Krishanveer Forge Ltd Management Discussions

Annexure F

About Krishanveer Forge Limited:

Krishanveer Forge Limited is an open die forging company serving a wide range of industries, including oil and gas, infrastructure, power transmission, mining, and construction. The company has a strong presence in the export market, particularly catering to global oil and gas clients. It also holds a solid reputation among domestic customers. The company operates a state-of-the-art facility equipped with advanced in-house processes to consistently deliver top-tier forgings. Committed to safety as its highest priority, the company is ISO-certified and strictly complies with established safety standards.

The Company Management is pleased to present the Management Discussion & Analysis Report (“MDAR”) of the Companys business for the financial year 2024-2025.

Global Economy and Indian Economy:

The World Economic Outlook is the International Monetary Funds key report on global economic trends and policy challenges. Published twice a year with interim updates, it provides projections for the near and medium term, covering advanced, emerging, and developing economies. The report supports the IMFs economic surveillance and guides discussions on policy among member countries.

The April 2025 edition notes that after several years of overlapping shocks, the global economy has entered a phase of cautious stabilisation. Growth remains modest and projections for global output have been revised downward for the year 2025. This shows the effect of steep rise in tariff rates, policy uncertainty, and slowing progress in international cooperation. Global inflation is expected to decline, although at a slower pace than previously anticipated, and downside risks such as trade tensions and volatile financial markets continue to weigh on the outlook.

For India, however, the growth outlook is relatively more stable. The IMF projects steady expansion for the Indian economy, supported by firm private consumption, particularly in rural areas. In a global environment marked by uncertainty and subdued growth, Indias resilience stands out, reinforcing its role as a key driver of global economic activity.

* Projection Source, Government of India Press Information Bureau

Economic Overview - India

India is poised to lead the global economy once again, with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. According to the April 2025 edition of the IMFs World Economic Outlook, Indias economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead over global and regional peers. In contrast, the IMF projects global economic growth to be much lower, at 2.8 per cent in 2025 and 3.0 per cent in 2026, highlighting Indias exceptional outperformance.

Reflecting the impact of heightened global trade tensions and growing uncertainty despite this slight moderation, the overall outlook remains strong. This consistency signals not only the strength of Indias macroeconomic fundamentals but also its capacity to sustain momentum in a complex international environment. As the IMF reaffirms Indias economic resilience, the countrys role as a key driver of global growth continues to gain prominence.

The recent conflict in the month of May 2025 between India-Pakistan has affected geopolitical environment, this may result in disruption of supply chain and increase the operating cost for the Company. Further in near future it may affect the growth of Indian Economy and our business performance to some extent. However, since the Indian Government has taken strong stand on Terrorism, the impact on the Growth of Economy is expected to be minimal.

Forging Industry Structure and Developments:

The India metal forging market size was valued at USD 4.43 billion in 2022 and is expected to grow from USD 5.08 billion in 2023 to USD 9.75 billion by 2030, exhibiting a CAGR of 9.8% during the forecast period. Moreover, the metal forging market size in the U.S. is projected to grow significantly, reaching an estimated value of USD 2.66 billion by 2032, driven by higher consumption of forged metals by automotive and construction industry.

Developed in the past, forging is a process of metal forming that has evolved through the integration of innovative techniques. In the process, a metal is deformed with the use of compressive forces such as hammering, rolling, and pressing in controlled conditions for giving the material a desired geometric change. The process produces high-quality metal parts consisting of alloy steel, stainless steel, and aluminium alloys with enhanced material strength. The forging process offers a wide range of forging components having different materials, shapes, finishes, and sizes.

In India, forging OEMs offer closed-die forged solutions that are used in the automotive industry. Indias market share in automotive forging is higher than other industries such as industrial machinery, railway, aerospace and defence, and others. The rising demand for the product is due to its application in construction, mechanical equipment, oil & gas, automotive, and aerospace, driving the market growth during the forecast period.

Source: https://www.fortunebusinessinsights.com/india-metal-forging-market-106788

Opportunities and threats:

The forging industry has several promising opportunities for growth. As a key global supplier, India plays a significant role in the expanding international market. Rising demand from major sectors such as automotive and power further fuels this growth. Government initiatives like “Make in India” and the Production Linked Incentive (PLI) scheme offer additional support by promoting domestic manufacturing. Moreover, technological advancements, including the use of advanced materials and automation, are enhancing efficiency and product quality, positioning the industry for a stronger future.

The forging industry faces several significant as well threats that could impact its growth and profitability. Fluctuations in the prices of raw materials like steel and aluminum can lead to increased production costs and reduced margins. The shift toward electric vehicles (EVs) poses a challenge, as it may decrease the demand for forged components traditionally used in internal combustion engines. Additionally, a slowdown in the automotive sector could result in lower demand, underutilized capacity, and potential job losses. Intense competition from both domestic and international players demands continuous innovation and cost-efficiency. Furthermore, infrastructure limitations, particularly in transportation and logistics, can disrupt production schedules and elevate operational costs.

Outlook:

The Management is working on optimizing costs using various means including reduction in repair and maintenance expenses, improving efficiency, negotiating better supplier pricing, and revising product pricing. The Make in India initiative is boosting the forging industry by increasing domestic demand, creating export opportunities, and advancing technology. Despite global trade tensions, the industry is optimistic, with significant growth expected in FY26, supported by a favorable monsoon outlook.

The Government policies also inclined towards industrial growth and allocation of budget towards infrastructural development and pumping of funds into Public Service Utilities (“PSU”) are expected to support in growth of overall revenue for the industry and consequently resulting into indirect growth for the Company.

Risks and concerns:

The Board is tasked with identifying, assessing, and mitigating risks affecting the Companys operations, objectives, and stakeholders. Details of the risk assessment framework are outlined in the Corporate Governance Report included in the Annual Report. The report covers the broader risks, their potential impacts on the Company, and the associated mitigation measures.

Key Risk	Impact on the Company	Mitigation
USs shift in tariff policy: It could trigger to global trade war, leading to redirection of global trade, disrupted trade flow, volatility in crude oil prices, higher input costs, margin pressure. Thus, it could have significant macroeconomic ripple effect globally, including on Indian industries. Persistent geopolitical instability: Continued tension in the Middle East and Ukraine & Russia conflict along with new risks in the Indo-Pacific region shall impact supply chain and will lead to lower growth. Slower growth in major economies: Slowdown in US, China and the EU may lead to weaken global demand affecting exports & industrial investments.	Geopolitical factors, such as trade disputes, changes in government policies, or economic instability, may have impacts on tariffs, trade barriers, global supply chains, prices of Raw Materials and gas costs and the export prospects of the Company.	The Indian economy has always proven to be remarkably resilient in the face of the deteriorating global situation due to the strong macroeconomic fundamentals that place it well ahead of other emerging market economies. Well planned procurement strategies and increase reliance on domestic or tariff neutral sourcing of raw materials shall reduce exposure to international trade volatility. The Company remains conservative with strong financial capital structure, healthy cash reserves, prudent capex investment policies and well managed uses of working capital.
Environmental, Social and Governance (ESG) and sustainability concerns	The increasing awareness about Environmental, Social and Governance (ESG) and sustainability concerns can thrust additional compliance burden on the overall manufacturing industry, leading to stricter emission norms, waste management regulations, and energy efficiency requirements.	Identify and assess potential ESG risks specific to the companys operations and supply chain. This assessment should consider environmental risks (such as resource scarcity, climate change, pollution), social risks (such as labour practices, human rights, and community impact), and governance risks (such as compliance, ethics, and transparency) and prioritize actions to address them.
Availability and Price Volatility of Raw Materials	Suppressed Margins	A well-structured raw material procurement strategy is in place, supported by efforts to encourage customers to share their long-term production plans. This allows for accurate production scheduling and timely sourcing of raw materials at competitive prices. Additionally, the Company maintains regular communication and engages in ongoing negotiations with customers to facilitate the transfer of increased material costs, ensuring sustained profitability.
Information Technology	In todays interconnected digital ecosystem, organizations are constantly exposed to risks, cybersecurity threats, operational disruptions and regulatory compliance challenges. Cybersecurity threats pose a significant risk to the Companys organizations operations and data integrity.	The Company emphasizes proactive risk mitigation as a key to safeguarding its business, enhancing resilience, and ensuring long-term success. This begins with thorough risk assessments to identify and prioritize potential threats. Key strategies include developing contingency plans, disaster recovery, and business continuity frameworks. Cybersecurity is critical, involving threat detection, strong access controls, regular audits, and employee training. Compliance with regulations and effective vendor risk management are also essential. Lastly, fostering a culture of risk awareness and accountability across all departments ensures collective responsibility in managing risks.
	Any non-compliance with regulatory requirements can expose the organization to legal liabilities, financial penalties, and reputational damage.

Internal control system and their adequacy:

The Company has established robust internal controls to ensure effective operational and financial functions. Management continuously reviews these controls to maintain efficient business conduct and regulatory compliance. M/s G R Patel & Associates, Chartered Accountants, act as the Internal Auditors, conducting audits and reporting to the Audit Committee and Board. The internal audit process evaluates the adequacy of control checks across key operations. Additionally, the Audit Committee annually assesses the Internal Auditors independence, performance, and the overall effectiveness of the audit process.

Financial Performance with regard to Operational Performance:

The Boards Report, included in the annual report, details the companys financial performance for FY 2024-25. The Company exercises precise control over cash flow, focusing on timely recoveries, reducing cash credit reliance, and ensuring prompt creditor payments. Cost optimization processes are regularly reviewed and implemented. The workforce adheres to high manufacturing standards, and preventive equipment maintenance minimizes production disruptions. Despite geopolitical tensions, notable achievements were accomplished during FY25.

Particulars	Rs. in Lakhs
Domestic sales	8,271.86
Export Sales	7.79
Total Sales	8,279.65

Key Performance Metrics

Parameters	FY 2024-25	FY 2023-24
Total Revenue (Rs. Lakhs)	8,375.65	8,425.45
EBIDTA (Rs. Lakhs)	932.11	749.79
PBT (Rs. Lakhs)	758.48	547.24
PAT (Rs. Lakhs)	563.71	398.98
Earnings per share (Rs.)	5.15	3.65

Key Financial Ratios:

Sr. No	Ratio	FY 2024-25	FY 2023-24	% change from the previous year	Details of significant changes (more than 25% as compared to the previous year)
1	Debtors Turnover Ratio	4.30	4.57	-0.27%	There is no Significant change during the reporting period
2	Inventory Turnover Ratio	7.09	6.65	0.44%	There is no Significant change during the reporting period
3	Interest Coverage Ratio	N/A	65.31	N/A	During the reporting period, the borrowing limit was not utilized due to internal accruals as compared to the previous year
4	Current Ratio	3.77	3.42	0.35%	There is no Significant change during the reporting period
5	Debt Equity Ratio	0.31	0.32	-0.01%	There is no Significant change during the reporting period
6	Operating Profit Margin (%)	9.31	7.12	2.19%	There is no Significant change during the reporting period
7	Net Profit Margin (%)	6.73	4.74	1.99%	There is no Significant change during the reporting period
8	Return on Net Worth	13.29	10.21	3.08%	There is no Significant change during the reporting period

Material development in the Human Resource / Industrial Relations front:

Material development on the Human Resource (HR) and Industrial Relations (IR) fronts focuses on improving employee skills, fostering positive relationships, and ensuring a healthy work environment. This includes training, development programs, and effective communication strategies to resolve conflicts and maintain productivity. HR development emphasizes a safe work environment, evolving recognition systems, and ongoing skill training. The number of employees has remained at 68 as on March 31, 2025.

Health, Safety and Environment

1. The Company maintains a strict zero-tolerance policy toward workplace accidents. To prevent incidents, it implements visible control measures and fail-safe systems wherever feasible. Safety is embedded into daily operations through prominently displayed notices and continuous awareness initiatives for operators. Regular communication, periodic evaluations of safety protocols, and ongoing training are essential elements in upholding and enhancing safety standards.

2. Companys manufacturing units operate in adherence to occupational health and safety management systems. Compliance with environmental regulations is a key priority, with pollution control norms strictly followed. The Company has installed appropriate equipments to treat industrial effluents and minimize air pollution, ensuring its operations meet all required environmental standards.

Disclosure of Accounting Treatment:

While preparing the financial statements, no different treatment from that prescribed in an Accounting Standard(s) has been followed.

Cautionary Statement:

Statements in the management discussions and analysis section describing the companys projections, estimations, expectations and predictions may be forward-looking statements within the meaning of applicable securities, laws and regulations. Actual results could defer materially from the expressed or implied ones. Important factors that would make a difference in the Companys operations include demand-supply conditions, input cost escalations, changes in government regulations and tax regimes, competition, economic developments within and outside the country etc.