Nitin Castings Ltd Management Discussions

Management Discussions and Analysis forming part of Directors Report for the year ended 31^st March, 2025

Industry Structure and Development

The global alloy steel market was valued at approximately USD 88.45 billion in 2025 and is projected to grow at a compound annual growth rate (CAGR) of 7.2% from 2025 to 2030. This growth is primarily driven by the steady expansion of key end-use sectors such as construction, automotive, and manufacturing. These industries increasingly rely on durable, high-performance materials, and alloy steels are widely preferred due to their exceptional strength, corrosion resistance, and ability to withstand high temperatures. As demand for infrastructure development, advanced automotive components, and industrial machinery rises, the use of alloy steel in these applications is expected to grow proportionally.

The energy sector also plays a vital role in fueling the demand for alloy steel. Applications such as wind turbines, offshore oil platforms, and gas pipelines require materials capable of withstanding extreme environmental conditions. Alloy steels ability to perform under high pressure and temperature makes it critical for energy infrastructure. Moreover, as the world accelerates its shift toward renewable and cleaner energy sources, the demand for robust, long-lasting materials like alloy steel is projected to increase significantly in the coming years.

Opportunities & threats

As of 2025, the ongoing wave of industrialization particularly in emerging economies is significantly driving the demand for alloy steels, which are essential for manufacturing durable and high-strength components used across diverse industrial operations. Their widespread application in producing high-performance tools, heavy machinery, and structural components further accelerates market growth.

The Asia-Pacific region continues to dominate the global alloy steel and metal casting market, supported by robust economic growth and rapid industrial development in countries such as China and India. However, the industry faces several challenges. High initial capital investments, energy-intensive manufacturing processes, and limitations in material availability remain key concerns.

In addition, the high cost of production due to the use of expensive alloying elements like chromium, molybdenum, and nickel, along with complex manufacturing techniques can limit the adoption of alloy steels in price-sensitive markets. Volatility in raw material prices further affects cost stability and profit margins for producers. On top of that, environmental concerns and increasing regulatory pressure to adopt sustainable and low emission practices add to the challenges, as alloy steel production remains energy-intensive and carbon-emitting.

Outlook

Indias growth story was, till recently, quite attractive in comparison with many other developed and developing economies. However, the nations adverse fiscal deficit and negative current account balance call for some bold rectification measures from the Government. The Government would be focusing on consolidation of the economic recovery through expeditious clearance of existing projects, selective disinvestment and accelerated foreign direct investment through policy reforms. Also, Governments emphasis on infrastructure projects would raise demand from Construction & Mining Equipment Industry in the domestic market. Reforms in global economy indicate positive signal for overseas market. Overall, the market seems to be going on the sluggish pace for the next few months and would have positive note thereafter.

Risk and Concerns

As industries increasingly adopt advanced manufacturing techniques, the demand for high-strength, reliable materials such as alloy steels becomes even more critical. However, several macroeconomic and operational factors may impact industry performance. A slowdown in infrastructure investments can lead to reduced order inflows, while power shortages, rising energy costs, and increases in labour and transportation expenses driven by fluctuations in fuel prices can contribute to overall inflationary pressure.

The Company views good corporate governance as a fundamental prerequisite for fulfilling the expectations of its shareholders and ensuring sustainable long-term value. However, the Company remains exposed to certain external risks, including changes in government policies and regulatory decisions, volatility in raw material prices, exchange rate fluctuations, and variability in industry demand—all of which may affect its operations and financial performance.

Segment or Product wise Performance

The Company is operating in one segment known as Alloys Steel Castings in the range of static and centrifugal. The product wise comparison is not possible as every product is specific as per order and to the size, shape and alloy mix. Therefore, performance of the Company has to be seen in overall manner and the Company has done reasonably well in the present scenario.

Internal control System and their Adequacy

The Company has developed adequate internal control system commensurate to its size and business. The Company has appointed Internal Auditors, an outside independent agency to conduct the internal audit to ensure adequacy of internal control system, compliance of rules and regulations of the country and adherence to the management policies.

Financial Performance with respect to Operational Performance

During the year under review, your Company has registered Income of Rs. 15447.85 Lakhs as against Rs. 15,309.07 Lakhs in the previous year. The Profit before taxes in the current year is Rs. 1676.57 Lakhs as against Rs. 1781.51 Lakhs in the previous year and profit after taxes are Rs.1241.24 Lakhs as against Rs. 1212.85 Lakhs in the previous year.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

Particulars	As at 31st March 2025	As at 31st March 2024	Deviation	Reason for deviation (more than 25%)
1 Debt equity ratio (in times)	0.09	0.07	32.46%	Due to increase in borrowings from banks.
2 Debt service coverage ratio (in times)	5.06	-2.75	-284.01%	Due to increase in borrowings from banks and increase in profit during the year.
3 Return on equity ratio (in %)	16.10%	18.50%	-12.95%	Not Applicable
4 Net profit ratio (in %)	8.24%	8.15%	1.10%	Not Applicable
5 Return on capital employed ratio (in %)	43.39%	46.81%	-7.31%	Not Applicable
6 Return on investment ratio (in %)	7.17%	12.44%	-42.33%	Due to Ind-AS effect on investment & consequently decrease in profit

Compliance with Indian Accounting Standards (Ind-As)

In the preparation of the financial statements, the Company has followed the Indian Accounting Standards (Ind-AS) notified by Ministry of Corporate Affairs from time to time. The significant accounting policies which are consistently applied have been set out in the Notes to the Financial Statements.

Environment Protection and Pollution Control

The Company has always been socially conscious corporate, and has always carried forward all its operations and procedures following environment friendly norms with all necessary clearances.

Your Company has taken the following steps towards environment and Ecological balance in manufacturing of Castings.

Continuous plantation activities in and around the Factory as usual has helped in keeping the environment pollution free.

Goal

The main goal of the company to set and achieve highest standard in performance and quality. The goal is to align all sections of the organization internally to generate even better customer value propositions and returns for shareholders. The goal is also to set and maintain high safety and environment norms for the company.

Human Resources

Human resources are integral and important part for the Company. It has put in place sound policies for the growth and progress of its employees. During the year, Company maintained harmonious and cordial industrial relations. No man days were lost due to strike, lock out etc.

Disclosure by the Senior Management Personnel i.e. one level below the Board including all HODs

None of the Senior Management Personnel has financial and commercial transaction with the Company, where they have personal interest that would have a potential conflict with the interest of the Company at large.

Cautionary statement

The statements in this management discussion and analysis describing the outlook may be "forward looking statement" within the meaning of applicable laws and regulations. Actual result might differ substantially or materially from those expected due to the developments that could affect the companys operations. The factors like significant change in political and economic environment, tax laws, litigation, technology, fluctuations in material cost etc. may deviate the outlook and result.