Pattech Fitwell Tube Components Ltd Management Discussions

KEY MARKET INSIGHTS

The global metal forging market size was valued at USD 78.05 Billion in 2023. The market is projected to grow from USD 67.43 Billion in 2024 to USD 94.88 Billion by 2032 at a CAGR of 4.4% during the forecast period. Asia Pacific dominated the metal forging market with a market share of 44.61% in 2023. Moreover, the U.S. metal forging market is projected to reach USD 13.96 billion by 2032, supported by automotive, aerospace, and industrial machinery demand.

Metal forging is a manufacturing process involving the shaping of metal using localized compressive forces. It is a critical process in producing components with high strength, durability, and precision, which is essential for industries such as automotive, aerospace, energy, and construction. Commonly forged metals include steel, aluminum, titanium, and other alloys, each selected based on specific application requirements.

The global market has witnessed significant growth, driven by increasing industrialization, technological advancements, and the rising demand for high-performance components. Forging can be performed at various temperatures, with the three main types being cold forging, warm forging, and hot forging. Hot forging, done at high temperatures, improves ductility and reduces the risk of fracturing, while cold forging enhances dimensional accuracy and surface finish.

The process involves deforming the metal into a desired shape through controlled force, often requiring repeated strikes or pressure. Forging methods include open-die forging, closed-die forging, and roll forging, each suited for specific applications and scales of production. Open- die forging is suitable for large components and offers flexibility in shapes, while closed-die forging is ideal for high-precision parts and offers better dimensional accuracy.

Forged products are widely used in industries such as automotive, aerospace, construction, and tool manufacturing due to their superior mechanical properties, including enhanced tensile strength and impact resistance. Advances in forging technology, such as precision forging and computer-controlled machinery, have further refined the process, allowing for greater efficiency and reduced material waste. Metal forging continues to be indispensable for producing critical components such as crankshafts, gears, and aircraft parts, ensuring reliability and performance in demanding applications.

GLOBAL METAL FORGING MARKET OVERVIEW

Market Size & Forecast:

2023 Market Size: USD 78.05 billion

2024 Market Size: USD 67.43 billion

2032 Forecast Market Size: USD 94.88 billion

CAGR: 4.4% from 2025-2032

Market Share:

Asia Pacific dominated the metal forging market with a 44.61% share in 2023, driven by rapid industrialization, infrastructure development, and rising demand from automotive, construction, and heavy machinery sectors across China, India, Japan, and Southeast Asia.

By end-user, the Automotive segment leads the market due to the expansion of the electric vehicle industry and demand for lightweight, durable forged components.

Key Country Highlights:

China: Remains the largest consumer and producer, with government- backed initiatives to localize manufacturing and promote infrastructure development fueling high demand.

United States: Projected to reach USD 13.96 billion by 2032, supported by demand in automotive, aerospace, and industrial machinery. Emphasis on lightweight materials and advanced forging technologies drives growth.

India: Strong growth in automotive manufacturing and infrastructure boosts forged component demand. Government initiatives like “Make in India” support local production.

Germany: Leads the European market through precision forging in automotive and aerospace. Strong emphasis on EV innovation and sustainability in forging processes.

Brazil: Automotive industry and infrastructure development drive demand, although economic volatility and currency fluctuations pose growth challenges.

Saudi Arabia: Infrastructure and industrial diversification initiatives such as Vision 2030 support market expansion, especially in oil, gas, and rail sectors.

METAL FORGING MARKET TRENDS

The metal forging industry is rapidly evolving, driven by technological advancements, sustainability goals, and changing market demands. Technological advancements are at the forefront, with automation and Industry 4.0 enabling the integration of IoT, data analytics, and robotics to improve production efficiency and quality control. The development of advanced materials, such as high-strength, lightweight alloys, is meeting the needs of industries such as aerospace and automotive for components with superior performance. Additionally, the use of simulation and modeling tools such as CAD and finite element analysis (FEA) allows manufacturers to optimize forging processes, reduce defects, and minimize material waste.

In line with global environmental priorities, the industry is emphasizing sustainability and green manufacturing by reducing energy consumption, minimizing waste, and adopting recycling practices to create eco-friendly production environments. The use of sustainable materials further aligns forging operations with broader environmental goals.

The growing need for customization and shorter lead times is reshaping manufacturing priorities. Customers increasingly demand forged components tailored to specific applications, pushing manufacturers to adopt more agile and efficient processes to reduce production lead times and meet these expectations.

Global supply chain optimization has also become critical as geopolitical tensions and pandemics expose vulnerabilities in traditional supply chains. Strategies such as diversifying suppliers, nearshoring, and reshoring are gaining traction, ensuring better control over quality, delivery, and resilience against disruptions. These trends highlight the industrys commitment to innovation, sustainability, and adaptability to remain competitive in a dynamic global market.

MARKET DYNAMICS

MARKET DRIVERS

The global market is experiencing significant growth, driven by the rapid expansion of the automotive industry. Forging is a crucial manufacturing process in automotive production, providing high- strength components capable of withstanding intense stress and wear. As the automotive sector grows, with the rising demand for electric vehicles (EVs), hybrid vehicles, and fuel-efficient cars, the adoption of forged metal components is increasing exponentially. The unique advantages of forged parts, including superior mechanical properties, enhanced durability, and cost-effectiveness in mass production, position metal forging as an essential process for automotive manufacturers. Key forged components such as crankshafts, connecting rods, axles, gears, and suspension parts are integral to modern vehicles. These parts must endure high dynamic loads while ensuring safety and longevity. The surge in EV production is a notable growth driver, as lightweight forged aluminum and high-strength steel components help reduce vehicle weight while maintaining structural integrity. Companies such as Bharat Forge, ThyssenKrupp, and Precision Castparts are capitalizing on this trend by developing innovative forged solutions tailored to EVs, where weight reduction is critical for battery efficiency and range optimization.

MARKET RESTRAINTS

Forging and casting are the two most popular metal transformation processes to create parts and components for various end-use industries. These exercises are different from one another and yield products with assorted characteristics. Due to its better tolerance and high level of detail in the casting counterpart, metal forging is susceptible to decay growth. This forging process is limited in terms of the product size and thickness of the metal, whereas metal casting is compatible with a wide range of sizes. As a result, the closed-die forging dies are developed after extensive detail and research. Material selection is limited in this forging, whereas the casting process is compatible with all types of metal. It provides the primary product with few secondary operations, which is another advantage that casting has over the forging process. These factors highly impacted the market growth.

MARKET OPPORTUNITIES

The growing technological advancements to make sustainable forged metal is driving the metal forging market growth. Global megatrends, including rising mobility, urbanization, population & economic development, and increasing climate change, are some prominent factors driving industry growth. Additionally, growing CO2 emissions across the globe have led many metal-forged-producing companies to develop sustainable solutions that enhance durability and reduce environmental impact. For instance, the United Nations (UN) Economic Commission for Europe states that the steel industry is responsible for about 7% to 9% of global anthropogenic carbon emissions. The forging industry uses large volumes of steel and electricity for production, and sustainability efforts are becoming increasingly critical.

Additionally, forged rings are used in shipbuilding applications, including cargo vessels, tankers, and military ships. The rise in globalization has increased the import & export of commodities, creating demand for forged marine components. Rising government regulations to support recycling initiatives, increasing technological advancements in metal forging to make it more reliable, and the growing preference of manufacturers to produce recyclable forged metal are anticipated to drive product consumption globally. Hence, such factors, coupled with growing consumer preference to buy metal forging-based products, will create newer heights for the market.

MARKET CHALLENGES

The market faces several challenges that impact its growth and operations. One major hurdle is the high initial investment required to establish forging facilities and acquire advanced machinery. This significant capital expenditure acts as a barrier for new entrants, limiting competition and innovation. Another pressing issue is the shortage of skilled labor. As forging technologies become more advanced, the demand for a workforce trained in modern techniques, such as automation and simulation, is increasing. The lack of skilled professionals can hinder the adoption of cutting-edge practices and reduce operational efficiency. Additionally, energy consumption is another challenge, particularly in energy-intensive processes such as hot forging. High energy requirements lead to elevated operational costs and raise environmental concerns, pushing manufacturers to explore energy-efficient technologies and sustainable practices.

Maintaining consistent quality is crucial in the forging industry, as products often serve high-stake applications in industries such as aerospace, automotive, and construction. Meeting stringent industry standards requires rigorous quality control measures, which can be resource-intensive and complex. Lastly, trade protectionism poses significant challenges to global supply chains. Rising tariffs, trade barriers, and restrictive policies in key markets disrupt the flow of forged products and raw materials, forcing manufacturers to adapt their strategies, such as diversifying suppliers or focusing on local markets. These challenges highlight the need for strategic investments, workforce development, sustainability initiatives, and adaptable supply chain management to ensure the industrys resilience and competitiveness.

IMPACT OF COVID-19

The COVID-19 pandemic had a detrimental impact on every aspect of the global economy, and the metal forging industry is no exception. Countries such as China, Germany, Japan, the U.S., and the U.K. are among the major forged metal producers across the globe. Forged metals are primarily used across many industrial & commercial sectors. The global forging sector was affected by the shortage of raw materials, logistic challenges, workforce shortage, and uncertainty, leading to suspension or shutdown of manufacturing facilities. As a result, limited product availability, higher material prices, and delayed project cycles were among the few challenges faced by several stakeholders in the forging sector.

TRADE PROTECTIONISM AND GEOPOLITICAL IMPACT

Trade policies significantly impact the metal forging industry, influencing costs, supply chain strategies, and market access. The imposition of tariffs and duties on imported forged metals is a common measure to protect domestic industries. While this supports local manufacturers, it raises costs for companies reliant on global supply chains, potentially affecting profitability and competitiveness. Import restrictions, such as quotas and licensing requirements, limit the volume of forged products entering certain markets, disrupting international trade dynamics.

Anti-dumping measures are another tool used by countries to safeguard local industries. By imposing duties on foreign manufacturers selling products below fair market value, these measures prevent unfair competition. However, they can also lead to increased costs for businesses that depend on imported materials or components.

These protectionist policies can cause significant disruptions to global supply chains, prompting manufacturers to adapt. Strategies such as local sourcing or diversifying suppliers become essential to mitigate risks and ensure consistent production. Participation in regional trade agreements (e.g., EU, USMCa, ASEAN) plays a crucial role in shaping market access and competitiveness. These agreements facilitate trade by reducing tariffs and streamlining regulations, creating opportunities for manufacturers to expand into new markets.

The interplay of these trade policies highlights the importance of strategic planning and adaptability for forging companies. Balancing compliance with regulations, managing costs, and seizing opportunities in regional markets are critical to navigating the challenges of an increasingly complex global trade environment.

RESEARCH AND DEVELOPMENT (R&D) TRENDS

The metal forging industry is undergoing significant transformations driven by advancements in technology, sustainability initiatives, and evolving market demands. Additive manufacturing is being integrated with traditional forging processes to create complex, lightweight components with improved properties, enabling the production of high- performance parts for aerospace, automotive, and other industries. Simultaneously, smart forging technologies are revolutionizing operations by incorporating sensors and real-time monitoring systems to optimize processes, reduce waste, and enhance product quality.

Research into high-performance alloys plays a crucial role in meeting the requirements of industries that demand materials with exceptional strength, corrosion resistance, and thermal stability. These developments are particularly important for applications in extreme environments. Alongside material innovation, efforts are being directed toward energy-efficient forging processes, with new equipment and methods designed to lower energy consumption and enhance sustainability.

The industry is also witnessing increased collaborations and partnerships between forging companies and technology providers, fostering innovation and expanding market opportunities. To meet the evolving expectations of regulators and customers, manufacturers are aligning with updated standards and regulatory frameworks, ensuring compliance and best practices.

Digital transformation initiatives are reshaping the industry, enabling streamlined manufacturing, better supply chain management, and enhanced customer engagement. Additionally, companies are embracing sustainability initiatives, such as reducing carbon emissions, implementing waste management practices, and adopting circular economy models to achieve long-term environmental goals. These trends underscore the industrys commitment to efficiency, innovation, and sustainability, ensuring its resilience and growth in an increasingly competitive global market.

SEGMENTATION ANALYSIS

By Raw Material

Based on raw material, the market is segmented into carbon steel, alloy steel, stainless steel, aluminum, magnesium, titanium, and others.

The carbon steel segment held the largest metal forging market share in 2023 and is anticipated to dominate the market during the forecast period as it is a widely used raw material due to its excellent mechanical properties, cost-effectiveness, and versatility. Carbon steel is preferred for its strength and ability to withstand heavy loads, making it integral in producing components such as gears, shafts, and fasteners. Additionally, the increasing focus on infrastructure development worldwide and the expansion of transportation networks drive its usage. Its recyclability also aligns with global sustainability goals, further boosting demand.

The stainless steel segment to witness significant growth during the forecast period. The growth is attributed to the increasing demand for applications such as medical instruments, kitchenware, and architectural components. The growth of the pharmaceutical and food & beverage industries boosts the need for forged stainless steel equipment. Moreover, its use in electric vehicles (EVs) and renewable energy projects adds a new avenue for growth. Rising awareness about hygiene and durability also favors stainless steel in consumer and industrial applications.

The alloy steel segment is expected to grow moderately during the forecast period due to the growth of renewable energy infrastructure, especially in wind and hydroelectric projects. This creates opportunities for alloy steel to forge large and durable components.

The aluminum segment is expected to grow considerably during the forecast period due to the rising demand for lightweight components in aviation, propelling the use of forged aluminum.

By Technology

Based on technology, the market is segmented into closed die, open die, and others.

The closed die segment held the highest global market share in 2023 and is estimated to record significant growth during the forecast period. Closed-die forging, also known as impression die forging, is experiencing robust growth, driven by its ability to produce highly precise and complex components. The growth of the segment is attributed to the increasing demand for high-strength, lightweight components in industries such as automotive, aerospace, and defense. The automotive sector, in particular, relies heavily on closed- die forging to manufacture critical components such as gears, crankshafts, and connecting rods, as manufacturers prioritize fuel efficiency and performance. Similarly, the aerospace industry benefits from closed-die forgings ability to produce high-performance parts with tight tolerances, making it essential for applications such as turbine blades and aircraft structural components.

The open die segment to witness significant growth during the forecast period owing to the increasing demand for heavy-duty, durable components in industries such as oil and gas, power generation, and construction. Open-die forging is essential for manufacturing large- scale components such as shafts, rollers, and pressure vessels, which are critical for these industries. The ongoing expansion of energy infrastructure projects, including oil exploration and renewable energy installations, has significantly bolstered the demand for open-die forged components.

By End-User

Based on end-user, the market is segmented into automotive, mechanical equipment, aerospace & railways, and others.

The automotive segment held the highest share of the global market in 2023 and is estimated to record significant growth during the forecast period. The automotive industry is an important driver of the global market, with increasing demand for lightweight and fuel-efficient vehicles encouraging manufacturers to adopt forged components that offer superior strength-to-weight ratios and durability. The rapid expansion of electric vehicles (EVs) is another key factor, as forged components are essential for producing lightweight battery casings, powertrain systems, and suspension components. Stringent environmental regulations worldwide push automakers to use forged materials to create lighter vehicles, leading to improved fuel efficiency and reduced emissions. Additionally, the growth of ride-sharing and autonomous vehicle sectors has spurred the need for high- performance forged parts to ensure safety and durability in high-usage conditions. The ongoing recovery of the automotive industry postpandemic and increasing investments in smart manufacturing technologies further bolster the demand for forged components.

The mechanical equipment segment benefits from robust industrialization and the growing adoption of advanced machinery across diverse industries such as agriculture, construction, and energy. Forged components, known for their exceptional strength and resistance to wear and fatigue, are widely used in gears, crankshafts, and connecting rods, ensuring the longevity and reliability of equipment under heavy operational stress. The global push for automation and smart manufacturing has increased the adoption of high-performance forged parts in robotics and industrial machinery. Furthermore, government initiatives aimed at boosting infrastructure development and agricultural productivity drive the demand for heavy-duty equipment, thereby supporting segment growth. The transition to renewable energy sources, such as wind and solar, has also increased the need for forged components in turbines and other energy- generation equipment.

KEY INDUSTRY DEVELOPMENTS

February2024: Ovako and Tibnor, well-known material manufacturing and distributing companies, announced a strategic partnership to promote low-carbon footprint solutions in steel production. Various industrial players are committing to science-based environmental targets, while legislative representatives are insisting companies decrease their emissions or face the true cost of pollution.

May 2023: Arconic Corporation announced a definitive agreement to be acquired by the Apollo Global Management Inc. fund holders in an all-cash transaction deal with the approximate value of USD 5.2 billion. This deal would provide Arconic with access to one of the worlds premier investment firms and deliver substantial value to customers and the end users of their products.

November 2022: Arconic Corporation announced the sale of its 100% of investment in Russian operations to Promishlennie Investitsii LLC, the parent holder of VSMPO-AVISMA Corporation, at a cash deal of USD 230 million. The major aim of this sale was to reduce the increased uncertainty caused by geopolitical crises, and this transaction will support the shareholders future returns.

July 2022: Patriot Forge announced that it would expand the forging facilities to include a complete rough machining process in its open-die custom forging manufacturing plant. The facility would accommodate open die components weighing up to 50,000 lbs., enabling more efficient and convenient processing to achieve the desired shape.

August 2021: Otto Fuchs KG announced a purchase agreement with ServoDirect technology from Schuler to buy a crank forging press with a capacity of 3,150 tons for its Shenyang, China, location. This deal will aim to produce more aluminum chassis components for automobile customers in China.

Source: https://www.fortunebusinessinsights.com/metal-forging- market-103175

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE & DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The company is primarily engaged in the business of Corrugated Plastic Sheets, which constitute a single reportable segment in accordance with Ind AS 108 - “Segment Reporting”.

Financial Highlights

INR In Thousand

Particulars	F.Y. 2024-25	F.Y. 2023-24*
Revenue from Operations	48,13,50.32	3,77,158.82
Other Income	775.48	233.27
Total Income	4,82,125.80	3,77,392.09
Less: Total Expenses before Depreciation, Finance Cost and Tax	4,44,586.17	3,45,162.16
Profit before Depreciation, Finance Cost and Tax	37,539.64	32,229.93
Less: Depreciation	3,223.52	2,291.94
Less: Finance Cost	16,892.41	10,584.11
Profit Before Extraordinary & Exceptional Items and Tax	17,423.71	19,353.88
Less: Extraordinary & Exceptional Items	-	-
Profit before tax	17,423.71	19,353.88
Less: Current Tax	4,782.92	5,217.13
Less: Earlier Years Tax	-177.88	170.12
Less: Deferred tax Liability (Asset)	565.24	-451.12
Profit after Tax	12,253.43	14,417.75

FINANCIAL PERFORMANCE

During the FY 2024-25, the company has achieved a turnover of INR 48,13,50.32 Thousand, registering a growth of 27.63% over the previous year. Profit before Tax, Depreciation and Finance cost was at INR 37,539.64 Thousand as against INR 32,229.93 Thousand in the previous year. Profit before Tax was at INR 17,423.71 Thousand as against INR 19,353.88 Thousand in the previous year.

RISK AND CONCERNS

The Company is exposed to various risks and uncertainties which may adversely impact its performance. The Companys future growth prospects and cash flow generation could be materially impacted by any of these risks or opportunities. The major risks as identified by the Company are demand-risks due to any resurgence in the COVID 19 pandemic, currency risk associated with imports, unfair competition, etc. The Company follows the Enterprise Risk Management (ERM) framework to manage and mitigate such risks which is primarily based on the integrated framework for enterprise risk management and internal controls developed by the Company. The other risks have already been discussed under “Threats & Risks” of this MDA Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company believes in establishing and building a strong performance and competency driven culture amongst its employees with greater sense of accountability and responsibility. The Company has taken various steps for strengthening organizational competency through the involvement and development of employees as well as installing effective systems for improving their productivity and accountability at functional levels. The Company acknowledges that its principal asset is its employees. Ongoing in-house and external training is provided to the employees at all levels to update their knowledge and upgrade their skills and abilities. As on March 31,2025, the Company had total 10 full time employees. The industrial relations have remained harmonious throughout the year.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources.

Your Company has also put in place adequate internal financial controls with reference to the financial statements commensurate with the size and nature of operations of the Company. During the year, such controls were tested and no material discrepancy or weakness in the Companys internal controls over financial reporting was observed.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Particulars	F.Y. 2024-25	F.Y. 2023-24
Debtors Turnover	3.89	3.05
Inventory Turnover	21.76	23.97
Current Ratio	1.71	2.13
Debt Equity Ratio	0.91	0.56
Net Profit Margin (%)	2.55%	3.82%

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources.

Your Company has also put in place adequate internal financial controls with reference to the financial statements commensurate with the size and nature of operations of the Company. During the year, such controls were tested and no material discrepancy or weakness in the Companys internal controls over financial reporting was observed.

CAUTIONARY NOTE

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.