Bharat Forge Ltd

The world is no longer conventionally cyclical it moves through structural pivots, policy changes, and geopolitical realignments. While our positioning has always been global, our strength today lies in how we leverage our talent and technology.

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Read about the macroeconomic landscape and industrial overview in our MD&A report

SHAPED BY TIME, DEFINED BY INTENT

Every business is tested sometimes by events it cannot control, often by choices it makes. The past few years reminded us that progress rarely follows a straight line. It bends, pauses, and often shifts. What matters is that progress and prosperity eventually follows.

FY2025 offered no easy answers. It brought shifts that called for reflection and pushed us to rejuvenate.

The result a business more attuned to its purpose and better positioned to move forward.

The year unfolded against a backdrop of complex macroeconomic and geopolitical conditions.

Major economies maintained a tight monetary policy, with elevated interest rates aimed at curbing persistent inflation. Global demand softened, particularly in industrial production across advanced markets, while private capex showed signs of caution.

The elections in the United States have led to sweeping policy changes that influenced global trade dynamics.

The evolving nature of trade has introduced considerable demand uncertainty across sectors globally, including the United States, the world's largest economy. As businesses and consumers await clarity, the intervening period till the end of 2025 will be characterized by demand uncertainties.

Beyond trade issues, geopolitical conflicts in the MiddleEast and the Indian subcontinent are also likely to impact business decisions in the near future.

The world is no longer conventionally cyclical it moves through structural pivots, policy changes, and geopolitical realignments. While our positioning has always been global, our strength today lies in how effectively we leverage our talent and technology.

Although there were improvements in many parameters in FY2025, the performance for the full year was a mixed bag. Consolidated revenues were flattish at C15,123 crore in FY2025 as against C15,682 crore in FY2024. Consolidated EBITDA margins improved 180 bps to 18.2%, and the balance sheet strengthened further with cash on books of 1:2,623 crore as of March end.

Transformation through diversification has been a key driver of our success over the past several years, and it is starting to manifest meaningfully in various aspects.

Over the last 56 years, we have undergone a pivotal shift in the customers we serve, the products we make and the technology frontiers we have surpassed. This shift has created newer market segments which hitherto didn't exist in our business mix.

Sectoral Shift: Within industrial exports, Oil & Gas was historically the dominant sector. This has gradually evolved with aerospace now accounting for 14% of industrial exports four times more than in FY2020. The aerospace unit has progressed from supplying components to

FY2025 challenged longheld assumptions. We responded with discipline balancing growth, profitability, and opportunity.

delivering assemblies and finished products. Building on this, we are investing in a new forging and machining complex for flightcritical parts, backed by longterm customer contracts.

Product/Component Shift: The defence business is central to our transition from components to products. With time, we have developed inhouse defence capabilities in electronics, embedded systems, and software creating competencies that are expected to benefit other verticals as well. With a revenue of around C1,800 crore across artillery systems, armored vehicles, sustainment spares, and naval utility products, the business is slowly delivering on its longterm vision. A key thrust area within defence is the small arms segment where we have invested heavily to build a globally competitive product line.

We see strong potential for this vertical to replicate the success seen in some of our wellestablished segments within defence.

As component/product sourcing patterns reflect the shift in supply chains, we believe the time has come for India's electronics story to play out over the next few years. Starting with the EMS space, we expect progressive development of capabilities to manufacture complex electronic products. A conducive policy environment and monetary incentives from the government augur well for the evolution of electronic product manufacturing in India. Recognizing this trend, we have made an initial entry into the value chain of hightech electronics manufacturing on both the equipment and EMS fronts.

Another important milestone in our transformation journey is the acquisition of AAMIMCPL. Through this acquisition, our portfolio of products and aggregates will broaden further. We anticipate the share of products, as a share of revenue, to reach 25% in the next few years.

FY2025 challenged longheld assumptions.

We responded with discipline balancing growth, profitability, and opportunity.

Margins strengthened across the board.

Standalone EBITDA rose to C2,524 crore with margins at 28.5%, while consolidated margins improved to 18.2%, driven by a sharper mix and tighter cost control.

Capital decisions reflected the same clarity. Surplus cash on the standalone balance sheet reached C2,623 crore, and RoCE (net of cash) held at 18.1%. Proceeds from our equity raise were used to repay overseas debt, reducing our consolidated netdebttoequity to 0.35x and lowering interest costs.

Our executable order book in defence now stands at around C9,500 crore, offering multiyear visibility. Securing the ATAGS contract reaffirmed our ability to deliver complex, hightech platforms.

Over the last 34 years, we have invested significant capital to strengthen our overseas aluminum operations, scale up our Indian subsidiaries and add capacity in the domestic forging business. Majority of these investments are concluded. With capex intensity coming down, our free cash flows are likely to improve from FY202526.

In FY2025, over 37% of our electricity came from renewable sources, and 99.18% of waste generated was recycled.

3.790

Women empowered

We view sustainability as a strategic imperative deeply embedded in our business model and culture. Over the past year, we have advanced in our ESG journey through stronger governance, sharper disclosures, and integrated decisionmaking. A dedicated ESG Committee at the Board level provides oversight, while our updated materiality assessment ensures we focus on what matters most to our stakeholders. We have aligned our priorities with global frameworks such as the UN SDGs and SBTi, reinforcing our commitment to responsible growth and transparent reporting. Our latest ESG ratings reflect this momentum, with significant improvements across S&P, Sustainalytics, CDP, and EcoVadis assessments.

We continue to make tangible progress across environmental, social, and governance pillars. In FY2025, over 37% of our electricity came from renewable sources, and 99.18% of waste generated was recycled. We have also enhanced social impact empowering

3.790 women, supporting over 36,000 youth through skill initiatives, and upgrading 32 rural health centers. These outcomes mark our progress towards a resilient, lowcarbon, inclusive future that creates longterm value for all stakeholders.

For over two decades, we've operated across every major continent. That experience brought scale, talent, and global reach but it also taught us that global presence requires sharp selectivity. Going forward, we will deploy our global footprint with greater caution. India will become the center of gravity, with capital, engineering, and leadership attention aligned to where demand visibility, policy support, and supplychain strength converge.

Our priorities reflect this shift. We will accelerate growth at highreturn Indian verticals defence, aerospace, advanced castings, and a growing electronics cluster while concluding the review of our European steel forging assets. Overseas expansion will be pursued only where riskadjusted returns justify the exposure. Digitization will streamline factories and compress development cycles, while the AAM India CV business acquisition strengthens our driveline platform and increases content on domestic vehicles.

External factors such as tariffs, emissions policy and election cycles will continue to evolve. But with a strong balance sheet and long domestic order books, we have the ability to adapt.

In retrospect, one truth is clear: progress is a collective effort. Our customers raised the bar we responded with performance. Our people embraced change with skill and resilience their growth remains central to our purpose. Shareholders enabled decisive moves they can expect the same clarity going forward. And the communities around us shared their trust we remain committed to translating success into local opportunity and responsible growth.

This year proved that purposeful transformation builds enduring strength. We acted swiftly where speed mattered, and stayed the course where patience paid off. That balance decisive action and steady execution will shape our path as we deepen our base in India and approach global opportunities with sharper intent.

Thank you for being part of this journey. Together, we'll keep building and keep emerging stronger.