Krishanveer Forge Ltd Management Discussions

About Krishanveer Forge Ltd. (Formerly known as Rajkumar Forge ltd.)

Krishanveer Forge ltd. is a leading open die forging facility catering across the industries including oil and Gas, infrastructure,

Power transmission, mining and construction. It has been serving the export market mainly to oil and Gas players of the world. The company has reputation amongst the domestic customers. Krishanveer Forge covers almost every sector of the industry wherever high-quality forgings are required. The company has a world class facility with best in-house processes to deliver the highest quality forgings to the customers. Safety is the topmost priority of the company and has ISO certifications and ensure adhere to the safety standards.

The Company Management is pleased to present before the members of the Company, the Management Discussion &

Analysis Report ("MDAR") of the Companys business for the financial year 2023-2024

Global Economy and Indian Economy:

In 2023, the global economy remained resilient with steady growth at 2.6% despite geopolitical conflicts, high interest rates, and a slowdown in demand. Inflation is decreasing faster than expected, with global inflation

2023 to 5.9% in 2024 and 4.5% in 2025. The IMF has slightly upgraded its global growth forecast from 3.1% to 3.2% for 2024 and 2025. Advanced economies will see a slight growth acceleration, while emerging markets and developing economies will experience a modest slowdown.

* Projection :: Source, World Economic Outlook :: IMF

Businesses worldwide must remain adaptable and flexible to navigate changing conditions and build resilient models for sustained performance. Emphasizing supply-enhancingreformscanhelpreduceinflationand debt, boost economic growth, and promote progress toward higher income levels.

Economic Overview – India

Indias economy remains resilient despite a slight moderation in growth. With a supportive domestic policy environment and ongoing structural reforms, India is projected to grow at 7.8% in FY 2023-24, up from 6.7% previously forecasted. Growth for FY 2024-25 and FY 2025-26 is expected to be 6.8% and 6.5%, respectively. India continues to be the fastest-growing major economy, bolstered by strong consumer spending, government investments, and infrastructure development. Despite global uncertainties and volatility in inflation, Indias economic strength is reflected in robust GDP growth and a resilient financial sector.

Forging Industry Structure and Developments:

The global manufacturing sector is shifting focus to high-tech and energy transition technologies due to government policies, boosting metal demand. Although the Manufacturing PMI has contracted in 2023, it shows signs of stabilization for early

2024. Commodity prices have been stable despite global challenges. Global trade growth is expected to be 3.0% in 2024 and 3.3% in 2025.

The Indian forging industry, with a capacity of 38.5 lakh MT, is renowned for its technical capabilities and supports various sectors like automotive, machinery, and construction. It relies on high-quality steel from Indias well-developed steel industry.

Indias automotive sector contributes significantly to GDP and has become a global hub for heavy vehicles, facing threats from global supply disruptions but benefiting from strong consumer demand and investment.

The forging industry, centered in clusters like Pune and Chennai, serves multiple sectors and employs over 95,000 directly and 2 million indirectly. India is a major global metal forging hub, with a projected CAGR of 10%, supported by strong government policies like Make in India and a reputation for innovation.

(Source: https://www.indianforging.org/)

Opportunities and threats:

The Indian forging industry benefits from its role in supplying critical components to the oil and gas sector, which is shifting away from less reliable Chinese suppliers. Increased infrastructure investment, with 10 lakh crores allocated in FY 2023-24, is expected to drive demand for forging products in construction and heavy machinery. Additionally, growth in aerospace and defense sectors, supported by government initiatives like Make in India, will further boost the industry.

However, Indian forgers face competition from countries with lower labor costs and are vulnerable to geopolitical tensions affecting raw material prices. Companies must stay updated on market trends and adopt these challenges and remain competitive.

Outlook:

The Management is working on optimizing costs, improving efficiency, negotiating better supplier pricing, and revising product pricing to mitigate higher input costs. The Make in India initiative is boosting the forging industry by increasing domestic demand, creating export opportunities, and advancing technology. Despite global trade tensions, the industry is optimistic, with significant growth expected in FY25, supported by a favorable monsoon outlook.

Risks and concerns:

The Board is tasked with identifying, assessing, and mitigating risks affecting the Companys operations, objectives, stakeholders. Details of the risk assessment framework are outlined in the Corporate Governance Report included in the annual report. The report covers the broader risks, their potential impacts on the Company, and the associated mitigation measures.

Internal control system and their adequacy:

The Company has established robust internal controls to ensure effective operational and financial functions. Management continuously reviews these controls to maintain efficient business conduct and regulatory compliance. M/s G R Patel &

Associates, Chartered Accountants, act as the Internal Auditors, conducting audits and reporting to the Audit Committee and

Board. The internal audit process evaluates the adequacy of control checks across key operations. Additionally, the Audit Committee annually assesses the Internal Auditors independence, performance, and the overall effectiveness of process.

Financial Performance w.r.t Operational Performance:

The Boards Report, included in the annual report, details the companys financial performance for FY 2023-24. The Company exercises precise control over cash flow, focusing on timely recoveries, reducing cash credit reliance, and ensuring prompt creditor payments. Cost optimization processes are regularly reviewed and implemented. The workforce adheres to high manufacturing standards, and preventive equipment maintenance minimizes production disruptions. Despite geopolitical tensions, notable achievements were accomplished during FY24.

Key Performance Metrics

Key Financial Ratios:

Material development in the Human Resource / Industrial Relations front:

The Company benefits from a committed and enthusiastic workforce. The HR team recruits skilled candidates, offers competitive salaries and benefits, and provides training programs. A succession plan is in place to ensure continuity and a safe work environment, evolving recognition systems, and ongoing skill maintain training. The number of employees has remained steady at 70 from March 31, 2023, to March 31, 2024.

Health, Safety and Environment

1. The Company follows a policy of zero tolerance towards accidents. Wherever possible, visible controls and fail-safe systems are provided to ensure the prevention of accidents. Safety is made an integral part of the system through notifications being displayed to the operators and promoting safety awareness. Regular communication, and periodic reviews of practices and training, play a vital role in maintaining safety standards.

2. All the Companys manufacturing facilities comply with occupational health and management safety systems. The

Company ensures compliance with all pollution control regulations. Adequate pollution control equipment has been installed to treat effluents and to control air pollution.

Cautionary Statement:

Statements in the management discussions and analysis section describing the companys projections, estimations, expectations and predictions may be ‘forward-looking statements within the meaning of applicable securities, laws and regulations. Actual results could defer materially from the expressed or implied ones. Important factors that would make a difference in the companys operations include demand-supply conditions, input cost escalations, changes in government regulations and tax regimes, competition, economic developments within and outside the country etc.