Gallard Steel Ltd Management Discussions

Industry Structure and Developments

Gallard Steel Limited operates in the engineering and metal-casting ecosystem with a focus on S.G. (ductile) iron, grey iron, special alloy castings and machined components. Its product portfolio has significant exposure to railway traction and rolling-stock applications, together with engineering and defence-related opportunities. The operating environment is influenced by public and private capital expenditure, railway modernisation, localisation of critical components, customer qualification cycles, raw-material and the ability of suppliers to meet stringent quality and traceability requirements.

The Indian railway manufacturing ecosystem continues to create opportunities for domestic suppliers capable of design support, foundry process control, machining, inspection and validation. At the same time, qualification requirements, Product Development Life Cycle, safety-critical performance standards create high entry barriers. Management believes that integrated casting, machining and quality capabilities will support the Company in addressing a wider share of value-added products.

Business Overview

The Company manufactures castings and engineered components from its manufacturing base at Pithampur, Madhya Pradesh. Its railway portfolio includes Locomotive Boggie components vis a vis Motor Assembly Components, Motor suspension units, Gear Cases, Stator Frames and rolling-stock components.

The Company is also developing coupling systems for Freight Wagons, Draft gears for Locomotives, Freight Wagons and Passenger Coaches, Brake discs for LHB and Semi high Speed trains, bogie-related products and other safety-critical railway components.

Managements strategic focus is to move progressively from individual castings toward higher-value design and developed products, improve manufacturing productivity, widen the approved product portfolio, and deepen relationships with Indian Railways production units and other industrial customers.

Indian Defense has set forth a unprecedent opportunity wherein the focus for Make in India products have created a wider market opportunity for Designing and developing indigenous components in Artilleries Guns, Field battle tanks, Ammunitions, Guided munitions, and the company is positioned well to increase its product portfolio and Expansion into the defense Industry.

Key Financial Ratios and Significant Changes

Ratios are already provided in the Financial Statements.

Future business opportunities

The Company has obtained a Letter of Intent from M.P. Industrial Development Corporation acquired of approximately 30,700 sq. m. (3.07 hectares) of leasehold industrial land at Sector 7, Pithampur, Madhya Pradesh, for future expansion. The disclosed consideration is approximately Rs. 7.02 crore.

IPO and Deployment of Funds

During FY2025-26, the Company raised Rs. 37.50 crore through its initial public offering. The stated objects included capital expenditure for expansion, repayment of debt, general corporate purposes and issue expenses. As disclosed for the year ended 31 March 2026, there was no deviation or variation in the use of funds from the stated objects. The details of utilization of funds have been provided Note Part C other notes.

Opportunities and Growth Drivers

Railway localisation: increasing preference for domestic manufacturing of critical railway and traction components can create opportunities for qualified suppliers.

Prototype approval of 5 Loco Boggie Component after successful fitment in Filed Trail. Bulk souce approval expected in 12 Months period.

New railway products to be under Field trials like coupling systems, brake discs, bogie-related products, to diversify the portfolio in the next Financialyear .

Customer diversification: defence and other engineering applications can provide additional avenues beyond the existing railway portfolio.

Risks, Concerns and Mitigation

Internal Control Systems and Their Adequacy

The Company has established internal control systems commensurate with the size and nature of its operations. The control framework covers financial reporting, procurement, production, inventory, quality, capital expenditure, statutory compliance and safeguarding of assets. Management continues to strengthen process discipline, segregation of duties, documentation, approval controls and periodic review as the scale and complexity of operations increase.

The Audit Committee and the Board review material financial and control matters in accordance with applicable requirements.

The statutory auditors issued unmodified opinions on the standalone and consolidated audited financial results for FY2025-26.

Human Resources and Industrial Relations

The Company regards skilled manpower, engineering capability and shop-floor discipline as important enablers of growth. As the product portfolio expands into higher-value and safety-critical components, emphasis is being placed on technical training, quality awareness, productivity, process ownership and development of cross-functional capabilities across foundry, machining, inspection, maintenance and product development. Industrial relations remained focused on maintaining a safe, productive and collaborative workplace.

Outlook

The Company enters FY2026-27 with a stronger balance sheet, improved profitability, significant liquidity from the IPO and an expanded investment programme. Managements priorities are to execute capacity expansion in a disciplined manner, accelerate qualification of new railway products, improve productivity and operating efficiency, and convert development programmes into sustainable commercial business.

The outlook remains subject to customer approval cycles, tender timing, raw-material and energy costs, execution of capital projects, competitive intensity and broader economic conditions. The Company will continue to balance growth investment with financial discipline and risk management.

Segment Reporting

The company deals in only one Segment.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or outlook may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to economic conditions, changes in government policies and regulations, customer demand, input costs, project execution, product approvals, competitive conditions and other factors. The Company assumes no obligation to publicly amend, modify or revise any forward-looking statement on the basis of subsequent developments, information or events, except as required by applicable law.