Integra Engineering India Ltd Management Discussions

Your Directors have pleasure in presenng the Management Discussion and Analysis Report for the year ended on 31st March 2024.

FORWARD LOOKING STATEMENT

This report contains forward-looking statements based on certain assumpons and expectaons of future events. The Company, therefore, cannot guarantee that these assumpons and expectaons are accurate or will be realized, The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, informaon or ev ents.

OVERVIEW

Integra Engineering India Ltd. ("IEIL" or "the Company") is a leading supplier of railway and rolling stock components to OEMs in India and abroad. The company has experse in design and manufacturing of sheet metal, wiring and electromechanical soluons.

The Company offers a range of engineering soluons to its customers such as manufacturing components for locomov e propulsion systems and interior parts for the metro and semi-high-speed train segments. The company also supplies various Research Design & Standard Organizaon (RDSO) approved products such as metal to metal relays, metal-to-carbon relays and LED signals to Indian Railways.

The Company strives for excellence and holds various cer c aons including EN 15085 CL-1, DIN 6701 process standard, RDSO, IP 65 & 55, CE marking product standard and ISO 9001:2015, ISO 14001:2015, ISO 45001:2018 management system standard.

The Company is listed on Bombay Stock Exchange and complies with a wide range of laws and regulaons as a responsible company.

The Company supplies to various OEMs such as Alstom, Siemens Mobility, Medha Servo, CAF Power & Automaon, CG Power, BHEL, Hind Rec er, and Sepsa Medha for both the domesc and export markets.

RAILWAY INDUSTRY TREND:

Rolling Stock Market (2023-2028)

The global rolling stock market is esma ted at USD 54.6 billion in 2023 and projected to reach USD 65.6 billion by 2028, growing at a CAGR of 3.8%. This growth is driven by urban populaon increases, pressuring exisng transport infrastructure and necessitang network expansion. Key challenges like inadequate infrastructure, air quality degradaon, high gasoline prices, tra c congeson, and greenhouse gas emissions make public transportaon appealing for its efficiency and reduced carbon footprint. Demand for rolling stock also stems from replacing old stock, new railway projects, and expanding routes, with railway electri caon further boosng market growth.

The rolling stock industry is undergoing rapid evoluon, driven by

emerging trends and global forecasts. Those include:

Electri caon and Hybridiz aon

Digitalizaon and Smart T echnologies

Autonomous Train Operaons

High-Speed Rail Development

Shi t owards Lightweight Materials

Customizaon and Modular Design

Focus on Sustainability and Environmental Impact

Urbanizaon and Mass T ransit Expansion

Source:h ps://www.marketsandmarkets.com/Market-

Reports/rolling-stock-market-4380892.html

h ps://www.marketsandmarkets.com/ResearchInsight/emerging-

trends-in-rolling-stock-market.asp

Rolling stock market in India overview

Locomov e Industry trend

The Locomov e Market is expected to reach USD 40.7 billion in 2027 by registering a CAGR of 10% during the forecast period (2022 - 2027).

The Asia-Paci c region is expected to dominate the market during the forecast period, driven by its large transport industry and increasing railway passengers. Rail travel is the preferred mode of transport in major economies like China, India, and Japan, which also lead in passenger-kilometers per year and host major locomov e manufacturers. Indian Railways has increased its locomov e producon target for 2024-25 by 27%. This move aims to modernize its eet and enhance operaonal capabilies to meet rising transportaon demands.

Source: hps://www .mordorintelligence.com/industry-

reports/locomov e-market

h ps://www.construc onworld.in/transport-infrastructure/metro-rail-and-railways-infrastructure/railways-increases-fy25-loco-producon-t arget-by-27/52455

Expanding Metro / Semi High speed / High speed train in India

India aims to become the 2nd Largest Metro Rail Network in

the world:

Indias metro network is rapidly expanding, poise to surpass the United Sates and become the worlds second largest in the coming years. within the next 5 years, India is poised to be among the top 3 economies globally. In terms of metro network operaons, India is currently ranked third globally behind China and United States.

Source: Metro Rail Today / May 2024 / Issue 38 / Vol. IV

Vande Bharat Semi High-speed train Plan:

Indian Railways (IR) has ambiously aimed at modernizaon and development by announcing plans to procure 4500 new Vande Bharat trains by 2047.

Source: hps://www .railway.supply/en/indiya-proizvodstvo- 4500-novyh-poezdov-vande-bharat-k-2047

Key data of Operaonal / Under cons trucon r oute:

Prcular s	Operaonal KMS	Under Construcon KMS
Metro Projects	911.48	704.41
RRTS Project	34.10	48.05
High Speed Rail Project	-	508.02
	945.58	1,260.48

Naonal Railw ay Plan Vision - 2030

Indian Railways has developed the Naonal Rail Plan (NRP) for 2030 to establish a future-ready railway system. The plan aims to increase the railways freight share to 45% and create capacity ahead of demand through 2050. It includes 58 super cric al projects (3750 km, 39,663 crore) and 68 cric al projects (6913 km, 75,736 crore), targeted for compleon by 2024.

Source: hps://pib.gov.in/PressReleasePage.aspx?PRID=1806617

Announcement in Interim Budget 2024-25

Finance Minister Nirmala Sitharaman allocated 2.55 lakh crore for the Railway budget in the Interim Budget 2024-25, a 5.8% increase over the previous esma te. This budget aims to drive Indias growth through a focus on transformav e sectors, technological advancement, and sustainability, seng the foundaon f or a resilient and progressive future.

Key Allocaons:

Ministry of Railways Rs. 2,52,000 crores

Source: Urban Transport Infrastructure / ISSN 2581 8023 /

March 2024 / Issue 32, Vol. V

KEY HIGHLIGHTS:

The government will implement three major economic railway corridors across major infrastructure sectors to decongest the exisng netw ork and provide seamless connecvity .

These are energy, mineral and cement corridors, port connecvity corridors, and high tra c density corridors. These projects have been iden ed under the PM Ga Shak for enabling mul-model connecvity . They will improve the logisc efficiency and reduce cost.

40,000 normal rail bogies will be converted to the Vande Bharat standards to enhance safety, convenience and comfort

of the passengers. Source:

hps://infr a.economicmes.india mes.c om/news/railways/bu dget-2024-three-major-economic-corridors-in-the-o ng/107320224

KEY DEVELOPMENTS DURING THE YEAR:

The Company is connuously exploring opportunies in the railway interior segment and has got an opportunity to increase the scope of supply in Metro Projects.

Further, connuous focus on export market resulted in addional opportunies to supply various fabricated enclosure to global customers like Alstom, CAF, Siemens and Sepsa Medha. For instance, for CAF a range of components for the new automac units desned for the Dockland Light Railway (DLR) line, operated by Transport for London was delivered.

During the year, the company supplied more than 3,250+ fabricated enclosures for electric locomov es and Vande Bharat Trains, as well as components for interiors of more than 185+ cars for metro trains (e.g. BhopalIndore Metro) to various customers. With this the company acv ely contributed to the electri caon and modernizaon of the Indian Railw ay network.

During the year, the company has also reorganized its producon lines to increase operaonal efficiency and installed new machinery to increase producon c apacity.

Moreover, there was a workplace condions assessment by M/s Intertek (Third Party Audit Body) and Transparency via ECOVADIS: INTEGRA remains acv ely involved in various frameworks promong corporate transparency regarding environmental and social concerns. Our engagement extends to parcipa on in the ECOVADIS pla orms, amplifying and reinforcing our sustainability endeavors.

In line with its sustainability strategy the company installed solar panels on the roof of its producon facilies which were put into operaon at the beginning of the FY 2024-25. With this installaon, the company will be able to cover about half of its electricity consumpon by its own power generaon. Furthermore, and as a part of the overall Integra sustainability strategy IEIL has inia ted the measurement of its carbon footprint, whereby scope 1 and 2 are being measured for the FY2023-24. A full measurement including scope 3 will be done for the first me in FY2024-25 with an extended decarbonizaon s trategy to follow.

OPPORTUNITY & THREATS

The Company takes pride in being a preferred supplier to many reputed OEMs of Rolling stock. With the connua on of major infrastructure policies and programs of the government, the focus will remain on strengthening the transport sectors. The Company will connue to capitalize on new opportunies by offering its products and services to exisng and new customers in the transport sector. This is in line with its drive to be the preferred choice for customers.

Measures taken so far as well as the ongoing measures enable the Company to increase its compev eness and offer a wider range of products and services. The strategy has been to connue the focus on profitable growth through new product and service offerings and operaonal e xcellence.

The Company is generang more than 80% of total revenue from

contract manufacturing business as an OEM supplier, hence, the business depends on customer requirements. Any uctuaon in the customers requirements demand can affect the Company performance.

The Companys products are highly labour intensive. Availability of manpower can impact the performance of the Company by in uencing on me delivery of qualitav e products. We are in a process of implemenng automaon or semi automaon wherever possible to reduce the dependency of manpower to be able to supply qualitav e products consistently.

OUTLOOK

Looking at the current business opportunies, the companys prospects for the coming years are promising. Integra Engineering India is targeng further growth in coming years. We plan to expand by supplying addional demands in rolling stock and especially addional dev elopment in metro projects.

The Company connues to focus on consolidang business in the rolling stock segment by supplying various fabricated parts as well as all RDSO approved products to Indian Railways. The further expansion of the product offering and the exploraon of the export market is an important ongoing e ort.

Due to the increasing demand in the railway sector, the company has installed various new machines and started the construcon of an addional producon building of 70,000 Sq. and a new admin building.

Further, the company plans to further invest into machinery, as well as in the automaon of the manufacturing process, and to strengthen the ERP and monitoring system to achieve the expected growth.

The Company Strives for excellence in quality and holds various cer c aons as below:

Process standards Cer c ates

EN 15085 CL-1 Welding Process for Railway TUV Nord

DIN 6701 CL 3 Adhesive Bonding TBBCert (Germany)

The Company has been qualified as welder as per American Welding Society (AWS). This is the prerequisite of our export customers in the USA.

Product approval and cer c ates

RDSO For Metal to Metal relays, Metal to Carbon relays, LED Signal, Fuse Automac Chang eover System (FACS)

IP 65 & 55 Standard Enclosure designed by Integra

CE Marking Standard Enclosure designed by Integra

Management standards of quality, environment and safety

ISO 9001:2015 Quality Standard TUV Nord

ISO 14001:2015 Environmental Management TUV Nord

ISO 45001:2018 Health and Safety Management TUV Nord

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL

RELATIONS:

With a total workforce of more than 800 employees, including sta , permanent employees and contract workers, the prime objecv e of the human resource funcon is employee development. The Company believes that human resources are its most valuable asset to achieve success and profitability in business.

The Company has established a connuous training culture for all levels of employees. New employees are educated about the Company with "Inducon training". Under this training, new recruits undergo an inducon training by departmental heads, which offer a broad overview of the Companys varied funcons, processes, strategy and growth objecv es. Inhouse as well as external training programs for all level of employees are conducted on regular basis. The Company has also opened a "welding training center" within the Company to develop new welders as well as to provide regular training to exisng w elder groups.

The Company periodically carries out various employee mov aon and engagement acvies which includes fesv al celebraon, birthday celebraons, sports, and c ompeon ev ents.

RISKS & CONCERNS

We set out below risk that is most material to our business and performance according to current market situaon. We explain mig aon s trategies which help us to manage this risk.

Risk	Mig aon Str ategy
Raw Material Price Volality:
Volality in prices of r aw materials can impact margins.	We have raw material (sheet metal) price variance clause with most of our customers. The mechanism of price variance clause and terms of price revision is transparent and easy to execute.
Manpower availability:
Producon planning and schedules vary with labour uctuaon which impacts on me deliv ery of the projects.	We are reasonably managing the mix of permanent labour and manpower.
	We are hiring the manpower from ITI and giving welding training. We have established a welding training center.
	We are connuously inspiring our all employees to take training on various ma ers and improving their skills.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal control system over the financial reporng ensuring the accuracy of the accounng systems and related financial reporng. The internal control system adheres to local statutory requirements for orderly and efficient conduct of business. The e cacy of the internal checks and control system are validated by internal as well as statutory auditors. The Audit Commi ee reviews the adequacy and e ecv eness of the internal control system, significant audit observaons and monitors the sustainability of remedial measures.

Discussion on financial performance with respect to operaonal perf ormance

The Company has achieved a turnover of Rs. 14,682 lakhs for the financial year 2023-24 against the turnover of Rs. 13,316 lakhs for the previous financial year 2022-23. Further, the Company a ained profit a er tax of Rs.1,452 lakhs in the F.Y. 2023-24 compared to Rs.1,819 lakhs for the previous financial year 2022-23.

Details of significant changes

	Standalone		Consolidated
Sr. List of Raos No.	2023-24	2022-23	2023-24	2022-23	% Variance	Explanaon (if chang e in more than 25%)
1 Opera ng Profit Margin Ra o (%)	15.13%	14.89%	15.13%	14.89%	2%	-
2 Net Profit Margin Ra o (%)	9.89%	13.66%	9.89%	13.66%	- 28%	Due to increase in turnover
3 Return on Net worth (%)	20.89%	34.38%	20.89%	34.38%	- 39%	Due to decrease in profit a er tax
4 Interest Coverage Ra o	18.66	17.23	18.66	17.23	8%	-
5 Debt Equity Ra o	0.32	0.32	0.32	0.32	1%	-
6 Current Ra o	1.72	2.36	1.72	2.36	- 27%	In view of reclassi caon of Cumulav e Redeemable Preference Shares from non-current to current
7 Debtors Turnover Ra o	3.84	3.27	3.84	3.27	17%	-
8 Inventory Turnover Ra o	4.86	4.68	4.86	4.68	4%	-