Lakshmi Machine Works Ltd Management Discussions

THE ECONOMIC LANDSCAPE

GROWTH AND UNCERTAINTY WALKED HAND-IN-HAND.

WORLD ECONOMY

World Economy: In 2024, the global economy demonstrated a combination of resilience and uncertainty. Economic growth was characterised by stability; however, it was noticeably uneven, with a discernible slowdown in the manufacturing sector, particularly in Europe and certain regions of Asia. This decline can be ascribed to persistent challenges within the supply chain, diminished demand, and subdued private consumption.

The United States economy exhibited performance that surpassed expectations, supported by robust consumer expenditure and a strong labour market. In contrast, Europe encountered sluggish demand coupled with elevated energy costs. Chinas economic growth has decelerated, attributed to challenges within the property sector and diminished consumer confidence, although stimulus measures have rendered some degree of stability.

Global trade reached a record high, marking a healthy uptick, according to the UN Trade and Development (UNCTAD). However, the momentum slowed in the latter half of the year.

In the fourth quarter, goods trade increased marginally, while services saw a better but modest rise, reflecting uncertainty for 2025.

Outlook: Global economic growth is anticipated to maintain a steady trajectory in 2025. Headline inflation is expected to continue declining across most nations throughout 2025, primarily driven by further reductions in food, energy, and goods prices. However, the global economy is stabilising at a low growth rate, insufficient to foster sustained economic development. Increased policy uncertainty, protectionist trade policies and geopolitical tensions further exacerbate this.

PROBABLE IMPACT OF RECIPROCAL TARIFFS

Risks to the merchandise trade forecast persist, particularly from the reactivation of "reciprocal tariffs" Q by the United States, as well as the spread of trade policy uncertainty that could impact non-US trade relationships. If realised, reciprocal tariffs would reduce global merchandise trade volume growth by 1.50% in 2025.

INDIAN ECONOMY

Indias economy exhibited stable growth during the fiscal year 2025, achieving a GDP growth rate of 6.3%, thereby maintaining its status as the fastest-growing major economy worldwide amid increasing volatility. This growth was supported by a resurgence in the rural economy, a substantial increase in government infrastructure expenditure, and favourable rainfall conditions during the latter half of the financial year.

Nevertheless, sluggish industrial growth and declining private investment hampered overall progress.

Inflation was effectively managed throughout the year, averaging 4.6%, a decrease from 5.4% in the fiscal year 2024. Consequently, the Reserve Bank of India (RBI) implemented a 25-basis point reduction in the repo rate, marking the first decrease in five years.

Manufacturing experienced a slowdown for most of the year due to weak external demand. However, by the end of the fiscal year, an upsurge in new orders contributed to an increase in the manufacturing index.

In FY25, Goods and Services Tax (GST) collections experienced an increase of 8.6% after accounting for refunds, amounting to C19.56 trillion, signifying a resilient domestic economy propelled by consumer spending.

Indias external trade surpassed US$800 billion during the financial year, predominantly driven by service exports, while merchandise exports remained stagnant. The current account deficit (CAD) is anticipated to comprise a greater share of GDP in the current fiscal year compared to the preceding fiscal year.

Outlook: Looking ahead, the Indian economy is on a stable yet moderated growth path in 202526. Global uncertainties and a high base effect will play significant roles. Subdued inflation will enable the RBI to pursue further rate cuts in the coming months, enhancing liquidity. The new tariff framework introduced by the US government is expected to influence global trade, including Indias, significantly. Nevertheless, exports are anticipated to increase in the upcoming financial year.

STEADY SUPPORT.

STRONG REPUTATION.

The Foundry Division is the cornerstone of LMW, renowned globally for its precision metal casting and innovative manufacturing solutions. Leveraging state-of-the-art technology and a commitment to quality, the division produces durable, high- performance castings. LMWs expertise ensures reliability, efficiency, and customisation, making the Company a trusted partner for industrial progress.

The Foundry Division plays a crucial role in supporting the strategic objectives of the Textile Machinery Division (TMD) and the Machine Tool Division (MTD), with a significant portion of its production dedicated to internal consumption.

In addition to this essential internal support, the Foundry Division manufactures complex and large- scale castings for esteemed international brands, serving domestic and global markets.

THE FOUNDATIONAL ROLE OF METAL CASTINGS

Metal castings form an indispensable foundation for modern society. Foundries, the producers of these essential components, are critical to a vast spectrum of industries, from automotive and aerospace to infrastructure and consumer goods. By manufacturing structural elements and crucial machinery parts, foundries enable the creation of nearly all manufactured products on which our daily lives depend. This fundamental role underscores the often- unseen but vital contribution of the Foundry sector to the functioning and progress of contemporary society.

PERFORMANCE FOR FY25: NAVIGATING HEADWINDS, WE MOVED FORWARD

In FY25, the Foundry Division encountered significant headwinds from reduced order volumes from its

primary internal client, the Textile Machinery. This contraction in internal demand led to decreased capacity utilisation within the foundry units, consequently impacting the divisions overall financial performance. Recognising these challenges, the Foundry Division proactively implemented strategic measures focused on streamlining production processes, reducing operational costs, and enhancing overall efficiency. These initiatives undertaken during the fiscal year have established a robust foundation for future growth.

INDUSTRY LANDSCAPE: CHALLENGES & OPPORTUNITIES

The Global Scenario: In 2024, the global metal casting industry encountered various challenges, including labour shortages, increased raw material costs, geopolitical tensions contributing to supply chain disruptions, and the imperative for innovation and adaptation to emerging technologies and evolving market demands.

Nonetheless, the metal casting market is anticipated to experience significant growth in the forthcoming

years, driven by factors like industrial expansion, technological advancements, and increasing demand from sectors including automotive, railway locomotives, pumps and valves, and aerospace. Furthermore, the transition towards sustainable practices and product customisation will also contribute to growth.

The global metal casting market is large and projected to grow significantly in the coming years. It was valued at US$177.54 billion in 2024 and is predicted to increase to approximately US$400.74 billion by 2034.

The Domestic Space: The Indian Foundry industry constitutes one of the oldest and largest sectors within the country and ranks as the second-largest producer of castings globally. The rise in industrialisation has augmented the demand for castings within India, thereby propelling the growth of the Indian metal casting industry.

FY 2025 witnessed a complex interplay of factors significantly influencing the foundry sector. Prevailing global geopolitical instability, coupled with substantial fluctuations in the cost of essential raw materials and alloys, exerted considerable pressure on profitability.

The limited availability of skilled foundry workmen further presented challenges to maintaining optimal production efficiency and stringent quality standards. Moreover, the industrys ongoing commitment to satisfying the increasing demand for higher-quality castings while simultaneously adhering to progressively rigorous industry and customer specifications also played a notable role in shaping overall performance during this period.

The Indian metal casting market was valued at US$13.20 billion in 2024. Projections from IMARC Group indicate that by 2033, it is expected to grow to US$21.90 billion, with a CAGR of 5.51% between 2025 and 2033.

SECTOR INSIGHTS:

TRENDS SHAPING THE FUTURE

Within the diverse user sectors, we plan to focus on the following

ENGINEERING LOCOMOTIVE PUMP & VALVES POWER & ENERGY DEFENCE

ENGINEERING INDUSTRY

Indias Capital Goods manufacturing industry functions as a robust foundation for the countrys involvement in various sectors, including Engineering, Construction, Infrastructure, and Consumer Goods. This sector constitutes 27% of the total number of factories within the industrial sector and accounts for 63% of all foreign collaborations. Furthermore, the Capital Goods sector contributes 12% to Indias manufacturing output and nearly 2% to its GDP.

The Indian engineering industry is set for sustained growth in the coming years, spurred by infrastructure development, manufacturing expansion, and rising exports. Key sectors such as renewable energy, space research, and defence technology demonstrate considerable promise.

India exports engineering goods to markets like the US, Europe, and the UAE. The export of engineering goods is projected to reach US$200 billion by 2030 from about US$109.32 billion in FY24. The IMARC Group anticipates that the machine tools market will reach US$2.5 billion by 2028, demonstrating a CAGR of 9.4% from 2023 to 2028.

LOCOMOTIVE INDUSTRY

Indias locomotive industry comprises both the public and private sector players. The Economic Survey for 2024-25 noted a rise in locomotive production, with 1,042 locomotives produced in FY25 (April-November) compared to 968 locomotives in FY24 (April- November).

In the fiscal year 2025, the Indian Railways embarked on an initiative aimed at augmenting locomotive production, establishing an ambitious target of 1,500 units, which signifies a 27% increase. This initiative underscores the emphasis on producing additional freight train locomotives, modernising signalling systems, and expanding the railway network.

The Indian Railways is likely to start exporting locomotives to the African market in 2025. The project is of strategic importance as it positions India as a global locomotive manufacturing hub and aligns with the "Make in India" and "Make for the World" initiatives under the "Atmanirbhar Bharat" vision.

PUMPS & VALVES INDUSTRY

Pumps and valves assume a pivotal role in various sectors within India, including agriculture, water management, oil and gas, power and energy, infrastructure, and construction, among others, thereby positioning this industry as a significant contributor to the nations economic development. Domestic pump manufacturers fulfil nearly all of the countrys demands. Furthermore, India exports pumps and valves to approximately one hundred countries, thereby capturing a considerable share of global trade.

This sector has seen remarkable growth in recent years, fuelled by the rise of domestic infrastructure projects and water-dependent industries.

The government has taken proactive measures to implement various programs and policies aimed at enhancing the nations industrial and infrastructural landscape. Initiatives centred on water and wastewater management, including the National Mission for Clean Ganga and the Jal Jeevan Mission, are instrumental in stimulating the demand for specialised valves for water treatment.

The growing adoption of smart valves represents a significant trend in the Indian industrial valve market. These valves facilitate real-time monitoring and control of fluid flow within industrial systems.

The Indian pump market was worth C214.70 billion in FY24 and is expected to reach C381.60 billion by FY29, growing at a CAGR of 12.20% between FY24 and FY29. The Indian industrial valve market is estimated to be around US$3.50 billion. It is expected to grow significantly in the coming years, driven by factors like infrastructure development, expansion of process industries, and increasing focus on renewable energy.

POWER & ENERGY INDUSTRY

India ranks as the third-largest producer and consumer of electricity globally, with an installed power capacity of 454.45 gigawatts (GW) as of 31^st October 2024.

The country boasts of a total installed capacity of 203.10 GW from renewable energy sources, including hydropower. Indias power demand is anticipated to persist in its upward trajectory. Projections indicate a peak demand of approximately 270 GW in the forthcoming fiscal year (2025-26) and potentially 446 GW by 2035.

Furthermore, to reduce reliance on fossil fuels and combat carbon emissions, India has established an ambitious goal of achieving 500 GW of renewable energy capacity by 2030, including 280 GW derived from solar power. Additionally, the nation aims for 50% of its electricity to come from non-fossil fuel sources by 2030.

India ranked fourth on the list of countries to make significant investments in renewable energy by allotting US$77.70 billion between 2015 and 2022. The PLI scheme promotes manufacturing high-efficiency solar PV modules in India, reducing import dependence.

THE ROAD AHEAD: OUR FOCUS AREAS

We aim to position the Foundry Division as a significant and sustained contributor to the Companys profitability. To transform this ambition into a reality, we have drawn up a comprehensive strategic blueprint summarised below.

Enhance external customer engagement by strategically focusing resources.

Build capabilities and expertise to position the division as a specialist foundry for critical industrial components, catering to domestic and international customers.

A heightened focus on scaling quality benchmarks for complex castings will provide a significant and sustainable improvement in divisional profitability.

TRUE TO THE MAKE IN INDIA DRIVE

A prominent leader in spinning technology, LMWs Textile Machinery Division (TMD) serves both the Indian and international textile sectors. Since being established in 1962 to empower Indian textile mills, TMD has propelled LMW to become one of the select global companies offering end-to-end spinning solutions.

TMDs remarkable growth over the years has established it as a centre of innovation. The division has been at the forefront of developing smart machinery, diligently crafting each phase from the Blow Room to the Auto-winder, with a steadfast emphasis on precision, efficiency, and reliability.

Furthermore, the division guarantees seamless operations for its partners by supplying authentic spare parts and ensuring optimal performance throughout the textile supply chain.

With each significant milestone, the division has augmented its presence, consolidating its foundations in India while extending its influence into global markets. Decades of expertise, supported by an extensive installed spindle capacity, have positioned LMW as a reliable global partner. Nonetheless, growth has never merely been about numerical

gains; it has been about cultivating relationships and comprehending the evolving needs of the textile industry.

To enhance customer-centricity on a global scale, the Company has instituted wholly-owned international subsidiaries and broadened its network. This strategic growth initiative has enabled the Company to draw closer to its customers, enabling agile responses to the dynamic market demands and expediting the delivery of innovative products.

SPINNING MACHINERY: THE HEART OF THE TEXTILE INDUSTRY

Textile machinery includes various devices that convert raw fibres into finished products. These machines perform multiple functions, such as spinning, weaving, dyeing, and finishing. Each system is essential for maintaining the quality and efficiency in various stages of textile production. These machines ensure uniformity and consistency, making them indispensable for high-quality textile manufacturing.

The evolution of textile machinery has been marked over the years by advancements in automation, AI integration, and sustainable processing, resulting in higher productivity, reduced waste, and energy- efficient manufacturing. As demand for textiles continues to grow globally, textile spinning machinery remain at the heart of the industry, driving progress and shaping the future of textile technology.

PERFORMANCE FOR FY25:

SPINNING A WINNING STRATEGY

The lacklustre performance of the textile sector led

to the deferral of capital projects. Consequently,

there was a decline in order flows for the division.

Nonetheless, the team exhibited resilience by

focusing on fortifying its core competencies and

aligning with the long-term vision, demonstrating

a firm commitment to sustainable growth. Also,

their commitment to efficient and timely deliveries _

resulted in the successful execution of the order book, t-

enhancing the Companys reputation within the textile

industry.

INDUSTRY LANDSCAPE:

CHALLENGES & OPPORTUNITIES

The global scenario: The rapid expansion of the textile and apparel industry positions this sector as a significant area of growth, attracting considerable interest from investors. As global textile manufacturers endeavour to enhance productivity and reduce costs, innovations driven by technology and automation are revolutionising the industry. Additionally, sustainability and Industry 5.0 are fundamentally transforming the sector by promoting a collaborative environment where skilled human workers interact with advanced technologies to facilitate highly personalised and on- demand production. This approach not only increases efficiency and enables greater customisation but also

emphasises sustainable practices through optimised resource utilisation and circular economy models, ultimately building a more resilient and human-centric future for global textile manufacturing.

The performance of the textile spinning machinery industry is closely linked to the performance of the textile and apparel sector. The global textile industry faced various challenges in 2024-25. Economic uncertainty, elevated inflation rates, and increasing production costs strained the industry, resulting in cautious investment strategies and sluggish growth.

Conversely, Asia and South America experienced a moderate recovery, with fibre producers and weavers noting some growth. However, weak demand continues to pose a concern, overshadowing marginal improvements in order intake and capacity utilisation. The cotton sector also encountered difficulties as global production surpassed demand, leading to elevated stock levels and price pressures.

This underperformance significantly influenced the textile spinning machinery market, catalysing a decline in demand for new equipment, reduced capital investments, and prudent expansion strategies among yarn manufacturers. Despite these challenges, the industry demonstrated adaptability by emphasising automation, sustainability, and cost-effective solutions. Manufacturers have increasingly pivoted towards energy-efficient machinery and AI-driven production systems to maintain competitiveness.

The market is expected to prioritise agility, green technology, and smart manufacturing, with growth concentrated in emerging markets and premium segments.

Recent developments, including the U.S. tariff structure, are likely to substantially impact the global textile machinery industry, disrupting supply chains and increasing costs for both manufacturers and consumers. This situation presents challenges for textile manufacturers reliant on imported machinery, as they now confront higher operational costs and delays. Furthermore, small textile-exporting nations may face significant obstacles due to heightened tariffs, which could adversely affect their production capabilities.

However, given that textiles are a basic necessity with relatively inelastic demand, the increased costs and trade barriers are likely to incentivise a geographical shift in textile production, thereby ultimately stabilising the overall global demand for textile machinery as new manufacturing hubs emerge and existing ones adapt.

The domestic scenario: The Indian textile machinery industry experienced a mixed performance during FY25. Domestic demand exhibited resilience, supported by governmental initiatives such as the PM- MITRA and PLI schemes, which stimulated orders for spinning and automation equipment. However, exports faced difficulties due to weakened global demand and disruptions within the supply chain.

Pressures from input costs, particularly those related to steel and components, moderated during the latter half of the fiscal year. Technological advancements and heightened operational efficiencies ultimately sustained the industry, albeit growth continued to be constrained by external challenges.

Going forward, the industrys biggest challenge will be the US tariff on Indian textile products. However, the reciprocal tariff on Indian textile products, based on a factor of equalisation, remains comparatively lower than the tariffs of most other competing countries at this stage.

Although this appears beneficial for India, how the cost increase adjusts is crucial. Historically, suppliers bore much of this escalation. With a steep rise, not all costs can shift to consumers, prompting importers to seek more cost-effective sources. Countries with efficient logistics and supply chains will maintain competitive pricing better. Also, competing countries with lower reciprocal tariffs than India will become more attractive, shifting trade flows and impacting Indias export share.

Additionally, a possible decline in US consumer demand, coupled with zero-tariff benefits offered to several countries, could diminish the opportunities initially anticipated amid the ongoing tariff war.

Other opportunities:

1. Modernisation & Automation: With the governments PM-MITRA parks and PLI scheme, demand for high-speed, IoT-enabled, and energy- efficient machinery will rise as mills upgrade outdated setups.

2. Export Potential: Due to the ongoing political/ economic crisis in select markets, global textile buyers are diversifying and exploring alternative sourcing destinations.

3. Sustainability Push: Eco-friendly solutions and renewable energy-integrated systems will gain traction.

The Cotton space: In FY25, the Indian cotton industry experienced a blend of stabilisation and challenges. Domestic demand exhibited signs of recovery; however, global trade uncertainties, price fluctuations, and climatic factors negatively impacted production.

Cotton prices, which softened in the preceding fiscal year, are anticipated to recover slightly due to a decrease in cotton acreage and an upturn in demand from downstream industries, including apparel and home textiles. Export activities remained moderate, with India sustaining its presence in global cotton markets despite competition from other nations.

The cotton industry in fiscal year 2026 and beyond is predicted to evolve, characterised by growth opportunities and challenges. The Indian government has introduced a five-year Cotton Mission to enhance cotton productivity, particularly for extra-long staple varieties, ensuring a consistent supply of high- quality cotton. This initiative seeks to diminish import dependence and bolster Indias competitiveness in the global textiles market, where micro, small, and medium enterprises (MSMEs) account for 80% of production capacity.

Moreover, the Production-Linked Incentive (PLI) scheme and increased financial allocation for the Ministry of Textiles will facilitate modernisation, sustainability, and export growth. Cotton prices are expected to remain stable, influenced by domestic supply shortages and global trade dynamics.

The industry is also likely to gain from the global geopolitical crisis as international buyers seek to diversify their supply chains. f

THE ROAD AHEAD: OUR FOCUS AREAS

We aim to solidify our presence in the textile machinery sector by becoming closer to and increasingly relevant to our customers. To tread this ambitious journey, we have identified important strategies that will progressively scale our position in this dynamic business space.

Progressively increase the automation content in machinery, thereby ensuring high productivity, efficiency and reduced cost of ownership.

Enhance our global presence by further consolidating our position in key textile hubs worldwide.

Significantly strengthen our service quotient to ensure that our machines operate at optimum efficiency and deliver on their promise.

PRECISION. PERFORMANCE. PROGRESS.

The Machine Tool Division (MTD) pioneered Indias CNC machine manufacturing sector. Established in 1988 MTD was the first of its kind in India!

The division employs state-of-the-art facilities coupled with technological partnerships to meet the needs of various industries, including automotive, aerospace, die & mould, pumps and valves, oil & gas, industrial machineries, foundry & forging, fittings and others.

Furthermore, in alignment with its commitment to service excellence, the division provides spare parts to guarantee the continuous operation of its machines throughout their operational lifespan.

The technical team also offers training to clients, ensuring their ability to operate these machines efficiently and effectively.

THE DYNAMIC WORLD OF CNC MACHINES

Technological advancements consistently redefine the dynamic landscape of the CNC (Computer Numerical Control) machining industry. Presently, the sector is experiencing a heightened integration of Artificial Intelligence (AI) and Machine Learning (ML) capabilities. These advancements enable CNC machines to analyse historical performance data, predict tool degradation, and autonomously re-calibrate, thereby enhancing accuracy, minimising disruptions, and improving overall productivity. Such developments reinforce the essential role of CNC technology in promoting innovation across diverse industrial applications.

PERFORMANCE FOR FY25: DESPITE CHALLENGES, WE MOVED FORWARD

Despite a passive automotive sector, the division maintained a stable performance, achieving marginal growth. Increased competition from imported high- end machinery further intensified the environment. However, the teams persistent efforts in marketing advanced machines yielded positive outcomes, driving topline growth and improving profitability.

INDUSTRY LANDSCAPE: CHALLENGES & OPPORTUNITIES

The Global Scenario: FY2025 was a year of great economic uncertainty for the global manufacturing sector. Interest rates, inflation, political uncertainties and fears of a recession have created a climate of apprehension among industry leaders.

Key industries such as automotive and construction, which heavily depend on CNC machines, have reduced capital investments due to uncertainty and consequently diminished consumer spending. For example, a slowdown in the global automotive sector likely limited capacity expansion, decreasing the demand for new machine tools.

Supply chain disruptions, such as those from the Red Sea crisis or lingering effects of global logistics bottlenecks, impacted the market by delaying raw material deliveries (e.g., metals, semiconductors).

These issues increased costs and lead times. However, technological adoption (AI, IoT) and demand for high- precision parts in resilient sectors offered some relief.

Growth in the sector remained in the low single digits, reflecting cautious expansion rather than a decline.

Estimates suggest that in 2024, the global CNC market was valued at US$95.29 billion (estimated). Asia Pacific led the global market with a 55.32% share. However, despite several geopolitical tensions, it is anticipated to rise from US$101.22 billion in 2025 to US$195.59 billion by 2032, reflecting a CAGR of 9.9% throughout the forecast period in 2024.

The Domestic Space: The Indian CNC machine market is closely linked to global manufacturing sectors such as automotive, aerospace, oil & gas, pumps and valves, die & mould and fittings. Consequently, a global economic slowdown in 2024, characterised by inflation and high interest rates, has dampened demand for CNC machines in price sensitive segments like two- wheelers. Furthermore, the growth of domestic auto sales has been modest, restricting capacity expansion and, consequently, CNC purchases.

Rising raw material costs and logistics disruptions have increased expenses, affecting affordability and margins. This trend aligns with global trends, where CNC machine prices have trended upward. Moreover, the growth of imported high-end CNC machines may have outstripped that of domestic manufacturers, posing challenges for local players despite their operational enhancements.

Despite these challenges, the Indian CNC machine market has remained resilient. While growth has been tempered by external pressures, it has been supported by strategic shifts and government backing. FY25 is projected to experience mid-to-high single-digit growth. Estimates suggest that the India machine tool market is anticipated to increase by US$3.08 billion at a CAGR of 11.60% between 2024 and 2029.

SECTOR INSIGHTS: TRENDS SHAPING THE FUTURE

The Automotive Component Sector: According to a report by a global research outfit, the automotive components industry is on the cusp of substantial growth and advancements, driven by the countrys strategic position within global supply chains, increasing demand for premium automotive features, and the development of alternative powertrain technologies. Collectively, these factors possess the potential to elevate the industrys market size to US$200 billion by the year 2030, growing at 16% CAGR, up from US$74 billion in 2024, with the majority of this growth anticipated to stem from the export market.

While the domestic market is anticipated , _ i

to continue contributing to Indias auto .t

component industry over the upcoming decade, exports are projected to increase fivefold to reach US$100 billion. Domestic OEM and aftermarket sales are predicted to grow at a CAGR of 6%, achieving US$89 billion and US$16 billion, respectively. This growth trajectory may position component exports as the largest segment by 2030, empowering the industry to achieve self-reliance and establish itself as a global hub for future mobility solutions.

Rating agency ICRA forecasts that the Indian auto components sector will invest C25,000-30,000 Crores in capital expenditure (capex) in FY26, focusing on capacity expansion, localisation, and technological improvements, particularly in electric vehicles (EVs).

ICRA anticipates that auto ancillary companies will allocate approximately 7-8% of their operating income towards capital expenditure in the medium term.

The Production-Linked Incentive (PLI) scheme, which aims to encourage investments in advanced technology and electric vehicle components, will support this.

A recent announcement by the US, imposing a 25% tariff on imported cars, auto components, and light commercial vehicles, is expected to have a limited impact on Indias automotive exports, as data from 2023 indicates that only a relatively small proportion, around 16%, of these exports were destined for the United States.

Industrial Automation: Industry 4.0 has taken off in India, with manufacturers embracing various technologies to optimise their processes across various verticals using automation. Automation technologies, such as robotics, control systems, and artificial intelligence (AI), are being increasingly adopted across various manufacturing sectors, including automotive, industrial machineries, electronics and medical.

The market is further fuelled by the governments push for "Make in India" and "Atmanirbhar Bharat" initiatives, which promote self-reliance and encourage investment in automation technologies to enhance the competitiveness of domestic industries. Additionally, the rising demand for energy-efficient solutions, coupled with the need to reduce operational costs and minimise human errors, is accelerating the adoption of industrial automation systems.

Industrial machinery and automation refer to introducing operating systems such as robots, IoT, and AI into the manufacturing industry to control various

processes and machines and take over tasks from people.

For India to compete globally, it must improve productivity, profitability, safety and rate of adoption of sustainable processes. To this end, Industrial Automation provides the way forward. The energy, oil & gas, forging, electronics and automotive industries are at the forefront of adopting various automation technologies. Estimates suggest that Indias Industrial Automation Market, valued at US$16.2 billion in 2024, is expected to reach US$37.42 billion in 2030 at a CAGR of 14.80% through 2030.

Even as Industry 4.0 is spreading fast across Indias industrial landscape, Industrial India is already looking forward to the next major milestone. Artificial Intelligence.

Artificial Intelligence (AI) is expected to drive the next industrial revolution. Factories already have sufficient automation, but AI-driven manufacturing can soon bring about significant changes and has taken centre stage in the Industry 5.0 era. Unlike Industry 4.0, which focuses on automation, connectivity, and data-driven decision-making, Industry 5.0 integrates human intelligence with advanced technologies such as AI, robotics, and open automation-fostering more agile, adaptive, and sustainable industrial ecosystems.

The Defence & Aerospace Sectors: The defence sector is experiencing notable growth due to

increased defence budgets, key institutional and policy changes, and a heightened focus on indigenising equipment. This focus has fuelled both domestic capital procurement and defence exports, signalling a promising future for companies within the sector.

In its drive for self-reliance, India set a roadmap for the Defence Acquisition Procedure (DAP) 2020, which mandates 50% Indigenous content in procurement contracts. A new procurement category, Buy (Global - Manufacture in India), was also introduced to encourage foreign OEMs to establish domestic manufacturing and maintenance facilities. This is expected to open significant opportunities for the Machine Tools sector.

Furthermore, the global space race, frequent space missions, and the launch of satellites by various private entities and smaller nations are elevating the industry to new heights.

The Electronic Manufacturing Services (EMS)

Industry: The electronics manufacturing sector in India is on the cusp of a transformative journey driven by favourable government policies, increasing domestic demand, and a robust push toward self-reliance.

India is emerging as a preferred global destination for electronics manufacturing due to increasing assembly activities and unprecedented demand in the EMS sector, particularly in mobile phones, automotive, and industrial segments.

Key policy initiatives, such as the Production Linked Incentive (PLI) scheme and the recently proposed PLI for components, are expected to offset cost disabilities and promote domestic manufacturing of high-priority components like PCBAs, batteries, displays, and enclosures.

Specifically, the consumer electronics and mobile phone sectors will see considerable expansion in the upcoming years. Mobile phones represent the largest share of the EMS market, with India currently ranking as the second-largest manufacturer globally.

Estimates suggest that Indias total electronics production is projected to grow at a robust CAGR of 26% between 2023-30, reaching US$500 billion. Indias push toward import substitution and increased domestic production offers significant growth opportunities.

Oil & gas: Fitch Ratings projects that Indias demand for petroleum products will increase by 3-4% in FY25, fuelled by heightened consumer, industrial, and infrastructure needs. This growth is mainly attributed to diesel and petrol production, which comprises a large share of the countrys petroleum consumption. This growth trend follows rises of 3% in the first seven months of FY25 and 5% in FY24.

Oil demand in India is expected to double, reaching 11 million barrels per day by 2045. By 2029-30, diesel consumption is projected to rise to 163 MT, with diesel and gasoline making up 58% of the nations oil demand by 2045. Over the past decade, Indias refining capacity has grown from 215.10 million Metric Tonnes Per Annum (MMTPA) to 256.80 MMTPA and is estimated to rise to 309.50 MMTPA by 2028.

THE ROAD AHEAD:

OUR FOCUS AREAS

We remain committed to sustaining profitable business growth over the foreseeable future. We have prioritised key measures to facilitate our journey towards our ambitious goal.

Expand into dynamic, high-growth industries to strategically diversify our business and reduce single-sector dependency.

Expand our product basket with superior machine variants; develop machines for specific niche applications.

Enhance our service quotient to ensure our customers derive maximum returns from their investments.

BUSINESS DIVISION 4

ADVANCED TECHNOLOGY CENTRE

147.64

Revenue in FY 25 Crores)

TECHNIQUE, TECHNOLOGY & TENACITY.

The ATC (Advanced Technology Centre) division stands at the forefront of precision engineering and innovation, catering to the aerospace and defence industries with specialised expertise in metallics and composites.

Established as a key pillar of LMWs

diversification strategy, ATC leverages cutting-

edge manufacturing capabilities to deliver high-

quality components & sub-assemblies, ranging

from air intake assemblies to payload fairings,

for domestic and global markets.

With a strong focus on passion, process, and promise, the division has nurtured a reputation for excellence, securing long-term contracts with global customers and prestigious projects from prominent aerospace players in India and worldwide.

THE DYNAMIC WORLD OF ADVANCED TECHNOLOGY IN AEROSPACE

The Aerospace and Defence sector encompasses many fundamental manufacturing industries namely, aircrafts, guided missiles, space vehicles, military vehicles, and all associated parts and systems. Implementing cutting-edge technology is crucial in fostering precision, innovation, and efficiency.

Key innovations driving the industry, such as lightweight materials, advanced composites, and top-of-the-line propulsion systems, underpin the advancement of high-performance components, thereby enhancing operational capabilities. This sector is of paramount importance not only for the economy but also for national security, as well as for business and leisure travel, space exploration and development, and the ongoing progression of new technologies that cater to various industry sectors.

PERFORMANCE FOR FY25: DESPITE CHALLENGES, WE MOVED FORWARD

The ATC division reported a stable performance despite sectoral volatility and customer-related challenges.

The marketing team secured new long-term contracts, even as the operations team progressed component development to full-scale production.

The Company strengthened its presence in the aerospace segment by delivering critical components for prestigious aerospace programs, demonstrating its technical excellence. The team also delivered critical components for the programs of the Indian Defence, building Indias Atmanirbharta (self-reliance) in defence.

The composites division maintained a strong performance, meeting tight deadlines for space, defence, and aviation projects. The Company continued to explore new opportunities while maintaining operational efficiency.

INDUSTRY LANDSCAPE: CHALLENGES & OPPORTUNITIES

The Global Scenario: The global aerospace and defence industry has been receiving significant attention recently. This is due to growing political volatility worldwide, an increasing focus on national security, a rising space race between countries and the growing use of civil and military aviation. Consequently, the supply chain for these industries is extensive, creating numerous opportunities across various sectors and subsectors.

In 2024, the industry experienced significant growth and transformation, driven by rebounding air travel, increased defence spending, the proliferation of small satellite technologies and the adoption of emerging technologies like AI.

The industry shows strong growth potential, having fully recovered from the pandemic despite inflation and supply chain challenges. Commercial aviation is expanding with rising aircraft demand and an untapped

middle-class market, while air cargo remains resilient with steady freighter production.

The defence sector is advancing through innovation and modernisation amid geopolitical tensions, while the space sector is emerging as a transformative force with high market potential.

With a projected US$1 trillion growth over the next decade, the sector thrives on innovation, startups, and M&A, adding a new dimension of growth and excitement. However, profitability remains a challenge, historically trailing broader industrial benchmarks.

THE DOMESTIC SCENARIO Civil Aviation: India is one of the worlds fastest- growing aviation markets, and according to government data the domestic passenger traffic is expected to double to 300 million by 2030. Estimates by aviation research group CAPA India indicate that traffic on overseas flights could more than double by then.

INCREASED SECURITY SPENDING

The global defence expenditures reached US$2.46 trillion in 2024, according to a recent report by the International Institute of Strategic Studies (IISS). This marked an increase from US$2.24 trillion in the previous year, bringing the average defence spending to 1.90% of global GDP, up from 1.60% in 2022 and 1.80% in 2023, as per the same report.

Going forward, countries worldwide are strengthening their military forces and increasing defence budgets to assert their : influence and power in an increasingly volatile and complex geopolitical world.

THE ROAD AHEAD: OUR FOCUS AREAS O

OOur primary objective is to enhance the order

inflow for the composites unit to ensure optimal utilisation of capacity and capability. The metallics team will further focus on fulfilling commitments about the long-term orders received.

@We seek to advance towards developing and delivering large and complex parts, which will be increasingly in demand as defence budgets worldwide continue to rise.

?We will take every initiative to progress further along the value chain to strengthen growth and align with our long-term strategic objectives.

,

jPROMISING PROSPECTS

; The valuation of the

: Indian aerospace and

: defence market stood

at US$27.10 billion in : 2024, with projections

: indicating an increase

to US$54.40 billion by

: 2033, achieving a CAGR :

. of nearly 7%.

In the worlds most populous nation, airlines have made unprecedented orders with Airbus and Boeing, aiming to double the number of airports by 2030 to rival major aviation hubs such as Singapore and Dubai. S&P Global Ratings anticipates that Indian airlines will allocate US$150 billion towards 1,700 aircraft orders and an additional US$24 billion for new airport development. With increasing passenger traffic and a growing fleet, the Indian MRO sector presents considerable growth opportunities.

The industry, valued at US$1.70 billion in 2021, is expected to reach US$4 billion by 2031, growing at a CAGR of 8%. India aims to become an MRO hub, supported by government initiatives, including reducing GST on MRO services from 18% to 5%.

This reform will go a long way toward developing a competitive MRO ecosystem in India.

Military Aviation: The Indian aerospace and defence sector stands at a pivotal juncture, primarily attributable to the modernisation and indigenisation initiatives undertaken by the Indian armed forces. An escalation in the defence budget, coupled with increasing governmental support for Atmanirbharta- signifying

self-reliance in defence manufacturing- is projected to catalyse market growth in the forthcoming years.

The expected surge in space programmes is anticipated to stimulate market expansion further.

In addition, the commercialisation of the aerospace and defence sectors, an uptick in international collaborations, an intensified emphasis on space exploration, and the advancement of cutting-edge technologies will likely augment the production and sale of associated equipment within the country.

On 1 February 2025, the Union Budget for the fiscal year 2025-26 appropriated a historic sum exceeding C6.81 Lakh Crore for the Ministry of Defence (MoD), denoting an increase of 9.53% relative to the preceding fiscal year.

Of this total allocation, C1.80 Lakh Crore has been earmarked under the Capital Budget for the Armed Forces, underscoring the emphasis on modernisation as a principal area of focus. Moreover, C1.12 Lakh Crore has been designated for procurement from domestic industries. Furthermore, there has been a 12% increase in the Defence Research and Development Budget.

HUMAN RESOURCE

Human resources well-being is paramount, as engaged and healthy employees significantly contribute to productivity, innovation, and retention, thus directly influencing overall business success. Therefore, when LMW prioritises employee wellness, it cultivates a positive organisational culture and establishes a sustainable competitive advantage.

In pursuit of this objective, the Company has initiated a series of strategic initiatives to enhance workforce capabilities, improve productivity, and foster an inclusive and future-ready environment.

A significant emphasis has been placed on skill development, with a particular focus on crosstraining employees to assume multiple roles, thereby enhancing operational flexibility and resilience. Despite challenging business conditions, this approach has effectively optimised workforce utilisation while preparing employees to meet evolving demands.

To promote workforce sustainability, the Company has actively transitioned high-performing apprentices into permanent positions, thereby safeguarding the continuity of skills. Furthermore, efforts surrounding diversity and inclusion have been prioritised, with a concerted initiative to increase womens participation in manufacturing roles, acknowledging their positive influence on productivity and workplace culture.

Technology plays a pivotal role in transforming HR operations through the integration of smart manufacturing tools, which allow for real-time monitoring of equipment and processes. This shift toward data-driven operations has significantly

enhanced efficiency and transparency across production units. Team members have been trained to use new-age technology tools effectively to ensure the organisation achieves its goals.

Employee welfare continues to be a foundational aspect of our strategy, underscoring proactive measures to secure enhanced benefits for both current and former personnel, thereby reinforcing long- term loyalty.

Looking ahead, the HR strategy focuses on further upskilling, enhancing diversity, and optimising workforce structure through technological advancements and process improvements. A planned transition to a new enterprise system will support these objectives, while a commitment to attrition-based restructuring will guarantee stability and fairness.

Collectively, these initiatives epitomise a balanced approach—driving efficiency while nurturing talent— thereby positioning the Company for sustained growth within a competitive landscape. As of 31^st March 2025, the Company employed 3,627 permanent employees.

RISK MANAGEMENT

The Companys procedures for risk assessment, mitigation, and management are comprehensive and strategically essential for the organisations sustained success. As a practice, the Board periodically engages with these procedures. It conducts active reviews of risk mitigation strategies to ensure they are rigorously evaluated and enhanced, reinforcing its commitment to excellence.

INTERNAL CONTROL SYSTEM & ADEQUACY

The internal control mechanism of the Company is comprehensively documented, as evidenced in the ERP Suite. It is a common practice within the organisation to establish well-considered business plans for each fiscal year. Budgets detailing revenue and capital expenditures for each quarter are derived from the annual business plan. The actual performance is evaluated against the budget, and any variances are appropriately addressed.

The Company maintains an internal audit system commensurate with its size and business volume.

The internal audit programme encompasses all functions and activities of the Company. A statutory compliance audit team is established to ascertain compliance across all areas and reports directly to management. This arrangement facilitates the efficient and effective implementation of corrective actions as necessary.

The Audit Committee of the Board of Directors convenes quarterly to review the reports from both the Internal and Statutory Audits, as well as to verify all financial statements, thereby ensuring compliance.

MOVEMENT IN KEY RATIOS

Ratio	2024-25	2023-24	Change %	Remarks
Current Ratio	2.6	2.09	24.12	-
Debt-Equity Ratio			Not Applicable
Debt Service Coverage Ratio			Not Applicable
Return on Equity*	8.61%	14.97%	-42.48%	Lesser margin due to decrease in sales.
Inventory Turnover Ratio	5.17	7.52	-31.25%	Decrease in turnover
Trade Receivables Turnover Ratio	14 94	18 51	-19.27%
Trade Payables Turnover Ratio	3 27	4 61	-28.95%	Decrease in turnover
Net Capital Turnover Ratio	179	3 93	-54 41%	Decrease in turnover
Operating Profit Ratio**	2 16	8 90%	-75 72%	Decrease in turnover
Net Profit Ratio*	8.49%	8 22%	3 29%	-
Return On Capital Employed*	9.81%	17.71%	-44.61%	Decrease in turnover
Return On Investment	8.44%	8.47%	0.35%	-

*Profit after exceptional items (Refer Notes to the Standalone Finanical Statement No.30.5)

**Operating Profit before exceptional item (Refer Notes to the Standalone Finanical Statement No.30.5)

FINANCIAL PERFORMANCE R CRORES)
Particulars	2024-25	2023-24
Gross Profit before Interest, Depreciation and Tax*	39413	57162
Interest	-	-
Depreciation	107.26	91.74
Provision for Tax	48.63	108.50
Profit after Tax	238.24	371.38
Earnings Per Share (before exceptional item) (Amount in Rs.)	99.81	347.64
Earnings Per Share (after exceptional item) (Amount in Rs.)	223.01	347.64

*Profit after exceptional items (Refer Notes to the Standalone Finanical Statement No.30.5)

CAUTIONARY STATEMENT

THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS REGARDING EXPECTED EVENTS AS WELL AS THE FINANCIAL AND OPERATIONAL RESULTS OF THE COMPANY BY THEIR NATURE, FORWARD-LOOKING STATEMENTS REQUIRE THE COMPANY TO MAKE ASSUMPTIONS AND ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES. THERE IS A SIGNIFICANT CHANCE THAT THE ASSUMPTIONS, PREDICTIONS, AND OTHER FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS, AS A NUMBER OF FACTORS COULD CAUSE ASSUMPTIONS AND ACTUAL RESULTS AND EVENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED HERE

SOCIAL

INITIATIVES

LMW holds the conviction that engineering excellence transcends mere innovation; it encompasses the commitment to constructing a better future for all. Consequently, our Corporate Social Responsibility (CSR) initiatives are designed to integrate sustainability with community empowerment.

By reducing environmental footprints through the implementation of green technologies, enhancing the skills of local talent, providing medical assistance, and supporting underserved communities, the Company endeavours to create lasting positive impacts. Guided by the fundamental values of integrity and responsibility, the Company remains dedicated to fostering inclusive growth, preserving natural resources, and effecting meaningful change. Together, it engineers not only solutions but also a more equitable, healthy, and sustainable world for current and future generations.

I) HEALTH & SAFETY

Spinal injury surgery & rehabilitation: LMW collaborates with distinguished hospitals and rehabilitation centres to enable patients from economically disadvantaged backgrounds to access essential treatment for burn injuries and restorative spinal surgery. In 2024-25, LMW facilitated the treatment of 26 patients.

Sickle Cell Anaemia Screening & Prevention Project: LMW, in partnership with the Nilgiris Adivasi Welfare Association (NAWA), is dedicated to addressing Sickle Cell Anaemia through our Screening and Prevention Project in the tribal regions of Anaikatti, Palamalai, and Karamadai within Coimbatore District. LMW collaborates closely with diagnosed individuals to ensure they receive essential nutritional supplements and medications that enhance their health.

Furthermore, we conduct informative counselling and awareness camps specifically designed for individuals affected by Sickle Cell traits, promoting a supportive community and empowering lives through education and healthcare. This initiative enabled LMW to assist 69 Sickle Cell Anaemic patients and 432 individuals with Sickle Cell traits in 2024-25.

Type-1 Diabetes Intervention Project for Children:

LMW is committed to supporting initiatives that assist children from economically disadvantaged backgrounds who are diagnosed with Type 1 Diabetes. Theseyoung individuals may require insulin injections multiple times daily, contingent upon theirblood glucose levels. Throughthis project, we provide essentialmedical resources, including a Mkglucometer, insulin cartridges,and other crucial fora full year. During 2024-

25, the Company assisted 60children in need through thisinitiative.

Road Safety Campaign &Awareness Program: LMW partners with UYIR Trust in Coimbatore to enhance road safety awareness initiatives aimed at preventing traffic t.accidents in the region.

Eye Checkup Program for Children: LMW, in collaboration with a prominent eye hospital, provides screenings and treatments for eye-related conditions to children enrolled in government schools in the Coimbatore and Tirupur districts. This initiative significantly benefits the children in these areas.

About 9,612 children from 18 government schools underwent screenings for various eye conditions through this initiative. Standard spectacles were provided to 1,832 children, while specialised myopia spectacles were issued to 92. Furthermore, children diagnosed with other ocular conditions were referred for treatment at the hospital. This program guarantees paediatric patients are screened for myopia and other eye conditions that may adversely affect their vision. Appropriate spectacles, including standard and specialised myopia lenses, are supplied to the children as necessary.

Community Health Checkup Camps: This initiative was made possible through a collaboration between LMW and the health department. In total, 171 individuals were referred to Primary Health Centres and Government Hospitals for advanced medical attention. Through 19 village-level health checkup camps held in 41 villages, 2,244 individuals received treatment for a range of health conditions.

2) VILLAGE LIVELIHOOD DEVELOPMENT

Livelihood enhancement program: LMW conducted income-generation training programs for tribal communities across several villages in the specified region. The organisation provided facilities such >

as mushroom cultivation sheds, vermicompost production bags, pulveriser machines, and a heavy- ^ duty sewing machine to the individuals they trained,

The Company actively supported local villagers in obtaining financial subsidies from the Tamil Nadu government through the Self-Help Group (SHG) model. As a result, SHGs received mushroom Vfl

cultivation sheds and secured financial support.

This initiative positively impacted the livelihoods of a ? specified number of individuals. 1

Veterinary check-up camps: In collaboration with the Tamil Nadu Animal Husbandry Department, 175 veterinary health check-ups and vaccination camps were conducted in tribal villages of Coimbatore District. Animal husbandry represents a key livelihood activity for these communities.

3) RURAL INFRASTRUCTURE DEVELOPMENT

Solar lights: Besides providing solar lighting systems for homes, 54 solar streetlights were installed during the year under review to enhance basic facilities in 11 tribal villages.

School Infrastructure Development: LMW has made substantial contributions to the enhancement of infrastructural facilities in rural government schools. The initiatives undertaken encompass the repair of school buildings, painting, installation of floor tiles in classrooms and verandas, renovation of restrooms, and the provision H of smart classrooms equipped with computers and other essential equipment. During the year under review, the following schools were included in this initiative:

1. Government Higher Secondary School, Velliangadu

2. Government Higher Secondary School, SS Kulam

3. Panchayat Union Middle School, Perianaickenpalayam

4. Panchayat Union Elementary School, Palayapudur

5. Anganwadi - Rayarpalayam

6. Anganwadi - M. Pappampatti

4) ENVIRONMENT

The Company recognises its responsibility to safeguard the environment. It strives to reduce its ecological footprint through the implementation of sustainable methods and technologies.

Tree Plantation: During the review period, LMW planted 5,305 saplings of native tree varieties in the villages of M. Pappampatti and Mopperipalayam Town Panchayat.

Solid Waste Management: The initiative spearheaded by LMW has played a crucial role in executing Solid Waste Management projects designed to promote a cleaner environment and eradicate waste dumping. This endeavour involves segregating waste generated from households and commercial establishments into recyclable, biodegradable, and medical categories. The waste collected has been systematically processed at the source.

To date, 199.25 tons of organic waste, 73.23 tons of non-biodegradable waste, and 25.16 tons of sanitary and medical waste have undergone treatment. Furthermore, LMW has partnered with Kaniyur Panchayat and Mopperipalayam Town Panchayat to develop a comprehensive solid waste management system. As part of this initiative, LMW has provided individual dustbins, an organic waste shredder, an inorganic waste shredder, and an incinerator machine to bolster the solid waste management efforts of the Mopperipalayam Town Panchayat.