L G Balakrishnan & Bros Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

Year 2024-2025 was a challenging year for the manufacturing industry. A mixed outlook, shaped by uncertainty due to various geopolitical and macroeconomic factors, such as impacts from US trade policies, political uncertainties around the Ukraine-Russia war and the Middle East conflicts.Inflation outlook also remained uncertain. Given the complicated global economic uncertainty and climate-related risks, Indias economy maintained steady growth supported by robust consumption and government spending up which enabled and growth.

COMPANY AND BUSINESS OVERVIEW

L.G.Balakrishnan & Bros Limited ("LGB") is a leading supplier of Transmission Chains, of products for automotive and Industrial Applications established in the year 1956. LGB provides a comprehensive range of Products. LGB leverages its collective experience to continuously improve its equipment and processes to meet current and future industry demands.

LGBs performance in 2025 remained positive, posting sales and a margin that demonstrated resilience despite market conditions. LGBs leadership position is based on three defining competitive strengths and a business strategy rooted in the Companys heritage. The Company distinguishes itself from the competition through its brand "ROLON" for technology leadership, manufacturing excellence, and customer trust and a committed group of executives and the work force.

OPPORTUNITIES / OUTLOOK

Indias economic growth outlook appears positive, and evolving conditions in the world has placed India in a well-positioned to capitalize on the evolving dynamics. The increase in market share of EV Segment offers a challenging but increased opportunity for our Company.

In view of the continuing challenging market environment, LGB is working closely with our customers in a disciplined manner to plan our capacity, based on the long-term market demand profile, investing in leading edge, technologies and to increase our presence throughout the region as we grow with new and existing products and Customers. LGB ensures that every product meets the highest standards of safety, efficiencyand customer

THREATS

The geopolitical environment is becoming increasingly uncertain, including talks about tariffs between some of the worlds largest economies which will daunt the automobile industry for an extended period. The future of the automobile industry is a blend of immense opportunities and significant disruptive threats to its business operations and adapt itself to ensure operational resilience.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company manufactures chains, sprockets and metal formed parts for automotive applications. Its business segments are transmission and metal forming. Its transmission products include chains, sprockets, tensioners, belts and brake shoe. It also offers metal forming products parts, machined components and wire drawing products for internal use as well as for other chain manufacturing plants, spring steel suppliers and umbrella manufacturers.

The sales performance during the year is as follows:

Particulars	Consolidated (Rs.in lakhs)
Transmission	198,904.46
Metal Forming	58,924.28
Total	257,828.74

RISkS ANd CONCERNS

The Board of Directors has adopted and approved a Risk Management Policy for the Company to ensure the ongoing identification, and mitigation of business risks, safeguarding the interests of its stakeholders. The Risk Management framework is designed to adapt to the evolving business environment and promptly address any emerging risks and concerns. The Risk Management Committee is updated on emerging risks and corrective actions every six months.

The Company has a robust risk management system covering all aspects of business including all essential operations, functional areas and business segments. The Risk Management framework ensures the safeguarding of the interests of all stakeholdersledbythoroughidentification, analysis, and mitigation of foreseeable business risks. A bottoms-up approach ensures timely risk recognition which helps in undertaking appropriate risk mitigation measures. The flexible nature of the risk management framework allows it to accommodate shifting business requirements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an independent Internal Audit function with a well-established risk management framework. The scope and authority of the Internal Audit function is derived from the Internal Audit Charter approved by the Audit Committee. The Company has engaged a reputable external firm to support the Internal Audit function for carrying out the Internal Audit reviews.

Reviews are conducted on an ongoing basis based on a comprehensive risk-based audit plan, which is approved by the Audit Committee at the beginning of each year. The Internal Audit team reviews and reports to the management and the Audit Committee about compliance with internal controls, and the efficiency and . operations as well as the key process risks.

The Audit Committee meets every quarter to review and discuss the various Internal Audit reports and follow up on action plans of past significant audit issues and compliance with the audit plan.

FINANCIAL ANd OPERATIONAL PERFORMANCE challenges. LGB continues to monitor key

On a consolidated basis, during the year ended March 31, 2025, your Company registered its Revenue from Operations of Rs.2,63,351.54 lakhs against Rs.2,39,547.19 Lakhs in the previous financialyear 2023-24 delivering a topline growth of 9.93% over previous financial year 2023-24. Rs.30,209.07 Lakhs as against Rs.27,149.58 Lakhs of the previous year, thus delivering a growth of 11.27% over the previous financial year 2023-24. of fine blanking for precision sheet metal On a standalone basis, during the year ended March 31, 2025, your Company registered its Revenue from Operations of Rs.2,44,527.69 Lakhs against Rs.2,28,015.84 Lakhs financial year 2023-24 delivering a topline theprevious growth of 7.24% over previous financial year 2023-24. Net Profit after Tax of the Company also improvedto Rs.29,066.21 Lakhs as against Rs.26,950.33 Lakhs of the previous year, thus delivering a growth of 7.85% over the previous financial year 2023-24.

kEY FINANCIAL RATIOS:

There is no significant change (i.e. change of 25% or more financial ratios.

key Ratios (%	Year ended March 31, 2025			Year ended March 31, 2024
Gross Margin	56.90 %			54.76 %
EBITDA Margin (excl. other income)	16.98 %			17.33 %
Operating Margin i.e. EBITDA (%)	19.26 %			19.53 %
PBT Margin (%)	16.34 %			16.25 %
Profit after	12.16 % Tax(%)			12.08 %
Employee Cost/ Revenue	16.12 %			14.87 %
Other Expenditure/ Revenue	23.79%			22.57 %
Effective Tax Rate	25.57 %			25.67 %
Diluted EPS (Rs.)	91.83			85.85
Balance Sheet Snapshot ( Rs. In Lakhs)		Year ended March 31, 2025	Year ended March 31, 2024
Net worth		1,86,940.38	1,61,805.48
Gross debt		9,718.32	8,509.19
Cash and cash equivalents		1,214.76	1,009.84
Fixed Assets (Plant & Machinery)		68,843.88	49,096.16
Debtor (days)		44	44
Inventory (days)		58	61
Creditor (days)		61	57
Working Capital Turnover (days)		41	48
RoE (%)		15.35 %	17.74 %
RoCE (%)		19.97 %	22.31 %
Return on Net worth (%)		15.55 %	16.66 %
Debtors Turnover (Times)		8.36	8.37
Inventory Turnover (Times)		6.32	6.02
Interest Coverage Ratio (Ratio)		21.76	19.02
Current Ratio (Ratio)		2.17	2.12
Debt Equity Ratio (Ratio)		0.05	0.05

HEALTH, SAFETY, SECURITY ENVIRONMENT

LGB is firmly committed to the policy of utmost safety in workplaces. The Company has all the required safety systems in place at all our facilities to ensure a high standard of safety and health of employees as well as the factory infrastructure. We have established all possible measures to remove/reduce risks to the health, safety and welfare of all the personnel at our facilities. The Company ensures all the safety equipment are in working condition, installed at appropriate locations and along with its user manual. All the employees are also periodically to the Financial Year 2023-2024) in any key trained on health and safety initiatives. Our workplace culture promotes the use of personal protection equipment and apparel, as well as strict adherence to managements health and safety directives.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

LGB foster a culture of inclusivity, collaboration, and continuous learning, where every employee is encouraged to reach their full potential. Our talent management initiatives focus on attracting and retaining top talent in the industry, nurturing their skills through training and development programs, and providing growth opportunities within the organization. We also emphasize employee engagement and work-life balance, ensuring a healthy and supportive work environment. By investing in our employees professional growth and well-being, we build a motivated and high-performing workforce that drives our success. The total number of permanent employees in the Company stands at 2,948.

CAUTIONARY STATEMENT

Statement in the Management Discussion and Analysis describing the Companys objectives, projections, expectations and estimates regarding future performance may be "forward-looking statements" and are based on the currently available information. The management believes these to be true to the best of its knowledge at the time of preparation of this report. However, these statements are subject to certain future events and uncertainties ,which could cause actual results to differ materially from those, which may be indicated in such statements.

	For and on behalf of the Board of directors
	B. VIjAYAkUMAR	P.PRABAkARAN
Place : Coimbatore	Executive Chairman	Managing Director
Date : 30.04.2025	DIN: 00015583	DIN:01709564