Krishanveer Forge Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS REPORT

About Krishanveer Forge Limited:

Krishanveer Forge Limited is an established player in the open die forging segment, catering to a diverse set of industries such as oil and gas, infrastructure, power transmission, mining, and construction. The Company has developed a strong presence in the market, with focus on serving various sectors including oil & gas, gear & transmission and general engineering etc.

The Company operates a state-of-the-art manufacturing facility equipped with advanced in-house capabilities, enabling it to deliver high-quality forgings that meet stringent customer specifications and industry standards. Its integrated operations and continuous focus on process improvements support consistent product quality and operational efficiency.

Safety remains a core priority for the Company. It is ISO-certified and adheres to rigorous safety protocols and compliance standards, ensuring a safe working environment and alignment with global best practices.

With its strong manufacturing capabilities, diversified industry presence, and commitment to quality and safety, the Company is well-positioned to capitalize on growth opportunities in both domestic and international markets.

The Company Management is pleased to present the Management Discussion & Analysis Report ("MDAR") of the Companys business for the Financial Year 2025-2026.

Global Economy and Indian Economy:

As per the latest assessment by the International Monetary Fund (IMF) in its World Economic Outlook (April 2026), the global economy is projected to grow at a moderate pace of around 3.1% in 2026 and 3.2% in 2027, reflecting a slowdown compared to historical averages. The outlook is shaped by heightened geopolitical tensions, particularly in the Middle East, which have led to elevated commodity prices, renewed inflationary pressures, and tighter financial conditions. While global inflation is expected to moderate gradually over the medium term, uncertainties surrounding trade dynamics, energy markets, and financial stability continue to pose downside risks to growth. Emerging market and developing economies are expected to remain key contributors to global expansion, although they too face vulnerabilities arising from external shocks and capital flow volatility.

The Indian economy, however, continues to exhibit strong resilience amidst global headwinds. According to the IMF, India is projected to remain the fastest-growing major economies, with GDP growth estimated at approximately 6.5% for FY 2026-27. Growth is primarily driven by robust domestic demand, ongoing infrastructure development, supportive policy environment, and structural reforms. Additionally, increasing emphasis on digitalization, manufacturing, and energy transition is expected to further strengthen Indias medium-term growth prospects. Despite external challenges such as volatile energy prices, geopolitical uncertainties, and global financial tightening may pose risks, the overall outlook for the Indian economy remains positive, supported by strong macroeconomic fundamentals and sustained reform momentum.

Economic Overview - India

India is expected to continue its position as one of the fastest-growing major economies globally, as highlighted by the latest assessment of the International Monetary Fund in its World Economic Outlook April 2026. The IMF projects Indias GDP growth at around 6.5% in FY 2026-27, supported by strong domestic demand, sustained public infrastructure investment, and a stable macroeconomic environment. In comparison, global economic growth is projected to remain moderate at approximately 3%, reflecting continued uncertainty in advanced and emerging economies.

Despite persistent global challenges, including geopolitical tensions, evolving trade dynamics, and financial market volatility, Indias growth outlook remains resilient. The countrys economic momentum is underpinned by structural reforms, increasing digitalization, a favorable demographic profile, and policy measures aimed at boosting manufacturing and investment. These factors continue to position India as a key driver of global economic growth.

However, geopolitical developments, including regional tensions, may have a bearing on supply chains and input costs, potentially impacting business operations in the near term. While such risks could create short-term uncertainties, the overall impact on Indias growth trajectory is expected to remain contained, supported by strong policy responses and macroeconomic stability. Consequently, the outlook for the Indian economy remains positive, with continued opportunities for sustainable growth and value creation.

Forging Industry Structure and Developments:

The global metal forging industry is undergoing a significant structural transformation, driven by robust infrastructure expansion, rapid industrialization, and shifting end-user requirements. Valued at USD 73.43 billion, the market is on a steady growth trajectory to reach USD 103.35 billion by 2034, expanding at a Compound Annual Growth Rate (CAGR) of 4.40%. This expansion is heavily anchored by the Asia-Pacific region, which controls a dominant 44.90% of the global market share. Countries like China and India serve as primary manufacturing hubs, fuelled by supportive government frameworks like the "Make in India" initiative, while North America and Europe lead in high-precision, automated manufacturing. While traditional carbon steel continues to dominate the market due to its cost-efficiency and load-bearing strength, the demand for aluminium forging is surging as automakers race to meet strict fuel efficiency and emission targets. Simultaneously, the aerospace and defense sectors are emerging as high-value growth frontiers.

Despite strong demand, the industry faces critical operational developments related to sustainability and supply chain resilience. Since traditional steel production and heavy forging operations contribute roughly 7% to 9% of global carbon emissions, market leaders are actively investing in green technologies. Developments include the adoption of power-efficient induction heating systems, automated smart factories, and recyclable alloys. However, volatile raw material pricing baselines and geopolitical disruptions in shipping corridors continue to pose risks, forcing forging companies to restructure their logistics and secure localized material supply chains.

Opportunities and threats:

The forging industry is expected to present significant growth opportunities during FY 2026-27, supported by favourable domestic and global demand dynamics. India continues to strengthen its position as a key global supplier of forged components, particularly in the automotive and industrial sectors. Increasing demand from end-use industries such as automotive, power, construction, and aerospace is likely to drive volume growth. Policy support through initiatives such as Make in India and the Production Linked Incentive Scheme continues to encourage domestic manufacturing, capacity expansion, and investment in the sector. In addition, ongoing technological advancements, including automation, precision engineering, and the use of advanced materials, are expected to enhance operational efficiency, improve product quality, and strengthen the competitiveness of Indian forging companies in global markets.

At the same time, the industry faces certain challenges that may impact its growth and profitability. Volatility in raw material prices, particularly steel and aluminium, remains a key concern, potentially affecting cost structures and margins. The industry also faces intense competition from both domestic and international players, necessitating continuous innovation, cost optimization, and quality enhancement. Further, infrastructure and logistics constraints may pose operational challenges, impacting supply chain efficiency and increasing overall costs. It also may be expected that global war situations particularly middle east war may contribute to enhance these threats. Despite these risks, the long-term outlook for the forging industry remains positive, supported by strong underlying demand and policy support.

Outlook:

The Management continues to focus on cost optimization through various strategic initiatives, including rationalisation of repair and maintenance expenses, improvement in operational efficiencies, negotiation of better terms with suppliers, and periodic review of product pricing to enhance margins and ensure sustained competitiveness.

The ongoing thrust of the Government under the Make in India initiative continues to provide strong support to the forging industry by stimulating domestic demand, expanding export opportunities, and encouraging the adoption of advanced technologies. Despite prevailing global trade uncertainties, the industry outlook remains positive, supported by sustained infrastructure development and stable macroeconomic conditions.

Further, Government policies aimed at promoting industrial growth, coupled with increased budgetary allocation towards infrastructure development and higher capital expenditure in Public Sector Undertakings (PSUs), are expected to drive overall economic activity. This, in turn, is likely to positively influence demand across core sectors and contribute to revenue growth for the industry, thereby indirectly supporting the Companys business performance in the medium to long term.

Risks and concerns:

The Board is tasked with identifying, assessing, and mitigating risks affecting the Companys operations, objectives, and 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.

Key Risk	Impact on the Company	Mitigation
Global geopolitical tensions and macroeconomic uncertainty (including Eastern Europe conflict, Middle East instability involving Iran-US-Israel dynamics, and Indo-Pacific tensions)	The forging industry, being closely linked to automotive, engineering, oil & gas, and capital goods sectors, remains exposed to global macroeconomic volatility. Escalation of geopolitical conflicts in Eastern Europe and the Middle East may disrupt global supply chains, particularly affecting shipping routes, energy availability, and logistics costs. Any disruption in crude oil supply corridors such as the Strait of Hormuz may lead to volatility in input costs, especially steel and alloy prices, along with inflationary pressure on freight and energy. Slowdown in major economies may also impact export demand for forged components.	The Company is not dependent on export business and hence effect of volatility due to geo-political instability is minimalized by strengthening domestic market penetration and diversifying its customer base across multiple sectors. Procurement is aligned towards domestic sourcing to mitigate global disruptions. Strong liquidity position, prudent capital allocation, and efficient working capital management support resilience against external shocks.
Cyclicality in end-user industries (automotive, industrial, and capital goods sectors)	Demand for forged components is inherently cyclical and closely linked to automotive production cycles, infrastructure spending, and capital expenditure trends. Any slowdown in these sectors may impact order inflows and capacity utilisation.	The Company mitigates cyclicality risk through customer diversification across multiple end-user industries, long-term supply relationships, and continuous focus on value- added forged components. Operational flexibility is maintained to adjust production in line with demand trends.
Price volatility in raw material (steel, alloy steel, aluminium) and energy inputs	Forging is highly dependent on steel and alloy inputs; volatility in raw material prices directly impacts cost structures and margins. Energy cost fluctuations further affect manufacturing economics due to the energy-intensive nature of forging operations.	The Company follows a structured procurement strategy supported by longterm vendor associations and periodic price negotiations. Wherever feasible, cost escalation clauses are incorporated in customer contracts. Continuous focus on yield improvement, process optimisation helps in partially offsetting input cost pressures. Further, setting up of Solar Power Plant is expected to reduce cost of energy.
Environmental, Social and Governance (ESG) and sustainability concerns	Increasing regulatory focus on emissions, energy efficiency, carbon footprint reduction, and waste management may lead to higher compliance costs and capital investments in cleaner technologies.	The Company is progressively aligning its operations with ESG requirements by improving energy efficiency, optimising resource consumption, and adopting sustainable manufacturing practices. Compliance systems are strengthened to meet evolving regulatory expectations and customer sustainability requirements, particularly from global OEMs.
Information Technology and Cybersecurity risks	Increased digitalization in manufacturing operations, including ERP systems, production monitoring, and supply chain integration, exposes the Company to cybersecurity threats, data breaches, and operational disruptions.	The Company has strengthened its IT governance framework with enhanced cybersecurity protocols, firewalls, access controls, and regular system audits. Disaster recovery and business continuity frameworks are in place to ensure minimal disruption to manufacturing operations. Employee awareness and training programmes are regularly conducted to strengthen cyber resilience.

Internal control system and their adequacy:

The Company has established a comprehensive and robust internal control system commensurate with the scale and nature of its operations, particularly in the manufacturing and forging industry. These internal controls are designed to ensure efficient conduct of business operations, safeguarding of assets, reliability of financial reporting, and compliance with applicable statutory and regulatory requirements.

The Management continuously monitors and reviews the effectiveness of internal control systems to ensure operational efficiency and adherence to established policies and procedures. The control framework is periodically strengthened to address evolving business risks, regulatory changes, and industry best practices.

Independent firm of Chartered Accountant is appointed as the Internal Auditors of the Company. They conduct regular internal audits covering key operational, financial, and compliance areas and submit their findings and recommendations to the Audit Committee and the Board of Directors. The internal audit function independently evaluates the adequacy and effectiveness of internal controls, risk management systems, and governance processes across all critical functions.

Financial Performance with regard to Operational Performance:

The detailed financial performance of the Company for FY 2025-26 has been appropriately disclosed in the Boards Report forming part of the Annual Report. During the year, the Company continued to maintain disciplined financial management with a strong focus on operational efficiency and cost optimisation.

The Company has exercised effective control over cash flows through timely monitoring of receivables, prudent management of working capital, and reduction in dependence on cash credit facilities. At the same time, the Company has ensured timely settlement of creditor obligations, thereby maintaining healthy supplier relationships and financial discipline.

Cost optimisation initiatives have been continuously reviewed and implemented across operations to enhance productivity and improve margins. Preventive maintenance practices and adherence to stringent manufacturing standards have helped minimise breakdowns and ensure smooth production operations.

The workforce remains committed to maintaining high-quality manufacturing standards, contributing to operational stability and efficiency. Despite external challenges, including prevailing geopolitical tensions and global economic uncertainties, the Company has been able to achieve satisfactory operational and financial performance during FY 2025-26, reflecting its resilience and strong execution capabilities.

Particulars	FY 2025-26	FY 2024-25
Domestic sales	8,741.20	8271.86
Export Sales	189.26	7.79
Total Sales	8,930.46	8,279.65

Key Performance Metrics

Parameters	FY 2025-26	FY 2024-25
Total Revenue (Rs. Lakhs)	9,060.18	8,375.65
EBIDTA (Rs. Lakhs)	1,341.33	932.11
PBT (Rs. Lakhs)	1,456.42	758.48
PAT (Rs. Lakhs)	1,137.71	563.71
Earnings per share (Rs.)	10.40	5.15

Key Financial Ratios:

Sr. No	Ratio	FY 2025-26	FY 2024-25	% change from the previous year	Details of significant changes (more than 25% as compared to the previous year)
1	Debtors Turnover Ratio	4.33	4.30	0.70	There is no Significant change during the reporting period.
2	Inventory Turnover Ratio	10.80	7.09	52.33	Increase due to better inventory management and higher sales volume during the reporting period.
3	Interest Coverage Ratio	N/A	N/A	N/A	During the reporting period, the borrowing limit Utilization was minimum due to internal accruals as compared to the previous year
4	Current Ratio	3.48	3.77	(7.69)	There is no Significant change during the reporting period
5	Debt Equity Ratio	0.33	0.29	13.79	There is no Significant change during the reporting period
6	Operating Profit Margin (%)	13.26	9.31	42.43	The increase in Operating Profit Margin was mainly attributable to improved operational efficiencies, better cost optimization measures and enhanced profitability from core business operations during the year.
7	Net Profit Margin (%)	12.56	6.73	86.63	The ratio increased significantly owing to higher profitability during the year. The increase was further supported by an exceptional gain arising from the transfer of a piece of land, which contributed materially to the net profit for the year.
8	Return on Net Worth	22.12	13.29	66.44	The increase in Return on Net Worth was primarily driven by the substantial growth in net profit during the year. The exceptional gain recognized on transfer of a piece of land also contributed significantly to the improvement in this ratio.

Material development in the Human Resource / Industrial Relations front:

During FY 2025-26, the Company continued to place strong emphasis on strengthening its Human Resource and Industrial Relations framework with a focus on skill enhancement, employee engagement, and maintaining a positive and collaborative work environment. The HR team is actively engaged in capability building initiatives, including on-the-job training, skill development programmes, and periodic awareness sessions aimed at improving operational efficiency and workforce productivity.

The Company also encourages effective communication across all levels to ensure smooth resolution of concerns and to foster harmonious industrial relations. A structured approach is followed to maintain employee motivation, workplace discipline, and engagement through appropriate recognition mechanisms and welfare measures. As on March 31, 2026, the total employee strength of the Company stood at 63.

Health, Safety and Environment

The Company accords highest priority to the health and safety of its employees and maintains a zero-tolerance approach towards workplace accidents. Safety management is integrated into day-to-day operations through clearly defined procedures, visible control measures, and fail-safe systems wherever applicable. Continuous awareness initiatives, prominently displayed safety instructions, and regular communication ensure that safety practices are consistently followed at the shop floor level.

Periodic training programmes and safety drills are conducted to enhance employee awareness and preparedness. The Company also undertakes regular reviews and assessments of safety systems to ensure continuous improvement in occupational health and safety standards.

The manufacturing operations are carried out in compliance with applicable occupational health, safety, and environmental regulations. The Company remains committed to environmental sustainability and strictly adheres to pollution control norms. Necessary equipment and systems have been installed for the treatment of industrial effluents and for minimizing air emissions, thereby ensuring that operations remain in conformity with prescribed environmental standards.

Disclosure of Accounting Treatment:

While preparing the Financial Statements, no different treatment from that prescribed in Accounting Standard(s) has been followed.

Cautionary Statement:

Statements made in the Management Discussion and Analysis section describing the Companys projections, estimates, expectations, or predictions may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied, depending on various factors beyond the Companys control.

Such factors include, but are not limited to, demand and supply conditions in domestic and international markets, volatility in input and raw material costs, changes in government policies, taxation and regulatory frameworks, competitive dynamics, as well as macroeconomic and geopolitical developments within India and globally.