Liotech Industries Ltd Management Discussions

1. Overview

Liotech Industries Limited ("Liotech" or "the Company") is engaged in the manufacturing and trading of architectural hardware, hardware accessories and engineering products. The Companys product portfolio comprises a wide range of hardware products including hinges, tower bolts, gate hooks, door kits, screws, door aldrops, handles, locks and other allied hardware products. The Company manufactures products in more than 150 specifications and caters to customers across diverse sectors including housing, infrastructure, agriculture, automotive, power, cement, mining, solar power and general engineering. In addition to manufacturing activities, the Company undertakes trading of complementary hardware products. The Company primarily operates through a business-to-business ("B2B") model and has developed a domestic distribution network across approximately nine States and Union Territories, with Gujarat contributing a significant portion of its revenue. The Companys manufacturing facility is located at Shapar, Rajkot, Gujarat, and is spread across approximately 12,632 square feet. The facility is supported by machinery and equipment covering various stages of production, including cutting, machining, assembling, surface treatment, testing and packaging. The manufacturing facility is ISO 9001:2015 certified. During the year under review, the Company continued to focus on quality manufacturing, operational efficiency, customer satisfaction and expansion of its market presence. Subsequent to the financial year-end, the Company successfully completed its Initial Public Offering and its Equity Shares were listed on the SME Platform of BSE Limited with effect from June 24, 2026. This listing marks an important milestone in the Companys growth journey and provides a platform for further strengthening its operational and financial capabilities. The Companys diverse product portfolio, manufacturing capabilities and focus on quality provide a foundation for addressing varied customer requirements.

2. Industry Overview

The architectural hardware and engineering products industry forms an important part of the broader building, construction, infrastructure and industrial ecosystem. Demand for hardware products is influenced by construction activity, infrastructure development, urbanisation, renovation and replacement demand, as well as industrial and engineering requirements. The Company believes that continuing infrastructure development, urbanisation and increasing demand for quality building products provide opportunities for the architectural hardware industry. The Companys presence across multiple end-use sectors provides diversification in terms of customer requirements and applications. The Company intends to benefit from these opportunities by strengthening its distribution network, expanding into under-penetrated geographies, increasing its product range and improving its manufacturing capabilities.

3. Business and Operational Performance

During FY 2025-26, the Company recorded significant growth in its business operations. Revenue from operations increased from 4,067.78 lakh in FY 2024-25 to 7,008.96 lakh in FY 2025-26, representing growth of approximately 72.30%.

The Company reported Profit After Tax ("PAT") of 632.01 lakh during FY 2025-26 as compared with 410.79 lakh in the previous financial year, representing growth of approximately 53.85%.

Financial Performance

Particulars	FY 2025-26 ( in lakh)	FY 2024-25 ( in lakh)	Growth
Revenue from Operations	7,008.96	4,067.78	72.30%
Other Income	40.67	0.84	4,741.67%
Total Income	7,049.64	4,068.62	73.27%
Total Expenses	6,199.92	3,508.43	76.72%
Profit Before Depreciation, Interest & Tax	1039.62	657.05	58.22%
Profit After Tax	632.01	410.79	53.86%

The increase in revenue reflects the Companys improved business performance during the year. The growth in profitability was supported by the increase in operating scale and continued focus on efficient utilisation of resources.

4. Financial Position and Liquidity

The Company generated net cash flow from operating activities of 648.06 lakh during FY 2025-26 as compared with 262.05 lakh in the previous year. The increase in operating cash flow is consistent with the growth in the Companys operating performance.

The Company invested 740.62 lakh in fixed assets during the year, reflecting continued investment in its manufacturing infrastructure and operational capabilities.

The Companys cash and cash equivalents increased from 1.48 lakh as at March 31, 2025 to 6.94 lakh as at March

31, 2026.

The Company continues to monitor its working capital requirements, inventory levels, receivables and payables with the objective of maintaining adequate liquidity and supporting business growth.

5. Key Financial Ratios

The key financial ratios of the Company for FY 2025-26 compared with FY 2024-25 are as follows:

Ratio	FY 2025-26	FY 2024-25	Change
Current Ratio	1.26	1.65	-23.64%
Debt-Equity Ratio	0.34	0.40	-15.00%
Return on Equity	0.47	0.56	-16.07%
Inventory Turnover Ratio	8.39	11.37	-26.21%
Trade Receivable Turnover Ratio	10.06	7.55	33.25%
Net Capital Turnover Ratio	16.33	7.84	108.29%
Net Profit Ratio	0.09	0.10	-10.00%
Return on Capital Employed	0.53	0.40	32.50%

The Company has reported that the reduction in inventory turnover was attributable to inventory levels increasing at a faster rate than sales, indicating comparatively slower inventory movement. The improvement in trade receivable turnover was attributed to more efficient collection of customer payments relative to revenue growth. The increase in net capital turnover reflects the significant increase in revenue relative to the growth in net working capital, while the improvement in return on capital employed reflects growth in operating profits at a higher rate than the capital invested in the business.

6. Manufacturing and Quality

The Companys manufacturing operations cover designing and prototyping, procurement of raw materials, cutting and shaping, machining and assembling, surface treatment, quality inspection and packaging. The principal raw materials used by the Company include mild steel, stainless steel, brass, aluminium, iron, stainless steel rods, sheets, coils and patta-patti. These materials are primarily sourced from the domestic market and are subjected to internal quality checks. The Companys manufacturing facility is ISO 9001:2015 certified. The Company also has a certificate of compliance from UK Certificate and Inspection for specified products. Quality control procedures are undertaken for raw materials and finished products to support consistency and adherence to applicable quality requirements.

7. Strengths

The Company believes that its principal strengths include:

Experienced Promoters and management with experience in the iron and steel industry;

Diverse product portfolio comprising more than 150 specifications;

Manufacturing capabilities supported by a range of machinery and equipment;

Focus on product quality and quality-control systems;

ISO 9001:2015 certified manufacturing facility;

Established domestic distribution network;

Ability to cater to customers across multiple end-use sectors; and

Focus on expanding its geographical presence and developing under-penetrated markets.

These strengths provide the Company with a foundation for pursuing sustainable business growth and strengthening its market position.

8. Opportunities

The Company sees opportunities arising from infrastructure development, urbanisation and increasing demand for quality building and engineering products. The Companys broad product portfolio provides opportunities to cater to different customer requirements and end-use industries. Further opportunities may arise through:

Expansion into under-penetrated geographical markets;

Strengthening of distribution and dealer networks;

Development of new products and specifications;

Improvement and expansion of manufacturing capacity;

Increased order-taking capabilities;

Adoption of improved manufacturing technologies;

Expansion of customer base across different sectors; and

Utilisation of the Companys listed-company platform to support its long-term growth objectives.

The Company intends to focus on capacity enhancement, product development, quality improvement, geographical expansion and efficient utilisation of resources.

9. Risks and Concerns

The Company operates in a competitive manufacturing and trading environment and is exposed to various business and operational risks. Key areas requiring continued management attention include:

Raw Material Price Risk

The Companys principal raw materials include steel, stainless steel, brass, aluminium and iron. Changes in the prices of these commodities may affect the Companys cost structure and profitability.

Inventory Risk

The Companys inventory turnover ratio declined from 11.37 times to 8.39 times during FY 2025-26. The Company has attributed the decline to inventory levels increasing at a faster rate than sales. Accordingly, effective inventory planning and stock management remain important for maintaining working capital efficiency.

Market and Competition Risk

The Company operates in the architectural hardware and engineering products industry and faces competition from manufacturers and suppliers operating in similar product categories. Maintaining product quality, competitive pricing, timely delivery, product development and customer relationships will remain important to sustain and expand the Companys market presence.

Customer and Receivable Risk

The Company has a B2B business model and therefore efficient management of trade receivables is important for maintaining liquidity. The improvement in trade receivable turnover during FY 2025-26 indicates improved collection efficiency; the Company will continue to monitor customer credit and collection cycles.

Operational Risk

The Companys manufacturing operations depend on the availability and efficient functioning of machinery, equipment, manpower and raw materials. Any disruption in production or supply chain may adversely affect operations.

Regulatory and Compliance Risk

As a listed company, Liotech is subject to applicable corporate, securities and listing-related regulatory requirements. The Company monitors compliance with applicable laws, regulations and regulatory requirements through appropriate internal processes and oversight by the management and the Board of Directors. The Company remains committed to maintaining adequate systems and procedures to identify and address regulatory and compliance-related risks in a timely manner.

10. Human Resources

The Company recognises that its employees and management team are important to the Companys continued growth and operational efficiency. The Company seeks to maintain a safe, conducive and professional working environment and remains committed to employee welfare and compliance with applicable labour laws. The Company has also adopted a policy for prevention of sexual harassment at the workplace and has constituted the requisite committee. No complaint of sexual harassment was received during FY 2025-26.

11. Internal Control Systems

The Company has established internal control systems commensurate with the nature and size of its operations. The statutory auditors have reported that the Company had, in all material respects, adequate internal financial controls over financial reporting and that such controls were operating effectively as at March 31, 2026. The Company continues to review its internal control framework with the objective of safeguarding assets, maintaining reliable financial reporting, preventing and detecting irregularities and ensuring compliance with applicable laws and regulations.

12. Risk Management

The Company has adopted and implemented a Risk Management Policy for identification and assessment of material risks and for establishing appropriate mitigation and monitoring mechanisms. The risk assessment and minimisation procedures are reviewed by the Board from time to time to ensure timely identification, assessment, mitigation and monitoring of risks.

13. Outlook and Future Strategy

The Company remains focused on strengthening its manufacturing and operational capabilities and building sustainable business relationships with customers. Going forward, the Companys key areas of focus include:

Increasing order-taking capabilities;

Enhancing production efficiency and product quality;

Strengthening and expanding the geographical distribution network;

Upgrading manufacturing infrastructure;

Expanding the product portfolio;

Developing new products and specifications;

Improving financial and working capital efficiency; and

Creating sustainable value for shareholders and other stakeholders.

The successful listing of the Companys Equity Shares on the BSE SME Platform on June 24, 2026 represents an important milestone and provides the Company with a strengthened corporate profile as it enters its next phase of growth.

14. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, expectations, estimates, outlook and future plans may constitute forward-looking statements. Actual results could differ materially from those expressed or implied due to various factors, including changes in economic conditions, market demand, competition, raw material prices, regulatory requirements, availability of resources, business risks and other factors beyond the Companys control. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, except as may be required under applicable laws and regulations. independent auditors report