TRF Ltd Management Discussions

1. Overview

The objective of this report is to convey Managements perspective on Industry Structure and Developments; Opportunities, and Threats; Human Resources & Industrial Relations; Financial and Operating Performance of the Company during FY 2024-25. This report forms an integral part of the Boards Report and should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Annual Report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS?) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (‘SEBI?) from time to time.

The global economy is projected to witness a modest growth in FY26, driven by sustained infrastructure development across emerging markets. This growth is likely to boost demand for Bulk Material Handling (‘BMH?) equipment worldwide.

India, a key player in this space, is anticipated to contribute significantly in the global BMH equipment market in the coming years. Core sectors such as mining, construction, and logistics are increasingly adopting advanced, automated, and energy-efficient material handling solutions, aligned with global Environmental, Social, and Governance (‘ESG?) objectives.

2. Industry, Structure and Development of Economy Global Economy

The global economy is expected to grow by 3.3% in 2025, supporting a moderate recovery in the industrial sector. Increased infrastructure investment, rising demand for raw materials, and government-backed green energy initiatives are driving demand for BMH equipment. The global BMH equipment market is projected to exceed USD 52 billion by 2027, with growth led by the mining, construction, and logistics sectors.

Key trends include a shift towards automation, energy-efficient systems, and ESG-aligned technologies. While challenges such as high capital costs and training requirements persist, continued infrastructure development, renewable energy expansion, and digital transformation are set to sustain market growth.

Indian Economy

In FY25, Indias manufacturing sector maintained strong growth, supported by economic stability, domestic demand, and supportive policies. With a projected GDP growth of 6.5% (IMF), India is emerging as a key global economic driver. Rising production, infrastructure upgrades, and export-oriented strategies are boosting demand for advanced, automated, and eco-friendly bulk material handling systems. The sector is expected to grow at a compounded annual growth rate (‘CAGR?) of ~9.38% (2022-2027), reaching 8% of the global market by 2027. However, challenges such as skill shortages, infrastructure gaps, high capital costs, and import competition remain. Despite these, BMH providers are well-positioned to support Indias industrial expansion through innovation and localization.

3. Opportunities

a. Tata Steel Expansion Projects: The commissioning of Indias largest blast furnace at Kalinganagar and expansion of Tata Steels mines in Odisha and Jharkhand offer significant opportunities for the Company to supply advanced systems for mining, processing, and logistics.

b. Strategic Alignment with Tata Group: Continued focus on partnerships with Tata Steel and other Tata Group companies provides a stable and growing business pipeline aligned with their growth trajectories.

c. Smart Automation and ESG Compliance: The Tata Groups increasing emphasis on automation, energy efficiency, and sustainability opens avenues for TRF to deliver advanced, future-ready bulk handling solutions.

d. Maintenance Services: Expanding opportunities in plant maintenance services for Tata Steel Limited can provide recurring revenue streams and strengthen long-term client relationships.

4. Threats

a. Competitive Pressure and Cost Inflation: Rising competition from domestic and global players, along with increasing input costs, may pressure profit margins and necessitate greater operational efficiency.

b. Cyclical Nature of Steel Industry: Despite near-term expansion, the steel industrys inherent cyclicality poses risks to long-term capital investment and project continuity in downturns.

c. Contract Risks: One-sided and unfavorable contract terms in projects have led to losses. Future projects may carry similar risks unless revision in contract structures is achieved.

d. Execution and Regulatory Risks: Delays, budget reallocations, and changing regulatory frameworks in companies can negatively impact execution timelines and cash flow stability.

e. Technological Disruption and Skill Shortages: Rapid technological advancements and automation trends require continual innovation, while attracting and retaining skilled manpower remains a challenge.

5. Financial including Operational Performance Major Highlights

Over the past decade, the Company has executed multiple Engineering, Procurement, and Construction (‘EPC?) projects as part of its material handling business. However, these engagements have posed significant challenges, due to adverse contracting terms, which resulted in strained cashflows, liquidity challenges, increased debt levels, cost overrun and project execution delays, further exacerbated by litigation and prolonged contract closure processes.

To mitigate such risks, the Company has, in recent years, strategically realigned its focus towards strengthening its engagement with Tata Steel and other Tata Group companies. This shift has enabled the Company to actively participate in their expansion initiatives and capitalize on emerging opportunities in terms of enhancement of manufacturing facilities for equipment and raw materials sectors. As a result, the Company has experienced improved cash flow, enhanced liquidity, and a significant reduction in external debt.

The Company in FY25 achieved consolidated EBITDA of 47.51 crore and PBT of 30.93 crore. This PBT includes one-time non-recurring profit of 4.59 crore. The Company through its persistent and focused initiatives has reduced material inventory held up for long, by over 20% and recovered over 231 crore via debtor liquidation.

On a consolidated basis, the Projects & Services segment posted a revenue of 15.65 crore and the Products & Services segment posted a revenue of 105.33 crore.

Operational highlights featured the production of over 59,000 idlers (997 MT), commissioning of a Powder Coating shop, and successful execution of a Side Arm Charger for Tata Steel.

Despite encountering challenges, we have achieved meaningful progress across several key external projects. This includes closure of four major projects, one each for Vizag Steel Plant, and National Thermal Power Corporation Limited and two for Bharat Heavy Electricals Limited.

As we look ahead, our focus remains on agility, operational excellence, and deepening our partnership with Tata Steel, while upholding safety, precision, and financial discipline.

Financial Performance

On a standalone basis, the total income from operations of your Company during FY 2024-25 was 135.41 crore (previous year was 160.28 crore). Profit before tax for the year was 27.63 crore (previous year profit before tax was 46.60 crore).

On a consolidated basis, the total income of your Company during the year stood at 138.79 crore (previous year was 162.05 crore), whereas the profit before tax for the year was 30.93 crore (previous year profit before tax was 41.67 crore). The total comprehensive profit for the year was 28.01 crore (previous year total comprehensive profit was 42.08 crore).

The analysis of major items of the Financial Statement is given below:

Segment-wise Performance Standalone:

During FY 2024-25, Projects & Services segment generated a revenue of 15.65 crore (previous year was 9.67 crore) and the Products & Services segment posted a revenue of 105.33 crore (previous year was 134.46 crore), including inter segmental revenue of 0.25 crore (previous year was 4.17 crore).

The Projects & Services segment incurred a segmental loss of 3.57 crore (previous year loss was 20.91 crore) whereas the profit in Products & Services segment stood at 32.48 crore (previous year profit was 64.05 crore). The profit of the Company after deducting interest, other un-allocable expenditure/ income and Income Tax from the segmental results arrived at 27.63 crore (previous year profit was 39.29 crore). This includes income in the nature of liabilities no longer required amounting to 4.60 crore.

Consolidated:

During FY 2024-25, the Projects & Services segment posted a revenue of 15.65 crore (previous year was 9.67 crore) and the Products & Services segment posted a revenue of 105.33 crore (previous year was 134.46 crore), including inter segmental revenue of 0.25 crore (previous year was 4.17 crore).

The Projects & Services segment incurred a segmental loss of 3.57 crore (previous year loss was 20.91 crore), whereas the profit in Products & Services segment stood at 32.48 crore (previous year profit was 64.05 crore). The profit of the Company after deducting interest, other un-allocable expenditure/income and Income Tax from the segmental results, has been 25.79 crore (previous year profit was 34.60 crore). This includes income in the nature of liabilities no longer required amounting to 4.60 crore.

Steel Sector:

The Indian steel sector is set for robust growth in 2025, driven by strong domestic demand, government initiatives,and strategic investments. Finished steel consumption is projected to grow by 9-10%, fueled by infrastructure projects, urbanization, and rising demand from the automotive and construction sectors.

Indias competitive advantage lies in its low-cost manpower and abundant iron ore reserves, being home to the fifth-highest reserves globally. However, the industry faces pressure to adopt sustainable practices and reduce carbon emissions, requiring significant investments in technology and infrastructure.

The adoption of advanced technologies like automation and digitalization is enhancing productivity and efficiency, crucial for maintaining global competitiveness. While the outlook is positive, the industry must navigate challenges such as global market conditions, rising steel imports, environmental regulations, and volatile raw material prices to sustain its growth trajectory.

Power Sector:

Indias power consumption is expected to continue its upward trend, driven by accelerated manufacturing, rapid urbanization, and expanding agricultural activities. Despite efforts to reduce dependence on fossil fuels, coal remains a dominant source of power. However, the share of renewable energy is expected to continue growing, contributing to a more sustainable energy mix.

Fluctuations in coal prices, both domestic and international, can impact the profitability of thermal power plants. Ensuring a stable and affordable supply of coal is vital for maintaining cost-effective operations. Increased domestic coal production and the use of imported coal to mitigate supply shortfalls are expected to support the thermal power sector. The governments focus on enhancing coal production and ensuring adequate supply is crucial for the sectors growth.

Mining Sector:

The outlook for Indian mining sector looks positive in 2025, driven by increased infrastructure investments, government initiatives, and rising demand for key minerals such as coal, steel, aluminum, and zinc. The Indian

governments focus on infrastructure development, including roads, railways, and airports, is expected to drive demand for minerals. The Coal Block Allocation Policy and the "Make in India" campaign aim to boost domestic production and reduce dependency on imports. These initiatives are crucial for ensuring a steady supply of essential minerals.

Efficient transportation and logistics are critical for the mining sector. Addressing logistical challenges is essential for ensuring the smooth movement of minerals from mines to markets.

Though this sector is expected to grow positively in 2025, it must navigate challenges related to ESG compliance, high taxation, and logistical issues to sustain its growth trajectory.

The Company is expected to benefit from the anticipated growth in the above sectors, primarily by participation in expansion projects being undertaken by Tata Steel Limited.

7. Risks and Concerns

Inordinate delays in conducting performance guarantee tests, despite the Company completing its scope of work, is leading to delays in financial closure of legacy contracts, adding uncertainty to recovery of retention amount, making the contracts onerous and thus, putting undue financial burden on the Company.

However, with the various orders from Tata Steel Limited, the Company is expected to have a better working capital cycle and enhance its liquidity position.

8. Statutory Compliance

A declaration regarding compliance with the provisions of the various statutes is made by the Managing Director at the Board Meetings of the Company on a quarterly basis. The Company Secretary & Compliance Officer is responsible for implementing the systems and processes for monitoring compliance with the applicable laws and for ensuring that the systems and processes are operating effectively.

Further, the Company Secretary ensures compliance with Company Law, SEBI Regulations and other Corporate Laws applicable to the Company.

9. Internal Control Systems and their Adequacy

The internal control systems and procedures are continuously monitored to enhance its effectiveness and to be commensurate with the scale and nature of operations of the Company. The Company has appointed the Head of Corporate Audit Division of Tata Steel Limited, as the Internal Auditor, who reports directly to the Audit Committee of the Board of the Company. During the year, the Audit Committee met regularly to discharge its functions as required pursuant to Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Internal Audit activities are undertaken as per the Annual Audit Plan of the Company duly approved by the Audit Committee.

The Audit Committee regularly meets with the Statutory Auditor to ascertain their views on the adequacy of internal controls and their observations on the financial reports. The Companys internal control framework is commensurate with the size and operations of the business and is in line with requirements of the Companies Act, 2013.

10. Developments in Human Resources/Industrial Relations

Human Resource development, employee cost, motivation and engagement continue to be a key focus area for the Company. The Company has a culture of working through joint consultation between Union and Management and is committed to the well-being of its employees.

To remain competitive, optimizing employee cost, improving employee productivity and employee experience is of utmost importance to the Organization and the Company strives to achieve the same through continuous capability building programs, employee welfare initiatives and providing recognition platform for its employees.

To enable the Organization to attain its full potential, it is imperative for us to create and maintain an ideal work culture thus creating an engaged and skilled workforce capable of delivering on the commitments to our stakeholders. The Company, to achieve this, undertook various key interventions & initiatives to improve and strengthen our HR related processes and systems, which, inter alia, includes -

a. Capability building program for development of critical skills completed in collaboration with JN Tata Vocational Training Institute (‘JnTVTI?) and Tata Steel Limited (‘Tata Steel?).

b. Employees Career growth through introduction of new career progression policy, fastrack policy & non-officer on pay roll (‘NOPR?) to officer on pay roll (‘OPR?) (IL6) promotion policy.

c. Implementation of Comprehensive External Recruitment Policy.

d. Annual Bonus agreement settlement for FY24 & FY25 with TRF labour union has been concluded amicably.

e. Successful & smooth conduct of TRF labour union election and formation of new executive committee.

f. Introduction of leave bank scheme - to provide sustainability to the employee and their family during time of major/prolonged sickness.

g. Revision in Karamchari Sahayata Yojanaa Scheme, medical policy, group personal accidental policy and funeral grant - to strengthen the social security benefit to the family post death of an employee while in the service.

h. "Annual Sports - 2025" organized for employees and their children.

i. Achieved PCVH (Per capital volunteering hours) of 8.23 (beyond Tata Group aspiration of 4.0) with ~6243 volunteering hours.

All the above initiatives were well received by the employees, which has yielded in improved employee satisfaction and morale.

The Company in-line with its present business profile and requirements, rationalizes its manpower requirements on regular intervals. Number of employees on permanent roll of the Company was 422 as on April 1,2025.

The industrial relations in the Company continued to be healthy and cordial. The Workers Union actively supported and participated in all important initiatives of the Company during the challenging times.

11. Details of Significant Changes (Standalone)

(1) Change of 25% or more as compared to the immediately previous Financial Year in key financial ratios, along with detailed explanations thereof, including: -

(2) Details of any change in Return on Net Worth as compared to the immediately previous Financial Year along with a detailed explanation thereof.

Return on average Net Worth 2024-25 is 0.46

Return on average Net Worth 2023-24 was 1.63

Return on average Net worth has declined due to lower profit during the current year as compared to previous year.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company?s objectives, projections, estimate, expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company?s operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company/ its subsidiaries operates, changes in the Government regulations, tax laws and other statutes and incidental factors.