Magna Electro Castings Ltd Management Discussions

Overview:

Three decades of mastering the art and science of casting, Magna has consistently broken the mould in the foundry industry. Magna has carefully crafted processes for low-to-medium volume castings. Magna Mastercast is adept at working with a variety of materials, Complex casting, and for diverse applications. Magna is focused on low and medium volumes of 1–250 kg. With a stronghold in the United States, Europe, and India, Magna has become the go-to partner for technically demanding, low-to-medium volume castings tailored for global multinationals.

Magna redefines excellence not just in casting, but in character. With a foundation built on integrity, fairness, and mutual respect, Magna goes beyond manufacturing to become a catalyst for progress. Every initiative, every innovation, and every interaction reflects its commitment to breaking the mould and shaping a more responsible, inclusive, and forward-looking industry.

Magna remains steadfast in its commitment to sustainable and ethical business practices. Through its ESG initiatives, the company integrates environmental stewardship, social responsibility, and robust governance into its operational framework. Magna actively pursues energy-efficient manufacturing, responsible resource utilization, and waste reduction to minimize its environmental footprint. Socially, it fosters an inclusive workplace culture, prioritizes employee well-being, and engages meaningfully with communities. Governance at Magna is anchored in transparency, accountability, and compliance, as reflected in its regular audit reviews and adherence to statutory regulations The financial statements presented here have been prepared in accordance with the various regulatory enactments in force.

Industry structure and Development:

The Indian foundry industry has witnessed steady growth in recent years, supported by increasing demand in various sectors such as automotive, engineering, energy and infrastructure. Many foundries have started modernising their production processes to become even more efficient and environmentally friendly. The India foundry market is segmented by end-user (automotive, electrical and construction, industrial machinery, and other end -users) and by type (gray iron casting, non-ferrous casting, ductile iron casting, steel casting, and malleable casting).

The Indian foundry market is projected to grow from USD 25.57 billion in 2025 to USD 42.61 billion by 2030, at a CAGR of 11.13%. This growth is driven by Increased demand from automotive, industrial machinery, and construction sector, Government initiatives like Make in India and expansion of the renewable energy sector Technological progress with the use of automated production processes - instead of manpower, simulation, digitalisation of the process chain with software and ERP systems or 3D printing - is becoming increasingly reduction are becoming more important, especially in important. At the same time, environmental aspects for CO2 the use of raw materials and auxiliary materials.

Indian foundries are also increasingly focusing on environmentally friendly materials, recycling, and waste reduction in order to keep an eye on their ecological footprint.

Operations:

The Operating Revenue of the Company has increased by 22.79% from 14,369.78 Lakhs in the previous year to 17,644.92 Lakhs in the current year.

The Export revenue during the year was 8,681.48 lakhs compared to 6,615.84 Lakhs in the previous year, registering an increase by 31.22%. During the year, the domestic market has also increased by 15.26% from 7,427.70 lakhs in the previous year to 8,560.81 Lakhs in the current year.

During the year, Profit Before Tax (PBT) was 3,104.46 Lakhs compared to previous years PBT of 2,040.61 registering an increase by 52.13 % and Profit After Tax (PAT) was 2,311.70 Lakhs compared to previous years PAT of 1,510.92 Lakhs.

During the year, 66.49% of the power consumption is sourced from green energy. This commitment to sustainability not only benefits the environment but also contributes to cost savings and a cleaner future. Our share of green energy input will help the Company to satisfy the upcoming Carbon Border Adjustment Mechanism (CBAM) Regulations in Europe. The total energy generation from Windmills and Solar Plant was 1,01,06,316 units, out of which Wind energy has contributed 50,27,050 units (33.07% of Total Consumption) and Solar energy has contributed 50,79,266 units (33.42% of Total Consumption).

Opportunities:

The foundry industry is undergoing major transformation with the integration of advanced technologies like automation and Industry 4.0. These technologies are making significant impact on operational efficiency and product quality. Additionally, the industry benefits from a skilled workforce and a growing focus on export markets.

Despite global competition, Indian foundries are gaining recognition for their ability to produce high-quality castings at competitive price. As the industry continues to evolve, innovation and delivering international quality are expected to drive future growth and success.

In 2030, Indias foundry industry faces both opportunities and challenges in global trade. With heightened export potential to markets like Europe, USA, and the Middle East, Indian foundries are increasingly targeting overseas contracts. However, they face competition from other major casting producers like China and Turkey, which offer competitive pricing and faster lead times.

Indias strategic advantage lies in its labor costs, manufacturing expertise, and the ability to produce castings across a range of materials, including ferrous and non-ferrous metals.

Threats:

Economic fluctuations and market uncertainties can affect the demand for castings across various industries.

One of the major challenges is the shortage of skilled labor. As the industry becomes more technologically advanced, there is a growing need for workers skilled in operating automated machinery, handling AI-driven systems and managing digital workflows.

The rising cost of raw materials such as iron, steel, and aluminum is a growing concern for the Indian foundry industry.

Supply chain disruptions, increasing energy costs, and fluctuating global commodity prices have contributed to this trend. Foundries are finding ways to mitigate these costs by adopting lean manufacturing techniques, optimizing material usage, and leveraging local sourcing strategies.

Environment, Safety and Energy Conservation Policy:

The Company commits to environmental stewardship by minimizing its impact on natural resources, ecosystems and air quality. It adheres to all applicable environmental laws, regulations, and standards. During the year, the Company has satisfying milestone towards utilisation of renewable energy. It establishes safety protocols, conducts regular training, and ensures compliance with safety regulations. The Company has Wind Energy Generators and also invested in Solar Power Generation Project. The Company has also invested in Sand Reclamation Plants as a part of its drive to preserve precious natural resources.

Risks and Concerns:

The Company anticipates significant opportunities in the low to medium volume engineered castings. However, to take up this opportunity availability of skilled engineers and ability to scale engineering workforce has to be addressed. Timely action on addressing the engineering capability and scale will decrease these risks.

The Company has cyber security systems in place. As a proactive measure, the Company is planning to take cyber security audits to enhance and strengthen cyber security defenses.

Internal control systems and their adequacy:

The Company has adequate Internal Financial Control Systems in place. It has also engaged third party consultants to assess the adequacy or otherwise of its Internal Control Systems and to suggest various measures to improve the controls. This is also been monitored at periodical intervals by the Audit Committee of the Board.

Personnel:

Magna believes that by embracing Human resource development, the Company can build a more agile, responsive and people-centric organization. Magnas focus is on inspiring employees, fostering collaboration and ensuring a positive work environment. Magna concentrates on employees safety measures, good infrastructure, healthy food and sanitation facilities etc., at its workplace. Further the Company ensures utmost care for employees safety at workplace by providing necessary equipments and safety measures and guidelines at regular intervals.

Key Financial Ratios:

There is significant change in some key financial ratios when compared with previous year and below are ratios;

Particulars	2024-25	2023-24
Trade Receivables Turnover Ratio	3.89	3.85
Trade Payables Turnover Ratio	2.81	4.74
Inventory Turnover Ratio	14.15	14.30
Working Capital Turnover Ratio	3.77	2.59
Interest Coverage Ratio	97.60 times	83.60 times
Current Ratio	2.13	4.08
Debt Equity Ratio	0.085	0.001
Operating Profit Margin	23.00%	20.84%
Net Profit Margin	13.10%	10.51%
Return on Net worth	17.88%	13.94%
Return on Capital Employed	24.22%	19.01%

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

Detailed explanations for significant changes in key financial ratios:

The difference in Current Ratio is primarily due to a substantial increase in current liabilities, notably in trade payables and other financial liabilities. This shift is likely related to increased operating activity and project execution during the year.

The difference in Debt Equity Ratio is primarily due to the availment of a term loan during the year. However, the gearing level remains low and does not pose any significant financial risk at present.

The difference in Trade Payables Turnover Ratio is due to increase in average trade payables, driven by higher outstanding dues to creditors other than MSMEs.

The difference in Working Capital Turnover Ratio is due to increase in turnover.

The difference in Return on Net worth is because of substantial increase in profits.

The Return on Capital Employed is supported by a stronger operating profit base and controlled capital deployment, including better asset utilization despite significant capital work-in-progress.

Cautionary Statement:

The statements in this Management Discussion and Analysis Report describing the companys views, 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.

ANNEXURE - H

CEO AND CFO CERTIFICATION

[As per Regulation 17(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015] To The Board of Directors, Magna Electro Castings Limited In compliance with Regulation 17(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby certify that,

(a) We have reviewed financial statements and the cash flow statement for the year ended 31st March 2025 and that to the best of their knowledge and belief: i. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii. These statements together present a true and fair view of the companys affairs and are in compliance with existing accounting standards, applicable laws and regulations. (b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year ended 31st March 2025 which are fraudulent, illegal or violative of the companys code of conduct.

(c) We accept responsibility for establishing and maintaining internal controls for the financial reporting and that we have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and we have not observed any deficiencies in the design or operation of such internal controls.

(d) We have indicated to the Auditors and the Audit committee that there are: i. No significant changes in internal control over financial reporting during the year ended 31st March, 2025; ii. No significant changes in accounting policies during the year ended 31st March, 2025; and iii. No instances of significant fraud where the involvement of the management or an employee having a significant role in the companys internal control system over financial reporting have been observed.

N. Krishnasamaraj	R.Ravi
Managing Director	Chief Financial Officer
Place : Coimbatore
DIN: 00048547
Date : 30.05.2025