Him Teknoforge Ltd Management Discussions

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

At the same time, the commercial vehicle (CV) segment is showing a cyclical upswing, both in domestic and export markets With renewed government spending on infrastructure, mining, and logistics efficiency, demand for medium and heavy commercial vehicles (M&HCVs) is expected to grow in double digits in FY 202526 This opens strong growth avenues for drivetrain Components, gear systems, brake assemblies, and highstrength forged components

Indian Economy and Industry Trends

OEM Automotive Components

The Indian automotive industry is expected to witness multisegment growth across twowheelers, passenger vehicles, and commercial vehicles Component suppliers catering to OEMs are seeing higher offtake as new vehicle models prioritise fuel efficiency, regulatory compliance (BSVI phase 2), and improved durability Localization 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

Agricultural Automotive Products

The outlook for tractor and agrimachinery components remains positive With an abovenormal monsoon forecast and increased rural allocation in the Union Budget, tractor demand is expected to remain resilient Key drivers include:

Rising rural mechanization across Tier 2 and Tier 3 towns

Strong Rabi crop output and allied income

Government schemes such as PMKUSUM, Agri Infra Fund, and subsidies on farm equipment

Tractor sales are expected to grow at 68% in FY 202526, with corresponding demand for gearboxes, differential components, engine parts, and precisionforged assemblies

Commercial Vehicle Segment

The CV sector, particularly the M&HCV category, is expected to grow at 0203% in FY 202526, after a Moderate recovery in FY 202425 This growth is being driven by:

Government capex in roads, logistics parks, railways, and smart cities

Higher freight movement due to ecommerce and industrial demand

Renewed replacement demand from fleet operators

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

The convergence of strong domestic demand, policydriven capital investment, and sectoral growth in automotive, agriequipment, and commercial vehicles offers a significant opportunity for companies in the OEM parts and forging ecosystem With sound fiscal policy, easing inflation, and positive ruralagri dynamics, Indias growth trajectory in FY 202526 is not just broadbased, but also strategically aligned with the needs of the manufacturing and mobility sectors

Opportunity and Threats

Opportunity

Commercial Vehicle Replacement and Demand Surge

Indias commercial vehicle (CV) sector, particularly in the medium and heavy commercial vehicle (M&HCV) category, is expected to witness Sustained demand vehicles by an ageing fleet and increased freight movement This presents an opportunity for company to supply drivetrain components, axles, and forged transmission parts to OEMs

Expansion of the CV Market and Infrastructure Push

Agriculture Mechanisation and Rural Growth

Increasing rural mechanisation, favourable monsoon predictions, and government support for farm productivity are fuelling demand for tractors and farm equipment This benefits the companys agricultural product line, including transmission gears, rear axles, and precisionforged tractor parts

Rising Export Potential and Localisation Incentives

Global supply chain realignments, coupled with the Indian governments "Make in India" and Production Linked Incentive (PLI) schemes, are promoting localisation and increasing the export viability of Indian auto components Company can capitalise by expanding its international customer base and export Portfolio Company is also very wellpositioned for allied sectors of the automotive industry, such as offhighway and material handling equipment, as company has focused its efforts in the last two years to develop components for its new export customers

Transition to EVs and New Powertrains in CVs

With electric commercial vehicles gaining ground, especially in urban logistics and intercity transport, there is a growing demand for lightweight, efficient components compatible with EV platforms This provides scope for the company to diversify into forged and machined parts for eaxles, motor housings, and integrated drive units

Threats

Volatility in Raw Material Prices

Fluctuations in steel, aluminum, and energy prices can directly impact production costs and margins In a competitive market, the ability to pass on these increases may be limited, creating margin pressure

Global Economic Uncertainty and Trade Barriers

A slowdown in global markets, or imposition of new trade restrictions in key geographies, may impact export orders and delay expansion plans, particularly in Europe and USA

Intensifying Competition

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

Transition Risk from ICE to EV

While electrification is still gradual in commercial and agricultural vehicles, the possible longterm decline in internal combustion engine (ICE) demand could impact certain product lines such as engine gears, crankshafts, and related components

Operational Challenges and Capital Intensity

Rising compliance requirements, need for continuous capex in automation and machining technology, and managing multilocation operations add complexity and cost Any misalignment in capacity planning or underutilization can adversely affect profitability

Segmentwise or productswise performance

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

Business Operations

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

While it continues with its legacy of operational efficiency, factors such as technological advancements 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 stateoftheart alternatives, thereby boosting productivity and minimizing downtime Furthermore, the Company is in the final stages of establishing a new press project at its Pithampur facility in Madhya Pradesh This project involves a capital expenditure of approximately ^52 crore, funded through a mix of equity and debt, and is expected to commence production in the fourth quarter of the current financial year

Technology Upgradation

The Company has undertaken several initiatives to upgrade its technological infrastructure Newgeneration 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 digitized employee attendance management and payroll processing across all its units, further strengthening operational effectiveness and administrative transparency

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 precisionforged and machined components In line with this, Him Teknoforge is exploring and establishing partnerships with reputed foreign entities to codevelop highperformance 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 longterm growth across target sectors including commercial vehicles, agricultural machinery, and industrial application Company is also inprocess to implement Machine 40 across all its facilities

Him Teknoforge continues to maintain a strong reputation among OEMs and industry stakeholders for its reliability,

Annual Report 202425

product quality, and customercentric 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 longterm value creation in the years to come

Risks & Concerns

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 alternativefuel platforms This evolution could reduce the longterm 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

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 longterm resilience and sustainability

Internal Control Systems and their adequacy

The Audit of Internal Control Systems is carried out by an independent firms 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 Turnover of Rs 40,70029 Lakhs for the financial year 20242025 as against turnover of Rs 37,34286 Lakhs in the previous financial year 20232024 Further, the Company earned a profit of Rs97580 Lakhs in the 20242025 as compared to Rs 71117 Lakhs in FY 20232024

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 highquality 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 learningoriented organization focused on driving operational excellence and elevating performance standards across all levels As of the financial year 202425, the Company employed a total of 1,157 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 therefor, including:

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

Disclosure of Accounting Treatment:

The financial statements for the year ended 31st March, 2025 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

For and on behalf of Board

Place: Chandigarh Date:26072026

Sd/

Vijay Aggarwal Chairman DIN:00094141