Paramount Speciality Forgings Ltd Management Discussions

1. OVERVIEW:

The objective of this report is to convey the Managements perspective on the external environment and forging industry, as well as operating and financial performance, material developments in human resources and industrial relations, SWOT Analysis and internal control systems and their adequacy in the Company during the FY 2024-25.

This should be read in conjunctions with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Annual Report. The Companys financial statements have been prepared in accordance with Generally Accepted Accounting Principle complying with the requirements of the Companies Act, 2013 as amended and regulations issued by the Securities and Exchange Board of India (‘SEBI] from time to time.

2. INDUSTRY STRUCTURE & DEVELOPMENT:

A. THE ECONOMIC OVERVIEW

(i) Global Economy: The baseline forecast anticipates that the global economy will maintain a growth rate of 3.2 percent in both 2024 and 2025, consistent with the pace recorded in 2023. A modest acceleration in advanced economies·from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025·is expected to be offset by a slight deceleration in emerging market and developing economies, where growth is projected to ease from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The medium-term outlook is less optimistic, with global growth five years from now projected at 3.1 percent·its lowest level in decades.

Global inflation is expected to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025. Advanced economies are anticipated to return to their inflation targets more swiftly than their emerging market and developing counterparts. Core inflation, however, is projected to decline more gradually across most regions.

Despite a series of aggressive interest rate hikes by central banks to restore price stability, the global economy has demonstrated notable resilience. Following several unprecedented shocks in recent years, growth remained steady - albeit subdued·through 2024, with similar dynamics projected in early 2025. However, the global policy environment has since evolved, with governments beginning to recalibrate their priorities. Notably, the United States has introduced a broad set

of new tariffs, which triggered retaliatory responses from trading partners. These measures culminated in the imposition of near-universal U.S. tariffs as of April 2, elevating effective tariff rates to levels not seen in a century. This development constitutes a significant negative shock to global growth.

Moreover, the heightened uncertainty surrounding trade policy and geopolitical developments has further weighed on economic activity and clouded the outlook, making it increasingly difficult to produce consistent and timely forecasts. In this context, the reference scenario projects global growth to slow to 2.8 percent in 2025 and 3.0 percent in 2026·down from 3.3 percent·representing a cumulative downward revision of 0.8 percentage point and remaining well below the 2000-2019 historical average of 3.7 percent. Growth in advanced economies is expected to decline to 1.4 percent in 2025. U.S. growth is forecast to slow to 1.8 percent·0.9 percentage point lower than previous estimates·due to increasing policy uncertainty, rising trade tensions, and softening demand momentum.

Despite these persistent global headwinds, the current environment also presents an opportunity to bolster economic resilience and lay the groundwork for sustainable, long-term growth. Addressing these macroeconomic challenges will require coherent policy coordination, the timely implementation of structural reforms, and effective sovereign debt resolution mechanisms. With clear monetary guidance, disciplined fiscal frameworks, and stronger financial systems, economies can restore stability and support a robust recovery. Continued international cooperation will be critical to addressing systemic vulnerabilities, supporting emerging markets, and fostering a more inclusive and balanced trajectory for global growth.

(Source: https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025 ]

Below is the forecast for revenue generation in global forging industry from 2019 to 2030, as projected by Fortune Business Insights.

(ii) Indian Economy: Indias economy remains on a strong footing, with an estimated growth rate of 6.5% for FY 2024-25. This performance underscores the countrys economic resilience amid a challenging global environment. The sustained

momentum is supported by sound policy initiatives and robust domestic fundamentals. Key drivers include substantial infrastructure investments, technological advancements, and ongoing structural reforms. Government policy continues to play a pivotal role, complemented by improving labour market conditions and stable consumer demand. Agriculture and services sectors remain critical pillars, providing balance between private consumption and broader macroeconomic stability.

However, the manufacturing export segment has faced headwinds due to subdued demand from major international markets and increasingly protectionist trade policies from key partners. Additionally, an above-average monsoon delivered mixed outcomes·positively contributing to water resource replenishment and agricultural output, while temporarily disrupting activity in sectors such as mining, construction, and parts of manufacturing. Furthermore, year-on-year variations in the timing of festivals between September and October contributed to a marginal moderation in growth during that period.

Despite these short-term challenges, the economys resilience has been reinforced by strong domestic demand and a notable surge in export orders·among the fastest in over a decade·driven by shifting global trade patterns. As a result, the manufacturing sector ended the year on a solid note, reaffirming its position as a key engine of growth for the Indian economy.

Investor confidence in the manufacturing sector remains high. This growth reflects improved corporate earnings, rising foreign direct investment, and technological innovations that have helped manufacturers maintain profitability, even in the face of rising input costs·particularly in sectors such as consumer goods, chemicals, and pharmaceuticals.

Below is the forecast for revenue generation in Indias forging industry from 2019 to 2030, as projected by Fortune Business Insights.

B. INDIAN FORGING INDUSTRY:

(i) A Strategic Driver of Economic Growth: The Indian forging industry plays a vital role in propelling the nations economic development. With roots tracing back to ancient times, the sector has transformed into a technologically advanced and dynamic industrial base. Comprising approximately 400 units·predominantly located in the western and northern re

gions·the industry currently produces around 2.2 million metric tonnes annually, accounting for 7.8% of global output, second only to China.

This sector contributes significantly not only through the production of critical components but also by generating employment and fostering skill development nationwide. Recent global shifts·such as the "China Plus One” strategy and rising energy costs in Europe·have created favourable conditions for Indian forging companies. In response, the industry aims to scale up production capacity to 3.5-4 million tonnes over the next two years.

(ii) Diversification and Export Growth: Historically, the forging industry has been closely aligned with the automotive sector, which accounts for nearly 80% of total orders. However, the industry is now diversifying into defence, aerospace, and railways. By 2030, it aims to rebalance its customer base, with a targeted composition of 60% automotive and 40% non-automotive clients.

Currently, exports comprise about 35% of Indias total forged products, a figure expected to rise due to increasing demand from North America and Europe. Over the next seven years, the industry is projected to grow at a compound annual rate of 10-15%, marking a pivotal transition into its next phase of expansion.

(iii) Technology, Modernisation, and Policy Support: To remain globally competitive, the industry must prioritise capacity expansion, technology upgrades, and increased automation. Embracing new materials such as aluminium and integrating disruptive technologies like additive manufacturing are crucial for future-readiness.

Government initiatives·such as Make in India, Skill India, and the Production-Linked Incentive (PLI] schemes·have further bolstered the industrys growth trajectory. This capital expenditure spans sectors including energy, mining, port connectivity, and railways. Forged components are essential to these projects, contributing to structural integrity and long-term durability in infrastructure like bridges, pipelines, and buildings.

(iv) Industrial Capacity and Investment Landscape: Indias forging sector has shifted from a labour-intensive model to a capital-intensive manufacturing ecosystem. With an installed capacity of approximately 3.85 million metric tonnes, the industry processes a wide range of materials, including carbon steel, alloy steel, stainless steel, superalloys, titanium, and aluminium. Industry players have invested over ?27,833 crore in plant and machinery, underscoring the sectors commitment to modernisation.

The industry comprises a mix of unit sizes·ranging from very large to very small·with the majority being small and very small enterprises. Forging clusters are strategically located near key customer bases, with major hubs in Maharashtra, Punjab, Tamil Nadu, Haryana, Gujarat, Delhi, Jharkhand, West Bengal, Karnataka, and Andhra Pradesh. These clusters contribute significantly to regional economic development and job creation.

(v) Towards Industry 4.0 and Sustainable Growth: Leading forging companies are actively embracing Industry 4.0 principles·leveraging digitalisation, data analytics, and connectivity to enhance productivity and operational efficiency. This transition reflects the industrys adaptability, technical expertise, and readiness to meet global standards.

As India continues its journey toward becoming a global manufacturing hub, the forging industry stands well-positioned to capitalise on emerging opportunities while navigating evolving market dynamics and external challenges. By embracing innovation, diversification, and sustainability, the sector is charting a path toward long-term growth and global competitiveness.

Driven by an infrastructure-focused growth strategy, steel demand in India is expanding at a strong pace. This growth is further bolstered by significant advancements in key user industries, particularly building & construction, and infrastructure. In FY24, construction, and infrastructure accounted for an estimated 68 per cent of total steel consumption, followed by engineering and packaging at 22 per cent and automobiles at nine per cent. India has been a net importer of steel from April to November FY25. The decline in Indias export of finished steel during FY25 was mainly driven by gaps between international and domestic prices. The low price in the international market during this period resulted in a low margin on exports and cheaper imports.

The governments Steels Scrap Recycling Policy encourages efficient recycling of scrap. The total domestic consumption of steel scrap in India is approximately 30 Million Tones [MT], of which around 5 MT is imported. Ensuring the availability of high-quality scrap in sufficient quantities is crucial for transitioning to green steel and supporting the future growth of the steel industry. In addition, the use of scrap significantly reduces specific energy consumption. It also reduces the water consumption by 40 per cent, and greenhouse gas emissions by 58 per cent.

3. KEY SECTORS SERVED:

Paramount Speciality Forgings Limited caters to a wide spectrum of industries where safety, performance, and reliability are critical. Leveraging advanced forging capabilities, stringent quality controls, and sector-specific expertise, the Company manufactures precision-engineered components that meet the demanding requirements of domestic and international clients. The principal sectors served are as follows:

A. Oil & Gas: The oil and gas industry demand components capable of withstanding high pressures, extreme temperatures, and corrosive operating conditions across upstream, midstream, and downstream activities. Paramount manufactures flanges, valve bodies, forged rings, and other precision parts for pipelines, refineries, and processing units. These products are designed to meet stringent technical specifications, ensuring operational safety and efficiency.

With the sector evolving towards deeper drilling, high-pressure/high-temperature (HPHT) applications, and cleaner energy solutions such as hydrogen and carbon capture, the need for high-integrity forged products is increasing. The

Company supports this transformation by delivering reliable, indigenous solutions that reduce import dependence and enhance domestic manufacturing capabilities.

B. Petrochemicals: Petrochemical plants operate in high-temperature and high-pressure environments, requiring robust and durable components for refining, cracking, storage, and transportation processes. Paramount supplies flanges, nozzles and valve bodies that meet stringent safety, efficiency, and environmental compliance standards.

The Company is well-positioned to benefit from growing domestic and global demand for petrochemical products, driven by the packaging, automotive, and construction sectors, as well as from investments in advanced petrochemical facilities focusing on efficiency and sustainability.

C. Heavy Engineering & Infrastructure: Heavy engineering projects, including power plants, steel mills, cement factories, and infrastructure equipment, require large, custom-designed forgings with exceptional strength and durability. Paramount manufactures gearing blanks and support structures that are integral to heavy-duty machinery and structural systems.

Indias focus on infrastructure expansion, renewable energy, and industrial modernisation is creating sustained demand for such components, where the Companys manufacturing expertise and flexibility in handling large dimensions offer a competitive edge.

D. Aerospace & Defence: The aerospace and defence sector requires lightweight yet high-strength forgings capable of meeting stringent metallurgical and dimensional tolerances for safety-critical applications. Paramount produces structural components, rings, and precision parts for aircraft, missiles, naval systems, and armoured vehicles.

With government initiatives like "Atmanirbhar Bharat” and growing defence procurement under Make in India, demand for indigenously manufactured, high-performance forgings are on the rise. The Companys ability to deliver customised, certified components positions it as a trusted partner in these strategic sectors.

E. Nuclear Power: Nuclear power plants require components that can perform reliably under intense radiation, high pressure, and elevated temperatures over extended lifespans. Paramount manufactures pressure vessel parts, flanges, and structural components for nuclear applications, adhering to strict regulatory and safety standards.

With Indias planned expansion of nuclear capacity as part of its clean energy roadmap, the demand for indigenously manufactured, safety-critical forgings are expected to increase significantly. The Companys precision manufacturing capabilities make it well-suited to serve this highly specialised sector.

F. Railways: The railway sector depends on durable, fatigue-resistant forgings for locomotives, passenger coaches, freight wagons, and track systems. Paramount supplies Flanges, Tyre rings, couplers, and gear blanks, all manufactured to meet Indian Railways and international quality standards.

Indias rail modernisation, including high-speed rail projects, electrification, and metro expansions, is driving demand for long-life, high-precision components. The Companys manufacturing expertise aligns with the sectors safety, performance, and indigenisation goals.

G. Emerging & Specialised Applications: Beyond traditional sectors, Paramounts forging capabilities cater to renewable energy, marine, mining, and specialised industrial machinery, where custom designs, advanced materials, and high-performance standards are critical. Continuous innovation in forging technology enables the Company to address evolving industrial needs and participate in new growth areas.

4. SEGMENT/SECTOR WISE PERFORMANCE:

The following table indicates a Segment/ Sector/Industry wise sales performance of the during the FY 2024-25.

Particulars	Amount of Sales (Rs. In Lakh)	of Sales%
Exports	2,829.705	25.90
Petrochemicals, Chemicals & Fertilizers	2,301.313	21.06
Oil & Gas Industry	1,840.406	16.84
Heavy Engineering & Other Sectors	1,207.024	11.05
Nuclear Power	117.721	1.08
Other Infrastructure Sectors	559.372	5.12
Others	2,070.207	18.95
Total	10,925.749	100

* The above segment wise sales performance not includes the amount of Export Incentives of Rs. 67.54 (In Lakhs)

5. ABOUT THE COMPANY:

Paramount Speciality Forgings Limited ("the Company” or "PSFL”) is a legacy-driven and quality-focused manufacturer of precision steel forgings based in India, with an industrial lineage spanning over six decades. The Companys origin can be traced back to 1962 through a proprietary concern named Acme Engineering Works, and it has since evolved through multiple strategic reconstitutions. It was converted into a partnership firm in 1994 under the name Paramount Forge, later into a Limited Liability Partnership in 2019, and subsequently incorporated as a public limited company under its current name on May 5, 2023. The Company was listed on the SME Platform of the National Stock Exchange of India (NSE Emerge) on September 25, 2024.

PSFL is engaged in the manufacturing of a wide range of closed-die, open-die, and ring-rolled forgings, supplied in rough or finish-machined conditions. The Company specializes in producing high-performance forged components in weight categories ranging from 1 kilogram to 4 metric tons, tailored to stringent customer specifications and applicable national and international standards.

The Companys products serve critical applications in sectors such as petrochemicals, oil and gas, fertilizers, chemicals, nuclear power, and heavy engineering. Its product portfolio includes, among others: Tube Sheet Blanks, Forged Rings, Girth Flanges, Tyre Rings, Spacers, Long Weld Neck Flanges, Self-Reinforced Nozzles, Valve Bodies, Bonnets, and Seats.

PSFL operates two state-of-the-art manufacturing units in the state of Maharashtra:

• A Closed-Die Forging Plant located at Kamothe, Navi Mumbai, with an installed capacity of 5,000 metric tons per annum (MTPA); and

• A Ring Rolling and Open-Die Forging Plant located at Khalapur, Raigad District, with an installed capacity of 7,000 MTPA.

Together, these facilities provide a combined forging capacity of 12,000 MTPA. The Companys infrastructure is integrated with in-house capabilities for die development, forging, CNC and VMC machining, automated heat treatment, dimensional testing, and metallurgical quality assurance.

The Company adheres to robust operational systems and quality standards and is certified under ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018, demonstrating its commitment to quality, environmental compliance, and occupational health and safety.

PSFL has been recognized by the industry for its consistent performance, having received:

• The "Star Performer” Award from EEPC India during the period 2008-2010; and

• The "Bright Beginner Performance” Award from the Kirloskar Group in 2022-2023.

6. SWOT ANALYSIS:

7. FINANCIAL PERFORMANCE:

1 Particulars		FY 2024-25		FY 2023-24		% Variance
Revenue from Operations		10,993.26		10,280.00		6.938%
Other Income		96.84		71.74		34.987%
Total Income		11,090.10		10,351.75		7.133%
Operating Expenditure		10,155.55		8,990.72		12.956%
Depreciation and Amortisation Expense		142.61		415.35		-65.665%
Total Expenses		10,298.16		9,406.07		9.484%
Profit before Finance Costs, Exceptional Item, and Tax		791.94		945.68		-16.257%
Finance Costs	204.94		189.78		7.988%
Profit before Exceptional Item and Tax	587.00		755.90		-22.344%
Total Tax Expense	140.43		215.42		-34.811%
Profit for the Year	446.57		540.48		-17.375%

Significant Changes in Key Financial Ratios:

1 Ratios	FY 2024-25	FY 2023-24	% Variance
Debtors Turnover	5.25	6.23	-16%
Inventory Turnover	1.74	2.06	-15.53%
Interest Coverage Ratio (%)	455.95	717.08	-36.5%
Current Ratio	1.57	1.21	30%
Debt-Equity Ratio	0.56	1.08	-48%
Operating Profit Margin (%)	8.50	13.24	-35.80%
Net Profit Margin (%)	4.06%	5.31%	-24%
Return on capital employed	26.40%	0.40%	-34%

8. RISK MANAGEMENT:

The Company recognises that proactive risk identification and mitigation are essential to safeguarding business performance and creating long-term stakeholder value. While no formal enterprise-wide Risk Management Framework has yet been adopted, risk awareness is embedded in decision-making across operational, financial, and compliance functions. Senior management periodically reviews key exposures through management discussions, project reviews, and statutory reporting, enabling timely corrective action. The Company is also evaluating the adoption of a structured framework to further strengthen its ability to anticipate and respond to emerging challenges.

The principal risks, together with ongoing mitigation measures, are as follows:

A. Raw Material Price Volatility

Risk: Steel and alloy prices are subject to global market fluctuations, which can impact cost structures and margins.

Mitigation: Engaging in long-term supply contracts with key vendors, maintaining buffer inventories for critical grades, and incorporating dynamic pricing mechanisms in customer agreements.

B. Energy and Utility Costs

Risk: Forging operations are energy-intensive, making them sensitive to electricity and fuel price increases.

Mitigation: Upgrading to energy-efficient furnaces, implementing waste-heat recovery systems, and diversifying energy sources, including renewables.

C. Skilled Workforce Dependency

Risk: Specialised forging processes require experienced manpower, and skill shortages may affect production quality and timelines.

Mitigation: Conducting in-house training, apprenticeships, and cross-skilling programmes to reduce reliance on specific individuals.

D. Regulatory and Environmental Compliance

Risk: Stricter environmental, health, and safety norms could increase operational costs or require significant process

modifications.

Mitigation: Proactive compliance monitoring, investment in pollution control systems, and adherence to ISO/OSHAS- certified practices.

E. Supply Chain Disruptions

Risk: Delays in raw material deliveries, transportation bottlenecks, or geopolitical events can affect operations.

Mitigation: Implementing a multi-source procurement strategy, maintaining safety stocks, and securing flexible logistics arrangements.

F. Market Demand and Economic Cycles

Risk: Demand for forged products is linked to capital expenditure cycles in industries such as oil & gas, infrastructure, and defence, making the Company vulnerable to economic slowdowns

Mitigation: Diversifying into multiple sectors, expanding export markets, and increasing focus on aftermarket/maintenance products.

G. Technological Disruption

Risk: Alternative manufacturing processes or new materials could substitute conventional forgings in certain applications.

Mitigation: Investing in R&D, adopting advanced manufacturing technologies, and developing new product lines to address emerging requirements.

H. Currency and Export Risks

Risk: Exchange rate fluctuations can affect export realisations and imported input costs.

Mitigation: Using forward contracts, applying natural hedging by balancing imports and exports, and regularly monitoring currency exposures.

I. Quality and Product Liability

Risk: Non-conformance to stringent quality standards in safety-critical applications can lead to rejections, penalties, or reputational damage.

Mitigation: Maintaining robust quality control systems, ensuring full product traceability, and adhering to customer-specific certification protocols.

9. SUSTAINABILITY INITIATIVES AND RENEWABLE ENERGY PROJECTS:

In line with its ESG roadmap and commitment to reducing environmental impact, the Company has initiated its first major solar power project. A purchase order has been placed with a leading Pune-based solar EPC contractor for the installation of a 1,050 kwp solar power plant under the Owned Model, ensuring long-term operational and sustainability benefits.

The projects first phase will be implemented at the Khalapur facility, followed by expansion to the Kamothe facility upon successful commissioning. The execution is structured into three stages, with full completion expected within four to five months:

• Phase 1: 8-10 weeks

• Phase 2:12-14 weeks

• Phase 3:16-18 weeks

Design and engineering work is in progress, and statutory approvals (including from MSED] are being pursued. Once operational, the plant is expected to meet 30%-35% of the Companys internal energy requirements, contributing significantly to operational efficiency and cost savings.

The initiative is projected to deliver substantial environmental benefits:

• Estimated annual C0₂ emission reduction: 787,500 kg

• Environmental equivalence: Planting approximately 36,750 trees per year.

Beyond immediate benefits, an additional 300-400 kW capacity expansion is planned for early next year, further reinforcing the Companys dedication to renewable energy adoption. The project is entirely self-financed and is not linked to any government scheme, subsidy, or incentive.

10.HUMAN RESOURCES:

At Paramount Speciality Forgings Limited [PSFL], people are recognised as the Companys most valuable asset, whether on the shop floor, in technical roles, or at the leadership level. Employee engagement, skill development, and workplace safety are positioned as strategic priorities, directly contributing to the Companys manufacturing excellence and customer satisfaction.

As on March 31,2025, PSFL employed 152 individuals, reflecting the scale and diversity of its manufacturing and operational footprint. With expansion plans in place, the Company anticipates onboarding additional skilled and semi-skilled workers in FY 2025-26 to support higher production volumes and new project requirements. Recruitment efforts will be aligned with the Companys focus on building a resilient, multi-skilled workforce.

PSFL ensures comprehensive social security coverage through schemes such as the Provident Fund (PF], Employees State Insurance (ESI], and gratuity benefits. Employee well-being is further supported by health and safety programs, counselling access, and welfare measures aimed at sustaining productivity and morale.

The Company is committed to fostering an inclusive and equitable workplace. In FY 2024-25, women represented 9.21% of the total workforce, held 16.67% of Board positions, and accounted for 66.67% of Key Managerial Personnel (KMPs], PSFL ensures that all facilities are fully accessible and compliant with applicable standards, in line with its diversity objectives.

The Company has a robust grievance redressal mechanism and a zero-tolerance policy towards harassment, supported by continuous awareness programs. No complaints were reported during FY 2024-25, underscoring the effectiveness of preventive measures.

PSFL holds ISO 45001:2018 certification, reflecting its commitment to the highest standards of occupational health and safety. The Company proactively identifies potential hazards, ensures compliance with statutory norms, and cultivates a culture of safety and accountability across all operations.

A comprehensive Policy Manual guides the Companys approach to recruitment, training, performance evaluation, and employee relations. These policies are anchored in the values of discipline, integrity, collaboration, and care, and are periodically updated to align with evolving workforce expectations and regulatory requirements.

Going forward, PSFL will focus on:

• Expanding its skilled workforce to meet growing production needs.

• Enhancing training programs, particularly in advanced forging technologies.

• Strengthening retention strategies to address industry-wide skilled labour shortages.

11.INFORMATION TECHNOLOGY

Information Technology (IT) plays a pivotal role in enhancing operational efficiency and accuracy within a company. With the integration of automated machinery and industrial control systems, IT enables precise monitoring, control, and optimization of the forging processes, leading to improved product quality, reduced downtime, and increased production efficiency, in addition to manufacturing automation.

IT supports the preparation of financial accounts through robust ERP (Enterprise Resource Planning) systems, ensuring accurate, real-time financial reporting, compliance, and data-driven decision-making. For employee data management, IT systems streamline HR functions such as payroll, attendance, performance tracking, and statutory compliance, contributing to better workforce planning and transparency.

IT also facilitates inventory management by enabling real-time tracking of raw materials, in-process goods, and finished products, thus optimizing stock levels, reducing wastage, and ensuring timely procurement. Furthermore, IT supports various other business functions including supply chain coordination, customer relationship management, preventive maintenance scheduling, and data analytics, collectively enhancing productivity, reliability, and strategic planning across the organization.

12.INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Paramount Speciality Forgings Limited (PSFL) has putin place internal financial controls commensurate with the scale, complexity, and nature of its operations. These controls are designed to ensure:

• Streamlining operational processes to improve productivity and reduce inefficiencies.

• Embedding statutory and regulatory compliance requirements into functional workflows.

• Physical verification and monitoring of inventories, fixed assets, and other resources to prevent misuse, loss, or damage.

• Multi-layered authorisation processes and periodic reconciliations to reduce financial and operational risks.

• Ensuring timely, correct, and complete accounting records in compliance with Generally Accepted Accounting Principles (GAAP).

Oversight and Governance

• The Board of Directors, through clearly defined and comprehensive policies, provides strategic direction for internal control mechanisms.

• An Independent Audit Committee of the Board reviews the adequacy and operating effectiveness of these controls at regular intervals and ensures that corrective actions are implemented promptly.

• A Management Committee conducts periodic reviews of control processes, investigates variances or gaps, and initiates timely remedial measures.

Audit and Continuous Improvement

• Both internal and external auditors are engaged to independently assess the effectiveness of internal controls, financial reporting systems, and compliance processes.

• Recommendations from audit reviews are systematically implemented, and follow-up audits are conducted to verify

compliance with agreed corrective actions.

• The Company invests in upgrading systems and processes to align with industry best practices, evolving business requirements, and emerging risk areas.

For FY 2024-25, the Board, based on reviews by the Audit Committee and independent internal auditors, has found the Companys internal financial controls to be adequate and operating effectively. These controls continue to evolve to meet the demands of business expansion, regulatory changes, and technological advancements, ensuring that PSFL remains compliant, secure, and resilient.

CAUTIONARY STATEMENT

The statements made in the Management Discussion and Analysis Report, which may qualify as forward-looking under applicable laws and regulations, are based on current expectations and projections regarding future events. However, actual outcomes may differ materially from those anticipated or implied. Key factors that could impact the Companys operations include global geopolitical developments, domestic economic conditions, industry-specific demand and supply dynamics, input costs, changes in government policies and tax legislation, as well as other considerations such as industrial relations. The Management does not provide any assurance that these forward-looking statements will materialize.

Annexure - II

FORM NO. MR-3 SECRETARIAL AUDIT REPORT PARAMOUNT SPECIALITY FORGINGS LIMITED For the Financial Year Ended 31^st March, 2025

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment

and Remuneration Personnel) Rules, 2014]

To,

The Members,

PARAMOUNT SPECIALITY FORGINGS LIMITED

3,1, Guru Himmat Building,

Dr. Mascarenhas Road, Anjirwadi, Mazgaon,

Mumbai,Maharashtra, India, 400010

We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by PARAMOUNT SPECIALITY FORGINGS LIMITED having CIN L24109MH- 2023PLC402307 ( hereinafter called the Company ) for financial year from April 01^st, 2024 to March 31^st, 2025 (hereinafter referred to as "the Audit Period”). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Companys books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit and as per the explanations given to us and the representations made by the Management of the Company, we hereby report that in our opinion, the Company had during the Audit Period generally complied with the statutory provisions listed hereunder and also that the Company had proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed during the Audit Period and other records made available to us and maintained by the Company and as shown to us during our audit and according to the provisions of the following laws:

1) The Companies Act, 2013 and the Rules made there under.

2) The Securities Contracts (Regulation) Act, 1956 (‘SCRA) and the rules made thereunder

3) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

4) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act):-

a. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

b. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018

c. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

d. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (Not applicable to the Company during the audit period);

e. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 (Not applicable to the Company during the audit period);

f. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client.

g. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Not applicable to the Company during the audit period);

h. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998 (Not applicable to the Company during the audit period);

i. The Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015;

5) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

6) The Company has identified the following laws as specifically applicable to the company:

a. The Payment of Wages Act, 1936

b. Employees State Insurance Act, 1948

C. The Employees Provident Fund and Miscellaneous Provisions Act, 1952

d. The Payment of Bonus Act, 1965

e. The Payment of Gratuity Act, 1972

f. The Motor Vehicle Act, 1988

g. Food Safety and Standards Act, 2006

We have also examined compliance with the applicable clauses of the following:

I. Secretarial Standards issued by The Institute of Company Secretaries of India;

II. The Listing Agreements entered into by the Company with National Stock Exchange (s);

During the Audit Period and as per the explanation and clarification given to us and the representations made by the management, the Company had generally complied with the provisions of the Act, Rules, Regulations, Guidelines etc. mentioned above, except we have observed a few minor deviations which including typographical errors in minutes.

We further report that:

1. The Directors have complied with the requirements as to disclosure of interests and concerns in contracts and arrangements, shareholdings / debenture holdings and directorships in other companies and interests in other entities;

2. The Directors have complied with the disclosure requirements in respect of their eligibility of appointment, their being independent and compliance with the Code of Business Conduct & Ethics for Directors and Management Personnel;

3. The Company has obtained all necessary approvals under the various provisions of the Act; and

4. There was no prosecution initiated during the year under review under the Companies Act and Rules, Regulations and Guidelines framed under these Acts against / on the Company, its Directors and Officers though some forms were uploaded with late filing fees.

We further report that

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors. The changes in the composition of the Board of Directors that took place during the audit period were carried out in compliance with the provisions of the Act.

Adequate notice were given to directors to schedule the Board Meetings, committee meetings, agenda along with the detailed notes on agenda were also sent in advance of seven days, however a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Decisions at the Board Meetings were taken unanimously.

We further report that as per the explanations given to us and the representations made by the management and relied upon by us, there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period the company has not done any such events mentioned below:

a. Redemption / buy-back of securities

b. Merger / amalgamation / reconstruction, etc.

c. Foreign technical collaborations

We further report that during the audit period, the company had following events as mentioned below:

1. Listing on Stock Exchange:

Duringtheauditperiod,theCompanyhassuccessfullylisteditsequitysharesontheNationalStockExchangeofIndiaLimited (NSE). The listing was carried out in compliance with applicable provisions of the Securities Contracts (Regulation) Act, 1956,theSEBI (Listing Obligations andDisclosure Requirements) Regulations, 2 015, and other applicable laws. Necessary approvals from regulatory authorities were obtained, and disclosures were duly made as per statutory requirements.

2. Allotment of Equity Shares:

During the audit period, the Company has allotted 48,02,000 (Forty-Eight Lakh Two Thousand) equity shares pursuant to Initial Public Offer and 6,80,000 (Six Lakhs Eighty Thousand) equity shares by the selling shareholder, in compliance with the applicable provisions of the Companies Act, 2013, the SEBI regulations, and other applicable laws. The necessary approvals of the Board of Directors, shareholders, and regulatory authorities were duly obtained, and the allotment was made in accordance with prescribed procedures.

ANNEXURE- A

(To the Secretarial Audit Report of PARAMOUNT SPECIALITY FORGINGS LIMITED for the

financial year ended March 31^st, 2025)

To,

The Members,

PARAMOUNT SPECIALITY FORGINGS LIMITED

3,1, Guru Himmat Building,

Dr. Mascarenhas Road, Anjirwadi, Mazgaon,

Mumbai,Maharashtra, India, 400010

Our Secretarial Audit Report for the financial year 31^st March, 2025 is to be read along with this letter.

Managements Responsibility:-

1. It is the responsibility of the management of the Company to maintain secretarial records, devise proper systems to ensure compliance with the provisions of all applicable laws and regulations and to ensure that the systems are adequate and operate effectively.

Auditors Responsibility:-

2. Our responsibility is to express an opinion on these secretarial records, standards and procedures followed by the Company with respect to secretarial compliances.

3. We believe that audit evidence and information obtained from the Companys management is adequate and appropriate for us to provide a basis for our opinion.

4. Wherever required, we have obtained the managements representation about the compliance of laws, rules and regulations and happening of events etc.

Disclaimer:-

5. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

6. We have not verified the correctness and appropriateness of financial records and books of account of the Company.

ANNEXURE-III

INFORMATION PURSUANT TO SECTION 197 (12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

1. Ratio of remuneration of each director to the median remuneration of employees:

Name of the Director	Designation	Ratio
Mr. Aliasgar Roshan Hararwala	Managing Director	6.36
Mr. Aliasgar Abdulla Bhagat	Director	6.36
Mr. Mohammed Salim Hararwala	Director	5.20
Mr. Kurian Pallathuseril Chandy	Independent Director	0.30
Mr. Nimesh Mukerji	Independent Director	0.30
Ms. Apurva Pradeep Joshi	Independent Director	0.30

2. The percentage increase in remuneration of each Director, Chief Financial Officer, CEO, Manager, Company Secretary in the financial year:

Name of the Directors, Chief Financial Officer, Company Secretary	Designation	% Increase
Mr. Aliasgar Roshan Hararwala	Managing Director	0
Mr. Aliasgar Abdulla Bhagat	Director	0
Mr. Mohammed Salim Hararwala	Director	0
Mr. Kurian Pallathuseril Chandy	Independent Director	0
Mr. Nimesh Mukerji	Independent Director	0
Ms. Apurva Pradeep Joshi	Independent Director	0
Ms. Farkhanda Abdul Razak Pagarkar	Chief Financial Officer	8.64%
Ms. Ankita Anil Patankar	Company Secretary & Compliance Officer	0

Note: Sitting fees paid to the Directors have not been considered as remuneration.

3. The percentage increase in the median remuneration of employees in the financial year: 16.03%

4. The number of permanent employees on the rolls of company: 152

5. Average percentile increase already made in the salaries of employees other than the managerial personnel (KMP) in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: 16.03%

6. Affirmation that the remuneration is as per the remuneration policy of the Company: Yes

Information as per Rule 5 of Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Details of Employees as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and also Top 10 employees in terms of remuneration drawn during the year 2024-25:

Name of Employee	Designation	Educational Qualification	Age (in yrs)	Experience (in years)	Date of Joining	Remuneration in FY 2024-25 (In f Lakh)	Previous employment	The percentage of equity shares held by the employee in the Company within the meaning of clause (iii) of sub-rule (2) of rule 5 of companies (Appointment and remuneration of managerial personnel) rules, 2014
Aliasgar R. Hararwala	Managing Director	MBA	47	28	05-05-23	21,00,000	-	12.48
Aliasgar A. Bhagat	Director	SSC	70	51	05-05-23	21,00,000	-	8.24
Roshan A. Hararwala	Promoter	Graduation	88	51	05-05-23	21,00,000	-	8.24
Zahid M. Hararwala	Promoter	Graduation	34	6	05-05-23	21,00,000	-	10.30
Abdulla A. Bhagat	Promoter	Graduation	43	21	05-05-23	21,00,000	-	12.37
Madan Karkhanis	Quality Control Manager	Diploma	55	34	05-05-23	20,65,200	-	-
Umesh Panchal	Production Manager	Diploma	46	26	05-05-23	19,28,400	-	-
Sachin Vaidya	Maintenance Manager	Diploma	47	21	05-05-23	18,88,800	-	-
Farkhanda Pagarkar	CFO	Graduation	52	31	05-05-23	16,97,400	-	-
Mohammed Hararwala	Director	Diploma	46	26	05-05-23	17,16,000	-	6.86

Notes:

1. Apart from Mr. Aliasgar R. Hararwala, Mr. Roshan A. Hararwala, Mr. Zahid M. Hararwala, Mr. Mohammed S. Hararwala, Mr. Aliasgar Abdulla Bhagat and Abdulla Aliasgar Bhagat all employees mentioned above are neither relative of any directors of the Company, nor hold 2% or more of the paid-up equity share capital of the Company as per Clause (iii) of sub-rule (2) of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Compliance Certificate as required under Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The Board of Directors

Paramount Speciality Forgings Limited

We hereby certify that:

1. We have reviewed the Balance Sheet as at March 31,2025, Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and a summary of the significant accounting policies and other explanatory information of the Company, and the Boards report for the year ended March 31, 2025.

2. These statements do not contain any materially untrue statement or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. The financial statements, and other financial information included in this report, present in all material respects a true and fair view of the Companys affairs, the financial condition, results of operations and cash flows of the Company as at, and for, the periods presented in this report, and are in compliance with the existing accounting standards and / or applicable laws and regulations.

4. There are no transactions entered into by the Company during the year that are fraudulent, illegal or violate the Companys Code of Conduct and Ethics, except as disclosed to the Companys auditors and the Companys audit committee of the Board of Directors.

5. We are responsible for establishing and maintaining disclosure controls and procedures and internal controls over financial reporting for the Company, and we have:

a) Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the Company, is made known to us by others within those entities, particularly during the period in which this report is being prepared.

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in India including the Accounting Standards.

c) Evaluated the effectiveness of the Companys disclosure, controls and procedures.

d) Disclosed in this report, changes, if any, in the Companys internal control over financial reporting that occurred during the Companys most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

6. We have disclosed, based on our most recent evaluation of the Companys internal control over financial reporting, wherever applicable, to the Companys auditors and the audit committee of the Companys Board (and persons performing the equivalent functions):

a) Any deficiencies in the design or operation of internal controls, that could adversely affect the Companys ability to record, process, summarize and report financial data, and have confirmed that there

have been no material weaknesses in internal controls over financial reporting including any corrective actions with regard to deficiencies.

b) Any significant changes in internal controls during the year covered by this report.

c) All significant changes in accounting policies during the year, if any, and the same have been disclosed in the notes to the financial statements.

d) Any instances of significant fraud of which we are aware, that involve the Management or other employees who have a significant role in the Companys internal control system.

7. We affirm that we have not denied any personnel access to the audit committee of the Company (in respect of matters involving alleged misconduct) and we have provided protection to whistle blowers from unfair termination and other unfair or prejudicial employment practices.

8. We further declare that all Board members and senior management personnel have affirmed compliance with the Code of Conduct and Ethics for the year covered by this report.

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

(pursuant to Regulation 34(3) and Schedule V Para C clause (10) (!) of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015)

To,

The Members of

Paramount Speciality Forgings Limited

3, 1, Guru Himmat Building,

Dr. Mascarenhas Road, Anjirwadi,

Mazgaon, Mazgaon, Mumbai,

Maharashtra, India, 400010.

We have examined the relevant registers, records, forms, returns and disclosures received from the Directors of Paramount Speciality Forgings Limited having CIN L24109MH2023PLC402307 and having registered office at 3, 1, Guru Himmat Building, Dr. Mascarenhas Road, Anjirwadi, Mazgaon, Mazgaon, Mumbai, Mumbai, Maharashtra, India, 400010 (hereinafter referred to as The Company), produced before me by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In our opinion and to the best of our information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in ) as considered necessary and explanations furnished to us by the Company & its officers, we hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31^stMarch, 2025 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

Sr. No.	Name of Director	DIN	Date of appointment in Company
1.	ALIASGAR ABDULLA BHAGAT	00335869	05-05-2023
2.	ALIASGAR ROSHAN HARARWALA	00334957	05-05-2023
3.	MOHAMMED SALIM HARARWALA	00335357	05-05-2023
4.	KURIAN PALLATHUSERIL CHANDY	00855226	28-09-2023
5.	APURVA PRADEEP JOSHI	06608172	28-09-2023
6.	NIMESH MUKERJI	07705885	28-09-2023

*the date of appointment is as per the MCA Portal.

Ensuring the eligibility of the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. Our responsibility is to express an opinion on these, based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.