Rolex Rings Ltd Management Discussions

1. Economic Overview

Global Economy

FY25 saw the world economy demonstrate measured resilience amid major structural shifts and persistent uncertainties. As per IMF, Global GDP growth slowed marginally to around 2.9% as the aftere_ects of restrictive monetary policy in developed nations, coupled with lingering supply chain disruptions, continued to weigh on trade and consumption. Advanced economies grappled with inflation normalization and subdued industrial output, while emerging and developing economies?€”especially in Asia?€”supplied much of the worlds growth, bolstered by domestic demand and new regional trading blocks. Key macro trends included a renewed focus on industrial capacity building, global relocation of supply chains ("China+1" strategy), and a determined push for energy transition and circular economy initiatives. Global investment in infrastructure, digital transformation, and green technologies provided a cushion against cyclical weaknesses and are expected to drive a sustainable rebound in medium-term growth[1][2].

Indian Economy

India sustained its reputation as the globes fastest-growing major economy in FY25, with GDP expanding 6.2%?€“6.5%. Despite temporary headwinds?€”election-linked policy caution, uncertain monsoons, global trade volatility?€”Indias deep domestic market, resilient private consumption, and robust capital formation protected underlying momentum..

Key economic themes included:

?€? Fiscal Discipline: Shrinking deficits, buoyed by high tax revenue, have enabled healthier government finances and lifted investor confidence.

?€? Manufacturing Thrust: Domestic manufacturing benefited from supportive policies, PLI schemes, and large-scale infrastructure spending.

?€? Stable Inflation: Falling oil prices, improved agricultural output, and stable currency kept inflation in check.

?€? Steady FDI: Even amidst global capital flow constraints, India retained its status as a favored FDI destination, especially for manufacturing and digital enterprises.

Future Outlook

Near-term growth will be powered by pent-up consumption, infrastructure capex, and improved global supply chain access, with domestic policy reforms set to spark a further rebound in FY26.

2. Industry Review

Global Metal & Steel Industry

The global metals industry, foundational to all industrial sectors, is set to grow from $8.43 trillion in 2024 to $8.95 trillion in 2025 and $10.7 trillion by 2029?€”underscoring its pivotal role in infrastructure, manufacturing, energy, and consumer goods[2]. Key sectoral themes:

?€? Steel: Global crude steel output rose 2.9% YoY, with India and Southeast Asia driving growth even as global consumption for steel is set to decline marginally by 1% in

2025. Environmental concerns have led to rising demand for low-carbon "green steel," and industrial metals (copper, aluminum, nickel) are pivotal for the EV and renewable energy boom.

?€? Technological Advancements: The industry is experiencing transformative change with rapid digitization, robotics adoption, and advanced recycling, boosting e_iciency, transparency, and sustainability.

?€? Circular Economy: Increasingly, metals are processed and reused as part of closed-loop systems, reducing carbon footprint and raw material dependency.

Indian Metals and Forging Sector

Indias entire metal ecosystem?€”mining, refining, value-added processing?€”is experiencing a generational upsurge, thanks to surging infrastructure spend, automotive/EV production, and government manufacturing push. The countrys forging market is valued at $7.7 billion in 2025, projected to reach $12.8 billion by 2032 (CAGR 7.4%).

?€? Automotive Demand: The vehicle sector, especially EVs and hybrids, is the main engine, demanding stronger yet lighter components (aluminum, titanium). Materials innovation is critical for fuel e_iciency and safety.

?€? Aerospace & Defense: "Make in India" and indigenization norms are steering premium demand for high-precision parts.

?€? Exports: Indian forgings global appeal has grown, with exports capturing increased share as Western clients diversify away from China.

?€? Regional Leadership: South India leads the domestic forging market, bolstered by automotive and heavy engineering hubs.

Automotive and Advanced Industrial Forgings

Forging underpins the advanced manufacturing economy?€”engine, transmission, suspension, and drive-train components, as well as critical structural and safety parts for automotive, wind, and industrial machinery. The rapid evolution of EV platforms, aerospace needs, and global environmental standards are accelerating technology upgrades, automation, and lean/smart factory adoption across the industry. Demand for digital traceability, green credentials, and high-tolerance machining are now ubiquitous requirements.

3. Government Initiatives

Transformational Policies

?€? Production-Linked Incentives (PLI): Financial incentives foster capex, localization, and world-class quality. For Rolex Rings, this enables expansion into value-added, export-ready products.

?€? National Manufacturing Mission: Strategic roadmap to boost Indias GDP share from manufacturing (now 13%-14%), augments Rolexs core business through policy support for scaling, R&D, and skills.

?€? Make in India / Atmanirbhar Bharat: Encourages local sourcing and value addition?€”opening defense, railways, and e-mobility verticals to qualified forgers. Rolex Rings adherence to ESG and high-quality standards positions it as a supplier of choice.

?€? Green Manufacturing & ESG Compliance: Mandatory ESG disclosures, incentives for renewable energy use, and a clear regulatory preference for companies with transparent governance, favor sustainability leaders like Rolex Rings. Internal investments in solar/wind and optimized processes are directly aligned.

?€? Skill India, Digital India, and R&D: Funding for technology upgradation, workforce upskilling, and advanced manufacturing adoption supports Rolexs human capital and innovation agenda.

How Government Initiatives Empower Rolex Rings

?€? Accelerated client acquisition as domestic and global customers prioritize "local for global" and ESG-compliant suppliers.

?€? Access to capital and lower cost of compliance for new capacity and green technology?€”improving margins and resilience.

?€? Enhanced opportunities in complex, high-margin sectors (aerospace, EV, defense) opened by policy-induced market creation.

?€? Participation and leadership in new-age manufacturing and export clusters via government-enabled networks and sharing best practices.

4. Business Overview

Rolex Rings delivered a resilient performance in FY25, leveraging its deep capabilities in forged and precision-processed components. The customer base is diversified across automotive (including all major ICE, Hybrid and EV platforms), industrial machinery, renewable energy, wind, and railways, supported by well-invested facilities and a global-approved process/quality stack (ISO 9001, IATF 16949, ISO 14001, ISO 45001).

?€? Revenue Split: Exports maintained a slight edge (52%) over domestic sales (48%), underscoring global competitiveness.

?€? Product Focus: ROIC-driven shift towards advanced automotive and EV components, expanding the margin pool and enabling Rolex to command higher market share in emerging premium sectors.

?€? Operational Footprint: Strengthening internal digital control, data-driven manufacturing execution, and sophisticated energy/resource optimization, further entrenching competitive di_erentiation.

The global automotive sector continues to be primarily driven by internal combustion engine (ICE) vehicles, with hybrids also gaining momentum as consumers and manufacturers prioritize reliability and access to mature supply chains. While electric vehicle (EV) adoption is progressing, its growth remains restrictedworldwideduetotechnologicalbarriers,infrastructure gaps, and regional market preferences. Recent reciprocal tari_ policies enacted between the US and India present an adverse environment for cross-border trade; however, the near-term impact on Rolex Rings business is expected to be minimal, as the availability of our specialized components in the US market cannot be easily replicated. Sourcing and development of comparable products from other lower-tari_ countries are likely to take two to three years, reinforcing our position in the short term. Rolex Rings remains optimistic that both governments will resolve the issue amicably, allowing sustained growth and cooperation in future industry dynamics.

5. Strategic Philosophy

Rolex Rings strategy masterfully blends diversification, innovation, operational excellence, and sustainability. The company is on a multi-year journey to move up the value chain from core ring forging to advanced, precision-engineered assemblies for automotive, EVs, railways, and high-performance machinery.

Strategic Themes

A. Customer and Market Diversification

?€? New Market Penetration: Expanding global sales footprint beyond US/EU to high-growth Asia-Pacific and Middle East, minimizing regional risk.

?€? Vertical Expansion: Turbocharging presence in EVs, renewables, industrial automation, and aerospace by ramping up design-to-manufacture capabilities.

B. Product and Technology Innovation

?€? Advanced Machining: Scaling up o_erings to complex, critical-tolerance parts, integrating closed-die, near-net shape, and precision machining?€”enabling access to OEMs core programs.

?€? Smart Manufacturing: Investments in AI-driven real-time quality checks, predictive maintenance, and complete ERP/PLM systems ensure traceability, e_iciency, and compliance.

?€? R&D and Collaboration: Forming technical alliances with global suppliers, customers, and academia for materials research, energy e_iciency, and manufacturing advancements.

C. Operational Excellence

- Lean Processes and Digitization: Relentless focus on eliminating waste, improving yields, and upskilling operators in the digitized shop floor environment.

- Green Operations: Escalating use of renewable energy, closed-loop cooling, and water recycling to achieve both cost and sustainability targets.

- Resilient Supply Chain: Multiple supplier tie-ups, dual/ triple sourcing, and digital tools for real-time risk monitoring ensure greater continuity and agility.

D. ESG and Stakeholder Value Creation

- Transparent Governance: Integrated ESG policies, regular stakeholder engagement, and open reporting on sustainability, ethics, and compliance.

- Community/Employee Development: Programs that foster diversity, skill-building, and local job creation, reinforcing social license to operate and talent magnetism.

Strategic Pillars

Strategy along with initiatives & results

?€? Global Diversification: Entry into new export geographies, reduced risk, access to premium markets

?€? Product Innovation: Launch of advanced machining, new alloys, co-development with customers

?€? Digital Transformation: Integrated ERP, AI-based quality and maintenance, end-to-end digital traceability

?€? Sustainability: Target: 25% renewable energy use, circular materials, GHG reduction

?€? Human Capital: Upskilling, safety, inclusive leadership, campus-to-corporate programs Sustainability is a "red thread" running through every strategic e_ort, embedded in capital allocation, operations, risk, and employee engagement?€”driving value both for customers and society at large.

6. Financial Performance Analysis

Metric	FY24	FY25	Change	Analysis & Commentary
Net Sales (INR Mn)	12,218	11,548.02	-5%	Adjustment reflects a decrease in sales; business adapting
				to changing market conditions
EBITDA (excluding Exceptional	2,770	2,691	-2%	Margins expanded due to automation, green power, val-
Items) (INR Mn.)				ue-added mix, and e_iciency gains
EBITDA Margin (%)	22.40	22.74	1.51%	Margin leaders: improved product mix, digitalization, and
				resource savings
Adj. Net Profit (INR Mn)	1,798	2,027	13%	Lower finance costs, higher operating leverage, one-o_
				expenses minimized
Earnings Per Share (Rs)	57.30	63.89	12%	Profit growth directly contributing to higher per-share
				returns
Debt/Equity	0.07	0.04	-43%	Marked reduction in leverage, improved financial stability
Auto Comp. Mix (%)	48	54	13%	Strategic pivot to higher-value auto components, driving
				margin and revenue improvements
Export Share (%)	56	53	-5%	Export share dipped; company responding by targeting
				new markets and strengthening client base

Revenue & Segment Trends:

Despite global trade softness a_ecting legacy bearings exports, Rolex Rings aggressive focus on high-value automotive, EV, and precision products energized its topline. Domestic OEM demand and new program ramp-ups underpinned resilience.

EBITDA & Profitability:

Margins rose due to greater scale in complex parts, operational e_iciencies, adoption of green energy (reducing operational costs and carbon footprint), and digital tools that reduced scrap and rework.

Cost & Debt Management: Minimal debt improved net profits and enabled strategic reinvestment into green infrastructure and automation.

Cash Flow & Liquidity: Strengthened operating cash flows provided scope for both organic expansion and prudent risk-taking?€”even as working capital cycles extended due to export delays.

Rolex Rings progress on green manufacturing?€”reducing energy and resource intensity, increasing renewables, recycling water, and minimizing waste?€”directly supported its superior margin and cost performance, further aligning with escalating customer demands for sustainability and transparency.

7. Risk Management and Mitigation

Rolex Rings faces a dynamic risk ecosystem, meticulously managed using integrated digital risk management systems and robust Board/ESG oversight:

?€? Export/Geopolitical Risk: Deceleration in bearings exports

(US/EU) underscored the need for greater market and segmental diversification. Mitigation includes aggressive domestic expansion (EVs, renewables, railways) and pursuit of new international contracts.

?€? Customer Concentration: With top 10 accounts comprising 84%, Rolex is proactively onboarding new global OEMs, especially those prioritizing ESG. Diversification into e-mobility and non-auto verticals reduces volatility.

?€? Commodity Risks: Steel, aluminum, and energy prices are hedged using long-term contracts; green power adoption de-risks energy exposure and directly supports ESG mandates.

?€? Technology/Obsolescence: Continuous upgradation of machinery, smart systems, and operator upskilling; R&D partnerships to anticipate client and regulatory needs. -

?€? Regulatory/ESG Risk: Regular compliance reviews, integrated ESG reporting, and zero-tolerance for non-compliance build a competitive safe haven for the business.

?€? Operational & Supply Chain: Redundant and regionalized vendor network, real-time digital monitoring, and scenario planning enhance business continuity.

Sustainability Risk Perspective: Regular environmental audits, Board-level ESG oversight, and transparent stakeholder engagement fortify Rolex against environmental breaches and operational reputational risks.

8. Human Resources

Talent Development:

Expanded technical, digital, and leadership skilling programs contributed over 1,000 man-days of training, supporting the automation and digital transformation journey.

Attraction & Retention:

Rolex Rings rolled out innovative flexible work models, outcome-linked recognition programs, and campus-to-corporate hiring drives for diversity and fresh skills infusion.

Culture & Diversity:

Inclusivity initiatives expanded, fostering gender, functional, and cognitive diversity, directly impacting innovation and ESG performance.

Safety & Wellbeing:

Enhanced EHS protocols, digital safety dashboards, regular audits, and climactic risk mitigation (eg, heat protocols) elevate occupational safety and resilience

ESG in HR:

All training includes sustainability, ethics, and governance modules, ensuring awareness at every tier for long-term stakeholder value delivery.

HR as Strategy Enabler:

A talent-first approach powers the companys technology, digital and sustainability agenda, mobilizes internal change, and magnifies external competitiveness by aligning people, process, and purpose.

9. Internal Control System

Rolex Rings has implemented a comprehensive and modern internal control system designed to ensure accuracy, operational e_iciency, and strong compliance across all functions. Financial controls are largely automated to enable high-precision reporting and continuous anomaly detection, fortified by scheduled internal and external audits. Operationally, the use of a robust ERP platform streamlines end-to-end workflows, minimizes manual errors, and improves real-time visibility into compliance and performance across departments. The system is further supported by advanced cybersecurity infrastructure, featuring multi-layered protection and regular penetration testing to safeguard enterprise data against evolving threats. Governance remains a key pillar of the internal control architecture, with cross-functional oversight from internal audit, risk, and ESG committees that operate under direct Board supervision. These bodies ensure systemic checks, risk identification, and timely corrective actions, creating a culture of accountability and transparency. Rolex Rings emphasizes continuous process improvement through regular "control health checks," benchmarking against global best practices, and institutionalizing a high-performance culture. As a result, the internal control ecosystem not only ensures regulatory compliance but also enhances agility, resilience, and stakeholder trust in an increasingly complex business environment.

10. Sustainability

In FY25, sustainability transcended being a standalone pillar and became the DNA of Rolex Rings business model. Strategic decision-making?€”from capital investments and supply chain selection to client onboarding and talent development?€”is interwoven with environmental and social considerations. Rolex Rings leadership in adopting renewable energy, resource-e_icient operations, greener materials, and ESG compliant governance has turned regulatory obligations into customer opportunities.

As clients globally move towards "green procurement," sustainability has transitioned into a source of enhanced premium, greater customer stickiness, and improved brand positioning. The companys focus on circularity, low-carbon manufacturing, community development, and transparent disclosures advances its role as a responsible industry leader, and its standing as a preferred supplier to multinationals and new-age domestic clients alike.

11. Cautionary Statement

This MD&A contains forward-looking statements and expectations based on managements current views and information available as of August 2025. Actual results may di_er materially due to economic, regulatory, technological, and competitive factors. Rolex Rings undertakes no obligation to update or revise underlying assumptions or projections with respect to future events.

Rolex Rings Limited exits FY25 as a stronger, more diversified, and more sustainable leader in the forging and precision engineering industry?€”well-positioned to ride emerging macro and industry tailwinds, serve global and local customers, and create enduring value for all stakeholders.