Him Teknoforge Ltd Management Discussions

Him Teknoforge Limited is a leading name in the manufacture of automotive and agri-components for domestic as well as international markets. With consistent commitment to superior quality and on the strength of robust performance of its products, Him Teknoforge Limited has earned national and international acclaim and appreciation.

Our products include transmission gears, bevel gears, pinions and spider kits, king pin kits, axles, shafts, propeller shaft components, non-gear components, fork-lift parts, off-highway equipment parts, machined castings, sub-assemblies and assemblies for commercial vehicle, off-highway and material handling segments, and many other products for the engineering industry, Defence and Railways.

Global Outlook

Global economic growth remains resilient, although the pace of expansion continues to be moderate and uneven across economies. According to the International Monetary Funds July 2026 World Economic Outlook Update, global growth is projected at 3.0% in 2026 and 3.4% in 2027. While AI-led technology investment is supporting activity in economies integrated into global technology value chains, geopolitical conflicts and their impact on energy-importing and vulnerable economies continue to weigh on the outlook.

Global GDP Growth and Headline Inflation

[Chart: Bar chart showing GDP Growth and Headline Inflation for 2025 (3.50%, 4.10%), 2026 (3.00%, 4.70%), 2027 (3.40%, 3.90%)]

Source: IMF WEO

Looking ahead, the global macroeconomic landscape remains cautiously stable for FY 2026-27. However, inflationary pressures have resurfaced in some regions due to geopolitical tensions and energy price volatility, prompting a divergence in central bank policy — with some banks holding rates steady after earlier cuts, and others resuming tightening to contain fresh inflation risks. This has kept global credit conditions tight and borrowing costs elevated in the near term. Despite these pressures, several sectors—including automotive manufacturing and agri-mechanisation—are positioned for steady expansion.

For OEM automotive suppliers, the emphasis continues to shift toward regionalised supply chains, EV transition, and next-gen materials. The global automotive industry is recovering from supply chain disruptions, and as new vehicle platforms evolve, demand is rising for lightweight, precision-engineered, and emission-compliant components. Suppliers with strong capabilities in forged and machined parts, especially for engine, transmission, and axle assemblies, are expected to benefit from this shift.

The agriculture equipment market globally is experiencing greater mechanisation, with increased tractor penetration, digitised monitoring, and fuel-efficient components gaining traction. As farm sizes remain small in India and many developing countries, the demand for compact, reliable, and durable tractor components—such as gear assemblies, rear axles, and hydraulics—remains strong.

At the same time, the commercial vehicle (CV) segment is showing continued growth after a strong FY 2025–26. With renewed government spending on infrastructure, mining, and logistics efficiency, overall CV wholesale volumes are projected to grow 4–6% in FY 2026–27, with the LCV and bus sub-segments leading (6–9% growth) while M&HCV trucks normalise to a more modest 1–3% following last years high base. This still opens meaningful growth avenues for drivetrain components, gear systems, brake assemblies, and high-strength forged components — particularly where suppliers are exposed to the LCV and bus segments.

Indian Economy and Industry Trends

India maintained a strong growth trajectory in FY 2025–26, demonstrating resilience amid an uncertain global environment. According to the Ministry of Statistics and Programme Implementations Provisional Estimates, real GDP grew by 7.7% in FY 2025-26, compared to 7.1% in the previous year. Real Gross Value Added (GVA) expanded by 7.9%, while nominal GDP grew by 8.9%. The economy also ended the year on a firm footing, with real GDP expanding by 7.8% in the fourth quarter.

Indias Annual GDP Growth

[Chart: Bar chart showing GDP Growth for FY23 (7.60%), FY24 (6.20%), FY25 (7.10%), FY26 (P) (7.70%)]

Source: Trading Economics

Growth remained broad-based, supported by domestic demand and healthy activity across key sectors of the economy. The strength of the domestic economy, together with continued investment and improving private investment intentions, provides a supportive backdrop for manufacturing and other investment-linked sectors.

Looking ahead, India is expected to sustain its position among the worlds fastest-growing major economies. The Economic Survey 2025–26 projects real GDP growth of 6.8–7.2% in FY 2026–27, with the economys medium-term growth potential estimated at around 7%. Resilient consumption, healthier household, corporate and banking-sector balance sheets, continued public investment and improving private investment intentions are expected to support growth. At the same time, global geopolitical and trade uncertainties remain key external risks. Against this backdrop, Indias sustained economic momentum and continued focus on manufacturing and investment provide a favourable operating environment for the automotive, engineering and capital-intensive manufacturing sectors.

OEM Automotive Components

The Indian automotive industry is expected to witness multi-segment growth across two-wheelers, passenger vehicles, and commercial vehicles. Component suppliers catering to OEMs are seeing higher off take as new vehicle models prioritise fuel efficiency, regulatory compliance (BS-VI Phase 2, with BS-VII norms now under discussion for 2026–27/2027), and improved durability. Localisation of components has received a push from government schemes, and manufacturers with precision engineering capabilities are increasingly being integrated into domestic and global supply chains.

Indias auto component industry recorded its highest-ever turnover of Rs7.6 lakh crore (US$85.9 billion) in FY 2025-26, growing 12.7%, and is projected to grow 8–10% in FY 2026–27 as per ACMA, with a longer-term CAGR of around 10% from FY 2026–27 to FY 2029-30 as per Goldman Sachs, driven by semiconductors, EVs, defence, aerospace, and precision manufacturing. Opportunities are particularly strong in gear systems, transmission housings, and high-tolerance machined components—especially for Tier 1 OEM suppliers.

Indias Auto Component Industry- Turnover Growth

[Chart: Bar chart showing Industry Turnover (Rs lakh crore) for FY23 (5.6, 33%), FY24 (6.14, 10%), FY25 (6.73, 10%), FY26 (7.59, 13%)]

Source: ACMA (FY24, FY25, FY26)

Agricultural Automotive Products

The outlook for tractor and agri-machinery components is more mixed than in recent years. After posting good growth in FY 2025–26, growth is expected to remain moderate at 1–4% in FY 2026–27. Two factors are driving this moderation:

- A high base effect following last years exceptional growth.

- IMDs Second Stage Long Range Forecast projects a below-normal 2026 Southwest Monsoon (90% ?4% of the long-period average), linked to the El Ni?o conditions ? a reversal from the favourable monsoons of the past two years.

Indias Domestic Tractor Sales

[Chart: Bar chart showing Domestic Tractor Sales (lakh units) for FY23 (9.45, 12%), FY24 (8.76, -7%), FY25 (9.4, 7%), FY26 (11.6, 24%)]

Source: Tractor & Mechanisation Association (TMA)

Government support to the agri sector remains steady:

PM-KISAN funding is unchanged at Rs63,500 crore, fertiliser subsidy has risen to Rs1.71 lakh crore, and total agriculture and allied allocation stands at Rs1.63 lakh crore in the FY 2026–27 Union Budget. However, TREM-V emission norms for 30–50 HP tractors — originally due April 2026 — have been deferred to April 2028, removing the pre-buying demand that boosted FY 2025-26 volumes.

Despite the near-term slowdown, structural drivers remain intact: Healthy agricultural output, with kharif and rabi foodgrain production increasing by around 3% year-on-year, continued MSP support and the steady progress of rural mechanisation provide a supportive underlying environment. Accordingly, demand for components such as gearboxes, differential components, engine parts and precision-forged assemblies is expected to remain positive, albeit in line with the more moderate growth in equipment volumes.

Commercial Vehicle Segment

The CV sector overall is expected to grow 4–6% in FY 2026–27 (ICRA), moderating after a strong FY 2025-26 rebound. Within this, growth is uneven across sub-segments:

- M&HCV trucks: just 1?3% (ICRA) to ~3% (Kotak), the slowest-growing sub-segment, as fleet operators absorb rising diesel and tyre costs against a high FY 2025-26 base

- LCV trucks: 6?8%, outperforming M&HCVs

- Buses: 7?9%, the strongest-performing sub-segment.

Fleet modernisation efforts and emission regulation enforcement (BS-VI Phase 2) are prompting OEMs to enhance performance and emission systems, leading to greater demand for precision-forged gears, transmission parts, crankshafts, and axles. With India becoming a growing hub for CV exports to Africa, South-East Asia, and the Middle East, component suppliers also stand to benefit from expanded export volumes.

The convergence of strong domestic demand, policy-driven capital investment, and sectoral growth in automotive, agri-equipment, and commercial vehicles offers a significant opportunity for companies in the OEM parts and forging ecosystem. With sound fiscal policy, easing inflation, and positive rural-agri dynamics, Indias growth trajectory in FY 2026–27 is not just broad-based, but also strategically aligned with the needs of the manufacturing and mobility sectors.

Companies with engineering depth, manufacturing scale, and the agility to adapt to evolving platform requirements are well positioned to leverage this momentum across multiple product verticals—from tractor components to drivetrain assemblies for commercial vehicles.

Opportunities and Threats

Opportunities

- Commercial Vehicle Replacement Demand

Indias CV sector continues to benefit from steady replacement demand, driven by an ageing fleet (averaging ~10 years for M&HCVs) and rising freight movement. While overall CV volume growth is moderating in FY 2026-27 after a strong FY 2025-26, replacement-driven demand remains a structural, less cyclical opportunity for the Company to supply drivetrain components, axles, and forged transmission parts to OEMs — particularly in the LCV and bus sub-segments, which are outpacing M&HCVs this year.

- Infrastructure-Led CV Demand, Moderating but Intact

Continued government investment in roads, logistics parks, mining, and industrial corridors remains supportive of the CV sector, though overall growth is expected to normalise in FY 2026-27 following last years high base. Demand for heavy-duty, precision-engineered components remains an area where the Company is well-positioned, even as the pace of growth moderates from FY 2025-26 levels.

- Agriculture Mechanisation and Rural Demand ? Structural Tailwind, Near-Term Caution

Rural mechanisation continues to deepen and government support for farm incomes remains strong, PM-KISAN, fertiliser subsidy, and total agriculture allocation all sustained or increased in the FY 2026–27 Union Budget. However, near-term tractor demand growth is expected to slow sharply this year — to roughly 1–4%, from over 20% in FY 2025–26 — due to a high base and an IMD forecast of below-normal monsoon rainfall. The Companys agricultural product line (transmission gears, rear axles, precision-forged tractor parts) should be viewed against this more moderate near-term volume outlook, with the longer-term structural growth story remaining intact.

- Export Potential and Localisation Incentives

Global supply chain realignments, along with “Make in India” and PLI schemes, continue to support localisation and export viability for Indian auto components. The broader industry recorded 5% export growth in FY 2025–26, alongside faster import growth, and ACMA projects 8–10% overall industry growth in FY 2026–27. The Company can capitalise by expanding its international customer base and export portfolio, and is well-positioned in allied sectors such as off-highway and material handling equipment, having invested over the last two years in developing components for new export customers.

- Transition to EVs and New Powertrains in CVs

Electric commercial vehicles are gaining ground in urban logistics and intercity transport, growing demand for lightweight, efficient components compatible with EV platforms. This provides scope for the Company to diversify into forged and machined parts for e-axles, motor housings, and integrated drive units.

Threats

- Volatility in Raw Material and Input Prices

Fluctuations in steel, aluminium, and energy prices continue to affect production costs and margins. A 12% tariff on select steel imports has added further cost pressure, and the ability to fully pass on these increases remains limited in a competitive market.

- Critical Input Availability ? Rare Earth Magnets

ACMA has specifically flagged limited availability of rare earth magnets as a supply chain risk for the industry, relevant to companies developing EV-related and precision-machined components.

- Monsoon and Agricultural Cyclicality

IMDs forecast of a below-normal 2026 Southwest Monsoon (90% ?4% of LPA, tied to expected El Ni?o conditions) creates direct downside risk to tractor and farm equipment demand in FY 2026?27, reversing the tailwind of the past two favourable monsoon years.

- Global Economic Uncertainty and Trade Barriers

Elevated crude oil prices, ongoing West Asian geopolitical tensions, and global trade policy uncertainty continue to pose risks to export orders and expansion plans, particularly in Europe and the US. While US tariffs on Indian goods eased from 50% to 10%, the broader auto component industry recorded its first trade deficit in last two years in FY 2025-26.

- Intensifying Competition

Entry of global component manufacturers and expansion of domestic peers could lead to price competition, especially in commoditised product categories. Continuous investment in technology and quality is necessary to stay competitive.

- Transition Risk from ICE to EV

While electrification remains gradual in commercial and agricultural vehicles, the possible long-term decline in ICE demand could impact certain product lines such as engine gears, crankshafts, and related components.

- Operational Challenges and Capital Intensity

Rising compliance requirements including the emerging BS-VII framework under discussion for 2026?27/2027, the need for continuous capex in automation and machining technology, and managing multi-location operations add complexity and cost. Any misalignment in capacity planning or underutilisation could adversely affect profitability.

Segment-wise or products-wise performance

The operations of the Company are focused towards automotive and allied components.

Business Operations

The Company has fully functional units located in Vadodara- Gujarat, Baddi- Himachal Pradesh and Pithampur - Madhya Pradesh.

While it continues with its legacy of operational efficiency, factors such as technological advancements, investment in new technology upgradation and product innovation continue to be its key drivers of differentiation. Enhanced productivity through retrofitting and refurbishing of machines and optimizing efficiencies at various levels has enabled the Company to achieve an improved performance and gain a competitive edge.

Resource Upgradation

The Company has undertaken retrofitting and reconditioning of older conventional machinery, resulting in significant improvements in operational efficiency and a substantial enhancement in throughput. In addition, targeted investments have been made to replace select machines with state-of-the-art alternatives, thereby boosting productivity and minimizing downtime. Further, the new press project at the Companys Pithampur facility in Madhya Pradesh, involving a capital expenditure of approximately Rs 52 crore funded through a mix of equity and debt, has commenced production. The project is expected to ramp up operations progressively and achieve full-scale operations by the third quarter of financial year 2026-27, with an anticipated capacity utilisation of approximately 50% and ramp up to 60 to 65% in fourth quarter of Financial year 2026-27. The project is expected to further augment the Companys production capacity and support its growth objectives.

Technology Upgradation

The Company has undertaken several initiatives to upgrade its technological infrastructure. New-generation machines have been commissioned across critical operations, including gear cutting, forging presses, and heat treatment, resulting in enhanced efficiency and improved output quality. Additionally, the Company has fully digitised employee attendance management and payroll processing across all its units, further strengthening operational effectiveness and administrative transparency.

Capacity utilisation across key manufacturing facilities improved during FY 2025-26 driven by healthy demand from automotive and agricultural segments. The new forging press project at Pithampur is expected to significantly enhance the Companys forging capabilities and support future growth in domestic and international markets.

Outlook

Looking ahead, the Company remains focused on expanding its portfolio of automotive products while strengthening its design, engineering, and manufacturing capabilities. Strategic investments are being directed towards enhancing operational efficiency, supporting product diversification, and developing advanced technical competencies to meet the evolving needs of both domestic and international markets.

A key area of focus is the expansion of export business. The Company is actively pursuing opportunities to increase its presence in global markets by leveraging its core strengths in precision-forged and machined components by specifically focusing on Europe and USA. In line with this, Him Teknoforge is exploring and establishing partnerships with reputed foreign entities to co-develop high-performance, high value-added components and assemblies to tap into new geographies and customer segments.

On the manufacturing front, the Company is implementing modern systems and technologies to improve process transparency, quality assurance, and scalability. These advancements are expected to drive cost competitiveness and support long-term growth across target sectors including commercial vehicles, agricultural machinery, and industrial applications. Company is also in the process of implementing Machine 4.0 across all its facilities.

Him Teknoforge continues to maintain a strong reputation among OEMs and industry stakeholders for its reliability, product quality, and customer-centric approach. The management is confident that with continued improvement in the global and domestic economic environment, and the internal initiatives that are underway, the Company is well-positioned to realise the full potential of its ongoing investments.

These developments will form a strong foundation for sustainable expansion, greater global integration, and long-term value creation in the years to come.

Risks & Concerns

Him Teknoforge Limited operates in a highly dynamic and competitive environment, both domestically and globally, and is therefore exposed to a range of potential risks that could impact its operations and financial performance. These include fluctuations in raw material prices—particularly steel and energy—which may adversely affect input costs and profitability.

With the Companys increasing focus on exports, foreign exchange volatility and geopolitical or trade disruptions in key international markets present additional challenges.

Furthermore, a significant dependency on a few major OEM customers poses concentration risks, where any changes in procurement strategies or order volumes may have a material impact. The automotive industry is also undergoing a technological shift, especially with the gradual transition from internal combustion engine (ICE)-based vehicles to electric and alternative-fuel platforms. This evolution could reduce the long-term demand for certain traditional components, necessitating continuous innovation and realignment of the Companys product portfolio. In addition, intensifying competition from both domestic and foreign manufacturers, many with advanced automation and global supply chains, can exert pressure on pricing and margins.

Regulatory risks also remain relevant, as any changes in environmental laws, safety standards, or tax policies—either in India or abroad—may affect the cost of compliance and business viability. Lastly, operational risks arising from natural or man-made disruptions, such as supply chain constraints, labour shortages, pandemics, or cybersecurity threats, may interrupt production or delivery schedules.

To mitigate these risks, the Company has implemented a structured and proactive risk management system, which is regularly reviewed and updated. This framework enables the identification, assessment, and mitigation of risks through strategic planning, customer diversification, technological upgrades, and process improvements, thereby ensuring long-term resilience and sustainability.

Internal Control Systems and their adequacy

The Audit of Internal Control Systems is carried out by an independent firm of Chartered Accountants on a quarterly basis and corrective actions are taken where shortcomings are identified. The Internal Auditors submit their quarterly reports to the Audit Committee. All the fixed assets of the company are physically examined and recorded at regular intervals.

Discussion on financial performance with respect to operational performance

Your Company has achieved total income of Rs 43,790.06 Lakhs for the financial year 2025-2026 as against total income of Rs 40,700.29 Lakhs in the previous financial year 2024-2025. Further, the Company earned a profit of Rs1,261.19 Lakhs in the 2025-2026 as compared to Rs 975.80 Lakhs in FY 2024-2025.

Revenue growth during FY 2025-26 was supported by improved demand from automotive and agricultural segments, increased product realisation and a continued focus on operational efficiencies. Profitability improved primarily due to better capacity utilisation, productivity improvements, cost optimisation initiatives and a more favourable product mix.

Material Developments in Human resources/Industrial relations front, including number of people employed

At Him Teknoforge Limited, we regard our human capital as one of our most valuable assets. The Company is committed to fostering a work environment that attracts, develops, and retains high-quality talent. We continuously review and refine our HR policies and practices to align with evolving business needs and employee aspirations. Ongoing efforts are made to enhance the knowledge and skillsets of our workforce through structured training, upskilling programs, and performance development initiatives. As the business environment becomes increasingly dynamic, we remain a learning-oriented organisation focused on driving operational excellence and elevating performance standards across all levels. As of the financial year 2025-26, the Company employed a total of 1,303 individuals.

Details of significant changes in financial ratios:

Details of significant changes as compared to the immediately previous financial year in key financial ratios, along with detailed explanations thereof, including:

Particulars	2025-2026	2024-2025
(i) Debtors Turnover	5.32	6.21
(ii) Inventory Turnover	2.51	2.45
(iii) Interest Coverage Ratio	2.56	2.26
(iv) Current Ratio	1.47	1.38
(v) Debt Equity Ratio	0.70	0.68
(vi) Operating Profit Margin (%)	8.18%	7.81%
(vii) Net Profit Margin (%)	2.90%	2.42%

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

Particulars	2025-2026	2024-2025
Return on Net Worth	5.21%	4.37%

Disclosure of Accounting Treatment:

The financial statements for the year ended 31st March, 2026 have been prepared as prescribed in accounting standards and accounting policies and have been followed consistently. There is no change in treatment of the said accounting standards & accounting policies, therefore, no explanation by the management is required for the same.