Innomet Advanced Materials Ltd Management Discussions

• Industry Structure and Developments

I.Global Economy

The Global Atomizing Metal Powder Market is experiencing significant growth, driven by increasing demand across industries such as automotive, aerospace, electronics, & additive manufacturing, and metallurgy. Atomizing metal powders produced through processes such as water atomization and gas atomization, offer high purity, controlled particle size, and excellent mechanical properties, making them ideal for powder metallurgy, coatings, end advanced manufacturing applications. The growing adoption of lightweight materials, high performance alloy, and energy. Efficient manufacturing techniques is further propelling market expansion. Additionally, advancements in 3D printing technology and the increasing use of sintered parts in industrial Applications are expected to boost demand for atomized metal powders worldwide.

Despite the strong growth potential, the market faces challenges related to raw material price volatility, supply chain disruptions, and stringent environmental regulations governing metal powder Production and emissions. Additionally, the high initial investment required for advanced atomization technologies can be a barrier for small and medium-sized manufacturers. However, increasing emphasis on sustainable manufacturing practices, the development of eco-friendly powder production methods, and the integration of digitalization in metal powder processing are expected to mitigate some of these Challenges. Leading player in the market are focusing on research and development (R&D), strategies partnerships, and geographic expansion to strengthen their market presence. The post Covid-19 recovery has been mixed, with sectors such as electronics, healthcare, and additive manufacturing rebounding rapidly {V-shaped recovery), while automotive and construction industries have shown a more gradual revival (U-shaped recovery). However, some industries, such as aerospace and industrial machinery, continue to experience fluctuations {W-shaped recovery) due to ongoing geopolitical uncertainties and supply chain constraints. Companies investing in automation, smart manufacturing, end supply chain resilience are being positioned to navigate these challenges and capitalize on emerging opportunities.

Looking ahead, the Global Atomizing Metal Powder Market is poised for continued growth, supported by technological advancements, increasing applications in electric vehicles (EVs) .and renewable energy sectors, and the rising demand for precision metal components. The market is also benefiting from government initiatives promote localized manufacturing, sustainability, and circular economy practices in key regions such as North America, Europe, and Asie--Pacific. As industries continue to evolve toward more efficient and sustainable production processes, atomized metal powders will play a critical role in shaping the future of advanced manufacturing.

II.Industry Overview

The advanced materials industry, particularly the powder metallurgy (PM) segment, has experienced accelerated growth driven by global trends in energy efficiency, electrification, lightweight manufacturing, and sustainability. As a key player in this domain, Innomet Advanced Materials Limited operates at the intersection of innovation, precision engineering, and green manufacturing.

III.Company Overview

Innomet Advanced Materials Limited a powder metallurgy company based in India, specializing in Metal Powers with a strong presence in manufacturing. Founded in 2019 and headquartered in Hyderabad, Telangana, the company has evolved into a vertically integrated player in the powder metallurgy sector.

Core Business Areas:

a) Metal Powders: Innomet Advanced Materials Ltd are Global Suppliers of Metal and Alloy Powders through water, air and gas atomization processes.

b) Tungsten Heavy Alloy: These products manufactured through Powder Metallurgy process. We supply the material in the form of bars, plates, cubes, spheres and components of various sizes and shapes also in the finished machined condition as per customer drawings.

• Opportunities, Threats, Risks and Concern:

A. Opportunities:

One of the biggest opportunities in the Global Atomizing Metal Powder Market is the growing adoption of additive manufacturing (AM) technologies. With the increasing use of 3D printing in industries Such as aerospace, medical implants, and automotive, the demand for high-quality, fine metal powders is rising significantly. This is trend presents are opportunity for manufactures to expand their product portfolios, develop specialized powders, and collaborate with AM technology providers to cater to this rapidly expanding market segment. Additionally, the development of advanced and customized metal powder formulations for specific AM applications further enhances market growth potential.

Another significant opportunity is the rise of sustainable and ecofriendly manufacturing practices. Tile increasing focus on recyclability}, material efficiency, end reduced carbon emissions is encouraging industries to shift toward metal powder- based manufacturing methods, which produce less materiel waste compared to traditional subtractive manufacturing techniques. This shift aligns with global sustainability goals and government regulations, presenting an opportunity for companies investing in green production technologies and sustainable atomisation processes to gain a competitive edge.

B. Threats

One of the primary threats to the Global Atomizing Metal Powder Market is tt1e volatility in raw material prices and supply chain disruptions. The market is {heavily reliant on the availability of metals s-.ich as iron, copper, aluminium and nickel, which are subject to fluctuating global demand geopolitical tensions, and mining regulations. Any disruptions in the supply chain can lead to price surges, production delays & reduced profit margins, impacting both manufacturers and end-users. Additionally, dependence on imported raw materials in certain regions makes companies vulnerable to trade restrictions, tariffs, and fluctuating exchange rates, further increasing operational risks.

Another major threat is intense competition, and technological barriers. The market is dominated by established players with strong R&D capabilities and advanced production facilities, making it difficult for new entrants and smaller manufacturers to compete. Additionally, the high initial investment required for advanced atomization equipme11t and process automation acts as a barrier for new companies looking to enter the market. Emerging alternative materials and powder production methods, such as mechanical alloying and chemical reduction, also pose a potential threat, as they could offer cost-effective solutions that reduce reliance on traditional atomization processes.

• Segment wise/Product wise Performance

FY 2024-25 Product-Wise Highlights:

Product Segment	Performance Highlights
Metal Powders	Revenue generated amounted to ^2,550.97 lakhs
Tungsten Heavy Alloys	Revenue generated amounted to ^701.53 lakhs

• Outlook:

Environmental and Regulatory Compliance Challenges

The environmental impact of Metal Powder production is an increasing concern, as high energy consumption, emissions, and waste generation pose significant sustainability challenges. Many governments and regulatory Bodies Worldwide have imposed stringent environmental regulations on metal production industries, requiring manufacturers to adopt cleaner technologies, minimize waste, and improve energy efficiency. Compliance with these regulations adds operational costs and necessitates investments in environmentally friendly production methods, waste recycling systems, and emission control technologies.

Moreover, handling and disposing of Metal Powder waste-especially for hazardous or reactive materials like aluminium and titanium-requires specialized procedures to prevent environmental contamination and workplace hazards. Companies operating in regions with strict environmental Policies, such as the EU and North America, may face higher compliance costs compared to those in developing markets where regulations are less stringent /ls sustainability Becomes a Major differentiating factor for industrial buyers, manufacturers must find ways to align with, global environmental standards witt1out compromising cost efficiency.

Supply Chain Disruptions and Raw Material Price Volatility

Tile Global Atomizing Metal Powder Market is highly dependent on the availability and pricing of raw materials, which are subject to fluctuations due to geopolitical tensions, trade Policies, and global supply chain disruptions. For example, the prices of key metals such as iron, copper, aluminium, and nickel are influenced by mining regulations, export restrictions, and fluctuating global demand. Any disruption in the supply of these raw materials can lead to production delays, cost surges, and reduced profitability for metal Powder manufacturers.

The COVID-19 pandemic and geopolitical conflicts have demonstrated the vulnerabilities of global supply chains, leading to shortages in raw materials and logistical challenges. Transportation delays, Import export restrictions, and workforce shortages continue to pose risks to the stability Of the atomizing metal powder market To mitigate these risks, manufacturers need to diversify their supply chains, invest in local sourcing strategies, and develop alternative materials to ensure uninterrupted production and cost stability.

• Risk and Concerns

Innomet Advanced Materials Limited faces several critical risks that could materially impact its operations and financial health. Ongoing litigations involving the Company, its Promoters, and Directors pose a potential threat; any adverse rulings may significantly affect our reputation, business continuity, and financial condition. Additionally, our operations depend heavily on securing various approvals, NOCs, licenses, registrations, and permits. Delays or failures in obtaining these regulatory clearances in a timely manner could disrupt our business activities and hinder expansion plans. Moreover, our manufacturing facilities require substantial and uninterrupted power supply to function efficiently. Any disruption in power availability or increase in energy costs could impair production and escalate operational expenses. Collectively, these factors represent substantial operational and regulatory challenges that may adversely affect our performance and long-term sustainability.

• Internal Control System and their adequacy:

Innomet Advanced Materials Limited has established a robust internal control framework designed to ensure the integrity of financial reporting, safeguard assets, and promote operational efficiency. The system is aligned with the requirements of the Companies Act, 2013 and is periodically reviewed by the Audit Committee and senior management.

The internal controls encompass all major business processes, including procurement, production, inventory management, project execution, and financial reporting. These controls are supported by clearly defined policies, standard operating procedures, and an ERP-based monitoring system that enhances transparency and accountability.

During F.Y. 2024-25, the companys internal auditors conducted regular audits across departments, and no material weaknesses were reported. The statutory auditors, in their report dated March 31, 2025, have confirmed that the internal financial controls over financial reporting are adequate and operating effectively.

The Board believes that the current internal control system is commensurate with the size and nature of the companys operations and provides reasonable assurance regarding the reliability of financial and operational information.

• Financial Performance

The following table sets forth our financial summary:

(Rs in Lakhs)

Particulars	FY 2024-25	FY 2023-24
Share Capital	1,294.02	951.66
Net Worth	4 ,132.30	1,471.99
Revenue	3,252.48	2 ,489.58
Profit After Tax	186.53	251.91
Basic and Diluted Earnings per Equity Share (Considering bonus in all previous years) (in Rs)	1.64	2.65
Total Borrowings	1,523.33	1,331.31

• Human Resources/Industrial Relations:

Human capital is viewed as a valuable resource and an integral part of the Companys success, and your Company strongly believes that its employees are the key pillar of your companys success.

The Company recognizes that its employees are its principal assets and that its continued growth is dependent upon the ability to attract and retain quality people. The Company also recognizes the importance of providing training and development opportunities to its people to enhance their skills and experiences, which in turn enables the company to achieve its business objectives.

The Company believes in establishing and building a strong performance and competency driven culture amongst its employees with greater sense of accountability and responsibility. The industrial relations within the Company have remained harmonious throughout the year.

• Key Financial Ratios

Sr No.	Ratios	Numerator	Denominator	As at 31st March, 2025	As at 31st March, 2024	% change in Ratio
1	Current ratio	Current Assets	Current Liabilities	3.12	1.57	98%
2	Debt-Equity Ratio	Borrowings+ Interest Accrued	Total Equityy	0.37	0.90	-59%
3	Debt service coverage ratio	Earnings available for Debt Servicing	Interest	3.60	3.51	2%
4	Return on Equity Ratio	Net Profits before taxes	Average Shareholders Equity	0.09	0.30	-69%
5	Inventory turnover ratio	Cost of goods sold OR sales	Average Inventory	2.67	2.53	6%
6	Trade Receivables turnover ratio	Net Credit Sales	Average Trade Receivables	6.59	9.84	-33%
7	Trade payables turnover ratio	Net Credit Purchases	Average Trade Payables	8.70	7.33	19%
8	Net Capital Turnover Ratio	Net Sales	Working Capital	1.21	3.81	-68%
9	Net Profit Ratio (in %)	Net Profit After Taxes	Net Sales	5.74%	10.12%	-43%
10	Return on Capital Employed (in %)	Earnings Before Interest and Tax	Capital Employed	7%	20%	-63%
11	Return on investment	Market Value	Initial investment	NA	NA	NA

Cautionary Statement

Statements made herein, in the Management Discussion & Analysis Report describing the Companys projections, estimates, expectations, plans or predictions or industry conditions or events are forward looking statement. The actual results may differ from those expected or predicted, since the Companys operations are influenced by many external factors which are beyond the control of your Company.