Technocraft Industries (India) Ltd Management Discussions

Industry structure and developments: ECONOMIC REVIEW

Global Economic Outlook

According to the International Monetary Fund (IMF), the global economy continues to navigate through a complex mix of opportunities and risks. For 2025–26, global GDP growth is expected to maintain a moderate trajectory amid monetary tightening, geopolitical uncertainties, and uneven post-pandemic recovery across regions. However, technological advancement and green investments continue to offer structural tailwinds.

The outlook projects global growth slowing to 3.1% in 2025 and 3.0% in 2026, with important differences across countries and regions.

Inflationary pressures persist in many economies, with headline inflation recently turning up again in an increasing share of economies. Services price inflation has stayed elevated, with a median rate of 3.6% across Organization for Economic Co-operation and Development (OECD) economies. Over 2025-26 inflation is projected to be higher than previously expected, although still moderating as economic growth softens.

Indian Economic Outlook

India is one of the fastest growing economies of the world and is poised to continue this path, with aspirations to reach high middle-income status by 2047, the centenary of Indian independence. It is also committed to ensuring that its continued growth path is equipped to deal with the challenges of climate change, and in line with its goal of achieving net-zero emissions by 2070.

The IMF projects GDP growth at 6.5% for FY 2025–26, supported by sustained domestic demand, government infrastructure push, and favorable demographics. Key government initiatives in manufacturing, housing, and digital infrastructure are expected to fuel broad-based economic momentum.

Segmental Outlook

Steel drum industry to grow at 5.1% CAGR Drum Closure

The market for industrial drums is estimated to reach a market size of USD 13.56 billion in 2025 and is projected to increase to USD 22.30 billion by 2035. It is expected to increase its sales at a CAGR of 5.1% over the forecast period 2025 to 2035. The chemicals and fertilizers sector is the dominant portion of the industrial market, accounting for 45% of the market share in industrial drums, as it globally ranks as one of the largest chemical producers, users, and transporters. Industrial drums provide safe packaging solutions that are leak-proof and meet regulations for hazardous chemicals, acids, and fertilizers.

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 market for Formwork Scaffolding was valued at US$ 9564 million in the year 2024 and is projected to reach a revised size of US$ 12760 million by 2031, growing at a CAGR of 4.2% during the forecast period.

Driven by infrastructure growth and stringent safety norms, the scaffolding and formwork segment is witnessing significant expansion. Continued investment in smart cities, housing, and large-scale infrastructure projects by the

Indian government is providing a robust demand pipeline.

Your Companys premium scaffolding systems and engineered formwork solutions have received strong traction in both domestic and international markets. The new solutions like M?CH ONE and M?CH PLUS offer strategic differentiation.

Textiles

The Textile market, which was USD 1,122.00 million in 2022, would rocket up to USD 2,961.72 million by 2030, and is expected to undergo a CAGR of 12.90% during the forecast period. Asia-Pacific is expected to witness significant growth during the forecast period of 2022 to 2030 because of the rising demand for apparel in this region.

The global textile industry is rebounding with growth in sustainable fashion and increased e-commerce penetration. In India, the governments Production-Linked Incentive (PLI) scheme and focus on cotton value chains have created positive tailwinds.

Your Companys restructured textile division, with spinning operations centered in Amravati and fabric production in

Murbad, continues to optimize efficiencies. Export markets remain the core focus, particularly in Europe and Latin

America.

Engineering & Designing Services

The global demand for outsourced engineering design services is increasing due to the rise in digital transformation and cost optimization. Sectors such as automotive and aerospace are investing in advanced engineering tools and simulation technologies.

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, Fabric 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 37% (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 543 Crores to 618 Crores as compared to previous year. Profit Before Tax and Finance Cost but after Depreciation increased from 186 Crores to 220 Crores as compared to previous year.

Out of the total revenue of the drum division, approximately 87% 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.

The Company is a leading Indian manufacturer and distributor of scaffolding and formwork systems. The Company uses high quality steel tubes with excellent dimensional accuracy and surface quality. The Company has been supplying scaffoldings to global markets for over 20 years. During the financial year the Company has increased its domestic sales, as the Company has started supplying to various infra Projects.

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. With the demand rising in the wake of ongoing and future projects, S&F manufacturers are keeping pace with the Construction Industry.

The Company 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 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 scaffoldings 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 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.

M?CH ONE

M?CH ONE is a very lightweight Formwork system made of high-quality Aluminum Extrusion with admirable strength to take on the site conditions. M?CH 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. As per industry reports, 80% of the total cost of scaffolding is attributed towards labor cost that is involved in loading and unloading and erection and dismantling of scaffolding. With MACH PLUS the Company has made this cost more efficient by making the entire system lighter without compromising on the required strength.

Consolidated Revenue from Operations increased by 21% from 1032 Crores to 1245 Crores. However, Profit Before Tax and Finance Cost but after Depreciation decreased from 184 Crores to 168 Crores.

Textile

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 is having 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. Currently, the Company exports approx. 58.41% of fabric products mainly in Europe, Asia, Latin American countries etc.

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 which is cotton growing area and has cost effective operations and has shown substantial improvements in revenue as well as profits.

In Murbad, the Company now stopped the production of Melange yarn and only fabric business is done in Murbad unit. Overall, this division has now been re-engineered and loss-making products and locations are being plugged.

As the new spinning unit stabilizes, it is expected to contribute an additional 2 Billion in topline revenue next year, while fixed costs remain largely unchanged, further strengthening EBITDA. However, in the short term, profitability is being impacted as the unit took longer to become operational. The company has set an overall EBITDA margin target of 12%-15% for the textile business.

Consolidated Revenue from Operations of Textile Division increase from 592 Crores as compared to 492 Crores of previous year. Loss Before Tax and Finance Cost but after Depreciation of Textile (Fabric and Yarn) Division stood at

39 Crores as compared to 17 Crores in previous year.

Engineering & designing services through Subsidiary

Engineering and designing service segment is considered to be 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, 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 2025 increased to 210 Crores from 198 Crores. Profit Before Tax and Finance Cost but after Depreciation stood at 29 Crores as compared to 37 Crores of previous year.

Out of the total revenue of this division, approximately 96.54% of revenue was generated from Export.

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 2024-25 is as follows:

(Rs. In Lakhs)

Particulars	31.03.2025	31.03.2024
1 Income from operations
Continuing Operations
a. Drum Closures Division	61,766.43	54,302.59
b. Scaffoldings Division	1,24,512.49	1,03,239.87
c. Yarn Division	35,755.52	31,275.32
d. Fabric Division	23,492.42	17,905.84
e. Engineering & Design	20,969.86	19,839.95
f. Others	-	-
Total	2,66,496.72	2,26,563.57
Less : Inter Segment Revenue	6,938.33	8,400.73
Total Income from operations	2,59,558.39	2,18,162.84
2 Segment Results
Profit/(Loss) after Depreciation but Before Finance Cost & Tax & Exceptional Items
a. Drum Closures Division	22,085.68	18,578.22
b. Scaffoldings Division	16,878.93	18,383.71
c. Yarn Division	(2,405.83)	(630.07)
d. Fabric Division	(1,468.07)	(1,054.03)
e. Engineering & Design	2,967.99	3,781.64
f. Others	(155.17)	(21.26)
Total	37,903.53	39,038.21
Less :
i. Finance Cost	5,481.66	3,966.83
ii. Other un-allocable expenditure net off un-allocable income	(2,902.62)	(3,019.29)
iii Share of Loss in Associate	-	0.40
Total Profit Before Tax & Exceptional Items from Continuing Operations	35,324.49	38,090.27
Exceptional Items -Refer Note 5	-	875.58
Total Profit Before Tax but after Exceptional Items	35,324.49	37,214.69
Gain/ (Loss) from Discontinued Operations (Net of Finance Cost) Power	-	(68.64)
Division
Total Profit / (Loss) before Tax ( Continuing & Discontinued Operations)	35,324.49	37,146.05

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

( In Lakhs)

Particulars	FY 2024-25	FY 2023-24	Variance
Revenue from operations	2,09,124.26	1,64,281.52	44,842.74
Profit before Tax- Continued Operation	32,190.84	22,454.73	9,736.11
Net Profit / (Loss) for the period from Continuing & Discontinued Operations	24,436.67	16,868.46	7,568.21

Key Financial Ratios
Ratios	FY 2024-25	FY 2023-24	Change%
Debtors Turnover	4.10	2.97	37.98*
Inventory Turnover	4.66	3.67	26.88
Interest Coverage Ratio	12.43	10.25	21.35
Current Ratio	1.45	1.76	-17.80
Debt Equity Ratio	0.34	0.29	17.73
Operating Profit Margin %	18.87	17.95	5.10
Net Profit Margin %	11.69	10.27	13.80
Return on Net Worth %	17.07	12.52	36.36*

Notes:

*a) Increase in Debtors Turnover ratio is due to increase in sales and improved collection procedures. b) Increase in Inventory Turnover Ratio is due to Increase in sales and better inventory management. c) Increase in Return on Net worth is due to increase in Revenue from operations because of better assets utilization.

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.