Smiths & Founders India Ltd Management Discussions

During the year under review, the Indian automobile sector drove through a steady lane. The forging industry too opened the year 2025-26 on a positive note. The Association of Indian Forging Industry (AIFI) projected higher demand for forgings during the year. Accordingly growth in the automobile / auto components sector remained steady.

The turnaround for the Indian auto industry, which began in the Financial Year 2022-23 and stabilised during the Financial Year 2023-24, continued its momentum in the Financial Year 202425 and further strengthened during Financial Year 2025-26. As a result, your Company achieved a growth of 5.79 % during the financial year.

The industrys focus on quality, productivity, technology adoption and cost competitiveness has enabled Indian manufacturers to strengthen their position in global supply chains.

There are a few concerns which seem to hamper the overall growth in the long run, including the rising steel prices, demand supply gap, high electricity tariff, rising fuel prices, governments thrust on electric vehicles and technology upgradation and modernization.

Given the importance of the automobile industry to the economy, its potential for generating employment opportunities and its backward and forward linkages with several sectors, the Government is committed to support its development.

Going forward, the Auto Industry is expected to show good growth across all segments on the back of healthy economic outlook, infrastructure investments and new launches by OEMs.

Growing concerns over air pollution, road safety and urban congestion, are driving the policy and regulations for electric motor vehicles and urban development. In the long run, these will impact ownership patterns and in turn will have a significant effect on the future of the automotive industry.

Your Company is primarily engaged in the business of ferrous forgings and hence there are no separate reportable segments.

The forging industry is expected to benefit from continued growth in the automotive and engineering sectors, increasing infrastructure investments and expanding manufacturing activities. The growing emphasis on localization, supply chain diversification and export opportunities is expected to create additional avenues for growth.

The transition towards electric and technologically advanced vehicles is expected to reshape the automotive ecosystem over the coming years. The Company remains focused on strengthening its manufacturing capabilities, improving operational efficiencies and meeting evolving customer requirements through continuous improvement and technological upgradation.

The Indian auto-component industry is expected to maintain a positive growth trajectory supported by increasing domestic demand, higher localization levels, export opportunities and policy support for manufacturing and industrial development.

The Companys business is exposed to many internal and external risks. Your Company with its lean, nimble and customer-oriented approach is confident of improving its performance and augmenting its resources.

The Company has an adequate system of internal control commensurate with the size and nature of its business, which ensures that transactions are recorded, authorised and reported correctly apart from safeguarding its assets against loss from wastage, unauthorised use and removal.

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) and comply with the Accounting Standard specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

Revenue from Operations has increased by 5.79% during the year, primarily due to higher sales volumes and improved business performance.

Employee Benefits Expense and Direct Expenses increased due to increments.

Selling and distribution expenses, as well as administrative expenses, also recorded a marginal increase.

Material cost decreased due to close monitoring, and finance cost decreased due to a reduction in borrowings

The Company firmly believes that its employees are its most valuable asset and key contributors to its sustained growth and success. The Company remains committed to fostering a positive work environment that promotes employee engagement, safety, skill enhancement and professional development.

During the year under review, industrial relations across all levels of the organization remained cordial and harmonious. The Company continued to focus on employee welfare, workplace safety, training and development initiatives aimed at enhancing productivity, operational efficiency and employee competencies.

The Company also emphasizes adherence to health, safety and environmental standards and continues to strengthen its human resource practices to support its business objectives and longterm growth.

As on March 31, 2026, the total number of employees on the rolls of the Company was 57.

Cautionary Statement:

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and other incidental factors, over which the Company does not have any direct control.