Shri Balaji Valve Components Ltd Management Discussions

1. INTRODUCTION

Our Company was originally incorporated on November 17, 2011 as "Shri Balaji Valve Components Private Limited" vides Registration No. 141370 under the provisions of the Companies Act, 2013 with the Registrar of Companies, Pune Maharashtra. The name of our Company was changed from "Shri Balaji Valve Components Private Limited" to "Shri Balaji Valve Components Limited" vide Fresh Certificate of Incorporation dated July 10, 2023, Consequent upon Change of Name pursuant to Shareholders Resolution passed at the Extraordinary General Meeting held on June 2 6,2023 and New Corporate Identification Number U29220PN2011PLC141370. Further our Company has issued share pursuant to Initial Public Offer (IPO] and listed on SME platform of BSE LTD on 03rd January 2024.

2. OVERVIEW OF BUSINESS

Incorporated in the year 2011, we are engaged in the business of engaged in the business of manufacturing ready-to- assemble valve components catering to the manufacturing of the valves. We manufacture and supply various types of valve components which are used in the manufacturing of ball valves, butterfly valves and other valves including forging products. Further, our manufacturing system has been certified for the establishment and application of the Quality management system for the manufacturer of materials according to directives 2014/68/EU by PED & the products manufactured by closed die forging have been certified to comply with the requirements specified by NORSOK.

3. SWOT ANALYSIS Strengths

• Integrated Manufacturing Capabilities: SBVCL possesses an integrated manufacturing setup that includes in-house forging, heat treatment, and machining plants. This allows for greater control over the production process, ensuring quality and consistency.

• Strong Financial Performance: The company has demonstrated a good revenue growth over the past three years. It has also maintained a healthy Return on Capital Employed (ROCE] and has a strong interest coverage ratio, indicating a robust financial position.

• High-Quality Products and Certifications: SBVCL emphasizes quality and has an array of certifications, including ISO 9001:2015, PED 2014/68/EU, and AD 2000-Merkblatt W0. This assures customers of the reliability and performance of their products, which are designed for critical applications.

• Extensive Product Range and Customization: The company offers a comprehensive range of valve components and also provides customized products tailored to specific client needs. This flexibility allows them to serve a wide variety of customers and applications.

• Global Clientele: SBVCL has a widespread customer base that extends beyond India to six continents. This geographical diversification helps to mitigate risks associated with reliance on a single market.

Weaknesses

• Enhancing Investor Relations: As a micro-cap company, Shri Balaji Valve Components Ltd. has an opportunity to increase its market visibility and transparency. By proactively engaging with the investment community, it can attract a broader investor base, improve stock liquidity, and unlock a more stable valuation that reflects its underlying business strengths.

• Strategic Capital Investment: A decline in some profitability ratios, such as ROE and ROCE, can be an indicator of recent strategic investments in capacity expansion or new projects. This is a common and necessary phase for a growing company, where current investment is made for future long-term gains. These metrics are poised to improve as the new investments begin to yield returns.

• Supplier Dependence: They rely on a limited number of suppliers for critical raw materials. Disruptions from these suppliers could impact production.

Opportunities

• Growing Industrial Sectors: The industries that SBVCL serves, such as oil & gas, petrochemicals, and power generation, are undergoing significant growth and development, creating a sustained demand for valve components.

• Expansion of Product Portfolio: The company can explore new products not currently in their portfolio to tap into new markets and customer segments.

• Leveraging Existing Certifications: The companys various certifications can be leveraged to expand into newinternational markets and attract high-profile clients who require adherence to stringent quality standards.

• Government Initiatives and Infrastructure Projects: Governments worldwide, and particularly in India, are investing heavily in infrastructure, which will drive demand for industrial equipment and, by extension, valve components.

Threats

• External Economic and Geopolitical Factors: Global economic and political instability poses a risk. Such conditions could influence the companys business by affecting demand from its clients, disrupting supply chains, and causing a rise in the cost of raw materials.

• Trade Policy Uncertainty: The company faces potential challenges from evolving international trade policies, including tariffs. While the specific impact is difficult to predict, these developments could affect the companys export markets and require strategic adjustments.

• Market Competition and Cost Pressures: The company operates in a competitive industry where maintaining profitability is a key challenge. It must continuously manage costs and adapt to market pricing to protect its margins.

• Regulatory and Technological Changes: The company needs to stay ahead of potential shifts in industry standards and technological advancements to ensure its products remain compliant and competitive.

4. MITIGATION OF RISK /RISK MANAGEMENT

The Board assesses and classifies risks across various domains such as operations, finance, marketing, regulatory compliance, and corporate affairs. The Internal Auditor, Statutory Auditor, and Company Secretary provide their insights on risk levels while auditing specific areas, reporting to the Audit Committee. The company is proactively implementing immediate and future-oriented measures to minimize any potential risks that might emerge.

5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an effective and reliable internal control system commensurate with the size of its operations. At the same time, it adheres to local statutory requirements for orderly and efficient conduct of business, safeguarding of assets, the detection and prevention of frauds and errors, adequacy and completeness of accounting records and timely preparation of reliable financial information. The efficacy of the internal checks and control systems is validated by self-audits and internal as well as statutory auditors.

Share Capital:

During the year under review, there is no changes in the share capital of the company.

Reserves and Surplus:

The Reserve and Surplus of Company is Rs. 3618.37 lacs as on period ended on 31st March 2025.

Total Income:

The Company has earned total Income Rs. 8235.84 lacs as on period ended on 31st March 2025.

7. CORPORATE GOVERNANCE

In addition to the applicable provisions of the Companies Act, 2013 with respect to Corporate Governance, provisions of the SEBI (LODR) Regulation, 2015 will also have complied with the extent applicable to our Company immediately upon the listing of the Equity Shares on the Stock Exchange. Our Company stands committed to good Corporate Governance practices based on principles such as accountability, transparency in dealings with our stakeholders, emphasis on communication and transparent reporting. We have complied with the requirements of the applicable regulations, in respect of corporate governance including the constitution of the Board and Committees thereof. The Corporate governance framework is based on an effective Independent Board, the Boards Supervisory role from the executive management team and the constitution of the Board Committees as required under law. The Board functions either as a full board or through the various committees constituted to oversee specific operational areas. As of the date, there are Five Directors on our Board out of which one-third are Independent Directors. Our Company complies with the corporate governance norms prescribed under the Companies Act, 2013, particularly, in relation to the appointment of Independent Directors to our Board and the constitution of Board- level committees. Our Company undertakes to take all necessary steps to continue to comply with all the requirements of the SEBI (LODR) Regulation, 2015 and the Companies Act, 2013.

8. MATERIAL DEVELOPMENTS IN THE HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING THE NUMBER OF PEOPLE EMPLOYED:

Your Company follows a policy of building strong teams of talented professionals. People remain the most valuable asset of your Company. The Company recognizes people as its most valuable asset and the Company has kept a sharp focus on Employee Engagement. The Companys Human Resources is commensurate with the size, nature and operations of the Company. In continuous development company is also providing the health Insurance policy of recognized Insurance company M/s ICICI Lombard to our employee, which provides the benefit of Health coverage up to the sum of Rs. 1,00,000 per person.

9. CAUTIONARY STATEMENT:

This report contains forward-looking statements based on the perceptions of the Company and the data and information available to the company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements and they reflect the Companys current views of future events and are subject to risks and uncertainties. Many factors like changes in general economic conditions, amongst others, could cause actual results to be materially different.