Welcast Steels Ltd Management Discussions

A. INDUSTRY OVERVIEW:

During the first half of the financial year under review, the company was engaged in the manufacture of high chrome grinding media balls sizes ranging from 40mm to 125mm in diameter, with alloy compositions containing 12% to 28% chromium.

These products are characterized by superior wear and corrosion resistance, together with adequate mechanical strength to withstand elevated operating temperatures without significant deterioration in their physical and chemical properties. Such characteristics are critical for grinding applications in the Cement, Mining and Thermal Power industries, where ores and other materials are reduced to fine particle sizes to facilitate the liberation and subsequent processing of valuable minerals.

The Company manufactured these products using the casting process.

However, with effect from 15 December 2025, the Company discontinued manufacturing operations at its only plant located in Bengaluru, which was subsequently shut down. The Factory License and sanctioned power facilities were also surrendered. During the year, substantially the entire workforce was retrenched, with only eight employees being retained to carry out post-closure activities and to ensure compliance with statutory and regulatory requirements.

At present, the Company has no plans to restart operations in foreseeable future.

B. SEGMENT WISE PERFORMANCE:

The Company primarily operates in only one segment i.e. manufacturing of High Chrome Grinding Media Balls.

C. CAPEX PLAN:

There are no capex plan as the Company has closed down its all business activities.

D. RISKS AND CONCERNS:

As the Company has permanently closed down its business operations, there are no major Risks and Concerns relating to business activities.

E. INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Companys Internal Control Systems are commensurate with the size and nature of its operations, aimed at achieving efficiency in operations, optimum utilisation of resources, reliable financial reporting and compliances with all applicable laws and regulations. The system also provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded & reported properly. The internal control system has been designed so as to ensure that the financial and other records are reliable and reflects a true and fair view of the state of the Companys business. A qualified and independent Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them. Similarly, the Internal Auditors Talati and Talati LLP, Chartered Accountants are also monitoring the Internal Control Systems. It carries out extensive internal audit throughout the year across all functional areas and submits reports to Management and Audit Committee. The recommendations from such internal audit and follow up actions for improvements of the business processes and controls are also periodically reviewed and monitored by the Audit Committee.

F. FINANCIAL PERFORMANCE REVIEW:

An analysis of financial performance of the Company is given below:

Production

The production achieved is as under.

(Qty. in M.T.)

Product	F.Y. 2025-2026	F.Y. 2024-2025
High Chrome Grinding Media Balls	5,524	9,539

Sales Turnover

The comparative position of sales turnover achieved by the Company is as under:

(? in Lakhs)

Particulars	For the year ended 2025-2026	For the year ended 2024-2025
Sales (Net of GST)	4,897.35	8,450.30
Other Income	198.69	168.77
Total	5,096.04	8,619.07

Key Performance Indicators

An analysis of the key indicators as percentage to Revenue is given below:

(? in Lakhs)

Particulars	FY 2025-26	% of Revenue	FY 2024-25	% of Revenue
Revenue from Operations (Net)	4,897.35	100	8,450.30	100
Cost of Materials Consumed (including Trading Purchase)	2,914.27	59.50	5,233.76	61.94
Employee Benefits Expense	706.87	14.44	903.00	10.68
Other Expenses	1,565.00	31.96	2,431.71	28.78
EBITDA	(90.10)	(1.84)	50.61	0.59
Finance Costs	7.18	0.15	7.01	0.08
Depreciation & Amortization Expenses	62.02	1.27	78.95	0.93
Profit/(Loss) before Exceptional Items and Tax	(159.30)	(3.25)	(35.35)	(0.42)
Exceptional Items	(328.19)	(6.70)	-	-
Profit before Tax	(487.49)	(9.96)	(35.35)	(0.42)
Tax Expenses	42.73	0.87	(1.61)	(0.02)
Profit/(Loss) for the period after tax	(530.22)	(10.83)	(33.74)	(0.39)

G. INDUSTRIAL RELATIONS AND HUMAN RESOURCE MANAGEMENT:

Consequent to the shutdown of the Companys only manufacturing plant in Bengaluru, the Company undertook a retrenchment process in accordance with applicable labour laws, while retaining eight employees whose services are essential for post-closure activities and statutory compliance. Closure compensation amounting to ?328.19 lakhs was recognised and fully settled during the year and has been disclosed as an exceptional item in the Statement of Profit and Loss.

H. DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS & RETURN ON NET WORTH

Pursuant to amendment made in Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 details of significant changes (i.e. change of 25% or more as compared to the immediately previous Financial Year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations there on are given below:

Sl.No.	Particulars	2025-26	2024-25	Change	Change in %	Explanations
1	Debtors Turnover (Days)	31	33	(2.00)	(6.06)	-
2	Inventory Turnover (Days)	15	20	(5.00)	(25.00)	Cessation of operation of the plant subsequent to 1st half of the financial year
3	Interest coverage Ratio	(66.90)	(4.05)	(62.85)	1551.74	Loss for the year (dividing factor for ratio calculation) is higher than previous year due to cessation of the operation of the company during the 2nd half of the financial year.
4	Current Ratio	27.22	5.41	21.81	403.48	Consequent to cessation of operation of plant, current liability reduced and current assets increased.
5	Debt Equity Ratio	-	-	-	0.00	No borrowings
6	Operating Profit Margin (%)	(7.95)	(2.25)	(5.70)	253.37	Reduction in operation of plant and increased fixed overheads and employees retrenchment related payments.
7	Net Profit Margin (%)	(11.57)	(0.40%)	(11.17%)	2792.32
8	Return on Net Worth (%)	(15.41%)	(1.08%)	(14.33%)	1327.19

I. CAUTIONARY STATEMENT:

Statements made in the Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations may be "Forward-looking statements" within the meaning of applicable Securities, laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand supply and price conditions in the domestic & overseas markets in which the Company operates, changes in the government regulations, tax laws & other statutes & other incidental factors. None of the Senior Management personnel have Financial and Commercial transactions with the Company, where they have personal interest that would / could emerge as potential conflict with the interest of the Company at large.