automation, ensuring sustained growth.

? Renewable Energy and Clean Technology - The expansion of solar, wind, LNG, and green hydrogen projects is creating fresh demand for precise and durable flow control solutions. Pneumatic actuators and valves are essential in managing critical processes, positioning the company to benefit from Indias energy transition.

? Healthcare and Pharmaceutical Expansion - Growth in healthcare, pharmaceuticals, and medical device manufacturing is increasing the need for contamination-free, precise automation. High-quality pneumatic products are increasingly required for medical equipment, cleanroom automation, and process control, supporting sectoral growth and regulatory compliance.

? Aftermarket Services - With industries focusing on uptime and operational efficiency, there is a rising need for reliable spares, and maintenance services. A robust service network and rapid response capabilities are essential to support clients maintenance needs and ensure continuous operations.

? Defence & Nuclear Indigenisation - Indias push for self-reliance in defence & nuclear sectors offers opportunities to supply high-spec pneumatic, hydraulic and valve automation solutions. Meeting stringent quality and safety standards in these critical areas will enable deeper participation in strategic national projects.

? Export Market Expansion - Indias growing reputation as a manufacturing hub, combined with cost competitiveness, is boosting export opportunities for pneumatic and valve automation products. Expanding into markets in the Middle East, Southeast Asia, etc. offers opportunities for global revenue diversification and brand recognition.

? Safety and Environmental Compliance - Increasing awareness about workplace safety and environmental regulations drives the adoption of pneumatic systems and valve automation products that offer reliability, precision, and compliance with safety and environmental standards.

Each of these opportunities is underpinned by Duncans strengths in engineering excellence, and customization, positioning the company to capture value across traditional and emerging industry segments.

4. Risks

? Intensifying Market Competition - The pneumatics and valve automation sector face fierce competition from both established multinationals and nimble domestic players. This competitive intensity can drive pricing pressures, impact margins, and demand continuous differentiation in technology and service.

? Price Sensitivity and Margin Pressure - Indian industrial customers remain highly price-conscious, especially in large-scale projects. Balancing competitive pricing with the need to maintain quality and innovation can challenge profitability, particularly as input costs fluctuate.

? Regulatory and Compliance Complexity - Navigating evolving regulatory standards, certifications, and sector-specific approvals, especially in public sector, defence, and nuclear projects - can lead to delays, increased compliance costs, and potential barriers to market entry for new products.

? Rapid Technological Change - To remain competitive and relevant, companies must prioritize continuous innovation and proactive adaptation to emerging technologies. Embracing advancements enables firms to deliver smarter, more efficient solutions, meet evolving industry standards, and address the dynamic needs of modern industrial applications.

? Supply Chain Vulnerabilities - Global and domestic supply chains are susceptible to disruptions from geopolitical tensions, natural calamities, logistics bottlenecks, and raw material shortages. Such disruptions can affect timely production, increase costs, and impact customer delivery commitments.

? Evolving Customer Expectations - Customer preferences are rapidly shifting towards integrated, digitally enabled, and sustainable automation solutions. As clients increasingly seek customized products, advanced diagnostics, and energy-efficient systems, companies must remain agile and responsive to these evolving needs to retain market relevance and foster long-term partnerships.

? Economic and Policy Uncertainty - Macroeconomic volatility including inflation, currency fluctuations, and changes in government policies can impact capital expenditure cycles in key sectors, affecting demand for automation and pneumatic solutions.

? Talent and Capability Gaps - As the industry evolves, attracting and retaining skilled talent in areas like digital engineering, R&D, and project management becomes crucial. A shortage of specialized skills may limit the companys ability to innovate and execute complex projects.

Effectively addressing these risks will be essential for sustaining growth, protecting margins, and maintaining Duncan Engineering Limiteds leadership in a rapidly changing industrial landscape.

5. Outlook

? Product Innovation and New Launches - New Product Development (NPD) remains central to Duncan Engineerings strategy, focused on expanding a range of cost-optimized, high-quality pneumatic solutions for demanding industrial applications. The portfolio is continually strengthened with established offerings such as Pulse Jet Valves for dust collection, Spool Valves for precise flow control, and advanced Valve Automation Systems featuring rotary actuators and scotch yoke designs. The company also offers Ball and Butterfly Valves, enabling seamless integration and the ability to deliver complete automated valve packages - meeting evolving customer needs and the latest industry standards.

? Certifications and Quality Excellence - The company remains committed to the highest standards of quality and compliance, upholding ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certifications, along with global and sector-specific approvals such as IP66/67, ATEX, and SIL. As we go to print, we are in the final stages of securing EIL approval for On-Off valves with automation, a significant milestone that will enable our entry into the Oil and Gas sector and further reinforce our reputation for reliability and safety.

? Customer Centricity with BHEL Focus - Duncan Engineering is placing special emphasis on understanding and addressing BHELs specific requirements, developing tailored solutions such as SADC BTPC cylinders, knife gate valves, solenoid valves, and scotch yoke actuators. This focused approach demonstrates a commitment to client-centricity, ensuring that product development and support are closely aligned with the operational needs of marquee public sector clients.

? Project Tracking and Market Expansion - Active monitoring of project pipelines in core sectors such as oil & gas, power, cement, steel, metals, and infrastructure enables precise alignment of solutions to industry needs. This targeted approach helps capture new business and drive consistent growth across high-potential market segments.

? Aftermarket Services and Dealer Network - Expansion of the dealer network and enhancement of aftermarket services ensure rapid access to spares, repairs, and maintenance across major industrial hubs. This robust support infrastructure minimizes downtime for customers, delivers tailored solutions, and reinforces long-term reliability and customer loyalty.

? Foray into Defence and Nuclear - Duncan Engineering is focused on expanding its footprint in high-potential sectors such as defence and nuclear, with an emphasis on fluid power systems for mission-critical national projects and supporting Indias indigenisation goals. Building on our current expertise and capabilities, we are committed to developing tailored solutions and entering these sectors with a dedicated, strategic approach to meet the countrys evolving needs.

? People and Leadership Ecosystem - A high caliber team of industry experts and visionary leaders sets Duncan Engineering apart. Guided by an experienced management team and a diverse, independent board, the company benefits from deep technical knowledge and strong strategic oversight. This culture drives innovation, strong governance, and operational excellence - setting the standard for quality and reliability in the pneumatics and valve automation industry.

? Navigating Challenges - While the outlook for the pneumatics and valve automation industry remains optimistic, Duncan Engineering recognizes the need for agility and innovation to navigate fierce competition, price sensitivity, regulatory complexity, and rapid technological change. The companys proactive approach to risk management and continuous improvement will be key to sustaining its leadership position.

With a clear vision, strategic investments, and a relentless focus on innovation and customer value, Duncan Engineering Limited is well-positioned to capture emerging opportunities and deliver consistent growth in FY2026 and beyond.

6. Internal Control Systems and their adequacy

The Company has adequate internal control systems, which includes internal financial controls, the efficacy of which is continuously monitored and updated when required internally. The internal Auditors monitor the compliance of the same.

The Companys internal control system ensures that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The Audit Committee reviews reports presented by the internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

7. Discussion on financial performance with respect to operational performance

A. Analysis of the profit and loss statement

i. Revenues: Revenues from operations registered a 30.12% increased from Rs. 6510.16 Lakh in FY 23-24 to Rs. 8471.35 Lakh in FY 24-25.

ii. Margins: EBITDA for the year was Rs. 985.31 Lakh as against Rs. 1101.74 Lakh in FY 23-24. EBITDA margin of the Company decreased to 11.29 % from 16.37 % in FY 23-24. The net profit margin of the Company was Rs. 521.07 Lakh in FY 24-25 compared to Rs. 687.38 Lakh in FY 23-24. The margins for the year were decreased by 24.20%.

B. Analysis of the Balance Sheet

i. Sources of funds: The capital employed by the Company increased to Rs. 5787.79 Lakh as on 31^st March 2025 from Rs. 5345.02 Lakh as on 31^st March 2024 owing to internal accruals.

The net worth of the Company increased 7.43 % to Rs. 5684.82 Lakh as on 31^st March 2025 from Rs. 5291.52 Lakh as on 31^st March 2024.

ii. Applications of funds: Fixed assets (gross) of the Company increased 12.14 % from Rs.3349.78 Lakh as on 31^st March 2024 to Rs.3756.59 Lakh as on 31^st March 2025.

iii. Working capital management: Total Current Assets of the Company increased by 8.79% from Rs. 5176.66 Lakh as on 31^st March 2024 to Rs. 5645.52 Lakh as on 31^st March 2025. Current Assets included current investment and cash and bank balance of Rs. 3573.88 Lakh in FY 24-25 compared to Rs. 3150.77 Lakh in FY 23-24 due to the deployment of funds into short term Investments.

Inventories, including raw materials, work-in-progress and finished goods, among others, increased to Rs. 1409.36 Lakh on 31^st March 2025 from Rs. 1128.10 Lakh as on 31^st March 2024 due to higher production. Trade receivables as at 31^st March 2025 were Rs. 562.52 Lakh compared to Rs. 775.11 Lakh as at 31^st March 2024.

8. Human Resources and Industrial Relations

The Company employed 187 officers and workmen as on 31^st March 2025. Increase in the value of human capital through the development of individual and collective competencies helped the Company stay in step with market developments and requirements. The Company has a policy to regularly run programs and projects on skill development and upgradation of employee competence. Programmes of knowledge sharing were conducted; employees are encouraged to attend external programs as required to enhance their perspective of emerging standards. Several innovative ideas received from employees were implemented, resulting in enhance quality, cost optimisation and productivity.

The Company generally enjoys cordial relationship with its staff and workers. The Company management has entered into wage revision agreement with the recognised workers union on March 28, 2024, for a period of 3 years effective from April 1,2024, to March 31,2027.

9. Key Financial Ratios

A. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor is given below:

Sr. No.	Particulars	FY 2024-2025	FY 2023-2024	% Change	Explanation
1.	Debtors Turnover	12.67	9.50	33%	Due to increase in turnover as compared to previous year.
2.	Inventory Turnover	3.87	3.04	27%	Due to increase in turnover as compared to previous year.
3.	Interest Coverage Ratio	4.14%	12.61%	-67%	Due to increase borrowings as compared to previous year 2023-24.
4.	Current Ratio	3.59%	3.78%	-5.00%
Sr. No.	Particulars	FY 2024-2025	FY 2023-2024	% Change	Explanation
5.	Debt Equity Ratio	0.02	0.01	78%	Due to increase borrowings as compared to previous year 2023-24.
6.	Operating Profit Margin (%)	11.29%	16.37%	45%	Due to Decrease in Profit compared to previous year 2023-24.
7.	Net Profit Margin (%)	6.15%	10.21%	42%	Due to Decrease in Profit compared to previous year 2023-24.

B. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Particulars	FY 2024-2025	FY 2023-2024	% Change	Explanation
Return on Net Worth	9.17%	12.99%	29%	Due to Decrease in Profit compared to previous year 2023-24.

10. Disclosure of Accounting Treatment:

Where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the managements explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction.

The Accounts for the year have been prepared as per Indian Accounting Standards (Ind AS). The current year and previous year figures have been re-stated accordingly. No treatment different from that prescribed in Ind AS has been followed by the Company.

11. Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectation, and estimations which may be forward looking statements within the meaning of applicable Securities Laws and Regulations. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in the statements or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements based on any subsequent development, information, or events.

	On behalf of the Board of Directors of
	Duncan Engineering Limited
	Akshat Goenka	Arvind Goenka
Place: Noida	Managing Director	Chairman & Non - Executive Director
Date: May 16, 2025	DIN:07131982	DIN:00135653