Sprayking Ltd Management Discussions

COMPANY OVERVIEW

Sprayking Limited (formerly known as Sprayking Agro Equipment Limited) is engaged in the manufacture of a comprehensive range of brass components, including brass fittings, brass forged components, brass transformer parts, precision turned components and a variety of customised brass products. The Company is among the listed entities on the Bombay Stock Exchange engaged exclusively in the processing of brass as its principal raw material. Established in the early 1980s, the Company has developed a distinct position in the brass manufacturing sector through a consistent focus on quality, precision engineering and customer satisfaction. The Company operates a modern manufacturing facility with an emphasis on process efficiency, workplace safety and environmental responsibility, and continues to invest in technology and skilled resources in pursuit of its objective of being counted among the leading brass component manufacturers in India. The Company is headquartered at Jamnagar, Gujarat, widely recognised as the brass hub of India, which provides access to a mature manufacturing ecosystem, an established ancillary base and a skilled labour pool. The Company serves customers across India as well as in the United States, Europe, Australia, Canada, South Africa and the United Arab Emirates, and its diversified product range enables it to address multiple end-user industries. The Company was converted from a private limited company into a public limited company in the year 2016, a step that reinforced its commitment to transparency, accountability and long-term growth.

2. ECONOMIC OVERVIEW

The global economy during the year under review continued to operate against a backdrop of moderate growth, persistent geopolitical tensions and volatility in commodity and currency markets. Trade policy uncertainty, elevated freight costs on certain routes and shifting tariff regimes in key export destinations affected sentiment across export-oriented manufacturing sectors. At the same time, the reconfiguration of global supply chains and the continued search by international buyers for alternative sourcing bases outside China have been supportive of Indian engineering and metal component exporters.

The Indian economy retained its position among the faster-growing major economies, aided by sustained public capital expenditure, infrastructure creation, growth in electrical and electronics manufacturing, expansion in the automotive sector and continued policy support to domestic manufacturing under initiatives such as Make in India and the production-linked incentive schemes. These factors provide a broadly favourable demand environment for brass and engineering components over the medium term. However, the sector remained exposed to sharp movements in the international prices of copper and zinc, the principal inputs in brass, and to fluctuations in foreign exchange rates. These factors influenced input costs, working-capital requirements and realisations during the year, as more particularly discussed under Risks and Concerns below.

3. INDUSTRY STRUCTURE AND DEVELOPMENTS

Brass is a copper-zinc alloy valued for its machinability, corrosion resistance, electrical and thermal conductivity, dimensional stability and recyclability. Brass components find application across a wide spectrum of industries including automotive, electrical and electronics, industrial machinery, sanitary and plumbing hardware, agricultural equipment, construction and renewable energy. The Indian brass components industry is highly fragmented and is dominated by micro, small and medium enterprises, with Jamnagar in Gujarat accounting for a very substantial share of the countrys brass parts production. The industry is characterised by a large unorganised segment, limited pricing power at the component level, and a business model in which raw-material cost forms the overwhelming proportion of the cost structure. The organised segment, of which the Company forms a part, competes on the basis of consistency of quality, precision, certification, delivery reliability and the ability to undertake customised orders. Structural developments shaping the industry include the progressive formalisation of the sector, the growing insistence of international buyers on documented quality systems and traceability, increasing adoption of CNC and automated machining, greater regulatory attention to effluent, emission and metal-scrap handling standards, and the emergence of lead-free and low-lead brass grades to meet potable-water and environmental norms in the European Union and the United States. The industry remains dependent on imported copper and zinc and on imported brass scrap, and consequently the profitability of participants is closely linked to the movement of international metal prices and to the exchange rate of the Indian Rupee.

4. OPPORTUNITIES AND THREATS

Opportunities

? Global supply-chain diversification: The continued efforts of international buyers to diversify their sourcing base away from a single geography present an opportunity for Indian brass component manufacturers with established export credentials to secure incremental business.

? Growth in end-user industries: Sustained demand from the automotive, electrical, electronics, sanitary ware, plumbing, construction and renewable-energy sectors, supported by infrastructure investment and housing activity in India, underpins demand for brass components.

? Value-added and customised products: There is a growing requirement for precision-engineered, application-specific brass components in sectors such as electricals, instrumentation and industrial equipment, where quality and dimensional accuracy rather than price alone determine sourcing decisions. Such products typically carry better realisations.

? Locational advantage: The Companys presence at Jamnagar provides proximity to raw-material suppliers, job-work capacity, ancillary units and a skilled workforce, which supports flexibility in operations and shorter lead times.

? Technology and process improvement: Adoption of automation, CNC machining and improved process controls offers scope to improve yields, reduce rejection and scrap losses, and enhance productivity per employee.

? Recycling and sustainability: Brass is fully recyclable. Increasing customer preference for products with a lower environmental footprint, together with the availability of recycled brass inputs, supports both cost efficiency and market positioning.

? Policy support: Government initiatives directed towards the promotion of domestic manufacturing, export incentives and support to the MSME sector may assist capacity expansion and market development.

Threats

? Raw-material price volatility: Copper and zinc prices are determined on international commodity exchanges and are subject to sharp movements. As raw material constitutes the predominant element of cost, adverse price movements that cannot be passed on promptly compress margins.

? Intense competition: The industry is fragmented and highly competitive, with competition from both the organised and the unorganised segments domestically and from lower-cost manufacturing locations internationally. This limits pricing power.

? Foreign exchange volatility: A meaningful portion of the industrys business is linked to imports of raw material and to export realisations. Movements in exchange rates can affect margins.

? Interest-rate and funding costs: The business is working-capital intensive. Increases in borrowing levels or in interest rates directly affect profitability, as was evident during the year under review.

? Customer and geographic concentration: Dependence on a limited number of customers or export markets exposes the business to the risk of order deferral or loss.

? Regulatory and environmental compliance: Progressively stringent environmental, effluent, emission and product-composition norms, both in India and in export markets, may require additional investment and increase operating costs.

? Technological obsolescence: Failure to keep pace with developments in machining technology and process automation may erode competitiveness on cost and quality.

? Macro-economic and geopolitical disruption: Economic slowdown, trade restrictions, tariff actions, shipping disruptions or geopolitical instability in key markets could adversely affect demand and logistics.

5. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company operates in a single reportable business segment, namely the manufacture of and dealing in brass components and products, within the meaning of the applicable Accounting Standard on segment reporting. Accordingly, separate segment-wise financial disclosure is not applicable to the Company. The product portfolio of the Company broadly comprises brass rods and billets, brass fittings and valves, sanitary and plumbing fittings, brass compression fittings, garden and agricultural sprayer fittings, electrical components, precision turned components, industrial components and other customised brass components manufactured to customer specification.

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The diversified application of these products across multiple end-user industries enables the Company to address several markets and reduces dependence on any single application segment. The Company continues to place emphasis on value-added and customised products, where quality, precision and delivery reliability are the principal purchasing considerations.

6. OUTLOOK

The Company remains cautiously optimistic regarding the medium-term to long-term prospects of the brass and engineering components industry. The underlying demand drivers, namely infrastructure creation, growth in the electrical and electronics sector, expansion of the automotive industry, construction activity and rising engineering exports from India, remain intact.

The financial performance of the year under review was affected principally by lower volumes, and by the significantly higher depreciation and finance costs arising from the capital expenditure undertaken and the borrowings availed in the recent past. As the additional capacity created is progressively utilised, the Company expects the benefit of operating leverage to be reflected in its results.

Against this background, the Company proposes to focus, during the ensuing period, on the following areas:

? Improving capacity utilisation of the assets already commissioned;

? Enhancing the share of value-added and customised products in the overall product mix;

? Rationalising the cost structure and improving yields and process efficiency;

? Reducing the working-capital cycle and containing finance costs;

? Deepening relationships with existing customers and broadening the customer base, including in export markets;

? Strengthening quality systems, certifications and delivery reliability; and

? Maintaining a prudent capital structure.

The Companys outlook remains subject to movements in international copper and zinc prices, exchange-rate movements, interest-rate conditions and the general demand environment, which are outside the control of the management.

7. RISKS AND CONCERNS

Risk is inherent in business, and the Company seeks to achieve an appropriate balance between risk and return. The senior management identifies and monitors risks on an ongoing basis and evolves systems and processes to contain such risks. Material risk events are placed before the Board of Directors periodically. The principal risks to which the Company is exposed, and the manner in which they are addressed, are set out below.

? Raw-material price risk: Copper and zinc prices are volatile and are determined internationally. The Company seeks to mitigate this risk through careful procurement planning, calibrated inventory holding, use of brass scrap where technically appropriate, and periodic revision of quotations to customers to reflect input-cost movements.

Figure 2: Composition of total expenses for FY 2025-26. Cost of materials consumed is stated net of the change in inventories. The predominance of raw-material cost illustrates the sensitivity of margins to movements in metal prices.

? Competition and margin risk: The fragmented and competitive nature of the industry limits pricing power. The Company seeks to address this by focusing on quality, precision, customised products and delivery reliability rather than competing on price alone.

? Credit risk: The Company is exposed to the risk of default by customers. Credit exposure is monitored through customer-wise credit limits, ageing analysis and follow-up of outstanding receivables. Trade receivables reduced from Rs. 679.52 lakhs as at March 31, 2025 to Rs. 437.13 lakhs as at March 31, 2026.

? Liquidity and interest-rate risk: The business is working-capital intensive and finance cost increased materially during the year. The Company monitors its borrowing levels, banking arrangements and cash flows, and total borrowings were reduced from Rs. 1,794.96 lakhs to Rs. 1,555.12 lakhs during the year.

? Foreign exchange risk: Exposure arising from export receivables and import payables is monitored on an ongoing basis, and natural hedges are utilised to the extent available.

? Concentration risk: Dependence on a limited number of customers or markets is sought to be mitigated by broadening the customer base and by addressing multiple end-user industries.

? Regulatory and compliance risk: The Company is subject to a wide range of statutory, environmental, labour and listing requirements. A compliance framework is in place and compliance status is reviewed periodically by the Board and its Committees.

? Technology risk: The Company monitors developments in machining technology and process automation and undertakes capital expenditure to maintain competitiveness.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place internal control systems commensurate with the size, scale, nature and complexity of its operations. The internal control framework is designed to provide reasonable assurance regarding:

? The effectiveness and efficiency of operations;

? The safeguarding of the assets of the Company against unauthorised use, loss or disposition;

? The prevention and detection of fraud and error;

? The accuracy and completeness of the accounting records;

? The timely preparation of reliable financial information;

? Compliance with applicable laws and regulations; and

22 nd ANNUAL REPORT

? The proper authorisation, recording and reporting of all transactions.

The internal control mechanisms of the Company include documented delegation of authority, checks and balances relating to procurement, production, inventory movement, sales, receivables, payments and financial reporting, and reconciliation and review procedures. An independent Internal Auditor has been appointed by the Board, whose scope of work is approved by the Audit Committee. The Internal Auditor conducts audits covering the operational and financial areas of the Company, and the internal audit reports, together with the significant observations and the corrective actions taken thereon, are placed before and reviewed by the Audit Committee. The Audit Committee and the Board of Directors review the adequacy and effectiveness of the internal control systems periodically. The Statutory Auditors also consider the internal financial controls of the Company with reference to the financial statements as part of their audit procedures. The management is of the view that the internal control systems presently in operation are adequate and commensurate with the size and nature of the business of the Company.

9. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company for the year ended March 31, 2026, on a standalone and consolidated basis, is summarised below:

(AMOUNTS IN LAKHS, EXCEPT EPS)

	Standalone Basis (Year Ended)		Consolidated Basis (Year Ended)
PARTICULARS
	31.03.2026	31.03.2025	31.03.2026	31.03.2025
I. Net Sales/Income from Operations	5349.48	6195.21	12,915.12	13,009.93
II. Other Income	48.28	90.57	248.40	116.12
III. Total Revenue (I+II)	5397.761	6285.78	13,163.52	13,126.05
IV. Earnings Before Interest,	423.91	462.22	1,082.84	1,363.18
Taxes, Depreciation and
Amortization Expense
V. Finance Cost	145.10	74.79	301.45	219.74
	222.39	105.67	324.46	180.98
VI. Depreciation and Amortization
Expense
VII. Profit Before Tax (IV-V-VI)	56.42	281.76	456.93	962.46
VIII. Tax Expense:
i. Current Tax Expense	18.98	80.98	71.93	194.60
ii. Deferred	(0.25)	(19.69)	(8.31)	40.69
IX. Profit After Tax (VII-VIII)	37.69	220.47	363.31	727.17
X. Earnings per equity share:
(1) Basic	0.02	0.42	0.90	6.03
(2) Diluted	0.02	0.42	0.90	6.03

REVIEW OF BUSINESS OPERATION

22 nd ANNUAL REPORT

Standalone:

The Total Income of the Company stood at Rs. 5397.761 Lakhs for the year ended March 31, 2026 as against Rs 6285.78 Lakhs in the previous year. The Company made a Net Profit of Rs.37.69 Lakhs for the year ended March 31, 2026 as compared to the Net Profit of Rs. 281.76 Lakhs in the previous year registering decrease of 82.90%.

Consolidated:

The Consolidated Total Income is Rs. 13163.52 Lakhs for the financial year ended March 31, 2026 as against Rs. 13126.05 Lakhs during the previous financial year. Consolidated Net Profit is Rs. 363.31 Lakhs for the year ended March 31, 2026 as compared to the Net Profit of Rs. 727.16 Lakhs in the previous year, registering decrease of 50.04%.

10. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company regards its human resources as a key element in the conduct of its operations. The manufacture of precision brass components requires skilled and experienced operators, and the Company recognises that the retention and development of such personnel is essential to maintaining quality, operational efficiency and timely delivery.

The Company endeavours to maintain a work environment that promotes employee development, skill enhancement, operational discipline, workplace safety, teamwork and productivity, and that is in compliance with applicable labour legislation. On-the-job training is provided to workmen with a view to improving technical competence, reducing rejection levels and reinforcing safe working practices.

Industrial relations remained cordial and harmonious throughout the year under review, and there was no instance of any strike, lock-out or material industrial dispute. No man-days were lost on account of industrial unrest.

The total number of employees on the rolls of the Company as at March 31, 2026 was [ ] as compared with [ ] as at

March 31, 2025.

The disclosures required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of the Boards Report. The Company has in place a Policy on Prevention of Sexual Harassment of Women at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, and an Internal

Complaints Committee has been constituted thereunder. During the year under review, [no complaint was received / complaints were received], and [there was no complaint pending as at the end of the year].

11. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

In accordance with Schedule V (Para B)(1)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of significant changes, being a change of 25% or more as compared with the immediately preceding financial year, in the key financial ratios of the Company on a standalone basis, together with the explanations therefor, are set out below:

Ratio	FY 2025- 26		FY 2024- 25	Change (%)	Explanation for significant variance
Current Ratio	2.52		2.17	16.13%	-
Debt Equity Ratio	0.58		0.72	(19.44%)	-
Debt Service Coverage Ratio	0.27		0.19	42.11%	Enhanced capacity to service debt obligations, driven by improved operational EBITDA.
Ratio		FY 2025- 26	FY 2024- 25	Change (%)	Explanation for significant variance
Return on Equity
Ratio		0.01	0.07	(85.71%)	Significant contraction in net profit for the year available to shareholders.
Inventory
				(8.33%)	-
Turnover Ratio		5.61	0.00
Trade Receivables
				34.21%	Much efficient credit collection cycles from debtors.
turnover ratio		12.24	9.12
Trade payables turnover ratio		27.04	21.01	28.70%	Accelerated settlement of dues to vendors and suppliers.
Net capital turnover ratio		3.05	3.42	(10.82%)	-
Net profit ratio		0.01	0.04	(75.00%)	Sharp compression of margins due to escalated operational or financial costs.
Return on Capital employed		0.05	0.12	(58.33%)	Lower EBIT generation relative to the overall capital invested in the business.
Return on investment		0.01	0.36	(86.11%)	Substantial drop in net profit performance against the cost of investment assets.

12. DETAILS OF CHANGE IN RETURN ON NET WORTH

The details of the change in the Return on Net Worth of the Company on a standalone basis, as compared with the immediately preceding financial year, are set out below:

Particulars	FY 2025-26	FY 2024-25	Change
Profit after tax (Rs. in lakhs)	37.69	220.47	(82.90)%
Net worth (Rs. in lakhs)	3,001.92	2,964.23	1.27%
Return on Net Worth (%)	1.26	7.44	(83.12)%

Return on Net Worth declined from 7.44% to 1.26%, a decrease of 83.12%. The decline is attributable principally to the reduction in profit after tax from Rs. 220.47 lakhs to Rs. 37.69 lakhs, and not to any material change in net worth, which increased marginally from Rs. 2,964.23 lakhs to Rs. 3,001.92 lakhs on account of retention of profits. The lower profit resulted from a decline of 13.65% in revenue from operations, together with an increase of Rs. 116.72 lakhs in depreciation and Rs. 70.31 lakhs in finance cost, both arising from the capital expenditure undertaken by the Company. The return on net worth is expected to improve as the capacity so created is progressively utilised.

13. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the objectives, projections, estimates and expectations of the Company may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Such statements are based on certain assumptions and expectations of future events and are subject to risks and uncertainties.

Actual results may differ materially from those expressed or implied in such statements on account of a variety of factors, including changes in economic conditions in India and abroad, demand and supply conditions, prices of copper, zinc and other raw materials, availability of resources, foreign exchange fluctuations, interest-rate movements, changes in government policies and tax regimes, regulatory developments, litigation, geopolitical conditions and other incidental factors, many of which are beyond the control of the management.

The Company assumes no obligation to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or event. Readers are accordingly advised not to place undue reliance on such forward-looking statements.