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ADVANCE TECHNOFORGE LIMITED

Advance Technoforge Limited - Related Party Transactions

Introduction

Based on the Prospectus dated July 20, 2026, and subsequent filings, here are the “Related Party Transactions” (RPT) details Advance Technoforge Limited.

Business Model Operations

  1. Business Model Explanation: The Company manufactures forged and machined components made of carbon steel, alloy steel, and stainless steel. It specializes in Closed Die Forging, Upset Forging, and Ring Rolling Forging. These products serve critical safety functions for OEMs in automotive, agriculture, oil and gas, and heavy machinery sectors.
  2. Advances from Customers: Yes, the Company receives advances. As of March 31, 2026, "Advance from Customers & Other Liabilities" stood at ₹18.89 lakhs.
  3. Comparable Peers: Listed comparable peers include Tirupati Forge Limited and Forge Auto International Limited.
  4. Raw Materials: The primary raw material consumed is steel bars (Carbon, Alloy, and Stainless Steel).
  5. Raw Material Sourcing: The Company uses 100% indigenous raw materials sourced domestically from a few selected suppliers in India.
  6. Volatility in Raw Material Prices: The Company is exposed to price fluctuations and availability risks for steel, which could harm profitability if cost increases cannot be passed on to customers.
  7. Key Factors Affecting Business: These include reliance on key customers, steel price volatility, capacity utilization, indebtedness, and the ability to meet stringent technical specifications.
  8. Competitive & Regulatory Landscape: The industry is highly fragmented and competitive, with domestic and international players. Regulatory oversight includes the Companies Act, SEBI, BSE SME listing norms, and environmental/labor laws.
  9. Key Competitors: Primary competitors mentioned are Tirupati Forge Limited and Forge Auto International Limited.
  10. Order Book: As of July 11, 2026, the Company had an order book in hand of ₹1,903.69 lakhs. It generally maintains a 2 to 4 months order book.


Financial Performance Health

  1. Balance Sheet Health: The Company's Net Worth has grown consistently from ₹692.59 lakhs in FY 2024 to ₹1,338.15 lakhs in FY 2026. Total assets increased to ₹4,692.03 lakhs in FY 2026.
  2. Operating Cashflows (CFO): CFO has shown significant improvement:
  3. FY 2026: ₹445.14 lakhs
  4. FY 2025: ₹378.60 lakhs
  5. FY 2024: ₹18.88 lakhs
  6. Customer Concentration: The Company relies heavily on a few clients. In FY 2026, the Top 1 customer contributed 12.34% and the Top 10 customers contributed 64.35% of revenue.
  7. Revenue Mix (Domestic vs. Exports): In FY 2026, Domestic sales were 71.35% (₹3,570.87 lakhs) and Exports were 28.65% (₹1,433.95 lakhs). Export share has grown from 14.01% in FY 2024.
  8. Total Debt: Outstanding total debt was ₹1,729.11 lakhs as of March 31, 2026, showing a slight decrease from ₹1,750.62 lakhs in FY 2025.
  9. Capital Expenditure (CapEx): Over the last three years, the Company invested in PPE/Intangibles:
  10. FY 2026: ₹230.23 lakhs
  11. FY 2025: ₹678.65 lakhs
  12. FY 2024: ₹164.64 lakhs
  13. Return on Capital (ROCE): ROCE was 22.52% in FY 2026, up from 17.63% in FY 2025 and 17.77% in FY 2024.
  14. Asset Turnover (Last 3 Years):
  15. Inventory Turnover Ratio: 3.96 (FY24), 3.33 (FY25), 2.33 (FY26)
  16. Trade Receivables Turnover Ratio: 4.56 (FY24), 4.26 (FY25), 3.96 (FY26)
  17. Trend Analysis (Sales, EBITDA, PAT):
  18. Sales: Generally increasing (₹4,796.41L in FY24 to ₹5,004.82L in FY26), though a slight 1.29% dip occurred in FY26 due to US tariffs impacting the Top 1 customer.
  19. EBITDA: Consistently increasing: ₹385.79L (FY24) → ₹551.72L (FY25) → ₹835.35L (FY26).
  20. PAT: Consistently increasing: ₹170.49L (FY24) → ₹269.67L (FY25) → ₹405.86L (FY26).
  21. Trend Analysis (Margins):
  22. EBITDA Margin: 8.04% (FY24) → 10.88% (FY25) → 16.69% (FY26).
  23. PAT Margin: 3.55% (FY24) → 5.32% (FY25) → 8.11% (FY26).
  24. Why they are increasing: Growth is driven by improved operational efficiency, economies of scale, shifting outsourced processes to in-house, and higher realizations from export growth.
  25. Free Cash Flow (FCF) & EBITDA to CFO Conversion:

Key Insights:

  1. Free Cash Flow Trend: The Company's Free Cash Flow was negative in FY 2024 and FY 2025 due to significant investments in fixed assets and Capital Work In Progress (CWIP), including the installation of a 1.1 MW solar power plant. In FY 2026, FCF turned positive at ₹ 72.91 Lakhs as capital expenditure decreased compared to the previous year.
  2. Terminological Note: While standard financial practice defines FCF as CFO minus CAPEX, one table in the source material identifies "free cash flow from business operation" as being equivalent to the Net Cash Flow from Operating Activities (₹ 445.14, ₹ 378.60, and ₹ 18.88 Lakhs for FY 2026, 2025, and 2024 respectively).
  3. Conversion Percentage Trend: The EBITDA to CFO conversion percentage is not consistently increasing. It saw a sharp rise from 4.89% in FY 2024 to 68.62% in FY 2025, but subsequently declined to 53.29% in FY 2026. This decline in FY 2026 was largely due to an increase in working capital requirements, specifically higher procurement of raw materials and increased trade receivables.
  4. Red Flags:
  5. Past Rights Issue: Bank statements and payment trails for a 2014 Rights Issue are not traceable.
  6. Unsecured Loans: Loan agreements are executed on plain paper and are not adequately stamped or registered.
  7. High Customer Concentration: Top 10 customers represent 64% of revenue.
  8. Underutilization: Forging capacity utilization was only 50.5% in FY 2026.


Risks Management Outlook

  1. Key Risks: Primary risks include heavy reliance on a few customers and steel suppliers, underutilized manufacturing capacity, high indebtedness, foreign exchange fluctuations for exports, and regional concentration in Gujarat and Maharashtra.
  2. Growth Plans: The Company plans to expand capacity with a new Aluminum Product Line (600 MTPA) and a new Hammer line (1,250 MTPA). It also aims to expand its global presence in foreign markets.
  3. Government Intervention: The sector is influenced by the National Steel Policy 2017 and initiatives like 'Make in India' and 'Skill India'. Rigorous compliance with GPCB (pollution control) and other licenses is required.
  4. Promoter Quality: Promoters Nilesh Moliya and Pradip Vora have 12 years of experience in the line of business. There is no record of them being declared wilful defaulters or fugitive economic offenders.
  5. Management Commentary on Trends: Management views the demand growth for forged components as a long-term positive trend supported by government manufacturing thrusts. They believe their ability to meet high customer expectations provides a foundation for "future revenue growth". While the term "structural" is not used explicitly, the commentary describes the market expansion and increasing export potential as enduring opportunities.






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