Paramount Speciality Forgings Ltd Management Discussions

Global Economic Overview

Resilient Growth Amid Trade Realignment and Geopolitical Uncertainty

The global economy entered 2026 with a combination of resilience and heightened uncertainty. While inflationary pressures moderated across several advanced economies and financial conditions gradually improved, geopolitical conflicts, evolving trade policies, elevated public debt, and supply chain reconfiguration continued to shape the global economic landscape. The world economy demonstrated remarkable adaptability despite these headwinds, supported by resilient labour markets, accelerating investments in advanced manufacturing, digitalisation, artificial intelligence, and energy infrastructure.

According to the IMF World Economic Outlook (July 2026), global GDP is projected to grow by 2.9% in 2026, before improving to 2.8% in 2027. Emerging Market and Developing Economies (EMDEs) continue to outperform advanced economies, driven by robust domestic demand, infrastructure investments and manufacturing-led growth. India is expected to remain the fastest-growing major economy with GDP growth of 6.6% in 2026 and 7.2% in 2027, supported by strong domestic consumption and public capital expenditure.

Global manufacturing continued to witness mixed trends. While industrial activity remained subdued across several advanced economies due to weaker consumer demand and elevated financing costs, Asia continued to strengthen its position as the global manufacturing hub. Ongoing supply chain diversification and the "China+1" strategy are encouraging multinational corporations to increase investments across India and Southeast Asia, benefiting engineering-led manufacturers.

Outlook

Although the global economy continues to navigate geopolitical tensions, evolving trade relationships and commodity price volatility, the long-term outlook for industrial engineering remains constructive. Continued investments in energy infrastructure, process industries and manufacturing capacity are expected to sustain demand for high-integrity forged components, reinforcing the strategic relevance of companies such as Paramount Specialty Forgings Limited that possess specialised engineering capabilities, stringent quality systems and diversified end-market exposure.

Indian Economic Overview

India continued to demonstrate remarkable economic resilience during FY2025-26, reinforcing its position as one of the fastest-growing major economies despite global geopolitical uncertainties and supply chain disruptions. Strong domestic consumption, sustained public capital expenditure, expanding manufacturing activity, and a robust services sector remained the key drivers of economic growth. According to the IMF World Economic Outlook Update (July 2026), Indias GDP is projected to grow by 6.4% in FY2026 and 6.7% in FY2027, substantially outpacing the projected global growth of 3.0% in 2026.

The Governments continued emphasis on manufacturing competitiveness through initiatives such as Make in India, PM Gati Shakti, the National Infrastructure Pipeline (NIP) and Production Linked Incentive (PLI) schemes has accelerated investments across infrastructure, energy, heavy engineering, railways and industrial manufacturing. These structural reforms, coupled with rising private sector investments and increasing localisation of global supply chains, are strengthening Indias position as a preferred manufacturing and engineering hub.

OUTLOOK

India is projected to remain among the fastest-growing major economies, with GDP growth of 6.4% in FY2026. Increasing investments in Oil & Gas, power, railways, heavy engineering and process industries are creating a favourable demand environment for specialised forging manufacturers and Indias expanding manufacturing ecosystem and supply-chain diversification initiatives position companies like Paramount Specialty Forgings to capitalise on long-term domestic and export opportunities.

Global Forging Industry

Engineering Strength Driving Critical Industries

The global forging industry continues to expand, driven by increasing investments across Oil & Gas, aerospace, industrial machinery, transportation, power generation and heavy engineering. Forged components remain indispensable in mission-critical applications owing to their superior mechanical strength, fatigue resistance and reliability under extreme operating conditions.

According to Grand View Research, the global metal forging market was valued at USD 85.9 billion in 2025 and is projected to reach USD 158.8 billion by 2033, registering a CAGR of 7.8% during 2026-2033. Asia-Pacific accounted for over 53% of the global market in 2025, supported by strong manufacturing activity across China, India and Southeast Asia. The increasing localisation of supply chains and sustained investments in energy infrastructure are expected to further support demand for precision-engineered forged components.

Indian Forging Industry

Emerging as a Global Manufacturing Hub

India has established itself as one of the worlds leading forging destinations, supported by a strong engineering ecosystem, competitive manufacturing costs, skilled workforce and government initiatives such as Make in India and the Production Linked Incentive (PLI) scheme. The industry caters to diverse end-use sectors including automotive, oil & gas, railways, defence, power, capital goods and industrial equipment.

According to the Association of Indian Forging Industry (AIFI), India is the second-largest forging producer globally after China, with approximately 400 forging units, of which nearly 10% belong to the organised sector, contributing a significant share of production and exports. Increasing investments in industrial infrastructure, energy security and heavy engineering are expected to strengthen long-term demand for high-quality forged components.

End-user Industries Driving Indias Forging Demand

Major end-user industries identified in the supplied industry snapshot

Initiative	Objective	Key Highlights
Make in India	Promote domestic manufacturing and attract investments	Launched to increase manufacturings contribution to GDP, encourage technology adoption, improve ease of doing business and position India as a global manufacturing destination.
PM Gati Shakti National Master Plan	Integrated infrastructure planning	Brings together 16 ministries on a GIS-based digital platform to improve multimodal connectivity, logistics efficiency and infrastructure development across roads, railways, ports and industrial corridors.
National Infrastructure Pipeline (NIP)	Accelerate infrastructure development	A long-term infrastructure investment programme covering sectors such as energy, transport, urban infrastructure, irrigation and logistics to support economic growth.
National Manufacturing Mission (Union Budget 2025–26)	Strengthen manufacturing competitiveness	Focuses on ease of doing business, technology adoption, skilled workforce development, MSME support and integration with global value chains.
PLI Scheme for Specialty Steel	Promote domestic production of value-added steel	Incentivises investments in coated steel, alloy steel and specialty steel grades to reduce import dependence and strengthen the domestic steel value chain.
Steel Quality Control Orders (QCOs)	Ensure quality standards	Mandates BIS certification for specified steel products to improve product quality, enhance consumer protection and discourage sub-standard imports.
National Logistics Policy (NLP)	Improve logistics efficiency	Aims to reduce logistics costs, improve supply chain efficiency and enhance Indias competitiveness in global trade through digital integration and infrastructure improvements.
National Green Hydrogen Mission	Promote clean energy transition	Targets development of green hydrogen production and supporting infrastructure to accelerate decarbonisation of hard-to-abate industries.

Sources: Make in India: https://www.makeinindia.com, PM Gati Shakti: https://gati.shakti.gov.in, National Infrastructure Pipeline: https://www.nipindia.in, Union Budget 2025-26 (National Manufacturing Mission): https://www.indiabudget.gov.in, PLI Scheme for Specialty Steel: https://steel.gov.in, Steel Quality Control Orders: https://steel.gov.in, National Logistics Policy: https://dpiit.gov.in, National Green Hydrogen Mission: https://mnre.gov.in

Oil & Gas Industry Overview

The Oil & Gas industry remains one of the largest end-user markets for specialised forged components, with demand driven by upstream exploration, midstream pipeline infrastructure and downstream refining and petrochemical projects. Despite short-term geopolitical disruptions, long-term investments in LNG, refinery upgrades and energy security continue to support capital expenditure across the global energy value chain.

According to the International Energy Agency (IEA), global oil demand is expected to recover to approximately 105.3 million barrels per day (mb/d) in 2027, following temporary disruptions in 2026, while global supply is projected to reach 110.3 mb/d. India continues to strengthen its energy infrastructure through refinery expansions, city gas distribution networks and pipeline projects, creating sustained demand for high-integrity forged components.

Global Oil Supply Outlook (2025–2027)

Source: Market Reports, Industry Analysis

Sources: IEA Oil Market Report – June 2026, Fortune Business Insights – Oil & Gas Market Report

Railway Industry Overview

Railway infrastructure continues to witness significant investment globally, driven by urbanisation, freight efficiency and sustainable transportation initiatives. In India, the Governments continued focus on Dedicated Freight Corridors, station redevelopment, rolling stock modernisation and high-speed rail projects is creating long-term demand for precision-engineered industrial components.

These investments support opportunities for specialised forging manufacturers supplying critical components used in railway infrastructure and engineering applications.

Railway Industry Snapshot

Particulars	Value
Indian Railways Capital Outlay (FY2026-27 Budget)	Rs2.65 Lakh Crore
Key Growth Areas	Freight Corridors, Rolling Stock, Electrification

Sources: Union Budget 2026-27 Documents, Ministry of Railways Annual Report

Fertilizer Industry Overview

India remains one of the worlds largest fertiliser producers and consumers, supported by rising food demand and government initiatives to improve agricultural productivity. Expansion of fertiliser manufacturing facilities and investments in green ammonia and process plant modernisation continue to create demand for pressure equipment and forged industrial components.

Fertiliser plants represent an important end-user segment requiring high-performance flanges, tube sheets and custom-engineered forgings capable of operating under high-pressure and corrosive environments.

Heavy Engineering Industry Overview

The heavy engineering sector serves as the backbone of industrial infrastructure, supporting power generation, steel, cement, mining, process industries and capital goods manufacturing. Rising investments in infrastructure, energy, industrial automation and manufacturing localisation continue to strengthen demand for engineered equipment and specialised forged components.

Indias emphasis on industrial self-reliance, supported by initiatives such as Make in India, PM Gati Shakti and expanding capital expenditure, is expected to sustain long-term growth in the heavy engineering sector.

Heavy Engineering Industry Snapshot

Particulars	Value
Key End-use Industries	Power, Steel, Cement, Mining, Process Industries
Growth Drivers	Infrastructure, Manufacturing, Industrial Capex

Sources: Ministry of Heavy Industries – Annual Report

Manufacturing Sector Overview

Indias manufacturing sector continues to play a pivotal role in the countrys economic transformation, supported by policy reforms, rising infrastructure investments and global supply chain diversification. Government initiatives such as Make in India, PM Gati Shakti, the National Manufacturing Mission and Production Linked Incentive (PLI) schemes are strengthening Indias position as a preferred global manufacturing hub.

Manufacturing activity remained firmly in expansion during FY2025-26. Indias HSBC Manufacturing PMI stood at 54.2 in June 2026, marking the 60th consecutive month of expansion, reflecting sustained growth in production, new orders and exports. Industrial production also remained robust, with the Index of Industrial Production (IIP) growing 5.1% YoY in May 2026, driven by strong performance in manufacturing and capital goods.

Manufacturing Sector Snapshot

Indicator	Latest
Indias Manufacturing PMI (June 2026)	54.2
IIP Growth (May 2026)	5.1% YoY
Key Growth Drivers	Infrastructure, Capital Goods, Energy, Railways

Sources: HSBC India Manufacturing PMI (June 2026), MoSPI – Index of Industrial Production

Segment-wise Market Size & Opportunity Overview

Paramount Specialty Forgings operates across multiple industrial sectors, enabling the Company to benefit from diversified capital expenditure cycles rather than relying on a single end market. Oil & Gas remains the largest opportunity, complemented by growing investments in petrochemicals, railways, fertilisers and heavy engineering.

Paramounts Industry Opportunity Matrix

Large addressable markets and high-growth sectors supporting long-term forging demand

Industry	Latest Market Size	Forecast / Opportunity	CAGR	Horizon
Oil & Gas	USD 5.37 Tn	USD 19.93 Tn	15.2%	2025 ? 2034
Global Metal Forging	USD 85.9 Bn	USD 158.8 Bn	7.8%	2025 ? 2033
Petrochemicals	USD 701.1 Bn	USD 975.2 Bn	5.7%	2024 ? 2030
Heavy Engineering	USD 48.7 Bn	USD 79.3 Bn	8.5%	2024 ? 2030
Indian Railways Capex	Rs2.65 Lakh Cr	Increasing	Strategic	FY27 Budget
Fertilizer Industry	Capacity expansion	Green ammonia & urea	Strategic	Strategic opportunity

Industry Opportunities

Structural shifts in global manufacturing and Indias growing industrial capabilities present significant long-term opportunities for the forging industry. Rising investments across Oil & Gas, petrochemicals, railways, power, defence and heavy engineering, coupled with the China+1 sourcing strategy, are driving demand for high-quality, precision-engineered forged components. Government initiatives such as Make in India, infrastructure-led capital expenditure and increasing localisation of industrial manufacturing further strengthen Indias position as a preferred engineering hub. These trends align well with Paramounts expertise in closed-die forging, metallurgy and critical application components.

Industry Challenges

Despite favourable long-term fundamentals, the forging industry continues to face several operational and commercial challenges. Volatility in alloy steel prices, longer customer qualification cycles, stringent quality requirements, increasing energy costs and global competitive pressures continue to influence profitability. In export markets, geopolitical uncertainties, changing tariff regimes and evolving ESG expectations further increase operational complexity. Manufacturers are increasingly focusing on automation, process optimisation, quality certifications and product diversification to strengthen competitiveness.

Key Industry Challenges

Challenge	Impact
Raw material price volatility	Margin pressure
High energy & manufacturing costs	Increased operating costs
Stringent customer qualification	Longer sales cycle
Global competition	Pricing pressure
Skilled manpower availability	Productivity challenges
ESG & sustainability requirements	Higher compliance investments

PARAMOUNT AT A GLANCE

Established in 1994, Paramount Specialty Forgings Limited has evolved into one of Indias specialised manufacturers of open-die and closed-die forged components serving mission-critical industrial applications. Over three decades, the Company has built strong manufacturing capabilities in forged flanges, rolled rings, tube sheets, valve components and customised forgings that cater to demanding operating environments where precision, reliability and metallurgical integrity are non-negotiable.

Operating from manufacturing facilities at Kamothe and Khalapur, Maharashtra, the Company serves customers across oil & gas, petrochemicals, heavy engineering, railways, nuclear power, fertilisers and infrastructure. Supported by advanced forging, machining, heat treatment and testing capabilities, Paramount has established itself as a trusted supplier for engineered components requiring stringent dimensional accuracy and international quality compliance.

During FY26, the Company accelerated its transformation journey by investing in manufacturing expansion, strengthening its in-house testing infrastructure, expanding renewable energy usage and pursuing international registrations that will enable participation in larger global projects. These initiatives are positioning Paramount to move beyond conventional forgings towards larger, technologically complex and higher-value products.

Financial Highlights

During the financial year under review, the financial performance of the Company was as follows:

(Rs in Lakhs)

Sr. No.	Particulars	Year ended March 31, 2026	Year ended March 31, 2025
1.	Revenue from operations	11,995.97	10,993.26
2.	Other income	180.76	96.84
3.	Total income	12,176.73	11,090.10
4.	(Less): Total expenses, excluding depreciation and amortisation	11,456.12	10,360.49
5.	Profit before depreciation, amortisation and tax	720.61	729.61
6.	(Less): Depreciation and amortisation expense	150.35	142.61
7.	Profit before tax	570.26	587.00
	(Less): Tax expense:
	Current tax	165.00	169.86
8.	Prior-year tax adjustments	(3.52)	(32.99)
	Deferred tax (benefit)/expense	(16.75)	3.56
	Total tax expense	144.73	140.43
9.	Profit after tax	425.53	446.57

BUSINESS OVERVIEW

Paramount manufactures precision forged components that form the backbone of critical industrial infrastructure. Its products are deployed in pressure vessels, pipelines, refineries, petrochemical plants, nuclear facilities, heavy engineering equipment, railways and industrial machinery where product reliability directly influences operational safety and plant uptime.

The Company has gradually diversified beyond conventional flange manufacturing into rolled rings, customised forgings, gear blanks, tube sheets and specialised valve components, thereby expanding its addressable market while improving value addition. Management continues to increase its presence in high-performance alloy steels and nickel-based metallurgical grades, enabling participation in technically demanding applications across domestic and international markets.

Revenue remains well diversified, with Oil & Gas contributing 31.46%, Petrochemicals, Chemicals & Fertilisers 20.82%, Foreign Stockists 17.05%, Others 14.28%, Heavy Engineering 8.66%, Manufacturing 7.45%, Nuclear 0.26% and Power 0.01%, reflecting a balanced customer base across industrial sectors.

BUSINESS MODEL

Paramount operates an integrated manufacturing model that combines engineering expertise, advanced forging technologies and comprehensive quality assurance under one roof.

The value chain begins with sourcing premium-quality steel ingots, billets, rounds and bars from approved manufacturers. These materials undergo precision cutting before entering closed-die, open-die or ring-rolling forging operations depending upon customer specifications. Forged components subsequently pass through automated heat treatment facilities, CNC machining centres and comprehensive inspection processes before final packaging and dispatch.

The Companys integrated operations provide several strategic advantages:

- Superior control over product quality

- Faster production turnaround

- Lower dependence on third-party processors

- Capability to manufacture customised products

- Strong traceability across the manufacturing cycle

- Ability to cater to stringent customer specifications

The ongoing installation of a 10-ton forging hammer and a 2,000-ton forging press is expected to significantly enhance manufacturing flexibility, improve throughput, expand the product range and strengthen competitiveness in larger forged components.

PRODUCT PORTFOLIO

Paramount offers a diversified portfolio of forged products designed for high-pressure, high-temperature and mission-critical industrial environments.

Rolled Rings

Manufactured using advanced radial-axial ring rolling technology, these products include gear rings, slewing rings, tyre rings and turbine rings for heavy engineering and industrial equipment.

Flanges

The Company manufactures a comprehensive range of ANSI and international standard flanges, including weld neck, slip-on, blind, lap joint, threaded, long neck, line spacers, blind spades and drip rings serving pipeline and pressure vessel applications.

Non-Standard Forgings

Custom-engineered forgings such as girth flanges, self-reinforced nozzles, body flanges and specialised pressure equipment components are manufactured according to customer drawings and project specifications.

Valve Components

The Company also manufactures precision forged valve bodies, adaptors, seats, trunnion plates, balls, bonnets, stems and housings for industrial valve manufacturers.

Management is increasingly focusing on specialised alloy steel and nickel-alloy forgings that offer higher value addition and stronger margins while expanding opportunities in nuclear, aerospace and defence applications.

OPERATIONAL PERFORMANCE

FY26 represented another year of operational strengthening as Paramount continued enhancing manufacturing efficiency while executing strategic capacity expansion initiatives.

The Company improved production efficiency by approximately 3–4% during FY26 and intends to achieve further productivity gains through process optimisation and automation. Existing infrastructure is expected to deliver additional output improvements even before the commissioning of new forging equipment.

The major operational milestone remains the expansion of the Khalapur facility through installation of a 10-ton forging hammer and a 2,000-ton forging press. These investments will substantially increase manufacturing capabilities for larger forgings, improve production economics and enable entry into previously inaccessible product categories. Management expects the expansion to support installed capacity of approximately 6,000-8,000 tonnes while opening opportunities for long-term customer contracts.

The Company also continues strengthening customer relationships across oil & gas, nuclear, petrochemicals and heavy engineering while actively pursuing registrations with international energy companies to broaden its export opportunities.

TECHNOLOGY & METALLURGICAL EXCELLENCE

Paramounts competitive strength lies in its ability to manufacture complex forged components across carbon steel, stainless steel, alloy steel and nickel-based metallurgical grades.

The Company operates advanced closed-die forging, open forging and ring-rolling facilities supported by automated heat treatment systems capable of normalising, quenching, tempering, annealing, stress relieving and solution annealing processes. These technologies enable the production of forgings with precise mechanical properties, microstructures and dimensional tolerances required for critical industrial applications.

Management continues expanding capabilities in complex metallurgy and specialised alloy grades, positioning the Company to address higher-value applications across energy, aerospace, defence and heavy engineering sectors. The newly commissioned in-house testing laboratory further strengthens metallurgical validation through comprehensive chemical, mechanical, corrosion and metallographic testing.

QUALITY & CERTIFICATIONS

Quality remains fundamental to Paramounts manufacturing philosophy. The Company follows internationally recognised quality systems throughout procurement, forging, machining, testing and dispatch to ensure consistent product performance.

Its manufacturing facilities are certified under ISO 9001, ISO 14001, PED and occupational health & safety standards while maintaining approvals from leading oil & gas companies, EPC contractors and industrial customers.

FY26 marked another significant milestone with the commissioning of a modern in-house testing laboratory capable of conducting chemical analysis, metallography, corrosion testing and mechanical testing. The Company has also applied for NABL accreditation, which will not only strengthen customer confidence but also create opportunities to provide third-party testing services.

RESEARCH & DEVELOPMENT

Innovation at Paramount focuses on expanding metallurgical capabilities, enhancing manufacturing efficiency and developing specialised forged products for evolving industrial applications.

The Companys engineering teams continuously optimise forging processes, tooling designs and heat treatment methodologies to improve productivity while maintaining stringent quality standards. Recent investments in advanced forging equipment, automated manufacturing systems and in-house testing infrastructure further strengthen product development capabilities.

Management is also working towards developing forgings in complex alloy grades, larger dimensions and customised geometries to address emerging opportunities in defence, aerospace, nuclear energy and international oil & gas markets.

SUSTAINABILITY & ESG

Paramount continues integrating sustainability into its manufacturing operations by reducing energy consumption, lowering emissions and improving resource efficiency.

During FY26, the Company commissioned a 1.05 MW solar power project in phases across its manufacturing facilities. The project is expected to reduce electricity costs by approximately 25–30%, lower carbon emissions and improve long-term operating efficiency. Management also plans to expand installed solar capacity to approximately 1.3–1.4 MW over the coming months, reinforcing its commitment to cleaner manufacturing.

Alongside renewable energy investments, Paramount continues implementing process improvements that optimise energy utilisation, minimise waste generation and support responsible manufacturing practices.

RISK MANAGEMENT

Paramount operates in industries where product quality, execution capability and supply chain reliability are critical. Accordingly, the Company follows a proactive risk management framework focused on operational resilience, customer diversification and continuous capability enhancement.

Key risk mitigation measures include:

- Diversified presence across multiple industrial sectors, reducing dependence on a single end market.

- Continuous expansion into high-value products and specialised metallurgical grades.

- Ongoing international customer registrations to strengthen export opportunities.

- Capacity expansion to improve competitiveness and operational scalability.

- Integrated manufacturing and quality systems ensuring product traceability and compliance.

- Renewable energy investments that reduce exposure to rising energy costs.

- Continuous addition of domestic and international customers to broaden the revenue base.

As the new forging facilities become operational and international approvals progress, the Company expects to strengthen its market position while creating a more diversified and resilient business model capable of supporting long-term sustainable growth.

SWOT Analysis

Strengths	Weaknesses
Specialised forging expertise: Over three decades of experience in manufacturing precision-engineered forged components for mission-critical applications.	Sector concentration: A significant share of revenue continues to be derived from the Oil & Gas sector, making performance partially dependent on industry capital expenditure cycles.
Integrated manufacturing capabilities: End-to-end operations encompassing forging, ring rolling, heat treatment, machining, testing and inspection ensure quality, traceability and faster delivery.	Moderate scale of operations: Compared with larger listed forging companies, manufacturing scale and financial resources remain relatively limited, impacting economies of scale.
Diversified product portfolio: Wide range of rolled rings, flanges, valve components, tube sheets and customised forgings catering to multiple industrial sectors.	Capacity expansion under execution: Benefits from the new forging press and hammer will materialise progressively after successful commissioning and ramp-up.
Strong quality credentials: International certifications, EPC approvals and ongoing NABL accreditation strengthen credibility in highly regulated industries.	Limited global footprint: International presence is expanding but remains relatively concentrated compared with global forging peers.
Continuous technological investments: Expansion of forging capacity, advanced testing laboratory and renewable energy initiatives enhance long-term competitiveness and operational efficiency.
Opportunities	Threats
Expansion into high-value forgings: New 10-ton hammer and 2,000-ton forging press enable larger, complex and higher-margin products.	Raw material price volatility: Fluctuations in alloy steel, stainless steel and nickel prices may impact margins if not passed on to customers.
Growing energy and infrastructure investments: Rising investments in oil & gas, petrochemicals, nuclear power, defence, railways and heavy engineering present significant demand opportunities.	Intense competition: Competition from established domestic and global forging manufacturers may exert pricing pressure, particularly in standard products.
Export market expansion: Registrations with global energy companies such as ADNOC and increasing overseas approvals can broaden export opportunities.	Project execution delays: Delays in customer capex, EPC projects or commissioning of new facilities may defer revenue realisation.
Shift towards specialised metallurgy: Increasing focus on nickel alloys, special steels and customised engineered forgings can improve value addition and profitability.	Global macroeconomic and geopolitical risks: Slowdown in industrial investments, trade disruptions or geopolitical tensions could affect export demand and capital expenditure cycles.
Sustainability-led manufacturing: Solar power expansion and energy-efficient operations can reduce operating costs while strengthening ESG positioning.	Stringent quality requirements: Failure to maintain international certifications or customer approvals could impact participation in critical industrial projects.