Samrat Forgings Ltd Management Discussions

Your directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2026.

INDUSTRY STRUCTURE AND DEVELOPMENT

India continued to be one of the fastest-growing major economies during FY 2025-26, supported by sustained Government investments in infrastructure, railways, defence and manufacturing. Initiatives such as Make in India, Atmanirbhar Bharat and Production Linked Incentive (PLI) schemes, coupled with global supply chain diversification, continued to enhance Indias position as a preferred manufac- turing hub, creating significant growth opportunities for the domestic forging industry.

The ongoing geopolitical uncertainties across various parts of the world, coupled with supply chain diversification strategies adopted by global OEMs, have continued to shift manufacturing and sourcing preferences towards India. This structural shift has opened new business opportunities for Indian manufacturers possessing robust manufacturing capabilities, quality systems and reliable delivery performance. The Indian forging industry has accordingly witnessed sustained demand from sectors such as commercial vehicles, passenger vehicles, railways, construction equipment, agriculture, oil & gas and industrial machinery, while export demand also remained encouraging.

Considering the healthy demand outlook, expanding manufacturing base, strong customer confidence and favorable Government policies, the Company remains well positioned to capitalize on the emerging opportunities in both domestic and international markets and sustain its growth momentum in the coming years.

OPPORTUNITIES AND THREATS

India continues to present significant growth opportunities, supported by sustained investments in agriculture, infrastructure, railways and manufacturing under the Governments Make in India initiative. The Companys established presence in these high-growth sectors, coupled with its increasing focus on exports, positions it well to capitalize on the expanding domestic and global demand for high- quality forged and machined components.

During the year, the Company continued its capacity expansion by installing and commissioning new machinery at its forging and machining facilities to meet the growing requirements of existing customers and cater to new business opportunities. Ongoing initiatives in value engineering, product develop- ment, operational efficiency, energy conservation, and cost optimization are expected to further strengthen the Companys competitiveness.

The Company however, continues to face challenges such as shortage of skilled manpower, volatility in raw material prices and availability, higher energy cost, evolving global economic conditions, and geopolitical uncertainties, which may have an adverse impact on business operations. In addition, volatility in energy markets, including the curtailment of Piped Natural Gas (PNG) supplies and the significantly higher prices charged by gas suppliers due to the geopolitical tensions in the Middle East, has increased operating costs and affected the Companys manufacturing operations.

The management remains focused on mitigating these challenges through continuous workforce development, operational excellence, energy optimization initiatives, and prudent business strategies to ensure sustainable growth and operational resilience.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company operates in single segment i.e. manufacturing of closed die steel forgings and machined components and all its operational performance reported in the financial statements and other reports forming part of the Annual Report are from this single segment only. The Company manufactures and supply wide range of components to its customers in automotive and non- automotive industries; thus, the evaluation of product wide performance is much complicated and not feasible to be reported and the performance of the company can be recognized as a whole as there is no separate segment for reporting.

OUTLOOK

The global business environment continues to witness uncertainty arising from geopolitical develop- ments, changing trade policies and evolving supply chain dynamics. At the same time, India has further strengthened its position as a preferred global manufacturing and sourcing destination, supported by a stable policy framework, robust infrastructure development, the “Make in India” initiative and increasing investments across key sectors such as agriculture, railways, defence and construction equipment. These developments are expected to create sustained growth opportunities for the Indian engineering and forging industry.

The Company remains optimistic about its growth prospects, backed by healthy demand from its existing customers in the tractor, construction equipment and other non-automotive segments, along with a growing export business. Following the successful commissioning of its 6,000-ton forging press, the Company is in advanced stages of onboarding major OEM customers, which is expected to significantly enhance its revenue potential over the coming years.

While challenges such as availability of skilled manpower, volatility in raw material and energy costs and global economic uncertainties may continue, the management is confident that the Companys strong manufacturing capabilities, customer relationships and focus on operational excellence will support sustainable long-term growth.

RISKS AND CONCERNS

The Companys operations continue to be exposed to risks arising from fluctuations in the raw material and gas prices, shortage of raw material particularly alloy steel, which constitutes the principal input for manufacturing forged components. Volatility in raw material prices, coupled with changes in demand-supply dynamics, curtailment of PNG supplies and excessive increase in gas prices, may impact production costs, operating margins and working capital requirements. The Company contin- ues to focus on prudent procurement strategies, cost optimization initiatives and operational efficien- cies to mitigate the impact of such risks.

The business also remains exposed to global geopolitical and macroeconomic uncertainties, including continuing regional conflicts, supply chain disruptions and volatility in energy and freight costs. Such developments may affect the availability and pricing of inputs, logistics and export demand. The Company continuously monitoring these external risks and adopting appropriate measures to strengthen supply chain resilience, enhance operational flexibility and maintain sustainable business performance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

All departments of the Company are adequately staffed with professionally qualified and experi- enced personnel. There are established internal control systems and procedures in place commen- surate to the size and nature of business of the Company, which ensure efficient use and protection of business resources and compliance with the policies, procedures and statutes. The financial information is compiled periodically and reviewed by the management time to time. The reporting and monitoring system is elaborate and the same is reviewed by the management on regular basis. The internal control is supplemented by programs of internal audits, review by the management and documented policies, guidelines and procedures. The focus of these reviews is to identify the weaknesses and the areas of improvement, compliance with defined policies and processes, safeguarding the tangible and intangible assets and compliance with applicable statutes.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OP- ERATIONAL PERFORMANCE

Continuing the positive momentum of the previous financial year, the Company commenced FY 2025-26 on a strong note and sustained healthy business growth throughout the year. Backed by strong demand from its key customer segments and improved operational performance, the Company achieved its highest-ever sales during the financial year.

During the year ended 31st March, 2026, the Company recorded its highest-ever turnover of Rs. 203 crore as compared to Rs. 191 crore in the previous financial year ended 31st March, 2025. The Company earned a Profit Before Tax (PBT) of Rs. 6.17 crore against Rs. 6.97 crore in the previous year. Profit After Tax (before Other Comprehensive Income) stood at Rs. 4.39 crore, as against Rs. 5.10 crore in the previous year, resulting in an Earnings Per Share (EPS) of Rs. 8.78 compared with Rs. 10.20 in the previous year. The Total Comprehensive Income (net of tax) for the year amounted to Rs. 4.55 crore, as compared to Rs. 5.26 crore in the preceding financial year.

While the Company achieved record sales during the year, profitability was impacted by a substantial increase in employee benefit expenses on account of the implementation of the New Labour Codes, effective from 21st November, 2025. Pursuant to the revised statutory framework, the Company recognized the enhanced gratuity liability during the year, resulting in hefty increase in gratuity provisioning. Consequently, the profitability for FY 2025-26 was lower than the previous year despite higher turnover.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELA- TIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company believes that its human assets are the most valuable assets, which convert planning into execution and generate results. Flence, the Company always endeavor and attentive on having qualified and talented employees in all divisions. The management always keeps its focus to evaluate the performance of all employees and necessary steps are taken to strengthen the areas that need improvements. More experienced technical manpower is being taken at the senior level to streamline the whole business process and adequate facilities and opportunities are also being provided to the technical and professional staff to update themselves with the latest technologies and different other activities. The company continued to maintain good relationship with workers and staff during the last year.

As on March 31, 2026 the company had 844 permanent workers & employees.

KEY FINANCIAL RATIOS

Particulars	Financial Year 2025-26	Financial Year 2024-25	Change as compared to previous Financial Year	Reason for changes of 25% or more
Debtors Turnover Ratio	8.67	8.47	2.27%	NA
Inventory Turnover Ratio	2.81	2.91	-3.66%	NA
Interest Coverage Ratio	1.79	1.99	-10.05	NA
Current Ratio	1.10	1.12	-1.84%	NA
Debt Equity Ratio	2.31	2.35	-1.90%	NA
Operating Profit Margin%	6.88	7.32	-6.01%	NA
Net Profit Margin%	2.16	2.67	-18.97%	NA

RETURN ON NET WORTH

Return on Net Worth declined from 13.84% in FY 2024-25 to 10.61% in FY 2025-26, reflecting a 23.34% decrease, mainly due to lower Profit After Tax earned during the year compared to the previous financial year.

CAUTIONARY STATEMENT

This report may contain statements particularly which relate to Management Discussion and Analysis describing Companys objectives, projections, estimates and expectations etc., which the Company believes are or may be considered to be “forward looking statements” within the meaning of applicable laws and regulations. The actual results might differ materially from those expressed or implied. The Company assumes no responsibility in respect of forward looking statements which may be amended or modified in the future on the basis of subsequent developments, information or events.

	For and on behalf of the Board
Regd. Office:
Village & P.O. Ghollu Majra, Tehsil Derabassi,
Distt. Mohali, Punjab - 140506
Email: info@samratforgings.com
CIN: L28910PB1981PLC056444	Rakesh M Kumar	Ritu Joshi
Date: 13.08.2026	Managing Director	Director
Place: Derabassi	(DIN: 00066497)	(DIN: 01598873)