Hi Raj
MRP may firm planned orders dynamically when you are using an MRP with a proper firming type but it does not change the firming indicator.
The firming indicator is set automatically by any change made by the user on transaction MD12 or by a partial conversion. You can find on table PLAF (field PUSER) the user who last changed the planned order.
Also check if the BAdI MD_PLDORD_CHANGE is implemented and if the firming indicator is set on this BAdI.
BR
Caetano