LGB Forge Ltd Management Discussions

[Pursuant to Regulation 34(2)(e) read with Schedule V Para B of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015]

Economic Overview:

The Indian economy demonstrated steady growth in FY 2024-25, despite ongoing global challenges such as geopolitical tensions in the Middle East, the Russia-Ukraine conflict, evolving U.S. trade policies, and persistent inflationary pressures. While global economic growth is projected to remain modest—with the International Monetary Fund (IMF) forecasting 2.80% in 2025 and 3.00 in 2026, India continues to show resilience.

This growth is largely driven by robust public and private sector spending and a rise in real disposable income, which has supported domestic consumption. Looking ahead, the economic outlook for India remains cautiously optimistic amidst continued external headwinds. The IMF projects Indias GDP growth at 6.3% for 2025.

Industry Overview and Business Structure:

While global uncertainties are expected to impact exports across sectors, domestic demand within the forging and broader manufacturing industries remains stable. This creates a landscape that presents both opportunities and challenges.

The automotive industry, a key driver for forgings, has maintained consistent demand despite the gradual transition toward electric vehicles (EVs). In response, your Company continues to work closely with customers, aligning strategies with long-term goals and investing in capacity expansion to meet future demand.

Your Company aims to be the preferred supplier of hot and cold forged components catering to both automotive and industrial segments. We specialise in the development and production of components using stainless steel, alloy steel, and carbon steel—ranging from semi-finished to fully machined parts. In addition, we continue to explore new manufacturing domains that align with and expand our core business capabilities.

Our facilities are equipped with hot and cold forging presses, open hammer presses, and CNC machining centers. The in-house tool room is supported by advanced design and analysis software, enabling efficient die and tool production that is critical to forging quality and productivity. We operate fully integrated manufacturing plants that include capabilities for cutting, forging, heat treatment, machining, finishing, inspection, testing, cleaning, and surface treatment.

Business Environment Outlook & Prospects:

Our continuous focus on value engineering, operational efficiency, effective utilisation of manpower,, timely and high-quality deliveries and preventive machinery maintenance is yielding positive results.

To support customer demand and ensure uninterrupted supply, we have leased a new plant in Coimbatore. Additionally, construction has commenced at our new facility in Chennai, which is expected to begin operations by mid-next year. This expansion will help us meet increased customer demand and strengthen our manufacturing footprint.

In the upcoming year, we will maintain our focus on:

- Enhancing customer satisfaction

- Strengthening productivity systems

- Improving asset management and maintenance practices

- Driving sales growth and operational excellence

Opportunities and Threats:

The forging industry continues to face several challenges, including:

- Shortage of skilled labor

- High energy consumption

- Rising input and logistics costs

- Global geopolitical instability

These issues can impact operational efficiency, increase product costs, disrupt supply chains, and affect the timely delivery of forged products. Your Company actively monitors these developments and remains agile in responding to changes to ensure consistent delivery of high-quality products to our customers.

Segment-wise or Product-wise Performance:

The Company operates in only one segment viz., Forging and Machining. The performance of the Company is detailed in the Directors Report.

Risks and Concern:

The Company has an active risk management framework which enables diligent checks and appraisals of various activities for promptly identifying, responding and mitigating potential risks both internally and externally. The key risks for your company include raw material, technology, manpower competency and cyber security. The Company is taking requisite steps to mitigate the risk areas.

Internal Control Systems and their Adequacy:

The Company has adequate internal financial control systems in place. It has also engaged Internal Auditors, being third party consultants to regularly assess the adequacy of the internal control systems and to suggest appropriate measures to improve the controls. This has also been monitored at periodic intervals by the Audit Committee and the Board.

Human Resources / Industrial Relations:

Your Company currently has 206 employees. LGB Forge Limited has and continues to focus on fostering, nurturing, developing and retaining a proficient work force by conducting training programs and other HR initiatives for boosting morale and motivation.

The Company has successfully concluded all the applicable settlements in the respective plants. The industrial relations continue to be peaceful and harmonious throughout the year.

Health & Safety:

The Company has always prioritised the health and safety of its employees and ensures a safe and healthy working environment. Training programmes on health and safety are conducted in regular intervals and periodic inspections and reviews are done to ensure that adequate safety measures are taken in the company premises.

Discussion on Financial Performance with respect to Operational Performance:

During the year, the revenue from operations and other income for the financial year under review were 9475.28 Lakhs as against 8999.28 Lakhs for the previous financial year resulting in a marginal increase in the revenue. The profit/loss after tax (including the continued and discontinued operations) was ( 122.45) Lakhs for the financial year under review as against ( 986.748) Lakhs respectively for the previous financial year. The following are the summary of results of operations, breakup of expenditure and cash flows of the Company:

Results of Operations:

a) Continuing Operations:			(Rs in Lakhs)
Particulars	FY 2024-25	FY 2023-24	Growth (in %)
Net Sales	9,403.78	8,937.87	5.21%
Other Income	71.52	61.41	16.46%
Total Income	9,475.30	8,999.28	5.28%

b) Disontinuing Operations:

(Rs in Lakhs)

Particulars	FY 2024-25	FY 2023-24	Growth (in %)
Net Sales	-	1,932.82	-
Other Income	-	9.38	-
Total Income	-	1,942.20	-

Major heads of Expenditures:

a) Continuing Operations

(Rs in Lakhs)

Particulars	FY 2024-25	FY 2023-24	Growth (in %)
Cost of materials consumed	4,300.96	4,200.29	2.40%
Changes in inventory of finished goods, work-in-progress and stock in trade	(12.09)	(81.28)	85.13%
Employee benefit expense	2,042.49	2,011.68	1.53%
Finance cost	250.42	316.64	20.91%
Depreciation / Amortisation	291.03	276.88	5.11%
Other expenses	2,910.27	2,837.41	2.57%
Total Comprehensive Income before tax	(337.80)	(562.34)	39.93%
Total Comprehensive Income after tax	(337.80)	(562.34)	39.93%

b) Discontinuing Operations

(Rs in Lakhs)

Particulars	FY 2023-24	FY 2022-23	Growth %
Costs of material consumed	-	1,156.27	-
Changes in Inventory of Finished Goods,Work-in-progress and Stock-in-trade	-	23.49	-
Employee Benefit Expenses	-	296.60	-
Finance Cost	-	11.76	-
Depreciation and Amortisation Expenses	-	174.51	-
Other Expenses	-	703.97	-
Total Comprehensive Income Before Tax	-	(424.40)	-
Total Comprehensive Income After Tax	-	(424.40)	-

 

Cash Flows:			(Rs in Lakhs)
Particulars	FY 2024-25		FY 2023-24
Operating Cash and Cash Equivalents	0.31		0.71
a) Continuing Operations:
Net Cash from Operating Activities		1559.84		246.10
Net Cash from Investing Activities		(289.62)		(152.73)
Net Cash from Financing Activities		(1,269.80)		(110.88)
b) Discontinuing Operations:
Net Cash from Operating Activities		-		103.46
Net Cash from Investing Activities		-		(61.04)
Net Cash from Financing Activities		-		(25.31)
Change in Cash and Cash Equivalents		-		(0.40)
Closing Cash and Cash Equivalents		0.39		0.31

Details of Significant Changes in Key Financial Ratios (along with detailed explanation therefor):

There is significant change in some key financial ratios when compared with previous years and below are the ratios:

Particulars	FY 2024-25	FY 2023-24	Variance (%) Reason
Debtors Turnover Ratio	3.34	2.73	22.39
Inventory Turnover Ratio	4.17	3.09	34.91 The ratio increased due to a significant reduction in closing inventory.
Interest Coverage Ratio	(0.35)	(0.78)	(55.03) The ratio improved due to lower finance costs
Current Ratio	1.68	1.39	20.84
Debt Equity Ratio	1.45	1.47	(1.67)
Operating Profit Margin %	(0.93)	(2.75)	(66.20) The ratio improved due to reduced financial losses and lower finance costs
Net Profit Margin %	(1.30)	(6.29)	(79.30) The ratio improved due to substantial gains from exceptional item
Return on Net worth%	(17.61)	(41.74)	(57.82) The ratio improved due to a reduction in losses before exceptional items and higher non-current asset

Further, the Company confirms that there is no different accounting treatment that has been followed than prescribed in accounting standard while preparing financial statements.

Cautionary Statement:

The statements in the Management Discussion and Analysis Report describing the Companys view, projections, estimates and expectations may constitute “forward looking statements” within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied. Any investment by shareholders / investors should therefore be based on their individual analysis.

For and on behalf of the Board of Directors

LGB FORGE LIMITED

Place : Coimbatore	B. VIJAYAKUMAR	RAJSRI VIJAYAKUMAR
	Chairman & Non-Executive Director	Managing Director
Date : May 07, 2025	DIN: 00015583	DIN: 00018244