Carraro India Ltd Management Discussions

GLOBAL ECONOMY

As per the latest World Economic Outlook by the IMF, the global economy is demonstrating resilience but continues to face persistent uncertainty and shifting trade dynamics. Global growth is projected at 3.0% in 2025 and 3.1% in 2026, slightly higher than Aprils forecast, driven by stronger- than-expected front-loading ahead of tariff changes, lower average effective U.S. tariff rates, improved financial conditions, and fiscal expansion in key economies. Despite these gains, the pace remains below the pre-pandemic average of 3.7%. Global headline inflation is expected to ease to 4.2% in 2025 and 3.6% in 2026, with significant variation across countries; inflation is set to remain above target in the U.S. while staying more subdued in other major economies.

Advanced economies are forecast to grow by 1.5% in 2025, moderating from 1.8% in 2024. The U.S. economy is expected to expand by 1.9%, 0.1 percentage point higher than Aprils projection, benefiting from looser financial conditions and lower tariffs, though tempered by cooling private demand. The Euro Area is projected to grow by 1.0% in 2025, aided in part by strong Irish export performance, though underlying momentum remains modest.

Emerging markets and developing economies (EMDEs) are set to grow by 4.1% in 2025, up from the April forecast of 3.7%. Chinas growth is revised sharply upward to 4.8%, supported by robust first-half performance and reduced U.S.-China tariffs, though front-loading effects may fade in 2026. India continues to lead global growth, with projections of 6.4% in both 2025 and 2026, underpinned by strong domestic demand and a more favorable external environment.

While the near-term outlook benefits from stronger-than- expected trade activity, improved financial conditions, and targeted fiscal support, sustaining this momentum will require careful policy stewardship. Meaningful progress in trade negotiations and clearer policy frameworks could lower barriers, reduce uncertainty, and unlock fresh investment, paving the way for stronger, more inclusive growth. Nonetheless, risks remain from renewed tariff escalations and geopolitical flashpoints to fiscal vulnerabilities and the unwinding of front-loaded activity. Decisive, coordinated action to stabilise trade relations, rebuild fiscal buffers, safeguard financial stability, and advance structural reforms will be essential to converting current resilience into lasting, broad-based prosperity.

Real GDP Growth (in %)
Year	Global Economy	Advanced Economies	Emerging Markets and Developing Economies
2024	3.3	1.8	4.3
2025	3.0	1.5	4.1
2026 P	3.1	1.6	4.0

INDIAN ECONOMY

The year 2024-25 has been a reflection of Indias endurance, adaptability, and commitment to progress, even amidst a challenging global economic landscape. The nations journey has been shaped by a series of key events and developments that have improved the domestic economy and fortified the nations position as a global economic powerhouse. Despite inflationary pressures, geopolitical uncertainties, and fluctuating global demand, India has demonstrated impressive resilience and emerged as one of the fastest-growing major economies in the world.

Building on this momentum, sectoral strengths continue to offer a strong foundation for optimism. The services sector remains a key growth driver, contributing significantly to GDP and exports. At the same time, rural consumption has remained steady, backed by strong agricultural performance.

Between 2016-17 and 2022-23, Indias agricultural sector grew at an average of 5% annual growth rate. In Q2 2024-25, it recorded 3.5% growth, supported by focussed policies that enhanced productivity, encouraged crop diversification, and improved farmer incomes. The sector has accounted for 20% of Gross Value Added (GVA) in recent years, contributing significantly to national income and employment.

Inflation management has been another area of focus. While inflationary pressures have persisted due to rising crude oil prices and currency fluctuations, proactive government measures have helped stabilise food supply chains. These actions ensure that inflation stays within control, despite ongoing economic challenges.

Indias infrastructure sector plays an indispensable role in driving economic progress, with significant investments

aimed at enhancing connectivity, reducing logistics costs, and fostering industrial development. The 2025-26 Budget has earmarked 11.21 Lakh Crore for infrastructure development, prioritising public-private partnerships (PPPs) and asset monetisation to balance investment with debt sustainability. Key initiatives include investments in multimodal parks, railways, highways, and ports, all of which are set to strengthen market access and lower transportation costs.

Indias global stature is rising as it becomes a preferred destination for investment and trade under the China +1 supply chain strategy, showcasing its role in global trade and manufacturing potential. Strong domestic demand, industrial revival, a young workforce, urbanisation, and rising incomes drive growth, supported by export-led services, automation, green technology, fiscal discipline, and targeted investments. Despite challenges like US tariffs, Indias strategic alliances and favourable tariff policies attract foreign investment and boost manufacturing. Ongoing reforms to ease business and address global challenges position India for sustained growth and global economic leadership.

(Source: https://www.thehindubusinessline.com/economy/india- to-remain-fastest-arowina-amona-maior-economies-savs-world- bank/article68280023.ece,

https://www.entrepreneur.com/en-in/news-and-trends/oecd- forecasts-hiaher-arowth-for-india-amid-glohal-economic/480401. https://www.ev.com/en in/technical/alerts-hub/2025/02/budaet- 2025-infrastructure-sector.

https://www.pib.aov. in/PressReleasePaae.aspx?PRID=2097886) AGRICULTURE TRACTOR MARKET Global Agriculture Tractor Market

As per the projections shared by Country Agricultural Equipment Associations and Markets and Markets Analysis, the global market for agricultural tractors stood at 2.4 Million units in 2023 and is expected to reach 2.5 Million units and 2.6 Million units respectively in 2024 and 2025. The industry is expected to reach around 3.24 Million units by 2029, recording a compound annual growth rate (CAGR) of 5.4%. The anticipated growth is primarily driven by the increasing worldwide adoption of farm mechanisation, supported by favourable government policies and incentive schemes. Such momentum highlights the fact that tractors remain a key segment within the broader agricultural equipment category.

Farm mechanisation involves the use of advanced machinery, including tractors, combine harvesters, balers, and sprayers to improve farm efficiency and productivity. The integration of these technologies helps farmers reduce dependency on manual labour, save time, lower production costs, minimise post-harvest losses, and enhance both crop yields and income levels.

In 2023, Asia accounted for approximately 38% of global tractor sales, driven by major markets such as India and China. The Americas contributed about 15% during the same period. At the country level, India held the largest share with roughly 38%, followed by China at around 28%.

Looking ahead, India is expected to retain its leading position through the forecast period, further solidifying Asias status as the dominant market for agricultural tractors.

(Source: Country Aaricultural Equipment Associations and Markets and Markets analysis.)

Indian Agriculture Tractor Market

Indias agricultural tractor market witnessed a moderate uptick in 2024-25, with total domestic sales rising to 1,025 thousand units from 979 thousand units in 2023-24. The growth reflects evolving farm needs and the growing adoption of more versatile, power-efficient machinery. This trend aligns well with the increasing requirement for drivetrain and transmission systems, presenting sustained opportunities for component and system suppliers operating in this space.

This growth was supported by near-normal monsoons, improved crop realisations, higher MSPs, and increased rural credit availability, alongside structural shifts such as high labour costs, limited workforce availability, and the growing need for timely, efficient farm operations. Small and marginal farmers are increasingly adopting tractors to boost productivity and ease operational burdens. Additionally, government-backed schemes, improved access to financing, and the broader shift towards precision and sustainable agriculture are reinforcing demand. With ongoing technological upgrades and expanding export opportunities, the sector remains well-positioned for sustained growth.

INDIAN AGRICULTURE TRACTOR MARKET, BY DRIVELINE Two-Wheel Driveline (2WD)

Two-wheel drive (2WD) tractors continue to be used in select pockets of the Indian agricultural landscape, primarily where landholdings are smaller and the scope of mechanisation is modest. These models cater to basic farming requirements and are generally suited for lighter field applications.

Four-Wheel Driveline (4WD)

Four-wheel drive (4WD) tractors are gaining traction in India due to their performance in tough terrains and demanding tasks. The segment earns recognition for superior traction and versatility in tilling, haulage, and other heavy-duty operations. The shift towards lower horsepower, especially in the 41-50 HP range after TREM-IV (Tractor Engine Revision Emission) norms, continues to accelerate 4WD adoption. In addition, increasing exports of high-HP tractors are expected to sustain growth in this segment.

Key Trends and Key Growth Drivers in the Indian Agricultural Tractor Market

Rising Preference for Higher HP Tractors

The market is witnessing a clear shift towards higher horsepower tractors, particularly in the 41 -50 HP segment. This trend is fuelled by growing farmer incomes, a rise in collaborative and commercial farming practices, and the need for equipment suited to more intensive irrigation and larger landholdings. Technological advancements and a strong export push by OEMs are further accelerating this demand.

Growing Adoption of 4WD Tractors

While 2WD tractors continue to dominate, the 4WD segment is steadily expanding due to superior traction and versatility. The introduction of TREM emission norms has increased interest in lower HP 4WD models, which deliver performance comparable to mid-range 2WD tractors. This transition is also supporting export potential to emission-regulated markets.

Expansion of Custom Hiring Services

Custom hiring models, supported by government bodies, entrepreneurs, and private players, are enabling broader access to high-performance tractors. These services reduce upfront investment burdens on farmers while improving productivity, making them a strong enabler of farm mechanisation across India.

Increased Localisation

OEMs are advancing their localisation efforts to reduce dependence on imports and improve cost-efficiency. This

strategy not only enhances responsiveness to local market needs but also strengthens domestic manufacturing, enables job creation, and contributes to the overall growth of the Indian industrial ecosystem.

Export-Led Growth Momentum

Indias tractor industry is increasingly aligning with global standards by adhering to TREM-IV and the forthcoming TREM-V regulations. This positions Indian OEMs to expand into regulation-ready international markets, unlocking new growth opportunities through exports.

Government Initiatives to Promote Farm Mechanisation

Financial Incentives (FAME Scheme)	The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme provides financial incentives to electric vehicle manufacturers, dealers, and buyers, including those of tractors, to accelerate the adoption of electric vehicles and make them more cost-effective.
Infrastructure Development	The 1 Lakh Crore Agricultural Infrastructure Fund (AIF) is a significant initiative to boost farm mechanisation and improve agricultural infrastructure in India. As of 2022-23, projects worth 14,000 Crore have been approved under this fund, directly benefitting farmers by providing them access to modern equipment, storage facilities, and processing units.
Regulatory Support	The Indian government has updated emission standards for tractors, with Bharat Stage (CEV/ Trem) IV standards applicable to agricultural tractors with engine power exceeding 37 kW. Additionally, tractors with engines below 37 kW can be regulated under BS IV standards without waiting for the implementation of BS V standards in 2025-26.
Capacity Building	Between 2014-15 and 2022-23, the Central Government trained 1.64 Lakh workers through its four Farm Machinery Training and Testing Institutes (FMTTIs) and authorised test centres.

GLOBAL CONSTRUCTION VEHICLE MARKET

As per the Country Equipment Manufacturers/Construction Associations and Markets and Markets analysis, The global construction vehicle market stood at 1.16 Million units in 2023 and was expected to reach 1.19 Million units and 1.21 Million units in 2024 and 2025. The industry is expected to reach around 1.41 Million units by 2029, recording a compound annual growth rate (CAGR) of 3.5%. This growth is driven by advancements in autonomous machinery, large- scale infrastructure projects, and a heightened focus on energy-efficient construction practices. Notably, China, India, and the rest of Asia are expected to be primary drivers of this momentum. With increasing investments in infrastructure and technological innovation, the industry is evolving towards greater efficiency and sustainability. Companies are focussing on strengthening supply chains, using digital transformation, and adopting advanced technologies to enhance productivity. As the global construction vehicle market continues its growth trajectory, strategic advancements and proactive industry initiatives will ensure long-term resilience in an ever-evolving economic and environmental scenario.

(Source: Country Equipment Manufacturers/Construction Associations and Markets and Markets Analysis.)

INDIAN CONSTRUCTION VEHICLE MARKET

The Indian construction vehicle industry continued its upward trajectory in 2024-25, with total equipment volumes reaching 1,41,138 units, up from 1,35,660 units in 2023-24. Growth was driven by sustained demand across key segments such as backhoe loaders, excavators, and the Others category, indicating broad-based activity across infrastructure and industrial projects. The sectors momentum is supported by ongoing investment in roads, railways, real estate, and mining, along with a policy focus on accelerated project execution. As demand continues to rise, particularly in high-volume categories, the requirement for advanced and emission-compliant components is gaining importance. OEMs are increasingly focussing on efficient, high-performance transmission systems, opening up new opportunities for component suppliers aligned with evolving regulatory and operational needs.

The industry comprises earth-moving equipment, heavy construction vehicles, and material handling machinery, with earth-moving equipment forming the largest segment. This includes excavators, loaders, dozers, and dump trucks that serve critical functions in infrastructure and mining projects. A growing focus on fleet modernisation and operational efficiency is driving continued investment and technological advancement across the value chain. This momentum reinforces Indias position as an important market for construction vehicle manufacturers and component suppliers.

KEY TRENDS AND GROWTH DRIVERS IN THE INDIAN CONSTRUCTION VEHICLE MARKET Expansion of OEMs Beyond Traditional Propulsion

Electric construction vehicles are gaining traction for being low-maintenance and emission-free, though battery limitations remain a challenge. At the same time, OEMs are also exploring CNG, LPG, LNG, hydrogen, and biofuels, with startups introducing niche electric solutions.

Rise in Demand for Compact Vehicles

Mini excavators and skid steer loaders are increasingly preferred for their flexibility in both urban and rural applications. Their compact size and multi-functionality make them ideal for a wide range of tasks, driving portfolio growth among OEMs.

Adoption of Onboard Diagnostics (OBD)

Stricter emission norms are prompting wider integration of OBD systems. These technologies enable real-time performance tracking and fuel efficiency improvements, helping operators reduce costs and meet regulatory standards.

Momentum in Core Construction Equipment Sales

Backhoe loaders, crawler excavators, and motor graders continue to dominate sales, supported by steady demand from large infrastructure projects such as roadways, metro systems, and rail networks. OEMs are responding to this with new and upgraded models.

Growth in the Earthmoving and Road Equipment Segment

Earthmoving equipment remains the largest segment, with steady growth expected in the coming years. In addition, government infrastructure initiatives are boosting demand for road construction machinery like compactors, excavators, and graders.

GLOBAL BACKHOE LOADER MARKET

The global backhoe loader industry is experiencing steady growth driven by increasing infrastructure development and urbanisation worldwide. It plays a critical role in supporting diverse sectors such as construction, agriculture, and industrial projects due to its multifunctional capabilities and adaptability. Market expansion is fuelled by rising mechanisation, rapid urban growth, and increasing demand for efficient material handling. The industry is also evolving with innovations aimed at enhancing operational efficiency and environmental sustainability, positioning it as a key enabler of economic development and modernisation.

INDIAN BACKHOE LOADER MARKET

The backhoe loader segment continues to play a pivotal role in Indias construction equipment landscape, driven by its versatility, compact design, and broad application across infrastructure, agriculture, and utility sectors. Combining the functions of a bulldozer, excavator, and loader, these

machines offer an efficient, multi-functional solution for tasks such as loading, trenching, and digging, making them well-suited for both urban and rural projects.

Indias backhoe loader market sales have reached 48,529 units in 2024-25 from 46,903 units in 2023-24. Growth is supported by a mix of government-led infrastructure initiatives, small-scale construction activities, and expanding natural gas pipeline projects, which collectively fuel the need for reliable and adaptable equipment.

In addition to their role in infrastructure development, backhoe loaders are also finding increasing use in agricultural mechanisation, offering utility in material handling and excavation on farms. The broader market momentum is further reinforced by manufacturers efforts to integrate advanced features such as high-performance engines and load-sensing hydraulics, while also strengthening after-sales service networks to meet evolving customer expectations. These trends position the backhoe loader segment as an important part of Indias equipment market, with steady demand expected in the years ahead.

(Source: ICEMA, Industry and Markets and Markets Analysis.)

Key Central Sector Schemes Launched by the Government of India

Scheme	Details
Smart Cities Mission	Launched in June 2015, the Smart Cities Mission is a central sector initiative aimed at developing citizen-friendly and sustainable urban centres across India. As of June 2024, 7,132 out of 7,997 tendered projects have been completed, with 1,43,025 Crore utilised from the total tendered amount of 1,64,119 Crore. An additional 865 projects, valued at 21,094 Crore, are currently in progress.
Pradhan Mantri Awas Yojana (PMAY)	The Pradhan Mantri Awas Yojana (PMAY), introduced in June 2015, focusses on ensuring affordable housing for low and middle- income groups across India. By June 2024, a total of 118.64 Lakh houses had been sanctioned, with 83.67 Lakh completed, and 1,63,926 Crore in central assistance disbursed.
Atal Mission for Rejuvenation and Urban Transformation (AMRUT)	The Atal Mission for Rejuvenation and Urban Transformation (AMRUT), launched in June 2015, aims to provide every household with a reliable water supply and sewerage connection. The Ministry of Housing and Urban Affairs has approved State Annual Action Plans (SAAPs) totalling 77,640 Crore for the entire mission period. Under AMRUT 2.0, the total indicative outlay stands at 2,99,000 Crore, including a central share of 76,760 Crore for the five-year period.
Pradhan Mantri Gram Sadak Yojana (PMGSY)	The Pradhan Mantri Gram Sadak Yojana (PMGSY) is a key government initiative focussed on enhancing rural connectivity by constructing all-weather roads. As of March 2023, the schemes total investment surpassed 2.36 Lakh Crore.
National Infrastructure Pipeline (NIP)	The National Infrastructure Pipeline (NIP) aims to drive economic growth by investing over 100 Lakh Crore in infrastructure projects from 2018-19 to 2024-25, supporting Indias goal of achieving a USD 5 Trillion GDP by 2024-25. Key sectors such as energy, roads, railways, and urban development account for approximately 70% of the total projects. As of June 2023, the NIP had a total capital outlay of USD 1,826 Billion, covering 9,742 projects.

COMPANY OVERVIEW

Carraro India Limited (hereafter referred to as Carraro India or The Company), a subsidiary of the Italy-based Carraro Group, stands as a global leader in driveline systems. The Company designs and manufactures axles, transmission systems, and gears for off-highway vehicles. Recognised among Indias top independent Tier 1 suppliers, the Company caters to major Original Equipment Manufacturers (OEMs) in the agricultural and construction vehicle sectors.

Rooted in the Carraro Groups legacy of innovation since 1932, the Company has emerged as a key contributor to Indias dynamic agricultural and industrial sectors. Carraro India operates two state-of-the-art manufacturing facilities in Pune: an 84,000-square-metre assembly plant and a 78,000-square-metre gear plant, situated on a total land bank of 200,000 square metres. These facilities specialise in the production of axles, transaxles, and gearboxes for tractors and construction equipment, and are equipped with advanced capabilities in cast machining, gear manufacturing with in-house heat treatment, assembly, prototyping, testing, and painting-ensuring high-quality and technologically advanced products.

Carraro India draws on its research and development capabilities, developed through its subsidiary, Carraro Technologies India Private Limited, to expand beyond its core focus on axles and transmissions. The Company also manufactures gears, shafts, and ring gears for industrial, automotive, and material handling applications. Backed by advanced technology and deep expertise in driveline systems, Carraro India continues to drive innovation and reinforce its leadership in the market.

SEGMENT-WISE PERFORMANCE Agricultural Equipment

Carraro Indias agricultural segment continued to be the leading revenue contributor in 2024-25, accounting for approximately 47.4% of the Companys operational revenue. This segment encompasses axles and transmission systems for tractors, with a primary focus on the above 40 HP category and product offerings extending up to 150 HP The Indian market is witnessing a clear shift towards higher horsepower and four-wheel drive (4WD) tractors, with 4WD penetration expected to grow from an estimated 20% in 2024 to 38% by 2029, at a CAGR of 23%. With a strong track record of in-house R&D, deep engineering expertise, and longstanding OEM partnerships, the Company is well-positioned to address this transition through advanced platforms such as the AG Evo transmission-specifically engineered for 100-150 HP tractors with wet PTO clutch configurations.

Market Leadership in 4WD Drivelines (Non-Captive Segment)

Segment	Estimated Market Share
Domestic Tractors 4WD Axles above 40 HP (Non-captive)	55-60%
Domestic Construction Vehicles Transmission Systems (Non-captive)	60-65%

Construction Equipment

Construction Equipment contributed approximately 41.4% of the total operational revenue in 2024-25, comprising transmission systems and axles for backhoe loaders (BHLs) and a diversified range of off-highway vehicles, including tele-boom handlers (TBHs), compact loaders, cranes, graders, and soil compactors. BHL demand remained steady across both domestic and export markets, mitigating broader softness in global exports. A key highlight for the year was the launch of the TBH axle platform, developed for a leading global OEM, with initial exports commencing in 2024-25. The Company has also secured additional TBH axle projects from two domestic OEMs, signalling future volume visibility. Carraro maintains a 60-65% market share in the non-captive construction vehicle driveline market, reinforcing its leadership position and ability to scale niche product offerings in both standard and emerging off- highway categories.

Others

The remaining 11.2% of operational revenue in 2024-25 came from loose gear supplies, aftermarket parts, and engineering services. During the last two quarters of the year, the Gears business recorded a slight decline in sales and is expected to remain stable in the near term. This segment continues to play an integral role in supporting OEM customers through the full product lifecycle. The engineering services vertical, though currently a small contributor, is expected to gain traction as new development contracts mature over the near future.

OPPORTUNITIES

Rising 4WD Tractor Penetration

Indias tractor market is witnessing a rapid transition towards four-wheel-drive technology, with penetration expected to nearly double over the next few years. With a dominant market share in the 41 HP+ non-captive 4WD axle segment, Carraro India is ideally positioned to benefit from this structural trend.

Scaling High-HP and Premium Driveline Platforms

The Company continues to strengthen its leadership in high- horsepower transmission systems through platforms like AG Evo and new projects in the >105 HP category. These initiatives cater to the evolving needs of OEMs and enhance Carraros technology-driven value proposition.

Entry into the TBH Market: Supplying Axles to Global and Domestic OEMs

Carraros foray into telescopic boom handler axles opens a new growth vertical within construction equipment. With

domestic and international contracts in place, this segment offers multi-year volume visibility and supports product mix improvement.

Momentum in Engineering Services and Electrification

Growing OEM interest in advanced engineering and electrified solutions has created early traction for Carraros new business lines, including its entry into electric tractor transmissions. These segments are expected to scale in the medium term.

Localisation and Operational Efficiency

With localisation reaching 77% in 2024-25 from 73.2% in 2023-24 and set to increase, the Company is reducing cost volatility and boosting margin resilience. Enhanced labour productivity and process automation further strengthen operational leverage.

THREATS

Prolonged Export Market Weakness

Export demand, particularly in agricultural tractors, remained subdued through 2024-25 due to macroeconomic softness. Any delay in recovery across key markets like Europe and the U.S. could continue to weigh on international business momentum.

Global geopolitical scenario remains uncertain and the broad-based tariffs imposed by the U.S. contribute to the overall instability and unpredictable evolution of the markets. Nevertheless, with particular focus to the latter, Carraro India appears to be sufficiently insulated, benefiting from (I) limited exposure to the US market, (II) commercial arrangements that put the duty burden and risk on the customers and (iii) a product portfolio which is by nature not replaceable in the short term and which is characterized by a high switching cost at Customers end.

Cost and Supply Chain Pressures

Inflation in input materials, logistics, and energy remains a potential threat. While partly offset by localisation, continued volatility may impact cost structures and supplier margins.

Seasonal and Regulatory Dependence in Agri Segment

The agricultural equipment business is cyclical and dependent on monsoon patterns and rural sentiment. Regulatory changes in Agricultural policies for promotion of farm mechanisation could also necessitate rapid adaptation.

OUTLOOK

Carraro India enters 2025-26 on a strong footing, backed by diversified customer relationships, a balanced portfolio,

and continued innovation. Domestic demand remains encouraging, driven by rising 4WD adoption in agriculture and steady infrastructure-led construction activity.

While export markets remain uncertain in the near term, a recovery is expected in the second half, supported by the ramp-up of the newly acquired tele-boom handler business and ongoing project conversions. The engineering services vertical is gaining traction, with active negotiations underway for advanced, higher-horsepower configurations that are expected to contribute during the year.

The Company is working closely with OEMs on future-ready driveline solutions, supported by its strong R&D and product development capabilities. Efforts to localise the supply chain and optimise costs will support margin expansion.

Topline growth is projected in the range of 8% to 12% in 2025-26, with a continued focus on profitability. Carraro India remains committed to achieving mid-teen EBITDA margins and strengthening its position as a trusted technology partner to OEMs in India and globally.

PERFORMANCE REVIEW ( MILLION)

Particulars	2024-25	2023-24
Total Income	18,233.79	18,065.47
EBITDA	1,864.42	1,499.95
EBITDA Margins (%)	10.23	8.30
PAT	881.36	625.63
EPS	15.50	11.00

KEY RATIOS

Particulars	As of 31st March, 2025	As of 31st March, 2024	Variance (In %)	Explanation if Variance is More than 25%
(a) Current Ratio (in Times)	1.52	1.26	20.63	NA
(b) Debt-to-Equity Ratio (in Times)	0.42	0.58	28.69	Decrease in ratio primarily due decrease in debt and increase in shareholders fund owing to profit for the year.
(c) Debt Service Coverage Ratio (in Times)	2.53	1.96	28.96	Increase in ratio primarily due to increase in profit for the year and reduction in short term borrowings.
(d) Return on Equity Ratio (in %)	21.29	17.69	20.37	NA
(e) Inventory Turnover Ratio (No. of Days)	81.29	75.29	(7.97)	NA
(f) Trade Receivables Turnover Ratio (No. of Days)	53.91	55.71	3.23	NA
(g) Trade Payables Turnover Ratio (No. of Days)	96.71	106.45	9.15	NA
(h) Net Profit Ratio (in %)	4.88	3.50	39.43	Increase in ratio due to increase in profit for the year primarily due to rationalisation of direct and indirect costs.

 

Particulars	As of 31st March, 2025	As of 31st March, 2024	Variance (In %)	Explanation if Variance is More than 25%
(j) Return on Capital Employed (in %)	22.78	19.31	17.95	NA
(k) Return of Net Worth (in %)	19.24	16.91	13.76	NA
Debtors Turnover Ratio (In times)	6.77	6.55	3.33	NA
Operating Profit Margin (%)	27.32	26.60	2.73	NA
Interest Coverage Ratio (In times)	13.74	18.27	24.81	NA

RISKS AND MITIGATION

Carraro India follows a structured risk management framework to identify, assess, and mitigate risks associated with its operations.

Risk	Impact on the Company	Mitigation Measures
Customer Concentration Risk	A large share of revenue depends on a few key customers. Any reduction in orders from them may adversely impact performance.	Focus on expanding the customer base across geographies and applications while deepening strategic OEM partnerships.
Group Dependency Risk	Reliance on Carraro Group entities for technology and procurement could limit operational independence.	Enhancing self-reliance through localised R&D, independent sourcing, and manufacturing autonomy.
Related Party Transactions Risk	High volume of intercompany transactions may raise governance and compliance concerns.	Ensuring all related party transactions comply with arms length principles and are subject to regulatory oversight.
Seasonality Risk	Agricultural sector-linked seasonality can cause uneven revenue recognition.	Broadening the product portfolio and market presence to reduce reliance on seasonal demand cycles.
Internal Market Overlap Risk	Competitive dynamics within the broader industry and potential overlaps with related entities may impact market positioning.	Differentiating through technological innovation, enhancing product quality, and adopting customer-centric strategies to strengthen market leadership.
Industry Exposure Risk	Business performance is linked to specific industries, which may be impacted by macroeconomic and sectoral trends.	Diversifying end-user applications, expanding into adjacent markets, and using innovation to cater to evolving industry needs.
Margin Pressure Risk	Rising input costs and pricing pressure may impact margins and overall profitability.	Improving efficiency, maximising resource utilisation, and delivering value-led products to strengthen financial performance.
Manufacturing Location Risk	Production is concentrated in a single location, which could pose risks in case of disruptions.	Strengthening business continuity planning, investing in risk mitigation measures, and exploring expansion or alternative manufacturing capabilities.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

Carraro India maintains a well-structured internal control system that ensures operational efficiency, accurate financial reporting, asset protection, fraud prevention, and compliance with applicable laws and regulations. The internal control framework is tailored to the Companys scale and operational complexity, with clearly defined policies and procedures guiding daily operations. Unit and functional heads are accountable for enforcing these controls, assuring transparency and accountability across all levels.

The internal audit function follows a risk-based annual audit plan approved by the Audit Committee, prioritising key risk areas across business operations. Regular internal audits and management reviews are conducted, and findings are periodically reviewed by the Audit and Risk Management Committees. These assessments help strengthen governance practices, mitigate

risks, and improve overall operational effectiveness, ensuring the Company continues to function efficiently and remains compliant with regulatory standards.

HUMAN RESOURCES

Carraro India places strong emphasis on developing a skilled and motivated workforce. The Company invests in training programmes, technical upskilling, and leadership development to enhance employee capabilities and boost efficiency. Additionally, a well-defined talent management strategy ensures employees have ample opportunities for growth and career progression.

Employee engagement, workplace safety, and inclusivity remain key priorities, promoting a collaborative and productive work environment. Further, through training and development programmes, we ensure that employees have opportunities for learning and growth.

As of 31^st March, 2025 Carraro India employed around 1,600 employees, each playing a vital role in the Companys operations and long-term success in the driveline systems industry.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report contains statements regarding the Companys objectives, projections, estimates, expectations or predictions, which may be considered as forward-looking statements according to the applicable laws and regulations. It should be noted that actual results may differ significantly from those expressed or implied in these statements. The Company is under no obligation to publicly amend, modify, or revise any forward-looking statements, whether due to subsequent developments, new information, events or any other reason.