OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is intended to convey the managements perspective on our financial condition and results of operations for the six months period ended June 30, 2026 and 2025 and for Fiscals 2025, 2024 and 2023.
Unless otherwise stated, or the context otherwise requires, the financial information used in this section is derived from our "Restated Financial Information" included in this Red Herring Prospectus on page 281.
Ind AS differs in certain respects from Indian GAAP, IFRS and US GAAP and other accounting principles with which prospective investors may be familiar. Please also see "Risk Factors - Differences exist between Ind AS use to prepare our financial information and other accounting principles, such as IFRS, Indian GAAP and U.S. GAAP, with which investors may be more familiar" on page 52.
This discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as the risks set forth in the chapters entitled "Risk Factors" and "Forward-Looking Statements" on pages 20 and 19, respectively.
Our Companys financial year commences on January 1 and ends on December 31 of the same year, and references to a particular Fiscal are to the 12 months ended December 31 of that particular year. Unless otherwise stated, or the context otherwise requires, the financial information used in this section is derived from our "Restated Financial Information" included in this Red Herring Prospectus beginning on page 281.
Only to the extent explicitly indicated, industry and market data used in this section has been derived from the report titled "Market potential assessment of power transmission products across industry & automation, mobility, and wind solutions" dated September 28, 2026, prepared and issued by Frost and Sullivan (the "F&S Report"), commissioned by and paid for by our Company in relation to the Offer and any reliance on such information for making an investment decision in this Offer is subject to inherent risks. The F&S Report has been prepared and issued by Frost & Sullivan for the purpose of understanding the industry exclusively in connection with the Offer. The F&S Report will be made available on the website of our Company at https://www.bonfiglioli.in/Investor_Relations from the date of this Red Herring Prospectus until the Bid/Offer Closing Date. Unless otherwise indicated, all financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular fiscal or calendar year, refers to such information for the relevant fiscal or calendar year. For further details, see "Risk Factors – We have used information from the F&S Report which has been commissioned and paid for by our Company for industry related data in this Red Herring Prospectus and any reliance on such information is subject to inherent risks" and "Industry Overview" on pages 47 and 131, respectively.
All references to "Bonfiglioli Group" refer to any company (individually or in the aggregate, as the context may require) that is directly or indirectly owned or controlled by one of our Corporate Promoters, Bonfiglioli S.p.A. ("BSPA").
OVERVIEW
We are one of Indias largest technology-led mechanical and electro-mechanical power transmissions and industrial drive solutions providers by revenue for the six months period ended June 30, 2026 (Source: F&S Report). We manufacture a wide range of mission-critical and highly precision engineered gear motors, gearboxes and drive systems used across diverse end-user markets (Source: F&S Report). Our legacy and reputation lie in the Bonfiglioli brand, which has a worldwide presence of nearly 70 years, and which we have established in India through more than 25 years of operations.
Our Corporate Promoter, Bonfiglioli S.p.A. is headquartered in Italy, and according to the F&S Report, is one of the largest technologically advanced players globally in the mechanical and electro-mechanical power transmissions and industrial drive solutions industry with consolidated revenues of Euro 1,172.94 million (Rs115.56 billion) for the year ended December 31, 2025. It focuses on the development, manufacture and distribution of gearboxes and drive systems to cater to the needs of industrial processes, automation, off-highway mobility solutions and renewable energy applications. As at the date of this Red Herring Prospectus, the Bonfiglioli Group has operations spanning across 80 countries through 18 production sites, seven R&D centres, a network of more than 550 distributors and resellers, and a workforce of more than 5,000 employees, with 21 patents granted under the name of Bonfiglioli S.p.A.
The markets we cater to are broadly categorized into three business verticals: Industry and Automation Solutions, Off-Highway Mobility and Wind Industries, based on the end-use applications. According to the F&S Report, we are the largest manufacturer in India of gearboxes (gear motors below 15 kNm) and drives catering to OEMs and end-users in the Industry & Automation, Off-Highway Mobility and Wind Industries in India as of June 30, 2026, in terms of revenue from operations. We were also among the leading manufacturers of planetary gearboxes in India in the year ended December 31, 2025 by revenue. (Source: F&S Report)
Set forth below is an overview of our three business verticals, categorized based on the customer industries we serve:
| Particulars | Industry & Automation Solutions | Off-highway Mobility Industry | Wind Industry |
| Market share according to the F&S Report | Leading market share of 25.0% (1) | 32.0% (2) | Leading market share of 67.9% (3) |
| End-user industries(4) | Material handling, chemicals & pharmaceuticals, mining, food, beverage & tobacco, metal processing & machine tools, construction, textiles & leather, rubber & plastics | Earthmoving/ excavator, concrete, mining, road construction, agricultural and material handling | Wind turbine manufacturers |
| Product portfolio | Low, medium and heavy duty gear motors and gearboxes in torque capacities ranging from 13 Nm to 1,400 kNm Helical, bevel, planetary and worm gearboxes and gear motors, electric motors; variable frequency drives, servo motors and drives, and precision drives for robotics & automation solutions | Swing and track drives; drum and skip/ mixer drives; wheel and auger/ conveyor drives; cutter and hoist drives | Yaw and pitch drives |
| Key customers and vintage(5) | ElectroMech Material Handling Systems (India) Private Limited, GMM Pfaudler Limited, Miltec Machinery Private Limited, Terex India Private Limited, Uzzala Bio Energy Solutions and Ammann India Private Limited. As of June 30, 2026, each of our top 10 OEM customers (by revenue in Fiscal 2025), had been engaged with us for more than 10 years | Action Construction Equipment, Ajax Engineering Limited, CNH Industrial (India) Private Limited, Hyundai Construction Equipment India Private Limited, JCB India Limited, Schwing Stetter (India) Private Limited and Wirtgen India Private Limited. As of June 30, 2026, eight of our top 10 OEM customers by revenue in Fiscal 2025, had been engaged with us for more than 10 years | Nordex India Private Limited, Senvion Wind Technology Private Limited and Suzlon Energy Limited. As of June 30, 2026, seven of our top 10 OEM customers by revenue in Fiscal 2025, had been engaged with us for more than 10 years |
| Number of SKUs | |||
| Six months period ended June 30, 2026 | 8,517 | 221 | 42 |
| Six months period ended June 30, 2025 | 7,758 | 214 | 42 |
| Fiscal 2025 | 11,535 | 274 | 48 |
| Fiscal 2024 | 11,219 | 236 | 62 |
| Fiscal 2023 | 9,676 | 221 | 62 |
| Sales and distribution | Direct customer relationships and dealer network | Direct customer relationships and co-engineering (IP for co-engineered products remains with the Bonfiglioli Group) | Direct customer relationships and co-engineering (IP for co-engineered products remains with the Bonfiglioli Group) |
Notes:
(1) Among low and medium-duty gear motors (below 15 kNm) in India based on revenue for the year ended December 31, 2025.
(2) Among off-highway mobility market among non-captive players in India by revenue for the year ended December 31, 2025.
(3) Among domestic manufacturers of yaw and pitch drives in terms of sales values for the year ended December 31, 2025.
(4) We categorize our customers into the relevant business verticals based on application of the customers product – for example, mining applications where the equipment is static are categorized under Industry & Automation Solutions while those where the equipment is mobile are categorized under Off-Highway Mobility.
(5) Names of customers identified above have been included based on consents received from such entities to include their names in this Red Herring Prospectus.
The table below sets forth vertical-wise revenue from operations across our three business verticals for the periods/ years indicated:
| Vertical | Six months period ended June 30, 2026 | Six months period ended June 30, 2025 | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | |||||
| Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | |
| Industry & Automation Solutions | 4,813.28 | 42.53% | 3,902.36 | 40.63% | 8,244.39 | 40.95% | 7,648.89 | 41.25% | 7,270.46 | 43.09% |
| Off-Highway Mobility Industry | 3,203.78 | 28.31% | 2,349.51 | 24.46% | 5,070.48 | 25.18% | 4,357.92 | 23.50% | 4,257.93 | 25.23% |
| Wind Industry | 3,096.46 | 27.36% | 3,092.33 | 32.20% | 6,347.70 | 31.53% | 5,994.29 | 32.33% | 5,009.58 | 29.69% |
| Others (1) | 205.17 | 1.80% | 259.35 | 2.71% | 472.69 | 2.34% | 540.73 | 2.92% | 335.33 | 1.99% |
| Total | 11,318.69 | 100.00% | 9,603.55 | 100.00% | 20,135.26 | 100.00% | 18,541.83 | 100.00% | 16,873.30 | 100.00% |
Notes: (1) Others include export incentive, scrap sales, and sale of components such as components like pinion shafts, housings, sun gears, reduction wheels, shafts, covers that we provide and bill to vendors we sub-contract certain services to on behalf of our customers.
Set forth below is a chart highlighting key milestones that we have achieved through 25 years of operations in India:
Our customer base comprises OEMs that we directly supply products to under our Industry & Automation vertical, and OEMs that we co-engineer with under our Off-Highway Mobility Industry and Wind Industry verticals. We cater to a wide range of industries under our Industry & Automation vertical with no single industry contributing more than 10% of our revenue under the Industry & Automation vertical in the six months periods ended June 30, 2026 and June 30, 2025 and in Fiscals 2025, 2024, and 2023. The Industry & Automation vertical benefits from our strong and loyal dealer network which, as of June 30, 2026 comprised of 44 dealers of which 16 dealers had been engaged with us for 20 years or more. Furthermore, of the 44 dealers we engaged with, 36 dealers engaged with us on an exclusive basis as of June 30, 2026. We are an integral part of our customers product development cycles under the Off-Highway Mobility and Wind Industries, working closely with them from design stage to create customized, technology intensive products to meet their bespoke end-use specifications. For further information on our customer base, see " – Our Operations – Sales and Distribution" on page 227.
In the six months period ended June 30, 2026, we served more than 930 customers directly and had been engaged by seven out of our top 10 OEM customers (in terms of revenue from operations in Fiscal 2025) for more than 10 years, demonstrating the lasting value and reliability of our service commitment. We also had a diverse range of customers with our top 10 OEM customers representing less than 31.72% of our revenue from operations in the six months periods ended June 30, 2026 and June 30, 2025 and in each of Fiscals 2025, 2024, and 2023. We also engage with dealers for onward sales to OEMs under our Industry & Automation vertical.
We approach customers directly through our pan-India sales network that comprised 13 sales offices and 64 sales employees as of June 30, 2026. The table below sets forth channel-wise revenue from operations across our sales channels for the periods/ years indicated:
| Sales Channel | Six months period ended June 30, 2026 | Six months period ended June 30, 2025 | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | |||||
| Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | |
| Dealer sales | 2,145.72 | 18.96% | 1,865.11 | 19.42% | 3,909.41 | 19.42% | 3,535.58 | 19.07% | 3,333.07 | 19.75% |
| Direct sales | 6,741.06 | 59.56% | 6,210.11 | 64.66% | 12,746.32 | 63.30% | 11,756.65 | 63.41% | 10,556.18 | 62.56% |
| Inter-company sales (1) | 2,263.99 | 20.00% | 1,294.75 | 13.48% | 3,064.77 | 15.22% | 2,755.09 | 14.97% | 2,722.21 | 16.13% |
| Others(2) | 167.92 | 1.48% | 233.59 | 2.44% | 414.76 | 2.06% | 474.51 | 2.56% | 261.84 | 1.55% |
| Total | 11,318.69 | 100.00% | 9,603.55 | 100.00% | 20,135.26 | 100.00% | 18,541.83 | 100.00% | 16,873.30 | 100.00% |
Notes:
(1) Inter-company sales includes sale of finished goods such as yaw drives and swing drives to related parties, for onward sale to their customers.
(2) Others includes non-core sales such as the sale of components to vendors.
We benefit significantly by being a part of the Bonfiglioli Group, which enables us to leverage its global customer relationships and supply products and solutions to the Indian businesses of international players. With access to the extensive research and development expertise of Bonfiglioli S.p.A. ("BSPA"), including a broad portfolio of innovative products, we are able to meet the localized requirements of our customers. As of June 30, 2026, the Bonfiglioli Group had seven R&D centers globally including in India, Italy, Germany and China, that employed 376 employees. Set forth below is a diagrammatic representation of the holding structure of our Company as on the date of this RHP:
[Diagram: Holding structure showing Sonia Bonfiglioli and Luciano Bonfiglioli owning BON-FI S.r.l (69.54%) and Bonfiglioli S.p.A (20.23% and 10.23%), which owns 100% of Bonfiglioli Transmissions Limited]
We regularly liaise with the R&D and IT center located in Chennai, Tamil Nadu, India ("India R&D Centre") which is housed under Bonfiglioli Technology Space Private Limited ("BTSPL"), a company forming part of the Bonfiglioli Group. The India R&D Centre has test facilities for products across all three of our business verticals, and as of June 30, 2026, it was the only test laboratory in India equipped to test yaw and pitch drives for wind turbines (Source: F&S Report). The proximity of our manufacturing operations with Bonfiglioli Groups global R&D ecosystem enables faster product development through strong design manufacturing alignment and early supplier involvement, resulting in faster time-to-market and enhancing our responsiveness to India-specific customer requirements, establishing our position as a specialised solutions provider in India. The India R&D Centre is the only R&D centre in the Bonfiglioli Group that caters to all three end-user verticals, which allows us to leverage its development capabilities across our entire portfolio of products and services. For further information on our shared R&D functions, see " – Our Operations – Research and Development" on page 231.
As of June 30, 2026, we operated three facilities in India, two of which were in Tamil Nadu (at Thirumudivakkam and Mannur) and one was in Maharashtra (in Talegaon), that manufactured a combined total of 341,133 units of gear motors and gearboxes in Fiscal 2025. Over the years, we have consistently increased sourcing parts and materials from domestic suppliers to strengthen our localisation strategy. As of June 30, 2026, we had 215 suppliers in India and 70 suppliers outside India. In the six months periods ended June 30, 2026 and June 30, 2025 and in Fiscals 2025, 2024 and 2023, purchases of raw materials and components from the domestic market represented 68.32%, 68.15%, 70.00%, 68.71% and 64.12%, of our total purchase of raw material and components, respectively, demonstrating our commitment to sourcing from India. We source from a diverse network of suppliers, with no single supplier providing more than 20.00% of our purchases in the six months periods ended June 30, 2026 and June 30, 2025 and Fiscals 2025, 2024 and 2023. For further information on our material procurement, see " – Our Operations – Procurement and Suppliers" on page 237.
We follow a multi-dimensional approach to quality assurance that involves ensuring quality compliance at each level of our operations. We also provide after-sales services to our customers through two dedicated channels: (a) team of in-house service engineers stationed at our 13 sales offices across India (three of which are located at our manufacturing locations in Thirumudivakkam (Tamil Nadu), Mannur (Tamil Nadu), and Talegaon (Maharashtra)) that aggregated to 15 engineers as of June 30, 2026; and (b) a broad base of 13 third-party authorised service facilities that had an aggregate of 24 service engineers as of June 30, 2026. We strive to, on average, respond to complaints within the next working day, significantly increasing product uptime and lifecycle value.
Our 25 years of operating experience in India, global R&D, manufacturing capabilities, and customer relationships, have enabled us to deliver growth over the years in terms of our profitability, return on equity and return on capital employed.
The table below summarizes key financial results and financial position for the periods/ years indicated:
| Particulars | As at and for the six months period ended June 30, 2026 | As at and for the six months period ended June 30, 2025 | As at and for the year ended December 31, 2025 | As at and for the year ended December 31, 2024 | As at and for the year ended December 31, 2023 |
| Total Assets (Rs million) | 14,958.24 | 13,879.41 | 14,394.58 | 12,990.76 | 14,147.15 |
| Total Equity (Rs million) | 10,342.68 | 8,754.47 | 9,929.93 | 8,609.51 | 8,013.63 |
| Total Current Assets (Rs million) | 11,399.02 | 10,370.00 | 10,903.21 | 9,467.85 | 10,649.29 |
| Total Current Liabilities (Rs million) | 4,471.97 | 5,009.18 | 4,317.36 | 4,244.99 | 5,945.52 |
| Current Borrowings (Rs million) | - | - | - | - | 1,107.86 |
| Cash and Cash Equivalents (Rs million) | 1,401.70 | 250.81 | 1,531.81 | 1,446.67 | 905.32 |
| Total income (Rs million) | 11,391.68 | 9,664.97 | 20,235.89 | 18,611.55 | 17,018.01 |
| Revenue from operations – continuing operations (1) (Rs million) | 11,318.69 | 9,603.55 | 20,135.26 | 18,541.83 | 16,873.30 |
| Revenue from operations – continuing operations growth (2) (YoY %) | 12.43% | 3.59% | 8.59% | 9.89% | 8.25% |
| Restated profit after tax for the period/year from continuing operations (Rs million) | 1,485.81 | 1,149.69 | 2,378.74 | 1,915.98 | 1,466.65 |
| EBITDA (excluding Other Income) (Rs million) (3) | 2,238.74 | 1,764.28 | 3,707.70 | 2,950.74 | 2,438.91 |
| EBITDA (excluding Other Income) Margin (%) (4) | 19.78% | 18.37% | 18.41% | 15.91% | 14.45% |
| PAT Margin (%) (5) | 13.04% | 11.90% | 11.76% | 10.29% | 8.62% |
| Net Debt (Rs million) (6) | (1,393.81) | (1,841.77) | (1,603.84) | (1,382.04) | (1,400.92) |
| Working Capital (Rs million) (7) | 6,927.05 | 5,360.82 | 6,585.85 | 5,222.86 | 4,703.77 |
| Cash Conversion Cycle (Days) (8) | 94 | 90 | 90 | 83 | 80 |
| Return on Capital Employed (%) (9) | 20.03% | 18.62% | 34.05% | 30.05% | 24.53% |
| Return on Equity (%) (10) * | 14.66% | 13.24% | 25.66% | 23.05% | 19.21% |
| Fixed Asset Turnover Ratio (in times) (11) * | 3.99 | 3.55 | 7.15 | 6.68 | 6.10 |
| Inventory Days Outstanding (Days) (12) | 99 | 102 | 93 | 100 | 112 |
| Payable Days Outstanding (Days) (13) | 90 | 95 | 97 | 97 | 121 |
| Receivable Days Outstanding (Days) (14) | 85 | 83 | 94 | 80 | 89 |
*Not annualized for the six months periods ended June 30, 2026 and June 30, 2025.
(1) Revenue from continuing operations (sale of products, sale of services and other operating revenue) for the period / year.
(2) Year-on-year growth in revenue from operations – continuing operations for a period/ year is calculated as revenue from operations – continuing operations in the relevant period/ year minus revenue from operations – continuing operations in the prior period/ year divided by revenue from operations – continuing operations in the prior period/ year and represented as a percentage.
(3) EBITDA (excluding Other Income) is calculated as profit after tax for the period/ year plus total tax expense plus finance costs plus depreciation and amortization. EBITDA (excluding Other Income) = EBITDA minus Other Income.
(4) EBITDA (excluding Other Income) Margin is calculated as EBITDA (excluding Other Income) divided by revenue from operations.
(5) PAT Margin is calculated as profit after tax for the period/year divided by Total Income.
(6) Net Debt is calculated as the sum of current borrowings, current lease liabilities, non-current borrowings and non-current lease liabilities minus cash and cash equivalents and bank balances other than cash and cash equivalents.
(7) Working Capital is calculated as total current assets minus total current liabilities.
(8) Cash Conversion Cycle is calculated as receivable days plus inventory days minus payable days (in which receivable days is calculated as receivables divided by revenue from operations multiplied by number of days; inventory days is calculated as inventory divided by cost of goods sold multiplied by number of days; and payable days is calculated as payables divided by purchase of raw materials and components plus stock-in-trade multiplied by number of days; where cost of goods sold is the sum of cost of material consumed, change in inventory, purchases of stock-in-trade, receivables, inventory and payables taken as of end of period/year.Cash conversion for six months period ended June 30, 2026 and June 30, 2025, has been calculated using 181 days, being the actual number of days in the reporting period.
(9) Return On Capital Employed is calculated as Earnings Before Interest and Tax divided by Capital Employed; Earnings Before Interest and Tax is calculated as restated profit after tax for the period/ year plus total tax expense and finance costs; Capital Employed is calculated as the sum of Tangible Net Worth and Total Debt; Tangible Net Worth is calculated as Total Equity minus Intangible Assets minus Intangible Assets Under Development minus Deferred Tax Asset (Net); Total Debt is calculated as sum of current borrowings, current lease liabilities, non-current borrowings and non-current lease liabilities.
(10) Return on Equity is calculated as restated profit after tax for the period/year from continuing operations divided by average of opening and closing Total Equity for the period / year
(11) Fixed Asset Turnover Ratio is calculated as revenue from operations –divided by Fixed Assets. Fixed Assets is calculated sum of Property, Plant and Equipment and Capital work-in-progress at the end of period/year.
(12) Inventory days outstanding is calculated as inventory as of end of period / year divided by cost of goods sold multiplied by number of days, where cost of goods sold is the sum of cost of material consumed, change in inventory, purchases of stock-in-trade. Inventory days outstanding for the six months periods ended June 30, 2026 and June 30, 2025, has been calculated using 181 days, being the actual number of days in the reporting period.or the fiscal year ended December 31, 2025, December 31, 2024, and December 31, 2023, has been calculated using 181 days, 181 days, 365 days, 366 days and 365 days respectively, being the actual number of days in the reporting period.
(13) Payable days outstanding is calculated as payables as of end of period/year divided by sum of purchase of raw materials and components consumed and purchase of stock-in-trade multiplied by number of days. Payable days outstanding for the six months periods ended June 30, 2026 and June 30, 2025, has been calculated using 181 days, being the actual number of days in the reporting period.
(14) Receivable days outstanding is calculated as trade receivables as of end of period / year divided by revenue from operations multiplied by number of days. Receivable days outstanding for the six months periods ended June 30, 2026 and June 30, 2025, has been calculated using 181 days, being the actual number of days in the reporting period.
For a reconciliation of such Non-GAAP measures, see "Other Financial Information – Non-GAAP Financial Measures" on page 349.
SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations and financial condition are affected by a number of important factors including:
Macro-economic conditions and factors affecting the industries in which our customers operate
We sell gearboxes and drive systems in India and outside India. Our business therefore depends on general macroeconomic factors affecting Industry & Automation Solutions and the Mobility and Wind Industries in which our customers are engaged, which are beyond our control. In particular, our revenue and profitability are correlated with the level of industrial capital expenditure and modernisation in the end-user industries served by our Industry & Automation Solutions vertical, the level of investment in infrastructure, mining, construction and agriculture that drives OEM production in our Off-Highway Mobility Industry vertical, and renewable energy policy and wind capacity additions in India and in export markets that drive demand in our Wind Industry vertical.
The cyclical nature of general macro-economic conditions and, therefore, of the industries in which our customers operate means that our results of operations can fluctuate substantially from period to period. Stronger macro-economic indicators, such as GDP growth, increases in infrastructure investment and focus on renewable energy tend to correlate with increased activities in industries which require our products. We believe that this in turn contributes to an increased demand for our products, while weaker macro-economic indicators tend to correlate with less activities in the above industries and therefore, lower demand for our products. We expect that these macro-economic factors and conditions in the above industries will continue to be the most important factor affecting our revenues and results of operations.
See "Industry Overview" on page 131 of this Red Herring Prospectus for a discussion on macro-economic conditions in the industry in which we operate.
Fluctuations in exchange rates
We present our financial statements in Indian Rupees. However, a certain portion of our business transactions is denominated in foreign currencies, as we export products to customers in China, United States, Italy, Germany and other countries, and also purchase raw materials and components from vendors outside India.
The table below sets forth geography-wise revenue from contract with customers – continuing operations as per Ind AS-108, Operating Segments ("Ind AS-108"), including as a percentage of total revenue from contracts with customers – continuing operations for the period/years indicated:
| Revenue from contract with customers – continuing operations | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | For the year ended December 31, 2025 | For the year ended December 31, 2024 | For the year ended December 31, 2023 | |||||
| Amount (Rs million) | Percentage of total revenue from contracts with customers – continuing operations (%) | Amount (Rs million) | Percentage of total revenue from contracts with customers – continuing operations (%) | Amount (Rs million) | Percentage of total revenue from contracts with customers – continuing operations (%) | Amount (Rs million) | Percentage of total revenue from contracts with customers – continuing operations (%) | Amount (Rs million) | Percentage of total revenue from contracts with customers – continuing operations (%) | |
| India | 7,833.67 | 70.04% | 6,981.67 | 74.11% | 14,372.84 | 72.49% | 13,546.37 | 74.59% | 12,709.58 | 76.15% |
| USA | 1,591.60 | 14.23% | 1,451.28 | 15.40% | 3,077.40 | 15.52% | 2,405.17 | 13.24% | 1,577.45 | 9.45% |
| Italy | 342.68 | 3.06% | 252.15 | 2.68% | 607.63 | 3.06% | 373.18 | 2.05% | 371.31 | 2.22% |
| Germany | 322.47 | 2.88% | 194.49 | 2.06% | 435.33 | 2.20% | 642.25 | 3.54% | 589.16 | 3.53% |
| China | 108.15 | 0.97% | 94.17 | 1.00% | 186.70 | 0.94% | 411.43 | 2.27% | 592.70 | 3.55% |
| Other countries | 986.66 | 8.82% | 447.23 | 4.75% | 1,147.05 | 5.79% | 782.90 | 4.31% | 848.95 | 5.09% |
| Total | 11,185.23 | 100.00% | 9,420.99 | 100.00% | 19,826.95 | 100.00% | 18,161.30 | 100.00% | 16,689.15 | 100.00% |
For the six months period ended June 30, 2026 and 2025 and Fiscals 2025, 2024 and 2023, the proportion of our cost of raw materials & components consumed plus changes in inventories of work-in-progress supplied from international suppliers was 29.30%, 30.36%, 28.90%, 30.00%, and 34.61%, respectively.
The exchange rates between the Indian Rupee and the U.S. Dollar and Euro have fluctuated in the past and our results of operations have been impacted by such fluctuations and may be impacted by such fluctuations in the future. For further details in relation to RBI reference exchange rates for the U.S. Dollar and Euro, see "Certain Conventions, Presentation of Financial, Industry and Market Data" on page 16.
Depreciation of the Indian Rupee against the U.S. Dollar, the Euro and other foreign currencies may adversely affect our results of operations by increasing the cost of our raw materials or any proposed capital expenditure in foreign currencies. Similarly, appreciation of the Indian Rupee against foreign currencies may positively affect our results of operations by decreasing the cost of our raw materials or any proposed capital expenditure in such foreign currencies. Our revenue from customers outside India and our purchases of raw materials and components from international suppliers therefore provide a partial natural hedge against depreciation in the Indian Rupee. We have a risk management policy covering our foreign exchange risk, which is reviewed periodically by our management. To manage the risk of exchange rate fluctuations, we enter into derivative transactions and adopt policies for financial risk management, for our open positions to hedge our foreign currency exposure. However, any amounts we spend in order to hedge the risks on account of fluctuations in currencies may not adequately hedge against any losses we incur due to such fluctuations. See "– Quantitative and Qualitative Disclosures about Market Risks – Currency risk" on page 383 for further details.
Product and Sales mix
We are engaged in the manufacture of low, medium and heavy duty gearboxes, swing and track drives; drum and skip/ mixer drives; wheel and auger/ conveyor drives; cutter and hoist drives and yaw and pitch drives. Our margins depend on the prices we charge on our products and our production volume. The following table sets forth our revenue from operations by vertical in the period/years indicated:
| Vertical | Six months period ended June 30, 2026 | Six months period ended June 30, 2025 | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 | |||||
| Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | Amount (Rs million) | Percentage of total revenue from operations (%) | |
| Industry & Automation Solutions | 4,813.28 | 42.53% | 3,902.36 | 40.63% | 8,244.39 | 40.95% | 7,648.89 | 41.25% | 7,270.46 | 43.09% |
| Off-Highway Mobility Industry | 3,203.78 | 28.31% | 2,349.51 | 24.46% | 5,070.48 | 25.18% | 4,357.92 | 23.50% | 4,257.93 | 25.23% |
| Wind Industry | 3,096.46 | 27.36% | 3,092.33 | 32.20% | 6,347.70 | 31.53% | 5,994.29 | 32.33% | 5,009.58 | 29.69% |
| Others (1) | 205.17 | 1.80% | 259.35 | 2.71% | 472.69 | 2.34% | 540.73 | 2.92% | 335.32 | 1.99% |
| Total | 11,318.69 | 100.00% | 9,603.55 | 100.00% | 20,135.26 | 100.00% | 18,541.83 | 100.00% | 16,873.30 | 100.00% |
Notes: (1) Others include non-core sales such as sale of components to vendors.
For further details, see "Our Business – Our Operations – Manufacturing Facilities" on page 232.
Demand for our products is driven by different factors in each of our three business verticals: (i) in Industry & Automation Solutions, by capacity additions, modernisation and replacement across the industrial end-user segments we serve (including material handling, chemicals and pharmaceuticals, food and beverage, metal processing, cement and steel), with new installations accounting for approximately 55% and replacement and modernisation approximately 45% of Indias industrial gearbox demand (Source: F&S Report), and where we sell at catalogue and negotiated prices for standardised gear motors and gearboxes through direct customer relationships and a dealer network of 44 dealers as of June 30, 2026 (36 on an exclusive basis); (ii) in Off-Highway Mobility Industry, by investment in infrastructure, mining, road construction and agriculture, which drives OEM production of excavators, concrete equipment, cranes and agricultural machinery, for which our products are co-engineered with OEMs to their platform specifications and supplied on a programme basis over the life of the platform; and (iii) in Wind Industry,by wind capacity additions in India and in the export markets served by our OEM customers, with the industrys shift towards turbines of 3–5 MW increasing the value of yaw and pitch drives supplied per installation (Source: F&S Report).
Because our Off-Highway Mobility and Wind Industry products are co-engineered and supplied under programme-based arrangements, while our Industry & Automation Solutions products are largely standardised and sold through dealers and direct channels, changes in the relative contribution of our verticals affect our average realisations, raw-material intensity and margins. The overall sales mix impacts our raw material requirements and costs. A shift in our sales mix may require increased procurement of components such as iron and aluminium castings, forgings, gears, bearings, as well as more complex machining and testing processes, enabling us to leverage economies of scale in our negotiations with our supplier network. Accordingly, changes in our sales mix across the Industry & Automation, Mobility Solutions and Wind Solutions verticals may affect our revenue, cost of operations and operating results.
Cost and availability of raw materials
Our cost of raw materials and components consumed constitutes the largest component of our expenses. The table below sets forth our cost of raw materials and components consumed, changes in Inventories of Finished Goods and Work-in-progress and materials cost in the period/years indicated and the percentage of total expenses:
| Particulars | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | For the year ended December 31, 2025 | For the year ended December 31, 2024 | For the year ended December 31, 2023 |
| Cost of raw materials & components consumed (Rs million) (A) | 7,541.76 | 5,977.36 | 11,967.18 | 11,854.27 | 11,104.93 |
| Total Expenses (Rs million) (B) | 9,392.54 | 8,109.85 | 16,983.56 | 16,161.56 | 14,936.30 |
| Cost of raw materials & components consumed as a % of total expenses (C=A/B) (%) | 80.30% | 73.70% | 70.46% | 73.35% | 74.35% |
| Particulars | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | For the year ended December 31, 2025 | For the year ended December 31, 2024 | For the year ended December 31, 2023 |
| Changes in Inventories of Finished Goods and Work-in-progress (Rs million) (D) | (633.04) | 34.41 | 542.53 | (64.11) | (268.86) |
| Materials Cost (Rs million) (E = A + D) | 6,908.72 | 6,011.77 | 12,509.71 | 11,790.16 | 10,836.07 |
| Revenue from Operations – Continuing Operations (Rs million) (F) | 11,318.69 | 9,603.55 | 20,135.26 | 18,541.83 | 16,873.30 |
| Materials Cost as a percentage of revenue from operations (%) (E/F) | 61.04% | 62.60% | 62.13% | 63.59% | 64.22% |
Our materials cost as a percentage of revenue from operations declined over Fiscals 2023, 2024 and 2025, and was lower in the six months period ended June 30, 2026 compared to the corresponding period in the previous year, reflecting the pass-through of raw material price movements under the price variation clauses in our agreements with OEM customers, changes in our product mix and the increase in the proportion of raw materials and components sourced from domestic suppliers. We use materials cost, which comprises cost of raw materials and components consumed together with changes in inventories of finished goods and work-in-progress, to assess our material intensity, since the cost of raw materials and components consumed in any period is affected by the timing of production relative to deliveries.
Our cost of raw materials and components consumed are generally impacted by our manufacturing volumes, mix of products, the prices paid for raw materials and our manufacturing efficiency. Our primary raw materials required for the manufacture of our products include iron and aluminium castings, forgings, gears, bearings and proprietary components. Our suppliers may impose price increases and surcharges on us from time to time. In addition, according to the F&S Report, pricing and availability of such materials can be highly volatile due to numerous factors beyond the control of any individual company, including general economic conditions, global production capacity, import levels, fluctuations in raw material costs, sales levels, competition, supply chain fluctuations, labour costs, trade policies, and foreign currency exchange rates.
Furthermore, we procure our materials from a mix of local and international suppliers, the split of which are set forth in the table below:
| Particulars | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | For the year ended December 31, 2025 | For the year ended December 31, 2024 | For the year ended December 31, 2023 | |||||
| Amount | % cost of raw materials consumed adjusted for change in WIP | Amount | % cost of raw materials consumed adjusted for change in WIP | Amount | % cost of raw materials consumed adjusted for change in WIP | Amount | % cost of raw materials consumed adjusted for change in WIP | Amount | % cost of raw materials consumed adjusted for change in WIP | |
| From local suppliers | 5,093.87 | 70.70% | 4220.93 | 69.64% | 8,808.63 | 71.10% | 8,352.73 | 70% | 7,145.80 | 65.39% |
| From international suppliers | 2,111.49 | 29.30% | 1,839.74 | 30.36% | 3,579.86 | 28.90% | 3,579.56 | 30% | 3,782.67 | 34.61% |
| Total cost of raw materials consumed | 7,205.36 | 100.00% | 6,060.67 | 100.00% | 12,388.49 | 100.00% | 11,932.29 | 100.00% | 10,928.47 | 100.00% |
Note: International suppliers also include Group Companies such as Bonfiglioli Riduttori S.p.A, Bonfiglioli Drive Solutions Private Limited
Accordingly, the price we pay for the raw materials that we import from international suppliers may fluctuate due to volatility in exchange rates.
The proportion of our cost of raw materials consumed sourced from domestic suppliers increased over Fiscals 2023, 2024 and 2025. Over the years, we have adopted a phased strategy to increase the share of locally sourced materials in our overall procurement, prioritising components for localisation on the basis of product lead time, application of the end product, supply chain risk and total cost of ownership. Increased local sourcing reduces our exposure to exchange rate fluctuations, import duties and transportation and inventory costs, and shortens lead times. For instance, in October 2025 we commenced in-house production of electric motors at our facility in Mannur (Tamil Nadu), with a target lead time of up to four weeks from the date of order compared to the erstwhile lead time of approximately 12 weeks for such motors. The proportion of our cost of raw materials consumed sourced from international suppliers was marginally higher in the six months period ended June 30, 2026 compared to Fiscal 2025, primarily due to the product mix during the period, including a relatively higher consumption of components that are currently sourced internationally. This does not represent a reversal of our localisation strategy.
Any increase in our prices and surcharges of our primary raw materials may result in us having to incur higher input costs in the manufacture of our products and we may not be able to pass on the increased costs to our customers, which may have an adverse effect on our business and results of operations. In the agreements with our OEM customers, we generally include price variation clauses so that the sales price of our products is adjusted periodically based on a formula that takes into account changes in raw material prices. While we are generally able to pass on changes in the cost of our raw materials due to changes in prices of raw materials to our customers, we may not be able to do so immediately or fully, and as a result, fluctuations in the price of these raw materials may adversely affect our business and results of operations.
Manufacturing capacity and utilization
Our results of operations are directly affected by our production volume, which in turn depends on several factors, including our manufacturing capacity and market demand. As of June 30, 2026, we had three manufacturing facilities, two of which were located in Tamil Nadu at Thirumudivakkam and Mannur and one was located in Maharashtra at Talegaon. The following table sets forth the available manufacturing capacity, utilization and utilization as a percentage of available capacity at our manufacturing facilities for the period/years indicated:
| Facility | Six months period ended June 30, 2026* | Six months period ended June 30, 2025* | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 |
| (in hours, except for percentages) | |||||
| Thirumudivakkam, Tamil Nadu | |||||
| Machine Shop | |||||
| Available Capacity | 353,304 | 322,658 | 687,348 | 629,657 | 594,332 |
| Utilization | 285,262 | 261,661 | 556,670 | 500,737 | 443,805 |
| Utilization as a percentage of Available Capacity | 80.74% | 81.10% | 80.99% | 79.53% | 74.67% |
| Assembly | |||||
| Available Capacity | 167,184 | 163,080 | 323,411 | 312,570 | 312,570 |
| Utilization | 102,746 | 88,634 | 181,709 | 162,655 | 151,406 |
| Utilization as a percentage of Available Capacity | 61.46% | 54.35% | 56.19% | 52.04% | 48.44% |
| Mannur, Tamil Nadu | |||||
| Assembly | |||||
| Available Capacity | 35,938 | 24,468 | 54,040 | 48,320 | 112,368 |
| Utilization | 27,997 | 18,001 | 41,913 | 35,463 | 65,039 |
| Utilization as a percentage of Available Capacity | 77.90% | 73.57% | 77.56% | 73.39% | 57.88% |
| Machine Shop | |||||
| Available Capacity | 5,663 | - | - | - | - |
| Utilization | 4,118 | - | - | - | - |
| Utilization as a percentage of Available Capacity | 72.72% | - | - | - | - |
| Facility | Six months period ended June 30, 2026* | Six months period ended June 30, 2025* | Year ended December 31, 2025 | Year ended December 31, 2024 | Year ended December 31, 2023 |
| (in hours, except for percentages) | |||||
| Talegaon, Maharashtra | |||||
| Assembly | |||||
| Available Capacity | 86,146 | 66,818 | 140,950 | 129,105 | 91,482 |
| Utilization | 66,319 | 51,168 | 108,522 | 92,456 | 52,905 |
| Utilization as a percentage of Available Capacity | 76.99% | 76.58% | 76.99% | 71.61% | 57.83% |
** Not annualized*
Notes:
(i) Our Company produced 8,780 SKUs, 8,014 SKUs, 11,857 SKUs, 11,517 SKUs and 9,959 SKUs of Gearbox & Gearmotors (SKUs) in the six months periods ended June 30, 2026 and June 30, 2025 and the financial years ended December 31, 2025, December 31, 2024 and December 31, 2023. Each SKU has multiple sub-components and there are multiple SKUs which require different machining and/or assembly processes. The time for machining and or assembly for each SKU is different. The capacity utilisation also depends on the SKUs that our Company manufactures as per demand. Hence, capacity utilization in the table above has been computed based on the number of available hours of machines used in the manufacturing processes during a period ("Available Capacity") and the number of hours for which such machines were utilized during the relevant period.
(ii) The calculation of the hours for which machines were available during the periods included above is based on the following assumptions and estimates: (i) each of the machines operates for 22.5 hours a day (after deducting 30 minutes due for shift change) across 302 working days in a financial year (excluding one weekly holiday) or 151 working days during the six months periods ended June 30, 2026 and June 30, 2025); (ii) in case of heat treatment plant at Thirumudivakkam which is continuous process plant, the Available Capacity is computed on 342 days in a financial year (excluding the mandatory maintenance period) (or 171 working days during the six months periods ended June 30, 2026 and June 30, 2025) ; and (iii) the manufacturing facilities located in Thirumudivakkam, Tamil Nadu and Talegaon, Maharashtra operated on a 3 shift basis, while the manufacturing facility located in Mannur, Tamil Nadu operated on a 2 shift basis in the financial year ended December 31, 2023 and one shift basis in the financial years ended December 31, 2024 and December 31, 2025 and the six months periods ended June 30, 2025 and June 30, 2026. Owing to these shifts, the year-on-year available capacity of the manufacturing facility in Mannur is not directly comparable.
(iii) In case of the manufacturing facility located in Mannur, Tamil Nadu, certain equipment have been relocated to the assembly plant located at Talegaon, Maharashtra in the financial years ended December 31, 2023 and December 31, 2024 due to business requirements. Hence, the same is reflected in the reduced available capacity for the respective periods in Mannur, Tamil Nadu facility. Furthermore, since establishing the assembly plant in Talegaon, our Company has gradually increased use of the facility resulting in an increase in available capacity from 91,482 hours in the financial year ended December 31, 2023, to 129,105 hours in the financial year ended December 31, 2024, to 140,950 hours in the financial year ended December 31, 2025 and to 86,146 hours in the six months period ended June 30, 2026. The increase in the available assembly capacity in Mannur during the financial year ended December 31, 2025 and the six months period ended June 30, 2026 was the result of addition of motor assembly and testing line in Q4 of the financial year ended December 31, 2025. The machine shop was added to the manufacturing facility at Mannur towards the end of the financial year ended December 31, 2025 as a result of a slump sale acquisition from Bonfiglioli Drive Solutions Private Limited pursuant to a business transfer agreement.
(iv) In case of the machine shop at the manufacturing facility located in Thirumudivakkam, Tamil Nadu, certain machines have been added in each of the periods, resulting in an increase in the Available Capacity.
Utilisation of the machine shop at our Thirumudivakkam facility increased over Fiscals 2023, 2024 and 2025, following the addition of machines in each of these years, while our assembly operations at Thirumudivakkam, Mannur and Talegaon retain capacity to support growth in volumes. Utilisation of our Talegaon assembly facility, which commenced operations in the fourth quarter of Fiscal 2023, also increased over Fiscals 2023, 2024 and 2025 as production was ramped up. We have funded our capacity additions during the periods under review from internal accruals, and we had no outstanding borrowings as of December 31, 2024, December 31, 2025 and June 30, 2026.
For further details in relation to our capacity and utilization during the six months period ended June 30, 2026 and 2025 and Fiscals 2025, 2024 and 2023, see "Our Business – Our Operations – Manufacturing Facilities" on page 232.
We plan our manufacturing capacity requirements and capacity expansions based on forecasts of our customers demands, overall growth rate of the Indian economy and market feedback on growth in our key product segments. We have to maintain a balance to ensure that we have the optimum capacity to meet our customer demands currently and in the future. Any delay in our capacity adjustment process following a significant increase or decrease in demand may impact our overall utilization. Conversely, a greater than expected increase of competitors investments in additional capacity might lead to overcapacity in the industry which could impact our utilization. This in turn may cause reduced sales and/or a decrease in prices, which would have a negative impact on our business, financial condition, results of operations and cash flows. Any discrepancy between our forecasted and actual customers demands may lead to prolonged underutilization of our manufacturing plants, which may adversely affect our business and results of operations.
Pricing mechanisms and OEM programme dynamics
Our financial performance is affected by the operating models of our key customer segments. A significant portion of our revenue in the Mobility Solutions and Wind Solutions verticals is derived from OEMs that operate on program-based procurement models. As a result, our results of operations may be influenced by changes in OEM production schedules, inventory strategies, sourcing decisions and program lifecycles, including delays, rescheduling or cancellations, which may affect our revenue, capacity utilization and margins. OEM-driven businesses may also involve longer receivable cycles and higher working capital requirements, which may affect our cash flows and return on capital employed in certain periods. While our Industry & Automation Solutions vertical benefits from a broader customer base and channel-driven sales model, our Mobility Solutions and Wind Solutions verticals may experience higher variability in performance from period to period. In addition, our profitability is influenced by pricing arrangements with customers and the timing of cost pass-through. In some cases, particularly with OEM customers, pricing revisions are governed by contractual mechanisms such as periodic reviews or price variation clauses linked to raw material indices, which may create a time lag between changes in raw material costs and corresponding adjustments in our selling prices. Also see, "Risk Factors – Any increase in the prices of raw materials and components required for our operations or levy of duties on the materials we import for our operations, could adversely affect our business, financial condition, results of operations, and cash flows." on page 22.
PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE
The following descriptions set forth information with respect to the key components of our profit and loss statements.
Income
Income consists of revenue from operations and other income.
Revenue from operations.
Revenue from operations comprises sale of products, income from services, and other operating revenue.Sale of products includes sale of goods, and revenue from sale of goods is recognized at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods or ex-works depending on the contractual terms.
Income from services includes income from services rendered. Revenue from services is recognised as and when the services are rendered in accordance with the specific terms of contract with the customer. When the consideration is received, before we render service to the customer, we present the consideration as a contract liability, which is then recognised as revenue once the services are rendered.
Other operating revenue comprises revenue from scrap sales, export incentives, and miscellaneous income. In Fiscal 2024, we recorded a one-time income from secondary adjustment as per transfer pricing regulations. This arose from a dispute with the income tax department regarding disallowance of certain cost-sharing expenses under the Intercompany Service Agreement with BSPA, which was subsequently settled under the Vivad se Vishwas scheme in Fiscal 2025, whereby we paid 50% of the disputed tax liability and the remaining amount was waived. Consequently, the corresponding cost-sharing expenses were reversed and reimbursed to BSPA, resulting in this one-time income recognition in Fiscal 2024.
Other income.
Other income primarily comprises (i) interest income on bank deposits, other deposits, and inter-company loans, (ii) net gain on sale of property, plant and equipment, (iii) allowance for doubtful debts no longer required written back, (iv) net gain on foreign currency transactions and translation, and (v) liabilities no longer required written back.Expenses
Expenses comprise cost of raw materials consumed, changes in inventories of finished goods and work-in-progress, employee benefits expense, finance costs, depreciation and amortisation expense, and other expenses.
Cost of raw materials & components consumed.
Cost of raw materials & components consumed comprises the cost of raw materials and components we use in our manufacturing operations, such as iron and aluminium castings, forgings, gears, bearings.Changes in inventories of finished goods and work-in-progress.
Changes in inventories of finished goods and work-in-progress comprises opening stock and closing stock, which each comprise net increase or decrease in stock of work-in-progress and finished goods.Employee benefits expense.
Employee benefits expense comprises salaries, wages and bonus, and contribution to provident and gratuity, and staff welfare expenses. On November 21, 2025, the Government of India notified the provisions of the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 (the "Labour Codes"), which consolidate twenty-nine existing labour laws into a unified framework governing employee benefits during employment and post-employment. The Labour Codes, amongst other things, introduce changes including a uniform definition of wages and enhanced benefits relating to leave. Our Company has assessed the financial implications of these changes and ensured compliance with the latest provisions of the Labor Codes as of December 31, 2025. This assessment is based on information currently available and the FAQs on key accounting implications arising from the Labour Codes issued by the Institute of Chartered Accountants of India. The Central Government has notified the Code on Wages (Central) Rules, 2026; however, the corresponding State Rules and certain other operational clarifications under the Labour Codes are yet to be notified. Our Company continues to monitor the notification of the remaining State Rules and clarifications, and the impact, if any, of these will be accounted for in accordance with applicable accounting standards.Finance costs.
Finance costs include interest on borrowings, interest on lease liabilities, and other borrowing costs.Depreciation and amortisation expense.
Depreciation and amortisation expense relate to depreciation of property, plant and equipment, and amortisation of intangible assets and right-of-use-assets.Other expenses.
Other expenses primarily comprise (i) royalty to the Bonfiglioli Group for use of intellectual property including the "Bonfiglioli" brand, (ii) professional fees incurred towards cost sharing from Bonfiglioli Group under the Intra-Group Services Agreement and other third party consultancy for industrial and corporate functions, (iii) sub-contracting charges incurred towards processing of raw materials that we outsource to third party manufacturers,(iv) power and fuel expenses, and (v) consumption of stores, spare parts and tools. For further information, see "Our Business – Our Operations – Agreements with BSPA; License Agreement and Intercompany Services" on page 231.Other expenses also comprise expenses towards rent, repairs and maintenance on plant and machinery, buildings and others, insurance, rates and taxes, travelling and conveyance expenses, contract labour charges, payments to auditors, directors remuneration, expenditure towards corporate social responsibility ("CSR") activities, freight and handling charges (net), provision for product warranty, allowance for doubtful debts, communication expenses, bad debts written off, asset written off, provision for sales tax disputes, net loss on foreign currency transactions and translation, and miscellaneous expenses.
Tax Expense
Tax expense consists of current tax, tax pertaining to earlier years and deferred tax.
RESULTS OF OPERATIONS
The following table sets forth our selected restated financial data derived from our restated statement of profit and loss for the six months period ended June 30, 2026 and 2025, the components of which are also expressed as a percentage of total income for such period:
| Particulars | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | ||
| Amount (Rs million) | Percentage of Total Income (%) | Amount (Rs million) | Percentage of Total Income (%) | |
| Income | ||||
| Revenue from operations | 11,318.69 | 99.36% | 9,603.55 | 99.36% |
| Other income | 72.99 | 0.64% | 61.42 | 0.64% |
| Total Income | 11,391.68 | 100.00% | 9,664.97 | 100.00% |
| Expenses | ||||
| Cost of raw materials & components consumed | 7,541.76 | 66.20% | 5,977.36 | 61.85% |
| Changes in inventories of finished goods and work-in-progress | (633.04) | (5.56%) | 34.41 | 0.36% |
| Employee benefits expense | 589.61 | 5.18% | 492.28 | 5.09% |
| Finance costs | 40.72 | 0.36% | 36.56 | 0.38% |
| Depreciation and amortisation expense | 271.87 | 2.39% | 234.02 | 2.42% |
| Other Expenses | 1,581.62 | 13.88% | 1,335.22 | 13.82% |
| Total Expenses | 9,392.54 | 82.45% | 8,109.85 | 83.91% |
| Restated Profit Before Tax from Continuing Operations | 1,999.14 | 17.55% | 1,555.12 | 16.09% |
| Tax Expenses | ||||
| Current Tax | 509.31 | 4.47% | 452.12 | 4.68% |
| Tax pertaining to earlier years | 0.17 | 0.00% | 28.26 | 0.29% |
| Deferred Tax | 3.85 | 0.03% | (74.95) | (0.78%) |
| Total Tax Expense | 513.33 | 4.51% | 405.43 | 4.19% |
| Restated Profit After Tax for the period from Continuing Operations | 1,485.81 | 13.04% | 1,149.69 | 11.90% |
| Discontinued Operations | ||||
| Profit/ (Loss) from Discontinued Operations before tax | - | - | - | - |
| Gain on disposal of discontinued operations | - | - | - | - |
| Tax expense of discontinued operations | - | - | - | - |
| Restated Profit after tax for the period from discontinued operations | - | - | - | - |
| Restated Profit after tax for the year | ||||
| Restated total comprehensive income for the period net of tax | 1,512.53 | 13.28% | 1,134.77 | 11.74% |
| Other comprehensive income: | ||||
| Items that will not be reclassified to profit or loss in subsequent periods | ||||
| Remeasurements loss of post-employment benefit obligations | 35.71 | 0.31% | (19.94) | (0.21%) |
| Income tax relating to the above item | (8.99) | (0.08%) | 5.02 | 0.05% |
Six months period ended June 30, 2026 compared to six months period ended June 30, 2025
Total income.
Total income increased by 17.87% from Rs9,664.97 million in the six months period ended June 30, 2025 to Rs11,391.68 million in the six months period ended June 30, 2026, primarily driven by higher revenue from operations.Revenue from operations
. Revenue from operations increased by 17.86% from Rs9,603.55 million in the six months period ended June 30, 2025 to Rs11,318.69 million in the six months period ended June 30, 2026, primarily due to an increase in total revenue from contract with customers by 18.73% from Rs9,420.99 million in period ended June 30, 2025 to Rs11,185.23 million in period ended June 30, 2026, which was primarily a result of an increase in revenue from sale of goods that increased by 18.80% from Rs9,392.71 million in period ended June 30, 2025 to Rs11,158.10 million in period ended 30, June 2026.The increase in revenue from sale of goods was driven by growth in our Off-Highway Mobility Industry and Industry & Automation Solutions verticals. Revenue from our Off-Highway Mobility Industry vertical increased by 36.36% from Rs2,349.51 million in the six months period ended June 30, 2025 to Rs3,203.78 million in the six months period ended June 30, 2026, primarily due to higher OEM production volumes and the commencement and ramp-up of supplies under new programmes, including programmes linked to OEM customers supply chain diversification. Revenue from our Industry & Automation Solutions vertical increased by 23.34% from Rs3,902.36 million in the six months period ended June 30, 2025 to Rs4,813.28 million in the six months period ended June 30, 2026, primarily due to higher demand from end-user industries including material handling, mining, construction and wastewater management, across both our direct and dealer channels. Revenue from our Wind Industry vertical was broadly stable at Rs3,096.46 million in the six months period ended June 30, 2026 compared to Rs3,092.33 million in the six months period ended June 30, 2025, as lower exports to the United States, arising from delays in wind turbine installations by our customers, were substantially offset by growth in the domestic market and increased exports to other international markets.
Other income.
Other income increased by 18.84% from Rs61.42 million in the six months period ended June 30, 2025 to Rs72.99 million in the six months period ended June 30, 2026, mainly due to increase in net gain on foreign currency transactionsTotal expenses
. Total expenses increased by 15.82% from Rs8,109.85 million in the six months period ended June 30, 2025 to Rs9,392.54 million in the six months period ended June 30, 2026, which was lower than the growth in our total income. Total expenses as a percentage of total income decreased from 83.91% in the six months period ended June 30, 2025 to 82.45% in the six months period ended June 30, 2026. The increase in total expenses was primarily due to an increase in Materials Cost, employee benefits expense and other expenses in line with the increase in our sales volumes.Cost of raw materials & components consumed.
Cost of raw materials & components consumed increased by 26.17% from Rs5,977.36 million in the six months period ended June 30, 2025 to Rs7,541.76 million in the six months period ended June 30, 2026 on account of higher volumes of raw materials and components consumed to meet the increase in sale of our goods.Changes in inventories of finished goods and work-in-progress.
Changes in inventories of finished goods and work-in-progress was Rs(633.04) million in the six months period ended June 30, 2026, as compared to Rs34.41 million in the six months period ended June 30, 2025, reflecting a build-up of finished goods and work-in-progress inventories during the six months period ended June 30, 2026 to support higher production and sales volumes.Materials Cost.
Materials Cost increased from Rs6,011.77 million in period ended June 30, 2025 to Rs6,908.72 million in period ended June 30, 2026, and represented 62.60% of revenue from operations in period ended June 30, 2025 and 61.04% of revenue from operations in period ended June 30 2026. This was primarily attributable to change in sales mix, increase in price of certain products to pass on inflation in raw material cost and net impact of exchange rate change.Employee benefits expense.
Employee benefits expense increased by 19.77% from Rs492.28 million in the six months period ended June 30, 2025 to Rs589.61 million in the six months period ended June 30, 2026, primarily due to annual increments in salaries and an increase in headcount from 943 employees as of June 30, 2025 to 1032 employees as of June 30, 2026 to support the increase in our production volumes, sales and the commencement of operations at our electric motor line at Mannur . Employee benefits expense represented 5.21% of revenue from operations (continuing operations) in the six months period ended June 30, 2026 compared to 5.13% in the six months period ended June 30, 2025.Depreciation and amortisation expense.
Depreciation and amortisation expense increased by 16.17% from Rs234.02 million in the six months period ended June 30, 2025 to Rs271.87 million in the six months period ended June 30, 2026, primarily due to an increase in depreciation of property, plant and equipment from Rs213.75 million to Rs249.28 million on account of additions to plant and machinery of Rs148.84 million in the six months period ended June 30, 2025 and Rs246.21 million in the six months period ended June 30, 2026, which included additional machines at the machine shop at our Thirumudivakkam facility and, in the six months period ended June 30, 2026, the electric motor production line at our Mannur facility that commenced operations in October 2025. Depreciation and amortisation expense represented 2.40% of revenue from operations in the six months period ended June 30, 2026 compared to 2.44% in the six months period ended June 30, 2025.Finance costs.
Finance costs increased by 11.38% from Rs36.56 million in the six months period ended June 30, 2025 to Rs40.72 million in the six months period ended June 30, 2026. We had no outstanding borrowings as of June 30, 2026. Finance costs during the period primarily comprised charges associated with early payment arrangements with certain customers, under which receivables otherwise payable under normal credit terms may be settled earlier at an agreed discount, together with interest on lease liabilities and other borrowing costs.Other expenses.
Other expenses increased by 18.45% from Rs1,335.22 million in the six months period ended June 30, 2025 to Rs1,581.62 million in the six months period ended June 30, 2026, in line with the increase in our revenue from operations and represented 13.97% of revenue from operations in the six months period ended June 30, 2026 compared to 13.90% in the six months period ended June 30, 2025. The increase in other expenses was primarily attributable to:- Royalty, which increased by 17.90% from Rs430.33 million in the six months period ended June 30, 2025 to Rs507.36 million in the six months period ended June 30, 2026, in line with growing sales of products on which royalty is payable.
- Professional fees, which increased by 24.49% from Rs228.18 million, or 2.38% of revenue from operations in the six months period ended June 30, 2025 to Rs284.05 million, or 2.51% of revenue from operations in the six months period ended June 30, 2026, primarily attributable to the foreign exchange impact on Group cost-sharing charges allocated under the Intra-Group Services Agreement.
- Power and fuel expenses, which increased by 7.73% from Rs109.95 million, or 1.14% of revenue from operations, in the six months period ended June 30, 2025 to Rs118.45 million, or 1.05% of revenue from operations, in the six months period ended June 30, 2026. The increase was lower than the growth in our revenue from operations, reflecting increased productivity and improved product mix.
Tax expense .
Total tax expense increased by 26.61% from Rs405.43 million in the six months period ended June 30, 2025 to Rs513.33 million in the six months period ended June 30, 2026.Restated profit after tax for the period from continuing operations.
As a result of the foregoing, restated profit after tax for the period from continuing operations increased by 29.24% from Rs1,149.69 million in the six months period ended June 30, 2025 to Rs1,485.81 million in the six months period ended June 30, 2026.Fiscals 2025, 2024 and 2023
The following table sets forth our selected restated financial data derived from our restated statement of profit and loss for Fiscals 2025, 2024 and 2023, the components of which are also expressed as a percentage of total income for such years:
| Particulars | For the years ended | |||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||
| Amount (Rs million) | Percentage of total income (%) | Amount (Rs million) | Percentage of total income (%) | Amount (Rs million) | Percentage of total income (%) | |
| Continuing Operations | ||||||
| Income | ||||||
| Revenue from operations | 20,135.26 | 99.50% | 18,541.83 | 99.63% | 16,873.30 | 99.15% |
| Other income | 100.63 | 0.50% | 69.72 | 0.37% | 144.71 | 0.85% |
| Total income | 20,235.89 | 100.00% | 18,611.55 | 100.00% | 17,018.01 | 100.00% |
| Expenses | ||||||
| Cost of raw materials & components consumed | 11,967.18 | 59.14% | 11,854.27 | 63.69% | 11,104.93 | 65.25% |
| Changes in inventories of finished goods and work-in-progress | 542.53 | 2.68% | (64.11) | (0.34%) | (268.86) | (1.58%) |
| Employee benefits expense | 1,062.70 | 5.25% | 982.19 | 5.28% | 896.70 | 5.27% |
| Finance costs | 77.77 | 0.38% | 104.18 | 0.56% | 130.92 | 0.77% |
| Depreciation and amortisation expense | 478.23 | 2.36% | 466.29 | 2.51% | 370.99 | 2.18% |
| Other expenses | 2,855.15 | 14.11% | 2,818.74 | 15.15% | 2,701.62 | 15.88% |
| Total expenses | 16,983.56 | 83.93% | 16,161.56 | 86.84% | 14,936.30 | 87.77% |
| Restated profit before tax from continuing operations | 3,252.33 | 16.07% | 2,449.99 | 13.16% | 2,081.71 | 12.23% |
| Tax expense | ||||||
| Current tax | 818.82 | 4.05% | 577.06 | 3.10% | 560.85 | 3.30% |
| Tax pertaining to earlier years | 61.21 | 0.30% | (58.58) | (0.31%) | 73.52 | 0.43% |
| Deferred tax | (6.44) | (0.03%) | 15.53 | 0.08% | (19.31) | (0.11%) |
| Total tax expense | 873.59 | 4.32% | 534.01 | 2.87% | 615.06 | 3.61% |
| Restated profit after tax for the year from continuing operations | 2,378.74 | 11.76% | 1,915.98 | 10.29% | 1,466.65 | 8.62% |
| Discontinued Operations | ||||||
| Profit from Discontinued Operations before tax | - | - | 22.06 | 0.12% | 24.41 | 0.14% |
| Gain on disposal of discontinued operations | - | - | 23.74 | 0.13% | - | - |
| Tax expenses of discontinued operations | - | - | (10.14) | (0.05%) | (6.14) | (0.04%) |
| Restated Profit after tax for the year from discontinued operations | - | - | 35.66 | 0.19% | 18.27 | 0.11% |
| Restated Profit after tax for the year | 2,378.74 | 11.76% | 1,951.64 | 10.49% | 1,484.92 | 8.73% |
| Restated total comprehensive income for the year net of tax | 2,361.39 | 11.67% | 1,944.94 | 10.45% | 1,444.88 | 8.49% |
| Other comprehensive income: | ||||||
| Items that will not be reclassified to profit or loss in subsequent periods | ||||||
| Remeasurements loss of post-employment benefit obligations | (23.19) | (0.11%) | (8.95) | (0.05%) | (53.51) | (0.31%) |
| Income tax relating to the above item | 5.84 | 0.03% | 2.25 | 0.01% | 13.47 | 0.08% |
Fiscal 2025 compared to Fiscal 2024
In Fiscal 2025, we recorded a non-recurring income from secondary adjustment as per transfer pricing regulations amounting to Rs80.32 million. The income was recognized further to the settlement of a dispute with the Indian income tax authorities under the Vivad se Vishwas scheme with respect to transfer pricing adjustments by the Company. As the dispute with the income tax department was regarding disallowance of certain cost-sharing expenses under the Intercompany Service Agreement with BSPA, on settlement of the dispute, the adjusted amount of Rs80.32 million was recovered from BSPA in accordance with the secondary adjustment provisions provided under the Income Tax Act, 1961.
Total income (continuing operations).
Total income (continuing operations) increased by 8.73% from Rs18,611.55 million in Fiscal 2024 to Rs20,235.89 million in Fiscal 2025, primarily driven by growth in revenue from operations (continuing operations).Revenue from operations (continuing operations).
Revenue from operations (continuing operations) increased by 8.59% from Rs18,541.83 million in Fiscal 2024 to Rs20,135.26 million in Fiscal 2025, primarily due to an increase in total revenue from contract with customers by 9.17% from Rs18,161.30 million in Fiscal 2024 to Rs19,826.95 million in Fiscal 2025, which was primarily a result of an increase in revenue from sale of goods that increased by 9.00% from Rs18,119.35 million in Fiscal 2024 to Rs19,749.40 million in Fiscal 2025.The increase in revenue from sale of goods was driven by growth across each of our business verticals. Revenue from our Off-Highway Mobility Industry vertical increased by 16.35% from Rs4,357.92 million in Fiscal 2024 to Rs5,070.48 million in Fiscal 2025, primarily due to higher production volumes at our OEM customers in the construction and agricultural equipment segments. Revenue from our Industry & Automation Solutions vertical increased by 7.79% from Rs7,648.89 million in Fiscal 2024 to Rs8,244.39 million in Fiscal 2025, primarily due to increase in demand from textile, leather and construction sectors. Revenue from our Wind Industry vertical increased by 5.90% from Rs5,994.29 million in Fiscal 2024 to Rs6,347.70 million in Fiscal 2025. During Fiscal 2025, revenue from customers in the United States increased significantly, while revenue from certain other export markets declined and the domestic wind market recorded high-single-digit growth. The diversification of our customer and geographic exposure enabled us to deliver overall growth in the Wind Industry vertical despite differing demand conditions across individual markets.
The increase in revenue from operations (continuing operations) was also partially offset by a decrease in other operating revenue (continuing operations) that decreased from Rs380.53 million in Fiscal 2024 to Rs308.31 million in Fiscal 2025, primarily due to decrease in non-recurring revenue from secondary adjustment as per the transfer pricing regulations of Rs80.32 million recognized in Fiscal 2025 compared to Rs140.63 million recognized in Fiscal 2024.
Other income.
Other income (continuing operations) increased by 44.33% from Rs69.72 million in Fiscal 2024 to Rs100.63 million in Fiscal 2025, mainly due to an increase in interest income on bank deposits, which increased from Rs53.14 million in Fiscal 2024 to Rs69.21 million in Fiscal 2025 on account of increase in our cash deposits.Total expenses (continuing operations).
increased by 5.09% from Rs16,161.56 million in Fiscal 2024 to Rs16,983.56 million in Fiscal 2025, which was lower than the growth in our total income, and total expenses as a percentage of total income decreased from 86.84% in Fiscal 2024 to 83.93% in Fiscal 2025.Cost of raw materials & components consumed (continuing operations).
Cost of raw materials & components consumed (continuing operations) increased by 0.95% from Rs11,854.27 million in Fiscal 2024 to Rs11,967.18 million in Fiscal 2025 on account of higher volumes of raw materials and components consumed to meet an increase in sale of our goods.Changes in inventories of finished goods and work-in-progress (continuing operations).
Changes in inventories of finished goods and work-in-progress was Rs542.53 million in Fiscal 2025, as compared to Rs(64.11) million in Fiscal 2024. For Fiscal 2025, we had stock as at the beginning of the year of Rs1,570.69 million and stock as at the end of the year of Rs1,028.16 million. For Fiscal 2024, the stock as at the beginning of the year was Rs1,506.58 million and the stock as at the end of the year was Rs1,570.69 million. The decrease in inventory in Fiscal 2025 was primarily due to the delivery during Fiscal 2025 of products manufactured towards the end of Fiscal 2024.Materials Cost (continuing operations).
Materials Cost (continuing operations) increased from Rs11,790.16 million in Fiscal 2024 to Rs12,509.71 million in Fiscal 2025 and represented 63.59% of revenue from operations (continuing operations) in Fiscal 2024 and 62.13% of revenue from operations (continuing operations) in Fiscal 2025. This decrease in Materials Cost (continuing operations) as percent of revenue from operations (continuing operations) was primarily attributable to increasing localization of raw material procurement and efficient procurement strategies.Employee benefits expense (continuing operations).
Employee benefits expense (continuing operations) increased by 8.20% from Rs982.19 million, or 5.30% of revenue from operations (continuing operations) in Fiscal 2024 to Rs1,062.70 million, or 5.28% of revenue from operations (continuing operations) in Fiscal 2025, primarily due to an increase in salaries, wages and bonus that increased by 6.74% from Rs849.21 million in Fiscal 2024 to Rs906.42 million in Fiscal 2025, as a result of increase in head count from 968 at end of Fiscal 2024 to 987 at end of Fiscal 2025 to support higher production and sales, and annual increments in salaries.Depreciation and amortisation expense (continuing operations).
Depreciation and amortisation expense increased by 2.56% from Rs466.29 million for Fiscal 2024 to Rs478.23 million for Fiscal 2025, primarily due to an increase in depreciation of property, plant and equipment from Rs421.67 million in Fiscal 2024 to Rs435.08 million in Fiscal 2025, which was due to addition of machinery to meet production requirements.Finance costs (continuing operations).
Finance costs decreased by 25.35% from Rs104.18 million in Fiscal 2024 to Rs77.77 million in Fiscal 2025. We had nil borrowings during both these periods and Finance costs during the period primarily comprised charges associated with early payment arrangements with certain customers, under which receivables otherwise payable under normal credit terms may be settled earlier at an agreed discount, together with interest on lease liabilities and other borrowing costs.Other expenses. (continuing operations)
increased by 1.29% from Rs2,818.74 million in Fiscal 2024 to Rs2,855.15 million in Fiscal 2025, which was lower than the growth in our revenue from operations, and other expenses as a percentage of revenue from operations (continuing operations) decreased from 15.20% in Fiscal 2024 to 14.18% in Fiscal 2025. The increase in other expenses (continuing operations) was primarily attributable to:- Royalty, which increased by 8.97% from Rs822.09 million, or 4.43% of revenue from operations (continuing operations) in Fiscal 2024 to Rs895.87 million, or 4.45% of revenue from operations (continuing operations) in Fiscal 2025, in line with growing sales of products on which royalty is payable.
- Professional fees, which increased by 4.99% from Rs453.06 million, or 2.44% of revenue from operations (continuing operations) in Fiscal 2024 to Rs475.67 million, or 2.36% of revenue from operations (continuing operations) in Fiscal 2025
- Power and fuel expenses, which increased by 4.98% from Rs213.74 million in Fiscal 2024, or 1.15% of revenue from operations (continuing operations) to Rs224.39 million, or 1.11% of revenue from operations (continuing operations) in Fiscal 2025. The reduction in Power and fuel expenses as percent of revenue from operations (continuing operations) was on account of improved efficiency in our manufacturing processes.
These increases were partially offset by lower sub-contracting charges, which decreased by 17.32% from Rs430.80 million, or 2.32% of revenue from operations (continuing operations) in Fiscal 2024 to Rs356.19 million, or 1.77% of revenue from operations (continuing operations) in Fiscal 2025, notwithstanding the increase in our production volumes due to in-sourcing of manufacturing processes at our Thirumudivakkam facility
Total tax expense (continuing operations).
Total tax expense (continuing operations) increased by 63.59% from Rs534.01 million in Fiscal 2024 to Rs873.59 million in Fiscal 2025. This was primarily due to an increase in tax expenses pertaining to earlier years, which shifted from a credit of Rs58.58 million in Fiscal 2024 of Rs61.21 million in Fiscal 2025. This increase was partially offset by a decrease in deferred tax, which shifted from an expense of Rs15.53 million in Fiscal 2024 of Rs6.44 million in Fiscal 2025.Restated profit after tax for the year from continuing operations.
As a result of the foregoing, restated profit after tax for the year from continuing operations increased by 24.15% from Rs1,915.98 million in Fiscal 2024 to Rs2,378.74 million in Fiscal 2025.Restated profit after tax for the year.
Restated profit after tax for the year increased by 21.88% from Rs1,951.64 million in Fiscal 2024 to Rs2,378.74 million in Fiscal 2025, primarily due to an increase in revenue from operations (continuing operations) by 8.59% from Rs18,541.83 million in Fiscal 2024 to Rs20,135.26 million in Fiscal 2025, and a reduction in raw material prices and increasing localisation of raw material procurement. As a result, total expense as a percentage of revenue from operations decreased from 87.16% in Fiscal 2024 to 84.35% in Fiscal 2025.Fiscal 2024 compared to Fiscal 2023
In Fiscal 2024, we recorded an income from secondary adjustment as per transfer pricing regulations amounting to Rs140.63 million. The income was recognized further to the settlement of a dispute with the Indian income tax authorities under the Vivad se Vishwas scheme with respect to transfer pricing adjustments by the Company. As the dispute with the income tax department was regarding disallowance of certain cost-sharing expenses under the Intercompany Service Agreement with BSPA, on settlement of the dispute, the adjusted amount of Rs140.63 million was recovered from BSPA in accordance with the secondary adjustment provisions provided under the Income Tax Act, 1961.
Total income (continuing operations).
Total income (continuing operations) increased by 9.36% from Rs17,018.01 million in Fiscal 2023 to Rs18,611.55 million in Fiscal 2024, primarily driven by higher revenue from operations (continuing operations).Revenue from operations (continuing operations).
Revenue from operations (continuing operations) increased by 9.89% from Rs16,873.30 million in Fiscal 2023 to Rs18,541.83 million in Fiscal 2024, primarily due to an increase in total revenue from contract with customers by 8.82% from Rs16,689.15 million in Fiscal 2023 to Rs18,161.30 million in Fiscal 2024, which was primarily a result of an increase in revenue from sale of goods that increased by 8.89% from Rs16,639.37 million in Fiscal 2023 to Rs18,119.35 million in Fiscal 2024.The increase in revenue from sale of goods was driven by an increase in sale of gear boxes that increased by 15.15% from Rs9,615.62 million in Fiscal 2023 to Rs11,072.63 million in Fiscal 2024, primarily as a result of an increase in sales to customers in the Wind Solutions vertical. Revenue from our Wind Solutions vertical increased by 19.66% from Rs5,009.58 million in Fiscal 2023 to Rs5,994.29 million in Fiscal 2024, which was largely attributable to an increase in order size/ price of an order placed by a customer in the United States. As per Ind AS - 108, Operating Segments, our revenue from customers in the United States increased by 52.47% from Rs1,577.45 million in Fiscal 2023 to Rs2,405.17 million in Fiscal 2024.
The increase in revenue from operations (continuing operations) was also attributable to an increase in other operating revenue (continuing operations) that increased from Rs184.15 million in Fiscal 2023 to Rs380.53 million in Fiscal 2024, primarily due to revenue from secondary adjustment as per transfer pricing regulations of Rs140.63 million recognized in Fiscal 2024, while no such revenue was recognized in Fiscal 2023. This income arose from a dispute with the income tax department regarding disallowance of certain cost-sharing expenses under the Intercompany Service Agreement with BSPA, which was subsequently settled under the Vivad se Vishwas scheme in Fiscal 2025.
Other income.
Other income (continuing operations) decreased by 51.82% from Rs144.71 million in Fiscal 2023 to Rs69.72 million in Fiscal 2024, mainly due to lower interest income on bank deposits, which declined from Rs138.85 million in Fiscal 2023 to Rs53.14 million in Fiscal 2024.Total expenses (continuing operations).
Total expenses (continuing operations) increased by 8.20% from Rs14,936.30 million in Fiscal 2023 to Rs16,161.56 million in Fiscal 2024, mainly due to an increase in depreciation (continuing operations), cost of raw materials & components consumed (continuing operations), employee benefits expense (continuing operations) and other operating expenses (continuing operations).Cost of raw materials & components consumed (continuing operations).
Cost of raw materials & components consumed (continuing operations) increased by 6.75% from Rs11,104.93 million in Fiscal 2023 to Rs11,854.27 million in Fiscal 2024 on account of higher volumes of raw materials and components consumed to meet an increase in sale of our goods.Changes in inventories of finished goods and work-in-progress (continuing operations).
Inventories of finished goods and work-in-progress was Rs(64.11) million for Fiscal 2024, as compared to Rs(268.86) million for Fiscal 2023. For Fiscal 2024, we had stock as at the beginning of the year of Rs1,506.58 million and stock as at the end of the year of Rs1,570.69 million. For Fiscal 2023, the stock as at the beginning of the year was Rs1,237.72 million and the stock as at the end of the year was Rs1,506.58 million. The increase in inventory in Fiscal 2024 was primarily to meet the increase in sale of our products.Materials Cost (continuing operations).
Materials Cost (continuing operations) increased from Rs10,836.07 million in Fiscal 2023 to Rs11,790.16 million in Fiscal 2024, and represented 64.22% of revenue from operations (continuing operations) in Fiscal 2023 and 63.59% of revenue from operations (continuing operations) in Fiscal 2024. This was primarily attributable to a reduction in raw material prices.Employee benefits expense (continuing operations).
Employee benefits expense (continuing operations) increased by 9.53% from Rs896.70 million in Fiscal 2023 to Rs982.19 million in Fiscal 2024, primarily due to an increase in salaries, wages and bonus that increased by 8.16% from Rs785.17 million in Fiscal 2023 to Rs849.21 million in Fiscal 2024, as a result of annual increments in salaries.Depreciation and amortisation expense (continuing operations).
Depreciation and amortisation expense increased by 25.69% from Rs370.99 million for Fiscal 2023 to Rs466.29 million for Fiscal 2024, primarily due to an increase in depreciation of property, plant and equipment from Rs319.37 million in Fiscal 2023 to Rs421.67 million in Fiscal 2024, which was due to establishment of the new assembly facility at Talegaon, Pune in the fourth quarter of 2023.Finance costs (continuing operations).
Finance costs decreased by 20.42% from Rs130.92 million in Fiscal 2023 to Rs104.18 million in Fiscal 2024 as we repaid our outstanding loans leading to reduced interest payments in the period. As a result of such repayment during the year ended December 31, 2024, we had nil borrowings as at December 31, 2024.Other expenses (continuing operations).
Other expenses (continuing operations) increased by 4.34% from Rs2,701.62 million in Fiscal 2023 to Rs2,818.74 million in Fiscal 2024. This increase was primarily attributable to:- Higher royalty, which increased by 9.27% from Rs752.35 million in Fiscal 2023 to Rs822.09 million in Fiscal 2024, as a result of higher sales.
- Power and fuel expenses (continuing operations), which increased by 20.36% from Rs177.59 million in Fiscal 2023 to Rs213.74 million in Fiscal 2024, mainly due to an increase in production to meet the increase in sales/ orders placed, and partly due to an increase in the per unit cost of electricity as prices were hiked by the state electricity board of Maharashtra and Tamil Nadu.
- Allowance for doubtful debts which increased from no such allowance in Fiscal 2023 to Rs23.24 million in Fiscal 2024, as a result of non-payment of dues by one of our OEM customers in Fiscal 2024.
Total tax expense (continuing operations).
Total tax expense (continuing operations) decreased by 13.18% from Rs615.06 million in Fiscal 2023 to Rs534.01 million in Fiscal 2024. This was primarily due to tax expenses pertaining to earlier years decreasing from a charge of Rs73.52 million in Fiscal 2023 to a credit of Rs58.58 million in Fiscal 2024. This decrease was partially offset by the increase in deferred tax, which shifted from a credit of Rs19.31 million in Fiscal 2023 to an expense of Rs15.53 million in Fiscal 2024.Restated profit after tax for the year from continuing operations.
As a result of the foregoing, restated profit after tax for the year from continuing operations increased by 30.64% from Rs1,466.65 million in Fiscal 2023 to Rs1,915.98 million in Fiscal 2024.Restated profit after tax for the year.
Restated profit after tax for the year increased by 31.43% from Rs1,484.92 million in Fiscal 2023 to Rs1,951.64 million in Fiscal 2024, primarily due to an increase in revenue from operations (continuing operations) by 9.89% from Rs16,873.30 million in Fiscal 2023 to Rs18,541.83 million in Fiscal 2024 due to increase in sales, and cost rationalization measures such as reduction in warranty cost and decrease in professional fees. In addition, we had nil net loss on foreign currency transactions in Fiscal 2024 compared to a net loss on foreign currency transactions of Rs25.35 million in the Fiscal 2023. As a result, total expense as a percentage of revenue from operations reduced from 88.52% in Fiscal 2023 to 87.16% in Fiscal 2024.Discontinued Operations
During the year ended December 31, 2024, our Company transferred a portion of its business that undertook IT related and R&D functions to a newly incorporated entity under the Bonfiglioli Group. The India R&D centre is currently located in Chennai (Tamil Nadu). The portion of the business that was transferred is referred to as our "discontinued operations", and the transfer was completed on September 30, 2024.
The table below sets forth information on the impact of the discontinued operations on our continuing operations, for the periods/years indicated:
| Particulars | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | For the year ended December 31, 2025 | For the year ended December 31, 2024 | For the year ended December 31, 2023 |
| Profit from discontinued operations before tax (Rs million) (A) | - | - | - | 22.06 | 24.41 |
| Restated profit before tax from continuing operations (Rs million) (B) | 1,999.14 | 1,555.12 | 3,252.33 | 2,449.99 | 2,081.71 |
| Profit from discontinued operations before tax as a percentage of Restated profit before tax from continuing operations (%) (A/B) | - | - | - | 0.90% | 1.17% |
| Tax expenses of discontinued operations (Rs million) (A) | - | - | - | (10.14) | (6.14) |
| Total tax expense (Rs million) (B) | 513.33 | 405.43 | 873.59 | 534.01 | 615.06 |
| Tax expenses of discontinued operations as a percentage of Total tax expense (%) (A/B) | - | - | - | (1.90%) | (1.00%) |
Liquidity and Capital Resources
Historically, our primary liquidity requirements have been to fund our working capital needs for our operations. We have met these requirements through cash flows from operations and equity infusions from our Promoter. As of June 30, 2026, we had cash and cash equivalents of Rs1,401.70 million. We believe that, after taking into account the expected cash to be generated from operations, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure and working capital for 12 months following the date of this Red Herring Prospectus.
Cash Flows
The following table summarizes our statements of cash flows for the period/years presented:
| Particulars | For the six months period ended June 30, 2026 | For the six months period ended June 30, 2025 | For the year ended December 31, 2025 | For the year ended December 31, 2024 | For the year ended December 31, 2023 |
| (Rs in million) | |||||
| Net cash inflow from operating activities (A) | 1,298.96 | 686.53 | 1,876.81 | 1,883.50 | 1,982.28 |
| Cash flow from / (used) investing activities – continuing and discontinued operations (B) | (260.58) | (1,827.99) | (523.79) | 1,093.95 | (999.23) |
| Net cash used from financing activities (C) | (1,168.49) | (54.40) | (1,267.88) | (2,436.10) | (1,164.44) |
| Net increase / (decrease) in cash and cash equivalents (A+B+C) | (130.11) | (1,195.86) | 85.14 | 541.35 | (181.39) |
| Cash and cash equivalents at beginning of the period / year | 1,531.81 | 1,446.67 | 1,446.67 | 905.32 | 1,086.71 |
| Cash and cash equivalents at end of the period / year | 1,401.70 | 250.81 | 1,531.81 | 1,446.67 | 905.32 |
Operating Activities
Six months period ended June 30, 2026
In the six months period ended June 30, 2026, net cash inflow from operating activities was Rs1,298.96 million. Restated profit before tax from continuing and discontinued operations was Rs1,999.14 million in the six months period ended June 30, 2026 and adjustments to reconcile restated profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortisation expense of Rs250.28 million, depreciation of right-of-use asset of Rs21.59 million, finance cost excluding interest on lease liabilities of Rs39.92 million and provision for product warranty of Rs14.48 million. Operating profit before working capital changes was Rs2,270.39 million in the six months period ended June 30, 2026. The main working capital adjustments in the six months period ended June 30, 2026 included increase in inventories of Rs583.93 million, primarily on account of a build-up of inventory of certain components (particularly imported components) to support higher production requirements and mitigate supply-chain and logistics risks, decrease in other financial liabilities of Rs243.31 million, increase in trade receivables of Rs169.08 million and decrease in provisions of Rs95.76 million, partially offset by an increase in trade payables of Rs428.21 million. Cash generated from operations in the six months period ended June 30, 2026 amounted to Rs1,683.71 million. Tax paid (continuing & discontinued operations) - net of refunds amounted to Rs384.75 million. As a result, net cash inflow from operating activities in the six months period ended June 30, 2026 was Rs1,298.96 million.
Six months period ended June 30, 2025
In the six months period ended June 30, 2025, net cash inflow from operating activities was Rs686.53 million. Restated profit before tax from continuing and discontinued operations was Rs1,555.12 million in the six months period ended June 30, 2025 and adjustments to reconcile restated profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortisation expense of Rs214.67 million, depreciation of right-of-use asset of Rs19.35 million, finance cost excluding interest on lease liabilities of Rs34.41 million and provision for product warranty of Rs4.56 million. Operating profit before working capital changes was Rs1,759.19 million in the six months period ended June 30, 2025. The main working capital adjustments in the six months period ended June 30, 2025 included decrease in other financial liabilities of Rs234.60 million, increase in trade receivables of Rs307.58 million, partially offset by an increase in trade payables of Rs152.64 million. Cash generated from operations in the six months period ended June 30, 2025 amounted to Rs906.69 million. Tax paid (continuing & discontinued operations) - net of refunds amounted to Rs220.16million. As a result, net cash inflow from operating activities in the six months period ended June 30, 2025 was Rs686.53 million.
Fiscal 2025
In Fiscal 2025, net cash inflow from operating activities was Rs1,876.81 million. Restated profit before tax from continuing and discontinued operations was Rs3,252.33 million in Fiscal 2025 and adjustments to reconcile restated profit before tax to operating profit before working capital changes consisted of depreciation and amortisation expense of Rs436.79 million, depreciation of right-of-use asset of Rs41.44 million, finance cost excluding interest on lease liabilities of Rs74.04 million and provision for product warranty of Rs60.85 million. Operating profit before working capital changes was Rs3,764.77 million in Fiscal 2025. The main working capital adjustments in Fiscal 2025 included increase in trade receivables of Rs1,083.44 million, increase in other assets of Rs325.78 million and decrease in other financial liabilities of Rs5.14 million, partially offset by an increase in trade payables of Rs203.26 million. Cash generated from operations in Fiscal 2025 amounted to Rs2,635.89. million. Tax paid (continuing & discontinued operations) - net of refunds amounted to Rs759.08 million. As a result, net cash inflow from operating activities in Fiscal 2025 was Rs1,876.81 million.
Fiscal 2024
In Fiscal 2024, net cash inflow from operating activities was Rs1,883.50 million. Restated profit before tax from continuing and discontinued operations was Rs2,495.79 million in Fiscal 2024 and adjustments to reconcile restated profit before tax to operating profit before working capital changes consisted of depreciation and amortisation expense of Rs407.59 million, depreciation of right-of-use asset of Rs42.67 million, finance cost excluding interest on lease liabilities of Rs97.21 million and provision for product warranty of Rs82.25 million. Operating profit before working capital changes was Rs3,026.63 million in Fiscal 2024. The main working capital adjustments in Fiscal 2024 included decrease in trade payables of Rs677.10 million, increase in other financial assets of Rs249.16 million, increase in other financial liabilities of Rs34.87 million and decrease in provisions of Rs124.42 million. Cash generated from operations in Fiscal 2024 amounted to Rs2,406.81 million. Tax paid (continuing & discontinued operations) - net of refunds amounted to Rs567.90 million and cash flow from operating activities – discontinued operations was Rs44.59 million. As a result, net cash inflow from operating activities in Fiscal 2024 was Rs1,883.50 million.
Fiscal 2023
In Fiscal 2023, net cash inflow from operating activities was Rs1,982.28 million. Restated profit before tax from continuing and discontinued operations was Rs2,106.12 million in Fiscal 2023 and adjustments to reconcile restated profit before tax to operating profit before working capital changes consisted of depreciation and amortisation expense of Rs320.89 million, depreciation of right-of-use asset of Rs50.10 million, finance cost excluding interest on lease liabilities of Rs125.59 million and provision for product warranty of Rs100.62 million. Operating profit before working capital changes was Rs2,567.07 million in Fiscal 2023. The main working capital adjustments in Fiscal 2023 included increase in inventories of Rs694.37 million, increase in trade receivables of Rs308.56 million and increase in other assets of Rs135.73 million which was partially offset by an increase in trade payables of Rs935.74 million. Cash generated from operations in Fiscal 2023 was Rs2,557.28 million. Tax paid (continuing & discontinued operations) - net of refunds amounted to Rs616.90 million, and cash flow from operating activities – discontinued operations amounts to Rs41.90 million. As a result, net cash inflow from operating activities in Fiscal 2023 was Rs1,982.28 million.
Investing Activities
Six months period ended June 30, 2026
Cash flow used investing activities – continuing and discontinued operations was Rs(260.58) million in the six months ended June 30, 2026, primarily on account of proceeds from the deposits matured during the period of Rs100.00 million, which was partially offset by deposits made during the periodof Rs4.44 million and purchase of property, plant and equipment and intangible assets of Rs409.22 million.
Six months period ended June 30, 2025
Cash flow used investing activities – continuing and discontinued operations was Rs(1827.99) million in the six months ended June 30, 2025, primarily on account of deposits made during the period of Rs1,638.33 million and purchase of property, plant and equipment and intangible assets of Rs247.99 million, which was partially offset by proceeds from the deposits matured during the period of Rs0.12 million.
Fiscal 2025
Cash flow used investing activities – continuing and discontinued operations was Rs(523.79) million in Fiscal 2025, primarily on account of deposits made during the year of Rs1,200.15 million and purchase of property, plant and equipment and intangible assets of Rs539.77 million, which was partially offset by proceeds from the deposits matured during the year of Rs1,100.94 million.
Fiscal 2024
Cash flow from investing activities – continuing and discontinued operations was Rs1,093.95 million in Fiscal 2024, primarily on account of proceeds from the deposits matured during the year of Rs2,200.00 million, which was partially offset by deposits made during the year of Rs500.80 million and purchase of property, plant and equipment and intangible assets of Rs430.77 million.
Fiscal 2023
Cash flow used investing activities – continuing and discontinued operations was Rs(999.23) million in Fiscal 2023, primarily on account of deposits made during the year of Rs4,740.10 million and purchase of property, plant and equipment and intangible assets of Rs1,201.21 million, which was partially offset by proceeds from the deposits matured during the year of Rs4,870.40 million.
Financing Activities
Six months period ended June 30, 2026
Net cash used from financing activities was Rs(1,168.49) million in the six months ended June 30, 2026, primarily on account of payment of dividend of Rs1,099.78 million and interest paid of Rs47.68 million. The higher financing cash outflow in the six months period ended June 30, 2026 compared to the corresponding period in the previous year was primarily attributable to the timing of dividend payments. A dividend of Rs1,099.78 million was paid during the six months period ended June 30, 2026, whereas the dividend payment in the previous Fiscal occurred in the second half of the year.
Six months period ended June 30, 2025
Net cash used from financing activities was Rs(54.40) million in the six months period ended June 30, 2025, primarily on account of interest paid of Rs34.41 million and payment of principal portion of lease liabilities of Rs17.84 million.
Fiscal 2025
Net cash used from financing activities was Rs(1,267.88) million in Fiscal 2025, primarily on account of payment of dividend of Rs1,153.05 million and interest paid of Rs74.04 million.
Fiscal 2024
Net cash used from financing activities was Rs(2,436.10) million in Fiscal 2024, primarily on account of repayments of borrowings of Rs1,607.86 million, payment of dividend of Rs463.72 million, buyback of shares of Rs720.00 million and interest paid of Rs99.07 million, partially offset by proceeds from borrowings of Rs500.00 million.
Fiscal 2023
Net cash used from financing activities was Rs(1,164.44) million in Fiscal 2023, primarily on account of repayment of borrowings of Rs3,319.60 million and payment of dividend of Rs655.60 million, which was partially offset by proceeds from borrowings of Rs2,990.00 million.
Indebtedness
For information on our outstanding indebtedness as of June 30, 2026, see "Financial Indebtedness" on page 398.
Capital Expenditures
Our historical capital expenditures were, and we expect our future capital expenditures to be, primarily for purchase of property, plant and equipment. In the six months period ended June 30, 2026 and 2025 and in Fiscals 2025, 2024 and 2023, capital expenditure towards additions to our property, plant and equipment, intangible assets, and right of use asset, were as follows:
| Particulars | Six months period ended June 30, 2026 | Six months period ended June 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| (Rs million) | |||||
| Additions: | |||||
| Property, plant and equipment (A) | 257.68 | 184.92 | 508.12 | 556.72 | 1,210.30 |
| Intangible assets (B)(1) | 0.59 | 2.04 | 2.05 | 9.10 | 14.02 |
| Right of Use Asset (C) | - | 96.64 | 96.61 | 7.40 | 103.04 |
| Total (D=A+B+C) | 258.27 | 283.60 | 606.78 | 573.22 | 1,327.36 |
Note: (1) Intangible assets primarily comprise computer software.
The table below sets forth the break-up of additions to property, plant and equipment in the six months period ended June 30, 2026 and 2025 and in Fiscals 2025, 2024 and 2023:
| Particulars | Six months period ended June 30, 2026 | Six months period ended June 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| (Rs million) | |||||
| Buildings (A) | 1.58 | 21.46 | 21.64 | 3.70 | 461.57 |
| Plant and machinery (B) | 246.21 | 148.84 | 451.81 | 518.52 | 636.16 |
| Furniture and fixtures (C) | 0.86 | 0.67 | 0.67 | 0.40 | 11.79 |
| Office equipments (including computers) (D) | 7.29 | 3.38 | 23.43 | 15.60 | 91.47 |
| Vehicles (E) | 1.74 | 10.57 | 10.57 | 18.50 | 9.31 |
| Total additions to property, plant and equipment (F=A+B+C+D+E) | 257.68 | 184.92 | 508.12 | 556.72 | 1,210.30 |
Our additions to property, plant and equipment in Fiscal 2023 of Rs1,210.30 million primarily related to the establishment of our assembly facility at Talegaon, Maharashtra, and comprised buildings of Rs461.57 million and plant and machinery of Rs636.16 million. Our additions in Fiscal 2024, Fiscal 2025 and the six months period ended June 30, 2026 primarily comprised plant and machinery of Rs518.52 million, Rs451.81 million and Rs246.21 million, respectively, including additional machines at the machine shop at our Thirumudivakkam facility to increase our in-house machining capacity and, in Fiscal 2025, the production line for electric motors at our Mannur facility. As of June 30, 2026, the estimated amount of contracts remaining to be executed on capital account and not provided for was Rs571.74 million. For details, see "– Contingent Liabilities and Commitments" on page 381.
Total assets decreased by 8.17% from Rs14,147.15 million as at December 31, 2023 to Rs12,990.76 million as at December 31, 2024, primarily due to a decrease in inventories by 3.27% from Rs3,322.79 million as at December 31, 2023 to Rs3,214.17 million as at December 31, 2024 and a decrease in bank balances other than cash and cash equivalents from Rs1,700.12 million as at December 31, 2023 to Rs0.94 million as at December 31, 2024.
Contractual Obligations
The table below sets forth our contractual obligations as at June 30, 2026. These obligations primarily relate to our contractual maturities of financial liabilities such as trade payables, other financial liabilities and lease liabilities:
| Particulars | Carrying value | Less than 6 months | 6 months to 1 year | More than 1 year |
| (Rs million) | ||||
| Trade Payables (includes total outstanding dues of micro and small enterprises and total outstanding dues of creditors other than micro and small enterprises) (A) | 3,712.06 | 3,698.40 | - | 13.66 |
| Other financial liabilities (B) | 124.44 | 106.41 | - | 18.03 |
| - Current | 106.41 | 106.41 | - | - |
| - Non-current | 18.03 | - | - | 18.03 |
| Lease liabilities (C) | 7.89 | 4.69 | - | 3.20 |
| - Current | 4.69 | 4.69 | - | - |
| - Non-current | 3.20 | - | - | 3.20 |
| Total (A+B+C) | 3,844.39 | 3,809.50 | - | 34.89 |
Contingent Liabilities and Commitments
The following table sets forth the principal components of our contingent liabilities as per Ind AS-37 – Provisions, contingent liabilities, and contingent assets as at June 30, 2026 as derived from the Restated Financial Information:
| Particulars | As at June 30, 2026 | As at June 30, 2025 | As at December 31, 2025 | As at December 31, 2024 | As at December 31, 2023 |
| (Rs million) | |||||
| Disputed Income-tax demands pending before various forums | 28.06 | 28.06 | 28.06 | 86.50 | 17.10 |
| Indirect tax matters | 2.76 | 2.76 | 2.76 | - | - |
Disputed income-tax demands pending before various forums includes demand orders received under Income Tax Act,1961 with respect to certain disallowances of expenditure for AY 04-05 (proceedings pending before High Court), AY 21-22 (Proceedings pending with CIT(Appeals) and AY 22-23 (demand order received from Assessing Officer) amounting to 28.06 (30 June-25 28.06,31 December-25 28.06, 31 December-24 32.40, 31 December-23 17.10) and downward transfer pricing adjustments relating to certain corporate support charges for AY 15-16, 17-18, 18-19, 20-21 and 23-24 amounting to Nil (30 Jun 25 Nil, 31 December -25 Nil, 31 December-24 54.13, 31 December -23 Nil). Further, the amounts disclosed in 31 December-24 relating to downward transfer pricing adjustments represents the reduction in tax and interest amounting to 54.13 owing to the application filed by the Company under The Direct Tax Vivad se Vishwas Scheme, 2024 in respect of which, the Company has received approval from the Income Tax Authorities subsequently.
The following table sets forth the principal components of our commitments as at June 30, 2026 as derived from the Restated Financial Information:
| Particulars | As at June 30, 2026 |
| (Rs million) | |
| Commitments | |
| Estimated amount of contracts remaining to be executed on capital account and not provided for | 571.74 |
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements.
Unusual or Infrequent Events of Transactions
Except as described in this Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".
Known Trends or Uncertainties
Our business has been affected and we expect will continue to be affected by the trends identified above in the heading titled " – Significant Factors Affecting Our Results of Operations" and the uncertainties described in the section titled "Risk Factors" on pages 361 and 20, respectively. To our knowledge, except as described or anticipated in this Red Herring Prospectus, there are no known factors which we expect will have a material adverse impact on our revenues or income from continuing operations.
Significant Economic Changes that Materially Affected or are likely to Affect Revenue from Operations
There are no significant economic changes that materially affected our Companys operations or are likely to affect income from continuing operations except as described in the sections "Risk Factors", "Industry Overview" and "Our Business" on pages 20, 131, and 205, respectively.
Future Relationship between Cost and Income
Other than as described in this Red Herring Prospectus, to the knowledge of our management, there are no known factors that might affect the future relationship between costs and revenues.
New Products or Business Segments
Other than as described in "Our Business" on page 205 of this Red Herring Prospectus, there are no new products or business segments in which we operate.
Significant dependence on a single or few Customers or Suppliers
Other than as described in this Red Herring Prospectus, particularly in sections "Risk Factors" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 20 and 355, respectively, to our knowledge, there is no significant dependence on a single or few customers or suppliers.
Seasonality of Business
Our business is not subject to seasonal fluctuations.
Quantitative and Qualitative Disclosures about Market Risks
Credit risk
Credit risk arises from cash and cash equivalents, bank balances other than cash and cash equivalents, financial assets measured at amortised cost and credit exposures to customers including outstanding receivables.
(i) Credit risk management
Credit risk on cash and cash equivalents is limited as we generally deposit surplus cash with banks holding high credit ratings.
Credit risk with respect to domestic and export trade receivable (other than receivables from related parties) is managed by us through periodical review of their credit worthiness. We do not perceive any credit risk in respect of receivables from related parties.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken.
We consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk we compare the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. We consider available reasonable and supportive forwarding-looking information.
A default on a financial asset is when the counterparty fails to make contractual payments within one year from the due date. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.
(ii) Provision for expected credit losses
We provide for loss allowance based on 12 month expected credit loss except in the case of trade receivables which are provided based on life-time expected credit loss and on a specific identification basis.
Liquidity risk
Liquidity risk refers to risk that we cannot meet our financial obligations. The objective of a prudent liquidity risk management is to maintain sufficient liquidity and ensure availability of funds to meet our obligations through: (a) internal financing by way of daily cash flow projection; and (b) fund and non-fund based working capital limits from various banks.
Market risk
Market risk is the risk that changes in market price, liquidity and other factors that could have an adverse effect on realizable fair values or future cash flows to the Company. Our activities expose it primarily to the financial risks of changes in foreign currency exchange risks and interest rates as future specific market changes cannot be predicted normally with accuracy.
Currency risk
We are exposed to foreign exchange risk arising from foreign currency transactions on account of sale/ purchase of goods denominated in a currency that is not the Companys functional currency (Rs). The risk is measured through a forecast of foreign currency cash flows that would arise due to the underlying assets and liabilities held.
We review the import and exports in specific currency and if there be the need to make payment over and above the receivables, then forward cover is taken to cover the exposure.
Cash flow and fair value interest rate risk
Our main interest rate risk arises from short term borrowings with variable rates, which expose us to cash flow interest rate risk.
We have not taken any interest rate swaps to convert the floating rate borrowings to fixed rate loans. We monitor the movement in the interest rates and uses the prepayment option to repay the borrowings at the time when the interest rates are unfavourable. The assessment of viability of using the pre-payment option shall be evaluated by the finance team.
Significant Developments after June 30, 2026
Except as stated in this Red Herring Prospectus, to our knowledge, no circumstances have arisen since the date of the Restated Financial Information as disclosed in this Red Herring Prospectus which materially and adversely affect or are likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months.
MATERIAL ACCOUNTING POLICIES
Historical cost convention
Our Restated Summary Statements have been prepared on the historical cost and accrual basis, except for certain financial instruments that are measured at fair value at the end of each reporting period (refer to the accounting policy regarding financial instruments). All amounts disclosed in our Restated Summary Statements and the accompanying notes have been rounded off to the nearest million Indian Rupees with two decimal places, unless otherwise stated.
Current/Non-current classification
We segregate assets and liabilities into current and non-current categories for presentation in the balance sheet, after considering our normal operating cycle and the other criteria set out in Ind AS 1, "Presentation of Financial Statements". For this purpose, current assets and liabilities include the current portion of non-current assets and liabilities, respectively. Deferred tax assets and liabilities are always classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. We have identified a period of up to twelve months as our operating cycle.
Use of Estimates
The preparation of the restated summary statements in conformity with generally accepted accounting principles in India requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the balance sheet date, the reported amounts of income and expenses for the year, and the disclosure of contingent liabilities as at the balance sheet date. The estimates and assumptions used in these restated summary statements are based on our managements evaluation of the relevant facts and circumstances as at the date of the restated summary statements. Actual results could differ from these estimates. Appropriate changes in estimates are made as our management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the restated summary statements in the period in which such changes are made and, if material, their effects are disclosed in the notes to the restated summary statement.
Property, plant and equipment and intangible assets
Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, if any. Historical cost represents expenditure that is directly attributable to the acquisition of the asset, including related taxes, duties, freight, insurance and cost of installation, and is net of Cenvat and VAT/GST credits.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to us and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance costs are charged to profit or loss during the reporting period in which they are incurred.
Capital work in progress is stated at cost, net of accumulated impairment loss, if any.
Gains or losses arising on derecognition of property, plant and equipment are recognised in the Statement of Profit and Loss.
Intangible assets
Intangible assets are stated at acquisition cost less accumulated amortisation and impairment losses, if any. Computer software is capitalised when it is expected to provide future enduring economic benefits.
Capitalisation cost includes license fees.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Gains or losses arising from derecognition of an intangible asset are recognised in the Statement of Profit and Loss.
Depreciation and Amortization
Depreciation on property, plant and equipment is provided on a pro-rata basis on the straight-line method over the estimated useful lives of the assets, assessed based on technical evaluation, which are lower than those specified by Schedule II to the Act, in order to reflect the actual usage of the assets. Technical evaluation takes into account the estimated usage, past history of replacement, service support, availability of spares, anticipated technological changes, and similar factors.
The useful life, residual value and the depreciation method are reviewed at least at each financial year end. If the expectations differ from previous estimates, the changes are accounted for prospectively as a change in accounting estimate.
The estimated useful lives of property, plant and equipment are as follows :
| Assets | Useful life followed by the Company (in years) | Useful life prescribed under Schedule II of the Act (in years) |
| Buildings | 30.00 | 30.00 |
| Office equipments (including computers) | 4.00 | 5.00 |
| Furniture and fixtures | 8.33 | 10.00 |
| Motor vehicles | 5.00 | 8.00 |
| Plant and machinery | ||
| Tools and patterns | 4.00 | 7.50 |
| Testing instruments | 6.45 | 7.50 |
| Others | 10.00 | 15.00 |
The cost of computer software is amortised on a straight-line basis over a period of three years based on the estimated useful life of the asset.
Leasehold improvements are depreciated over the leasehold period or the useful life estimated by our management, whichever is lesser.
Impairment of Non-financial Assets
Assessment is made at each balance sheet date as to whether there is any indication that an asset (tangible or intangible) may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset / cash generating unit is made. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit (CGU). Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is the higher of an assets or CGUs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Assessment is also made at each balance sheet date as to whether there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased.
Foreign Currency Translation
(i) Functional and presentation currency
Items included in the restated summary statements are measured using the currency of the primary economic environment in which we operate (the "functional currency"), i.e., Indian Rupees (Rs), and all values are rounded off to the nearest million and decimals thereof, except where otherwise indicated.
(ii) Transactions and balances
Initial Recognition
All foreign currency transactions are recorded in our functional currency using the exchange rate prevailing on the date of the transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate prevailing at the date of the transaction.
All monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rates. Exchange differences arising out of actual payment / realisation and from the year-end restatement are recognised in the Statement of Profit and Loss.
Forward contracts
Foreign exchange forward contracts outstanding at the year-end on account of firm commitment / highly probable forecast transactions are marked to market and the gains / losses, if any, are recognised in the Statement of Profit and Loss.
Hedging activities and derivatives
We are exposed to certain risks relating to our ongoing business operations. The primary risks managed using derivative instruments are foreign currency risk, commodity price risk and interest rate risk.
Inventories
Inventories are stated at the lower of cost and net realisable value.
The cost of raw materials is determined using the moving average price method.
The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Inventories are written down for obsolete / slow-moving / non-moving items, wherever necessary.
Financial instruments
Financial assets
(i) Classification
We classify our financial assets in the following measurement categories:
a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss); and
b) those measured at amortised cost.
The classification depends on our business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses are either recorded in profit or loss or in other comprehensive income. For investments in debt instruments, this depends on the business model in which the investment is held. For investments in equity instruments, this depends on whether we have made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
We reclassify debt investments when, and only when, our business model for managing those assets changes.
(ii) Measurements
Initial Recognition:
With the exception of trade receivables that do not contain a significant financing component or for which we have applied the practical expedient, we initially measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which we have applied the practical expedient are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies on "Revenue from contracts with customers".
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
Our business model for managing financial assets refers to how we manage our financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective of holding financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date on which we commit to purchase or sell the asset.
Subsequent measurement:
a) Debt Instruments:
Subsequent measurement of debt instruments depends on our business model for managing the asset and the cash flow characteristics of the asset. There are two measurement categories into which we classify our debt instruments. The instruments that do not meet the criteria for classification as measured at amortised cost or FVOCI are measured at FVTPL.
Amortized Cost:
Financial assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method and are subject to impairment as per the accounting policy applicable to ‘Impairment of financial assets. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income in profit or loss. The losses arising from impairment are recognised in profit or loss.
Fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses:
A financial asset is classified as at FVTOCI if the objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and the assets contractual cash flows represent solely payments of principal and interest.
Debt instruments included within the FVTOCI category are measured initially, and at each reporting date, at fair value. For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in profit or loss and are computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI are reclassified from equity to profit or loss.
b) Equity instruments:
Upon initial recognition, we may elect to classify irrevocably our equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under Ind AS 32, "Financial Instruments: Presentation", for the issuer and are not held for trading. The classification is determined on an instrument-by-instrument basis. Equity investments which are held for trading, and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies, are classified as FVTPL.
Gains and losses on such equity investments are never recycled to profit or loss. Dividends are recognised as other income in the Statement of Profit and Loss when the right of payment has been established, except when we benefit from such proceeds as a recovery of part of the cost of the financial asset, in which case such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
c) Financial assets at fair value through profit or loss:
Financial assets in this category are those that are held for trading and have been either designated by our management upon initial recognition or are mandatorily required to be measured at fair value under Ind AS 109, i.e., they do not meet the criteria for classification as measured at amortised cost or FVOCI. Our management only designates an instrument at FVTPL upon initial recognition if the designation eliminates, or significantly
reduces, the inconsistent treatment that would otherwise arise from measuring the assets or liabilities, or recognising gains or losses on them, on a different basis. Such designation is determined on an instrument-by-instrument basis. For us, this category includes derivative instruments and listed equity investments which we have not irrevocably elected to classify at fair value through OCI. We have not designated any financial assets at FVTPL.
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value, with net changes in fair value recognised in the Statement of Profit and Loss.
Interest earned on instruments designated at FVTPL is accrued in interest income using the EIR, taking into account any discount / premium and qualifying transaction costs that are an integral part of the instrument. Interest earned on assets mandatorily required to be measured at FVTPL is recorded using the contractual interest rate. Dividend income on listed equity investments is recognised in the Statement of Profit and Loss as other income when the right of payment has been established.
(iii) Impairment of financial assets
We assess, on a forward-looking basis, the expected credit losses associated with our assets carried at amortised cost and our FVOCI debt instruments. Impairment is considered when there is a significant increase in credit risk.
We recognise an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that we expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables, we apply the simplified approach permitted by Ind AS 109, "Financial Instruments", which requires expected credit losses to be recognised from initial recognition of the receivables.
(iv) De-recognition of financial assets
A financial asset is derecognised only when:
a) our contractual right to the cash flows expires; or
b) we have transferred the rights to receive cash flows from the financial asset.
Financial liabilities
(i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Our financial liabilities include deposits, loans and borrowings, and trade and other payables.
(ii) Subsequent measurement
Financial liabilities are subsequently carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(iii) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
(iv) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Trade receivables
A receivable represents our right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Trade receivables are recognised initially at transaction price and are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Also refer to the accounting policy on "Impairment of financial assets".
Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand, and short-term deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
Revenue from contract with customer
Revenue from contracts with customers is recognised when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We have generally concluded that we are the principal in our revenue arrangements because we typically control the goods or services before transferring them to the customer.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the goods or ex-works depending on the contractual terms.
Volume rebates
We provide retrospective volume rebates to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. To estimate the variable consideration for the expected future rebates, we apply the most likely amount method for contracts with a single volume threshold and the expected value method for contracts with more than one volume threshold. The method selected is the one that best predicts the amount of variable consideration and is primarily driven by the number of volume thresholds contained in the contract. We then apply the requirements on constraining estimates of variable consideration and recognise a refund liability for the expected future rebates.
Significant financing component
Generally, we receive short-term advances from our customers. Using the practical expedient in Ind AS 115, we do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If we perform by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which we have received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before we transfer goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when we perform under the contract.
Government Grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and we will comply with all attached conditions.
When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
Government grants relating to income are recognised in profit or loss, as necessary to match them with the costs that they are intended to compensate.
When we receive grants of non-monetary assets, the asset and the grant are recorded at fair value and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset, i.e., by equal annual instalments.
When loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value, and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured in accordance with the accounting policy applicable to financial liabilities.
Retirement and other employee benefits
Short-term
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognised in respect of employees services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
We recognise a liability and an expense for bonuses that we are contractually obliged to pay or where there is a past practice that has created a constructive obligation.
Post employment
Post-employment benefits comprise provident fund and gratuity, which are accounted for as follows:
(i) Provident fund
Contributions towards provident fund for employees are made to the regulatory authorities, and we have no further obligations. Such benefits are classified as defined contribution schemes, as we do not carry any further obligations apart from the contributions made on a monthly basis.
(ii) Gratuity
The liability or asset recognised in the balance sheet in respect of the defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government Bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefits expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income (net of tax). They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Compensated absences
Accumulated compensated absences that are expected to be availed or encashed within 12 months from the end of the year are treated as short-term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year-end.
Accumulated compensated absences that are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long-term employee benefits. Our liability is actuarially determined (using the projected unit credit method) at the end of each year. Actuarial losses / gains are recognised in the Statement of Profit and Loss in the year in which they arise.
Current and Deferred Tax
Tax expense comprises current tax and deferred tax.
Provision for current tax is computed at the applicable tax rate in accordance with the Income Tax Act, 1961. Our management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided using the balance sheet approach on temporary differences between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where we have a legally enforceable right to offset and intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity, respectively.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Borrowing Costs
Borrowing costs include interest, other costs incurred in connection with borrowing, and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to the interest cost. General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
Provisions and Contingent Liabilities
Provisions
Provisions are recognised when there is a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reasonably estimated.
Provisions are measured at the present value of managements best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Provision for product warranty covers the estimated liability to repair or replace products still under warranty on the balance sheet date, and is determined by applying a percentage of eligible sales based on managements best estimate, taking into account historical experience levels of repairs and replacement. Product warranty is generally extended for a period of 12 months from the date of sale.
Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within our control, or a present obligation that arises from past events but is not recognised because (a) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or (b) the amount of the obligation cannot be measured with sufficient reliability. We do not recognise a contingent liability but disclose its existence and other required disclosures in the notes to the financial statements, unless the possibility of any outflow in settlement is remote. Further, provision is created in the books of account in respect of matters where our management has concluded that our liability is probable.
Contingent Assets
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within our control.
Contingent assets are not recognised; however, they are disclosed in the restated summary statements when an inflow of economic benefits is probable. When the realisation of income is virtually certain, the related asset is not a contingent asset and we recognise such asset.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
The weighted average number of equity shares outstanding during the period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares) that have changed the number of equity shares outstanding without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Leases:
We assess at contract inception whether a contract is, or contains, a lease. That is, whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognise lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right of Use Assets:
We recognise right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease period or the useful life estimated by our management, whichever is lesser, as follows:
| Asset Description | Useful Lives (Years) |
| Building | 2 – 5 |
| Leasehold land | 95 |
If ownership of the leased asset transfers to us at the end of the lease term, or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
Lease Liabilities
At the commencement date of the lease, we recognise lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, we use our incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments), or a change in the assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets
We apply the short-term lease recognition exemption to our short-term leases of buildings and others (i.e., leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). Lease payments on short-term leases are recognised as an expense on a straight-line basis over the lease term.
Company as lessor
Leases in which we do not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Dividend
Final dividend distributed to equity shareholders is recognised in the period in which it is approved by our shareholders at the annual general meeting. Interim dividend is recognised when approved by our Board of Directors at the board meeting. Dividend distributed (including interim dividend) is recognised in the statement of changes in equity.
Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by us.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
We use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the restated summary statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the restated summary statements on a recurring basis, we determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For recurring and non-recurring fair value measurements categorised within Level 3 of the fair value hierarchy, we describe the valuation processes used, including how we decide our valuation policies and procedures and analyse changes in fair value measurements from period to period.
For the purpose of fair value disclosures, we have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Non-current assets held for sale and Discontinued operations
We classify non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (or disposal group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale / distribution should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Our management must be committed to the sale, and the sale must be expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale classification is regarded as met only when the asset or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets (or disposal groups), the sale is highly probable, and the asset or disposal group will genuinely be sold, and not abandoned. We treat the sale of an asset or disposal group as highly probable when:
- the appropriate level of our management is committed to a plan to sell the asset (or disposal group);
- an active programme to locate a buyer and complete the plan has been initiated (if applicable);
- the asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value;
- the sale is expected to qualify for recognition as a completed sale within one year from the date of classification; and
- the actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made, or that the plan will be withdrawn.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liabilities classified as held for sale are presented separately from other items in the balance sheet.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss before tax from discontinued operations in the Statement of Profit and Loss.
Business Combinations
We apply the acquisition method to account for business combinations. The consideration transferred for the acquisition of a business comprises the:
- fair values of the assets transferred;
- liabilities incurred to the former owners of the acquired business; equity interests issued by us; and
- fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the fair value of consideration over the identifiable net assets acquired is recorded as goodwill; if the consideration is lower, the gain is recognised directly in equity as capital reserve. In case the business acquisition is classified as a bargain purchase, the aforementioned gain is recognised in other comprehensive income and accumulated in equity as capital reserve.
Any contingent consideration to be transferred by us is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability are recognised in the Statement of Profit and Loss.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method. Under the pooling of interest method, the assets and liabilities of the combining entities are reflected at their carrying amounts, with adjustments only to harmonise accounting policies. Acquisition-related costs are expensed as incurred.
Significant estimates and judgments
The areas involving significant estimates and judgments are:
Defined benefit obligation
The cost of our defined benefit gratuity plan and other post-employment medical benefits, and the present value of our gratuity obligation, are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Useful life and Residual Value of PPE
Warranty provision
We typically provide warranties for general repairs of defects that existed at the time of sale, as required by law. These assurance-type warranties are accounted for under Ind AS 37, "Provisions, Contingent Liabilities and Contingent Assets". We also incur warranty expenses beyond the warranty period as a goodwill gesture to our customers on a case-to-case basis.
Expected credit loss
We use a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., by geography, product type, customer type and rating, and coverage by letters of credit). The provision matrix is initially based on our historical observed default rates as follows:
Balances not due are provided at 0.04% and amounts overdue by 1–90 days are provided at 0.29%. Amounts overdue by 91–180 days are provided at 8.47%, 181–270 days at 32.71%, 271–360 days at 88.32%, and more than 360 days at 100%.
We calibrate the matrix to adjust the historical credit loss experience with forward-looking information. For instance, if forecast economic conditions (i.e., gross domestic product) are expected to deteriorate over the next year in a manner that could lead to an increased number of defaults in the manufacturing sector, the historical default rates are adjusted. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and forecast economic conditions. Our historical credit loss experience and forecast of economic conditions may also not be representative of our customers actual default in the future.
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