Neetu Yoshi Ltd Management Discussions

Company Overview

Neetu Yoshi Limited ("the Company") has rapidly transformed from a raw material trader at inception in 2020 to a specialized engineering and manufacturing firm delivering critical ferrous metallurgical components for the railway sector. In FY25, the Company reinforced its identity as an Class A Foundry and CNC machining solutions provider, focused overwhelmingly on railway safety components, including assemblies for braking, suspension, propulsion, and coupling, with a near-exclusive client relationship with Indian Railways.

The Company operates a single fully-integrated manufacturing unit at Fakkarhedi, Bhagwanpur, Uttarakhand—spanning 7,173 square meters, equipped for melting, molding, machining, heat treatment, and painting. Installed capacity has expanded from 4,493 MTPA as of 15-07-2024 to 8,087 MTPA as of March 2025, supported by IPO-led capex and a sharp focus on process innovation and productivity.

Financial Performance

Neetu Yoshi Limited delivered exceptional financial growth and margin enhancement over the last three years, reflecting significant operational ramp-up and focused capital allocation: (? In crore)

Particulars	FY25	FY24	FY23	FY22
Total Income	70.81	47.45	16.55	4.63
EBITDA	23.43	17.19	1.26	0.17
Profit After Tax	16.46	12.58	0.57	0.07
EBITDA Margin (%)	33.09	36.22	7.61	3.78
PAT Margin (%)	23.25	26.50	3.46	1.52

• Revenue advanced over 10x from ?4.59 crore in FY22 to ?47.33 crore in FY24, and ?70.59 crore in FY25.

• EBITDA margins have risen sharply, from 3.78% in FY22 to over 33.09% in FY25, reflecting operating leverage, better process control, and premium client requirements.

• ROCE stood at an exceptional 37.62% in FY25, with RoNW near 36.89%, demonstrating the Companys high capital efficiency and robust internal accruals.

• The debt-to-equity ratio has improved from 1.44x (FY23) to 0.31x (FY24), a reduction of 1.13x, indicating prudent leverage despite aggressive expansion.

• Working capital and receivable cycles remain healthy, supported by anchor client confidence and repeat orders.

Industry and Sector Overview

Neetu Yoshi operates within the Indian foundry and casting space, focused on the specialized and regulated market for railway safety and propulsion components. The Indian railway infrastructure sector is experiencing a multi-year upcycle, receiving heavy government investment under the National Rail Plan and Make in India initiatives. Demand for modern rail coaches, safety upgrades, and indigenous sourcing is high, providing a robust end-market pipeline for certified suppliers.

The Companys operations are heavily oriented toward Indian Railways, accounting for ~99% of revenues. Indian Railways continues to be the worlds fourth-largest rail network and is undergoing extensive modernization and expansion, boosting demand for advanced castings and engineered assemblies. Neetu Yoshis RDSO-certified product suite aligns closely with these sectoral trends, while diversification towards other OEMs and heavy industry is planned as part of risk mitigation and future growth.

Indias railway infrastructure sector is among the largest and fastest growing globally, reflecting both the scale of the network and an ongoing wave of modernization and expansion. The rail system, with over 67,000 route kilometers, carries billions of passengers and more than a billion tonnes of freight annually, making it the fourth-largest in the world after the US, Russia, and China. As per data from IBEF, in FY25, Indian Railways revenue is estimated to surpass ?2.78 lakh crore (US$32 billion), with government and private investments driving significant growth in capacity, safety, and technology upgrades.

The Indian railroad market is expected to grow faster in next 10 years. The key growth drivers include the National Rail Plan, which aims for a future-ready, efficient, and sustainable railway sector by 2030, and large capex allocation targeting infrastructure, rolling stock, advanced signaling, and electrification. Rapid urbanization, manufacturing sector growth, and policy reforms, such as 100% FDI in railways are opening opportunities for private players, including suppliers of castings, forgings, and rail safety components.

With its certifications, modern capacity, and longstanding relationship with Indian Railways, Neetu Yoshi Limited is strategically positioned to benefit from these market trends, participating in vital railway modernization and infrastructure projects, and supporting Indias push towards world-class rail transport.

Operational Review

Neetu Yoshis core strengths lie in its integrated manufacturing, process control, and ability to deliver customized and critical components at scale:

• The Companys facility boasts advanced melting, molding, CNC machining, heat treatment, and finishing capabilities, allowing end-to-end production with minimal external dependencies.

• New investments, particularly from IPO proceeds, are being channeled into further automation (high-capacity

CNCs, VMCs, in-house heat treatment, and ladle preheating systems), boosting capacity and operational redundancy.

•; Capacity utilization is steadily increasing, and management expects continued ramp-up post-completion of the new Kanpur Nagar, Uttar Pradesh manufacturing facility, underwritten by ?50.78 crore of capital expenditure.

• Value-added processes—machining, assembly, and fabrication—drive premium customer engagement and higher margins, creating entry barriers for new competitors.

• The product portfolio is subject to stringent quality certification and frequent inspection, securing Neetu Yoshis position as a preferred supplier for rail safety components.

Business Strategy and Expansion

The Companys growth is anchored on several strategic pillars:

• Capacity Expansion: IPO funds are being deployed for a new state-of-the-art facility, expected to further double installed capacity, allowing for greater order aggregation and timely delivery.

• Client Concentration Risk Management: While Indian Railways remains the largest client, the Company aims to expand product certification (RDSO) and reach into other heavy industries (steel, cement, power) and international OEMs.

• Product Development: Managements focus is on evolving more complex railway assemblies and entering new high-margin categories, leveraging operational flexibility in design and metallurgy.

• Technology & Efficiency: Automation, process data analytics, and new machinery are expected to drive additional improvements in material yield and margin resilience.

• Sustainability: Neetu Yoshi continues to invest in environmentally compliant operations, aiming for higher energy efficiency and occupational health standards, while maintaining ISO 9001, ISO 14001, and ISO 45001 certifications.

Risks and Concerns

While well-positioned, Neetu Yoshi faces several risks typical of high-growth, single-location manufacturing:

• Customer Concentration: Indian Railways and its network account for the bulk of revenues. Any policy or tendering changes, delay in contracts, or client-specific disruption could materially affect the order book and cash flows.

• Sector Dependency: The Companys fortunes are closely tied to rail infrastructure investments and execution.

Governmental policy shifts or macro slowdowns may affect future demand and order flow.

• Execution and Supply Chain: Rapid scaling and reliance on timely capex and raw material availability could result in disruptions or margin volatility if not carefully managed.

• Legal and Compliance: Pending tax cases of ?4.33 lakhs as of March 2025 represent minor contingent liabilities, but legal and regulatory compliance remains a watchpoint during scale-up.

• Debt and Liquidity: While leverage is improving, ongoing capex and working capital needs require continuous balance sheet prudence. require continuous balance sheet prudence.

Internal Control System

Neetu Yoshi Limited maintains a robust internal control system that encompasses clearly defined policies, delegated authorities, and comprehensive digital processes to ensure the accuracy and integrity of all financial and operational transactions. Regular internal audits, periodic management reviews, and a commitment to ongoing enhancements help the company mitigate risk, safeguard assets, and remain compliant with regulatory standards. The companys recent focus on strengthening compliance processes, especially following key personnel transitions, further underscores its dedication to effective governance and transparency.

Human Resource

On the human resource front, Neetu Yoshi Limited views its employees as a cornerstone of its success. With a culture rooted in teamwork, continuous learning, and innovation, the company invests in structured training programs, skill development, and safety initiatives to empower its workforce. Leadership actively fosters open communication and recognizes outstanding performance, resulting in a highly engaged, agile, and quality-driven team. As a result, Neetu Yoshi continues to attract and retain talented professionals who are committed to driving operational excellence and supporting the companys ambitious growth journey

Outlook

Looking ahead, management remains confident of sustaining rapid revenue and earnings momentum, targeting revenue of approximately ?120 crore for FY26 as the new Kanpur facility becomes operational. Margin structure is expected to remain robust due to premium positioning and operational leverage, though capital allocation will focus on further product diversification and de-risking the order book. Management sees scope for expansion outside railways, including certified exports in subsequent years.

The Company is committed to delivering value to all stakeholders through prudent financial management, operational excellence, expanding production capabilities, and anticipating the evolving needs of core customers and the broader industry alike.

Cautionary Statement

The Companys objectives, projections, outlook, expectations, estimates, and other information expressed in the Management Discussion and Analysis may be considered forward-looking statements under applicable securities laws and regulations. These statements are based on certain assumptions that the Company cannot guarantee. Several circumstances, some of which the Company may not have direct control over, could have a substantial impact on the Companys operations. As a result, actual results may differ materially from such projections, whether expressed or implied, because it would be beyond the Companys ability to successfully implement its growth strategy. The Company assumes no obligation or responsibility to update forward-looking statements or to publicly amend, modify, or revise them to reflect events or circumstances that occur after the date of the statement on the basis of subsequent development, information, or events. The Management of Neetu Yoshi Limited (NYL, or the Company) presents below an analysis of its performance during the year under review, i.e., accounting year ended 31st March, 2025 (for the period April 1, 2024 up to March 31, 2025).