Technocraft Industries India Ltd Management Discussions

Industry structure and developments:

ECONOMIC REVIEW

Global Economic Outlook

According to the International Monetary Fund (IMF), after withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies.

Indian Economic Outlook

The IMF projects India will remain the worlds fastest-growing major economy, with FY2027 GDP growth raised to 6.5%. Sustained momentum and lower US tariffs are expected to drive this, despite risks from Middle East conflict. Key indicators include a projected $4.15 trillion GDP in 2026.

Segmental Outlook

Drum Closure

The global steel drums market size was valued at USD 10.06 billion in 2025. It is projected to be worth USD 10.76 billion in 2026 and reach USD 19.72 billion by 2034, exhibiting a CAGR of 7.87% during the forecast period. Asia Pacific dominated the steel drums market with a market share of 35.76% in 2025.

(Source Fortune Business Insights Asia Pacific market share in 2025)

Steel drums, commonly referred to as steel barrels, are crucial elements of industrial packaging, recognized for their resilience, sturdiness, and versatility. These cylindrical vessels, varying in capacity from 5 to 110 gallons, serve multiple functions, such as storage and transport of liquids, solids, and gases. Their robust design and durability against punctures, leaks, and outside damage render them perfect for managing hazardous materials. The market has experienced significant growth, driven by their widespread use in industries such as chemicals, petroleum, food and beverages, and pharmaceuticals. These durable and recyclable containers are essential for the safe storage and transportation of various materials.

Your Company continues to be the largest global manufacturer of steel drum closures, leveraging its proprietary technology and global distribution network. The product portfolio includes fully automated flange insertion systems and cap-sealing tools, catering to major drum manufacturers worldwide.

Scaffolding and Formwork

The global scaffolding and formwork industry is expected to witness robust growth over the next five years, supported by increasing infrastructure investments, urbanization, industrial expansion, and the growing adoption of modern construction technologies. The market is likely to benefit from government spending on transportation, renewable energy, commercial buildings, and affordable housing projects across both developed and emerging economies.

(Source Fortune Business Insights Scaffolding Market Grand View Research)

The global scaffolding and formwork market is expected to grow at a CAGR of approximately 6-8% over the next five years. Demand will be driven by large-scale infrastructure projects, industrial construction, data centres, logistics parks, metro rail projects, airports, bridges, and high-rise residential developments.

Textiles

The global textile industry is expected to experience steady growth over the next five years, driven by rising consumer demand, expanding technical textiles, increasing preference for sustainable products, and diversification of global sourcing away from China. While the industry continues to face challenges from volatile raw material prices, geopolitical uncertainties, and changing consumer preferences, India is well positioned to emerge as one of the key beneficiaries due to its integrated textile value chain, competitive manufacturing capabilities, and supportive government initiatives.

(Source Grand View Research, Fortune Business Insights)

The global textile market is projected to grow at a CAGR of approximately 5-7% during 2026-2031. Growth will be supported by increasing demand for apparel, home textiles, industrial textiles, medical textiles, and technical textiles across both developed and emerging markets.

The Indian textile and apparel market is set for rapid expansion, projected to reach over US $344 billion by 2027, growing at a 14.8% CAGR, supported by Indias Union Budget 2026-27 and PLI schemes focusing on sustainability and manufacturing scale.

Engineering & Design Services

The Engineering & Designing Services industry is expected to witness strong and sustained growth over the next five years, driven by increasing digital transformation, global engineering outsourcing, infrastructure development, Industry 4.0 adoption, and the growing demand for engineering support across manufacturing, construction, energy, transportation, and industrial sectors. India is expected to strengthen its position as one of the worlds leading engineering services outsourcing destinations due to its skilled talent pool, cost competitiveness, and technological capabilities.

(Source Grand View Research, Markets and Market, Fortune Business Insights and Industry estimates)

The global Engineering & Designing Services market is expected to grow at a CAGR of approximately 10-12% during 2026-2031. Growth will be driven by increasing investments in digital engineering, Building Information Modelling (BIM), product engineering, industrial automation, artificial intelligence (AI), digital twins, and sustainable infrastructure.

Your subsidiary, Technosoft Engineering Projects Ltd., has maintained its leadership in this space with a skilled team and a diversified global client base. The Company is focusing on expansion through value-added services and deeper client engagement.

BUSINESS OVERVIEW

The Company is a multi-product manufacturing company, which manufactures high precision and sophisticated products, mainly for discerning worldwide markets. The Company enjoys a significant position in business industries viz., Drum Closures, Scaffolding systems & accessories, Engineering and Designing Services, Cotton Yarn, and Garments.

The Company has diversified operations and manufacturing.

The Company uses the most modern equipment and technologies to manufacture its product, assuring world-class quality to its customers.

Drum Closure

Each steel drum requires a set of closures, a precision engineered product, so as to ensure that the liquid inside does not spill out. The Company has designed and developed the next generation technology for manufacturing drum closures. It also manufactures all its gaskets and clamps and offers a full range of drum closure products to its clients. With continuous improvement, there has been substantial reduction in manufacturing costs, improvement in quality and this has helped catapult TIIL to the largest global manufacturer of steel drum closures.

The Company is the largest manufacturer and seller of steel Drum Closures and continues to enjoy a worldwide market share of about 36% (excluding China). The Company produces a wide variety of closures and related equipment ranging from fully automatic flange insertion systems to cap-sealing tools. The Company caters to all leading steel drum manufacturing companies of the world.

Consolidated Revenue from Operations increased from 618 Crores to 636 Crores as compared to previous year. Profit Before Tax and Finance Cost but after Depreciation increased from 220 Crores to 233 Crores as compared to previous year.

Out of the total revenue of the drum division, approximately 88% of revenue was generated from Export Sales.

Scaffolding & Formwork

Scaffolding Business

Scaffolding is a temporary structure used to support people and material in the construction industries, real estate and any other large structures. It is usually a modular system of metal pipes or tubes, although it can be from other materials also, added with various components

Despite the volatile nature of construction and allied activities, the Scaffolding & Formwork (S&F) market is thriving in India and one can expect brighter times ahead.

With the government laying special emphasis on construction and infrastructural development in the 12th Five Year Plan, opportunities abound in the Indian Scaffolding and Formwork (S&F) Industry.

S&F manufacturers are keeping pace with the Construction Industry.

The Company along with its subsidiaries has strategically located state-of-the-art manufacturing combined facilities of scaffolding, formwork and MacOne with installed capacity of about 68,000 MT in India. The Company is positioned as an end-to-end solution provider owing to its well-integrated manufacturing capability. The Company supplies its products to a diversified set of end markets including oil & gas, power, refineries, petrochemical, infrastructure, residential and commercial construction.

The Company is present in the premium segment of Scaffolding business. Scaffolding segment is growing on the back of the strong demand from the international infrastructure markets and is also getting good response from infra projects in India.

The Company is a leading Indian manufacturer and distributor of scaffolding and formwork systems, supplying global markets for over 2 decades. It is the largest scaffolding exporter from India and manufacturers scaffolding as per standards / certifications set by the leading countries like the USA, Germany and the UK.

The Companys Scaffolding segment comprises of Scaffolding and Formwork business.

Formwork Business

Formwork is the term given to either temporary or permanent molds into which concrete or similar materials are poured. Traditionally, formwork was built using easy to produce timber and plywood, or moisture-resistant particleboard. Over a period of time formwork is now made more of steels or aluminum which are more durable and reusable.

Looking at Indian governments focus on rapid infrastructural development across the country by constructing railways, roads, bridges, dams, airports, power plants and many more, construction is now growing at a fast pace. Contractors have started adapting newer technologies, faster systems, advanced concrete techniques and better and established management tools.

Engineered Formwork Systems are built out of prefabricated modules with a metal frame - usually of steel or aluminum - and covered on the application (concrete) side with material having the wanted surface structure (steel, aluminum, plastic, timber, etc)

The Company has entered into manufacturing of sophisticated engineered Formwork systems for building, construction and infrastructure projects in India. The Company has state-of-the-art manufacturing plant in India and is well placed to play a larger role in the construction growth in India and overseas, with a network of offices at Mumbai and overseas.

MACHONE

MACHONE is a very lightweight Formwork system made of high-quality Aluminum Extrusion with admirable strength to take on the site conditions. MACH ONE Aluminium forms are best suited for construction of residential units and mass housing projects. It is fast, simple, adaptable and cost effective. It produces total quality work which requires minimum maintenance and when durability is the prime consideration.

The system is designed for maximum repetitions with very stringent tolerances, well designed edges to resist sight abuses. This system is most suitable for Indian conditions as a tailor-made aluminum formwork for cast in-situ fully concrete structure.

Consolidated Revenue from Operations increased by 8% from 1245 Crores to 1343 Crores. Further, Profit Before Tax and Finance Cost but after Depreciation increased by 11% from 168 Crores to 188 Crores.

Out of the total revenue of the Scaffolding, Formwork and Machone, approximately 62.5% of revenue was generated from India Sales. However, Machone has almost all the revenue from India only i.e. 97.5%. Out of the total revenue of Scaffolding and Formwork 73.4% are from export rest 26.6% is from India.

Textile (Yarn, Fabric and Garments)

The Company produces a variety of products ranging from NE 20 to NE 40, Carded and Combed varieties of Cotton Yarn. The Spinning mills are equipped with world-class Swiss, Japanese, German, Spanish equipment. The Company has a yarn division for consolidated capacity of around 62,000 spindles.

The Company manufactures premium quality active wear products and provides superior service. Products are custom knit, dyed, finished, cut, sewn, decorated, packaged, and distributed.

Being part of a diverse group, the Company, has access to the latest trends in the European markets, thus enabling it to offer high quality products and latest fashions with Indian prices in a very short lead-time.

This Division has made significant structural changes. Companys Grey Cotton Yarn operations are now based in Amravati only, which is cotton growing area and has cost effective operations and has shown substantial improvements in revenue as well as profits. In Amravati your company has two units of 31,000 spindles each, one unit is in the Company, and another unit is in Wholly owned Subsidiary Company "Technocrat Textiles Ltd".

Technocraft is one of the premier, wholly integrated manufacturers of premium quality knitwear which makes it one of the leading textile and apparel manufacturer in India. It has two units one at Amravati (Maharashtra) and another one at Betul (MP) both units are in Wholly owned Subsidiary Company "Technocrat Fashions Ltd".

The Companys Fabric Division at Murbad has been incurring losses for a sustained period due to adverse market conditions and operational challenges. Accordingly, the business remains under continuous review by the Management. Various strategic options, including the continuation, restructuring, or discontinuation of the operations, are being carefully evaluated. Based on the outcome of this review, the Management expects to take an appropriate decision in the near future, keeping in view the long-term interests of the Company and its stakeholders.

Consolidated Revenue from Operations of Textile (Fabric and Yarn) Division was ?555 Crores as compared to ?592 Crores of previous year. Loss Before Tax and Finance Cost but after Depreciation of Textile (Fabric and Yarn) Division was reduced to ?8 Crores as compared to ?39 Crores in previous year.

Out of the total revenue of Textile (Fabric and Yarn) Division, approximately 57% of revenue was generated from Export Sales.

Engineering & designing services through Subsidiary

Engineering and designing service segment is the fastest growing and highest potential business over the next 10 years.

Technosoft Engineering Projects Limited (Technosoft) is a subsidiary of the Company. Technosoft is a global technology services company offering broad-based engineering, designing and IT services using a variety of client-partnership models for delivery. Technosofts client base spans various industry verticals including Transportation, Industrial Products & Machinery, Process Engineering, Energy, Hi-Tech & Medical Devices and Furniture. The companys client base is widely spread globally including many clients from US, Canada, UK and Germany.

Technosoft has a strong team of over 800 engineers and designers located worldwide. Its engineers and designers are equipped with state-of-the-art hardware and software tools, including tools for 3-D modeling, Finite Element Analysis and process simulation.

Technosoft operates in North America and Europe through its subsidiaries, which provide general engineering and design services.

Revenue from Operations for Financial Year 2026 increased by 33% to ?280 Crores from ?210 Crores. Profit Before Tax and Finance Cost but after Depreciation increased by 15% to ?34 Crores as compared to ?30 Crores of previous year.

Almost all the revenue from Technosoft Engineering Projects Limited was generated from Export.

Defence through Subsidiary Techno Defence Private Ltd

Techno Defence Private Ltd has successfully developed an extremely precise, miniature Joule-Thomson Cryocooler (JT Cooler) and is exporting them to leading weapon manufacturers of the world.

Since 2014, the Government of India has placed greater emphasis on collaboration between DRDO and the private sector to strengthen indigenous defence capabilities. In line with this vision, DRDO entrusted Techno Defence with the challenging task of developing a critical Joule Thomson Cryocooler, a highly specialized technology that, at the time, was manufactured by only a limited number of global players.

It took four years of R&D, basing the initial designs on textbook knowledge and iterated on continuously. Dr Salinkar and the team came up with a design for a JT cooler, which is distinctly different from those of the established foreign players.

This project was fuelled by a generous development fund from Ministry of Defence, and the DRDO stepped in with guidance and help for testing the JT Coolers, which propelled the effort of this team further.

The Company continues to work tirelessly, committed to supporting the Government of Indias vision of Aatmanirbhar Bharat by developing indigenous technologies that reduce dependence on imports in critical defence domains.

OPPORTUNITIES & FUTURE PLAN

Your Company is strategically positioned to capitalise on the evolving opportunities within the manufacturing and infrastructure sectors, both in India and globally. With continued investment in capacity expansion and vertical integration, the Company is reinforcing its foundation for long-term, sustainable growth.

One of the key pillars of this strategy is the development of backward integration projects such as Technocraft Formworks Pvt. Ltd. and Technocraft Extrusions Pvt. Ltd. These initiatives are aimed at enhancing the Companys control over the aluminium-based formwork value chain, improving cost efficiency, quality assurance, and supply chain reliability. Such integration not only supports scalability but also strengthens the Companys competitive edge in delivering innovative and high-performance construction solutions.

The macroeconomic environment also presents significant growth prospects. The Indian governments ambitious vision to increase the manufacturing sectors contribution to 25% of GDP through initiatives like "Make in India," Smart Cities Mission, and continued investment in infrastructure development is expected to unlock a wide array of opportunities. These programs are driving demand for advanced engineering, construction materials, and industrial solutions, directly aligning with your Companys core business segments.

Looking ahead, the Company remains committed to an innovation-led growth strategy, with increased focus on customer-centric product development, geographic and sectoral diversification, and strategic partnerships. Efforts are underway to expand presence in international markets, enhance automation and digitalisation in manufacturing processes, and develop new product lines that meet the evolving demands of the construction and engineering sectors.

Overall, your Companys forward-looking initiatives, backed by favourable policy support and robust industry fundamentals, position it well to capture emerging opportunities and deliver sustained value to all stakeholders.

RISK & THREAT

Global Slowdown - Economic deceleration in key export markets may impact revenue. A slowdown in major economies such as the US, the Eurozone, and China can lead to reduced demand for Indian goods and services, particularly in sectors like IT services, pharmaceuticals, textiles, and auto components. Disruptions in global trade or prolonged geopolitical tensions can exacerbate these risks.

Foreign exchange - Fluctuations in foreign currency exchange rates pose a significant risk to the profitability of businesses. Any adverse movement against the Indian Rupee (INR) can erode margins and distort financial forecasts. Currency volatility increases hedging costs and complicates pricing strategies, contract negotiations, and budgeting.

Commodity prices fluctuations - Volatility in global and domestic commodity markets particularly in critical inputs like steel and cotton poses a substantial risk to Indian businesses, especially in sectors such as manufacturing, infrastructure, textiles, and garments.

Capital allocation - Returns from new ventures or acquisitions may be uncertain.

Market Share - Increasing global competition may impact pricing power and market share.

Supply Chain Risks: High dependency on critical raw materials or components especially those sourced internationally-exposes Indian businesses to significant logistical, operational, and cost-related risks. Disruptions in the global supply chain, such as geopolitical conflicts, trade restrictions, port congestions, or pandemics, can lead to delays, shortages, and cost escalations.

The Company aims to address risks, opportunities and threats posed by the business environment by developing appropriate risk mitigation measure.

The Management has also put in place effective measures to monitor the Risk Management System and appropriate steps are taken to strengthen the existing business practices and policies to the overcome the challenges.

Risk Management System is a way to try alternative solutions so as to determine what works and what doesnt and testing and refining assumptions.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Internal Control System plays an integral role in the Companys Success. It helps the management to monitor the effectiveness of the controls in an ever-changing environment. Internal control and risk management are critical in the process of setting and achieving operational, strategic, compliance and reporting objectives.

The Companys internal control policies are in line commensurate with its size and nature of operations and they provide assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly following all applicable statutes and General Accepted Accounting Principles.

The Company has an Audit Committee, where all the members including the Chairman are independent directors, in order to maintain objectivity. Internal Auditor comprising of professional firm of Chartered Accountants have been entrusted with the job to conduct regular internal audit and report to management the observation if any. Audit planning and executions are oriented towards assessing the state of internal controls, making them stronger and addressing the risks in the functional areas of the Company. The Audit findings are reported on quarterly basis to the Audit Committee of the Company.

Besides above, the Company has also meets the Internal Financial Control requirements as per Companies Act, 2013 where policies and procedures have been adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee also seeks views of the statutory auditors on the adequacy of internal control systems in the Company. In compliance with Section 143(3)(i) of the Act, the Statutory Auditors have issued an unmodified report on the Internal Financial Controls over Financial Reporting which forms a part of the Independent Auditors Report also forming part of this Annual Report.

SEGMENT WISE FINANCIAL PERFORMANCE

The summarized segment-wise performance of the Company on a consolidated basis for the Financial Year 2025-26 is as follows:

(? In Lakhs)

Particulars	31.03.2026	31.03.2025
1 Income from operations
Continuing Operations
a. Drum Closures Division	63,625.91	61,766.43
b. Scaffoldings Division	1,34,253.30	1,24,512.49
c. Yarn Division	36,156.23	35,755.52
d. Fabric Division	19,353.12	23,492.42
e. Engineering & Design	27,953.85	20,969.86
f. Others	65.27	-
Total	2,81,407.68	2,66,496.72
Less: Inter Segment Revenue	5,509.63	6,938.33
Total Income from operations	2,75,898.05	2,59,558.39

2 Segment Results

Profit/(Loss) after Depreciation but Before Finance Cost & Tax & Exceptional Items
a. Drum Closures Division	23,328.76	22,085.68
Particulars	31.03.2026	31.03.2025
b. Scaffoldings Division	18,751.91	16,878.93
c. Yarn Division	835.13	(2,405.83)
d. Fabric Division	(1,629.06)	(1,468.07)
e. Engineering & Design	3,415.21	2,967.99
f. Others	14.12	(155.17)
Total	44,716.07	37,903.53
Less:
i. Finance Cost	5,830.34	5,481.66
ii. Other un-allocable expenditure net off un-allocable income	89.17	(2,902.62)
iii Share of Loss in Associate	-	-
Total Profit Before Tax & Exceptional Items from Continuing Operations	38,796.56	35,324.49
Exceptional Items - Refer Note 5	-	-
Total Profit Before Tax but after Exceptional Items	38,796.56	35,324.49
Gain/(Loss) from Discontinued Operations (Net of Finance Cost) Power Division	-	-
Total Profit / (Loss) before Tax (Continuing & Discontinued Operations)	38,796.56	35,324.49

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company believes that good Human Resource Policies are very effective for supporting and building the desired organisation culture and to maintain the same the company takes actions on the day-to-day activities of the organization.

The Company continues to focus on creating strong and long term relationship with all employees as employees retention and development are among the highest priorities of the Company.

The Company is working on enhancing its competencies to take care of current and future business. Human Resource and Industrial Relations departments have developed systems and policies on recruitment, performance management, learning and development, and employee engagement.

The workers union of the Company has maintained healthy and cordial industrial relations, and has been an equal partner in implementing Companys policies and achieving stretched operational targets, year on year.

PERFORMANCE SNAPSHOT

The standalone financial highlights for FY 2025-26 are as follows:

(? In Lakhs)

Particulars	FY 2025-26	FY 2024-25	Variance
Revenue from operations	2,03,023.01	2,09,124.26	-6,101.25
Profit before Tax-Continued Operation	32,554.95	32,190.84	364.11
Net Profit / (Loss) for the period from Continuing & Discontinued Operations	24,495.87	24,436.67	59.2

Key Financial Ratios

Ratios	FY 2025-26	FY 2024-25	Change%
Debtors Turnover	3.56	4.10	-13.24
Inventory Turnover	4.75	4.66	1.92
Interest Coverage Ratio	13.59	12.43	9.26
Ratios	FY 2025-26	FY 2024-25	Change%
Current Ratio	2.03	1.45	39.72
Debt Equity Ratio	0.22	0.34	-35.25
Operating Profit Margin %	19.13	18.87	1.41
Net Profit Margin %	12.07	11.69	3.21
Return on Net Worth %	15.03	17.07	-11.96

Notes:

a) Debtors Turnover ratio is due to higher Current Assets and lower Current Liabilities in Current year as Compared to Previous Year.
b) Decrease in Debt Equity Ratio is due to lower debt in the Current year as compared to Previous Year.

CAUTIONARY STATEMENT

Statements made in Management Discussion and Analysis Report describing the Companys objectives, estimates, expectations or predictions are "Forward looking Statement" within the meaning of applicable laws and regulations. They are based on certain assumptions and expectations of future events. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operation include global and Indian demand-supply condition, raw material availability, trained manpower, changes in Government regulations, tax regimes, economic development within India and the countries within which the Company conducts business and other incidental factors.