Atul Auto Ltd Management Discussions

The Economic Overview

2025 finds the global economy at a familiar crossroads—steady on paper, but textured with uncertainty underneath.

According to the International Monetary Fund (IMF), global GDP growth is projected at 3.2% in 2025, maintaining the pace from 2024 but remaining below the pre-pandemic average of 3.8% recorded between 2000 and 2019. This reflects a stabilisation of macroeconomic conditions following a period of heightened volatility caused by inflationary surges and geopolitical tensions.

Advanced economies are expected to grow at a modest 1.6%, as high interest rates, demographic shifts and weaker productivity gains weigh on expansion. In contrast, emerging markets and developing economies are projected to grow at a stronger 4.2%, supported by improving external conditions and resilient domestic consumption.

Inflation is finally loosening its grip, with a forecast to ease to 5.9% in 2025, down from its peak in 2022. This decline is driven by tighter monetary policies, normalising supply chains and softening energy prices. However, core inflation remains elevated in several economies, keeping monetary authorities cautious and maintaining uncertainty over interest rates in the short term.

Despite encouraging signals, downside risks continue to weigh on sentiment. These include:

y Escalating geopolitical tensions, especially in Eastern Europe and the Middle East.

y Renewed disruptions in global supply chains.

y Energy market volatility.

y Fragility in the financial sectors of some emerging economies.

Looking ahead, the global economy is expected to remain on a moderate growth trajectory in the near term, with momentum supported by steady progress in disinflation, improving labour markets and recovering global trade volumes. The automotive sector, particularly in low-emission and last-mile mobility solutions, is poised to benefit from a growing focus on sustainable transportation and expanding infrastructure in emerging economies.

For Atul Auto, this macroeconomic environment presents an opportunity to strengthen its global presence, especially in markets with growing demand for affordable, fuel-efficient mobility solutions. However, agility in supply chain management, strategic pricing and sustained focus on innovation will be critical to navigating the evolving global landscape effectively.

Indias economic trajectory in FY25 reflected resilience and reform-driven momentum amid global headwinds. The country posted a robust GDP growth of 6.5%, building on the 9.2% expansion in the previous year. This performance was underpinned by positive consumption trends, a recovery in rural demand, a buoyant services sector and a steady increase in high-value manufacturing exports.

Inflation pressures eased considerably during the year, averaging 4.7%, with April 2025 recording a low of 3.2%, the lowest since August 2019. Lower food and energy prices, favourable monsoons, and prudent monetary policy aided this moderation. With inflation largely within the Reserve Bank of Indias comfort zone, the central bank undertook calibrated monetary policy measures to support growth and liquidity.

The Standing Deposit Facility (SDF) rate under the Liquidity Adjustment Facility (LAF) was adjusted to 5.25%, while the Marginal Standing Facility (MSF) rate and the Bank Rate were brought down to 5.75%. These interventions played a pivotal role in supporting borrowing activity, improving rural liquidity and spurring automobile financing.

Industrial activity, as measured by the Index of Industrial Production (IIP), grew by 5.9% in FY25, driven by stronger performance in manufacturing and capital goods. In April 2025 alone, the IIP rose by 2.7%, signalling steady momentum despite global trade volatility.

Indias external sector also demonstrated strength. Exports touched a record US$824.9 Billion, supported by a sharp uptick in service exports and a stable rupee. High-value exports, such as electronics and engineering goods, continued to gain global traction, thereby enhancing Indias role in global value chains.

Crude oil remains a critical input for Indias transportation-intensive sectors. According to the Petroleum Planning &

Analysis Cell (PPAC), the Indian basket price averaged around US$70.92 per barrel as of July 18, 2025, providing much-needed relief to Indias energy import bill and helping to moderate domestic inflation, crucial for sectors such as the automotive and logistics industries.

Crucially, India has now become the fourth-largest economy in the world by nominal GDP, ahead of Japan, a testament to its expanding economic footprint. This milestone is accompanied by increased infrastructure development, expanded public investment and improved access to credit.

The Union Budget for FY2025–26 earmarked _11.21 lakh crore for capital expenditure, with a large share focused on rural connectivity, road building and logistics corridors. These developments are expected to significantly boost demand for mobility solutions across urban and rural India.

Indias growing economic heft, a demographic dividend and a policy focus on infrastructure and manufacturing collectively provide a fertile environment for growth in the automotive and transport sector.

Industry Overview

India, the worlds third-largest auto market by sales and fourth-largest by production in 2025

Indias automotive industry is a significant economic driver, accounting for 7% of the countrys GDP and employing over 37 Million people. Production reached 28.4 Million vehicles in FY 2023-24, comprising 4.2 Million passenger vehicles, 0.97 Million commercial vehicles, 0.69 Million three-wheelers and 17.9 Million two-wheelers. The industry is dominated by two-wheelers (92.7% of production) and is the global leader in two-wheeler and tractor manufacturing, third in heavy trucks and fourth in cars.

Market Growth: The Indian automotive market was valued at USD 118.92 Billion in 2024 and is projected to surge to USD 276.46 Billion by 2034, reflecting a robust compound annual growth rate (CAGR) of 8.8% over the forecast period (2025–2034). This sustained expansion is fuelled by accelerating urbanisation, an expanding middle-class demographic, and heightened consumer preference for SUVs, electric vehicles (EVs), and hybrid models.

Passenger vehicle sales reached 4.3 Million units in 2025 and are forecasted to grow to 6 Million units by 2030, marking a CAGR of 6.8%. This trajectory underscores the sectors resilience and evolving market dynamics driven by innovation and shifting mobility preferences.

Electric Vehicles (EVs): Indias electric mobility sector sustained strong growth in FY2024–25, led by continued demand in the two- and three-wheeler segments. Electric two-wheeler sales reached 946,448 units, marking a marginal 0.3% increase as the segment stabilised after a high-growth phase. In contrast, electric three-wheeler sales grew by 9.5% to 691,338 units, driven by PM eDrive subsidies, lower operating costs and rising demand for last-mile delivery and urban transport. E-rickshaws and passenger carriers remained key contributors, supported by their strong economic viability.

Globally, the EV market was valued at USD 255.54 Billion in 2023 and is projected to expand to USD 2,108.80 Billion by 2033, registering a compound annual growth rate (CAGR) of 23.42% from 2024 to 2033. The sustained trajectory reflects structural shifts toward clean mobility and decarbonisation.

Indias EV landscape is further catalysed by strategic initiatives such as FAME II, PM E-DRIVE and the Electric Mobility Promotion Scheme 2024. These programs promote demand incentives, manufacturing capability and ecosystem readiness. Additionally, infrastructure investments—2,877 charging stations across 68 cities—are strengthening operational viability and consumer confidence.

Exports: Indias automobile exports have shown a dynamic trend over the past five financial years, culminating in a strong performance in FY2024-25. The Grand Total exports for FY2024-25 reached 5,363,089 units, marking a significant recovery and surpassing pre-pandemic levels from FY2019-20 (4,748,738 units).

Policy Support: The Government of Indias Production-Linked Incentive (PLI) Scheme for the automotive and auto component sector is a significant step toward strengthening domestic manufacturing and accelerating the transition to advanced, green mobility solutions. While the scheme offers strategic benefits to eligible players, Atul Auto Limited does not currently qualify under the defined eligibility criteria. However, the Company remains committed to aligning with the broader objectives of the scheme by investing in electric vehicle development, improving operational efficiency, and exploring partnerships that support long-term value creation and competitiveness in the evolving mobility landscape. The Automotive Mission Plan 2047 aims to make India a global hub for manufacturing. Bharat NCAP and AIS 197 mandate enhancements to safety and connectivity features.

Technological Advancements: The adoption of AI, IoT, and Industry 4.0 principles (including robotics and automation) is boosting efficiency by 30%. Connected car features (telematics, diagnostics) and ADAS (Level 2) are gaining traction. Generative AI is prioritised by 63% of automotive CEOs for real-time data processing.

Sustainability: Focusing on green manufacturing, sustainable materials, and hydrogen-powered vehicles aligns with stricter CAFE III & IV norms (2027-2032). The EV and hybrid segments are the fastest-growing, driven by environmental goals.

Indias three-wheeler market demonstrated steady performance in FY2024–25, maintaining its critical role in the countrys public and goods transportation ecosystem. Total domestic sales stood at approximately to 7,41,420 units in year 2025 against the 6,94,801 units in year 2024, , reflecting sustained demand across both passenger and cargo segments. Total export sales stood at approximately to 3,06,914 units in 2025 against the 2,99,977 units in 2024, reflecting sustained demand across both passenger and cargo segments.

This demand was largely driven by the affordability, manoeuvrability and utility of three-wheelers, especially in Tier II and III cities where they remain a primary mode of last-mile connectivity. The passenger carrier segment continued to dominate volumes, supported by urban and semi-urban mobility needs. In contrast, the cargo segment saw increasing traction due to the rise of e-commerce and intra-city logistics.

Despite the growing penetration of electric variants, internal combustion engine (ICE) models still form a significant share of the market, particularly in regions where EV charging infrastructure remains underdeveloped. Three-wheeler exports decreased from 3.66 lakh to 3.00 lakh units between FY 2023-24 and FY 2024- 25. Backed by strong demand from both rural and urban areas and its continued relevance in Indias low-cost mobility framework, the three-wheeler segment is expected to remain resilient and integral to the countrys transportation landscape.

Infrastructure Development in Cities: The rapid pace of urbanisation, combined with Smart City initiatives and evolving municipal frameworks, is accelerating demand for agile last-mile mobility solutions. Electric three-wheelers (e-3Ws) are uniquely positioned to meet these needs, designed to navigate congested streets and support intra-city transport with efficiency and minimal environmental impact. As urban ecosystems transition toward intelligent infrastructure, e-3Ws play a pivotal role in shaping inclusive, low-emission transport networks. Their affordability, compact form and sustainability advantages make them a strategic asset within Indias expanding urban mobility landscape.

E-commerce for Goods: The exponential growth of e-commerce and hyperlocal delivery models has sharply increased demand for agile, cost-effective logistics solutions. Cargo three-wheelers have emerged as the preferred mode for doorstep deliveries across Tier I, II, and III cities, offering unmatched scalability, fuel efficiency, and affordability for fleet operators and small enterprises. Their compact design and low operating costs make them ideal for navigating congested streets and optimising delivery routes. At the same time, their economic viability supports inclusive growth across urban and semi-urban markets. As digital commerce continues its rapid expansion, cargo three-wheelers are cementing their role as a foundational element of Indias last-mile logistics ecosystem.

Better Roads and Highways: Strategic investments in highway modernisation and last-mile road connectivity—through flagship schemes such as Bharatmala and PM Gati Shakti—are significantly enhancing roadway quality across urban and rural corridors. These improvements have expanded the operational range of three-wheelers, enabling smoother transit and increased service coverage. Improved infrastructure directly lowers maintenance costs and optimises travel time, making three-wheeler operations more economically viable across both passenger and cargo segments. This infrastructure-led efficiency is not only boosting fleet productivity but also catalysing greater adoption, particularly in emerging logistics hubs and underserved transit zones.

Government policies, including FAME II, EMPS-2024 and PM E-DRIVE, have been instrumental in providing incentives of _25,000–_50,000 per unit, driving affordability for operators and fleet buyers. The cost-efficiency of e-rickshaws is compelling, delivering significant savings in lifecycle costs. Technological shifts, from lead-acid to lithium-ion batteries and advanced telematics, are improving vehicle uptime, reliability and ROI for operators.

Sustainability Policies: Indias commitment to cleaner mobility is accelerating the shift towards electric three-wheelers. Backed by policy support such as FAME II and state-level EV incentives, the market is witnessing rising adoption of electric variants. These vehicles not only reduce emissions and running costs but also align with the broader ESG goals of fleet operators, making them increasingly attractive for both commercial and passenger use.

Opportunities and Threats

Atul Auto is strategically positioned to capitalise on multiple growth avenues in both domestic and international markets:

We are holding on each market scope:

Market Expansion and Network Growth: The Company is focused on penetrating untapped rural and semi-urban regions by increasing its dealership and service network. This initiative, supported by its new Ahmedabad facility with an additional annual capacity of 60,000 units, will significantly enhance market reach and operational agility.

Government Policy Support and EV Momentum:

The continued thrust on clean mobility through programs like FAME-II, state EV policies, and incentives for electric vehicle adoption provides a strong tailwind for Atuls growing electric three-wheeler portfolio. The Company aims to play a leading role in Indias transition to sustainable last-mile mobility.

Export Market Acceleration: With a presence in over 16 countries, Atul is actively working to expand its international business. Focused efforts in logistics partnerships, regional compliance, and product localisation are expected to increase export contribution from 7% to over 20% of total revenue.

Product Innovation and Electrification: Investments in R&D and strategic collaborations in the electric vehicle value chain (e.g., battery tech, drivetrain systems) will help Atul to upgrade its electric and CNG vehicles to meet future demand.

Digital Enablement and Customer Engagement: Enhanced use of digital platforms for lead generation, after-sales service, and finance partnerships will improve customer experience and retention, particularly in underpenetrated markets.

While the business environment presents robust opportunities, Atul Auto remains cautious of evolving industry headwinds and structural risks:

Rising Competitive Intensity: The domestic three-wheeler market continues to face aggressive competition from both legacy OEMs and emerging EV startups. The fight for market share in both ICE and electric segments may lead to pricing pressures.

Technology and Supply Chain Risks: Dependence on external suppliers for critical components, such as diesel engines, Atul may face cost volatility and margin reduction. The need to secure a robust, vertically integrated EV supply chain remains a strategic imperative.

Global Economic Volatility: Foreign exchange fluctuations, import/export regulations, and geopolitical tensions in key international markets may impact the scale-up of the export business.

Operational Performance

Atul Auto delivered commendable performance in FY 2024–25, registering robust growth in sales volumes across both domestic and international markets. The Companys marketing team played a pivotal role in leveraging emerging opportunities, while the operations team ensured timely deliveries, reinforcing customer trust and strengthening the Atul brand. The successful stabilisation of manufacturing and assembly operations at its new facility further marked a key operational milestone.

During the year, Atul Auto significantly enhanced its innovation capability by upgrading its R&D infrastructure, advancing technology systems and upskilling its teams. Notably, the Company made meaningful progress in its swappable battery pilot initiative, moving steadily toward full-scale deployment.

Looking ahead to FY 2025–26, the Company will intensify its focus on enhancing man-machine productivity to increase overall output and meet the growing market demand for three-wheelers.

Financial Performance

Revenue from operations grew substantially by 34.46%, reaching H64,596 Lacs, as against H48,040 Lacs in FY24. This growth reflects enhanced market penetration and efficiency to grab the increased demand, Export revenue witnessed a healthy uptick, rising to H5,228 Lacs from H3,691 Lacs in the previous year - a testimony to the Companys growing global footprint. Profit before depreciation, interest, and tax stood at H6,208 Lacs, marking a strong growth over H3,472 Lacs recorded in

FY24 - highlighting improved operational efficiency. PBT for the year surged to H4,641 Lacs, compared to H1,783 Lacs in the previous financial year - a growth of over 160%, reflecting disciplined cost control and better realisations. Net Profit After Tax stood at H3,462 Lacs, a significant improvement over H1,347 Lacs in FY24, underlining the Companys strong bottom-line performance.