CIE Automotive India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

BACKGROUND

CIE India is an automotive components Company with manufacturing and engineering operations in India, Spain, Lithuania, Italy, and Mexico. It supplies to key automotive OEMs and Tier 1 in each of these markets.

The Company is part of the CIE Automotive Group of Spain, which has identified our Companys Indian operations as a strategic growth driver for its global business. CIE India therefore draws from the vast and varied experience of the CIE Automotive Group in partnering and co-developing products for the rapidly evolving automotive industry. As part of CIE Automotive, CIE Indias strength lies in a solid business model, based on commercial and technological diversification, and on a strong financial culture securing high returns and high cash-flow generation.

The Company is listed on BSE and NSE with approximately 379 million shares outstanding. Exhibit 1 presents a graphical representation of the Company and its subsidiaries (together referred to as the Company in this report) as on 31^st December, 2025.

Exhibit 1: Legal Structure of the Company:

The list of subsidiaries and their ownership interest is provided in Exhibit 2.

Exhibit 2: The Subsidiary Companies of the Company as on 31^st December, 2025

Sr. No.	Name of Subsidiary	Proportion of Ownership Interest	Remarks
1	CIE Galfor S.A.U.#	100%	Collectively Known as CIE
	1. UAB CIE LT Forge	100%	Forgings
	2. CIE Legazpi S.A.	100%
	3. CIE Forging Germany AG*	100%	Forgings Germany
	4. Metalcastello S.p.A.	99.96%	Gears, Italy
2	CIE Aluminium Casting Private Limited	100%
3	Bill Forge de Mexico S. A. de C.V.##	99.99%
4	CIE HOSUR LIMITED	100%

Note: * Dormant Company

#- CIE Galfor S.A.U. is the Holding Company for all businesses in Europe and Mexico

##- Includes Direct and Indirect holding

During the year under review, BF Precision Private Limited stands dissolved by the Honble National Company Law Tribunal, Chennai Bench with effect from 5^th June, 2025.

GROUP OVERVIEW

CIE Automotive India Limited is a large, diversified auto-components group with presence across many processes/ product lines, geographies and customers. It manufactures complex components and sub-assemblies with significant value add.

Our Company has multiple manufacturing facilities in India, Europe and Mexico. The manufacturing locations are optimally located close to major automotive manufacturing hubs to facilitate supplies to customers. In certain instances, we also provide services such as value analysis and value engineering to add value to the customers products. CIE Indias unique combination of specialization in high value-added products, which is usually delivered directly to OEMs and presence across multiple production technologies, also differentiates it from other component suppliers.

CIE India is focused on the automotive market and largely operates in the two geographies of India and Europe. In India, the Company is highly diversified and supplies components to the light vehicles segment (both passenger vehicles and light commercial vehicles), two wheelers, tractors, medium and heavy commercial vehicles, Construction and Earthmoving equipment in order of dependence.

In Europe, the Company supplies components mainly to the light vehicles with a comparatively small business in the off-road sector.

A brief description of the key businesses of the Company is presented in Exhibit 3.

Exhibit 3: Lines of Business

Geography	Product Speciality	Focus Areas	Key Customers	CY 2025 Sales (In Rs mn)
Forgings
India	Light Vehicles: Crankshafts, Knuckles, Constant Velocity Joints, Tulips, Inner Races, Steering Shafts, Steering Yokes, Wheel Hubs, Fuel Rail 2 Wheelers: Steering Races and Engine Valve Retainers	Light Vehicles, Commercial Vehicles, Two Wheelers, Tractors	M&M, Maruti Suzuki, Tata Motors, Hero, Bajaj, Honda Two Wheelers, TVS, Ford, Hyundai WIA, GKN, NTN, Nexteer, Rane NSK, Renault Nissan, Stellantis, ZF, Royal Enfield, Hyundai, Stellantis (EV), Ola Electric (EV)	22,557
	All parts are forged & machined
	Tractor: Crankshafts
Spain + Lithuania + Mexico	Crankshafts, Common Rail, Stubs, Tulips	Light Vehicles	Renault, VW Group, Daimler, GKN, JLR, GM, Fiat, DAF, Bosch, NTN, Faurecia, Dana, ZF, BMW	25,238 (Mexico - 3,029)
Aluminium Castings
India	Crankcase , Pump Housing, Brake Panel, Timing Cases, Pump Bodies, ECU Covers, Housings used in EVs. (Parts made by high pressure & gravity die casting and then machined)	Two & Three Wheelers, Light Vehicles, Commercial Vehicles, Electric Vehicles	Bajaj, Nidec GPM, Brembo, Renault, Hyundai, Ford, Bajaj (EV), TACO (EV), Bosch (ev), JLR	11,728
Stampings
India	BIW Panels & Assemblies, Chassis & Structural Parts, Fuel Tanks, Cross Car Beams, Oil Sumps. (Stamped parts made from sheet metal)	Light Vehicles, Commercial Vehicles and Tractors	M&M (incl. EVs), Tata Motors (incl. EVs), Ashok Leyland, Hyundai	14,556
Castings
India	Differential Housings, Turbine Housings, Crankshafts, Differential Cases, Diff Carriers, Hub Cases, Bearing Caps, Flanges	Light Vehicles, Commercial Vehicles, Tractors, Construction & Earthmoving Equipments	M&M, Hyundai, JCB, Ford, Automotive Axle, Cummins, Dana, John Deere, CNH, MAN, Scania, International	7,222
Magnetic Products
India	Soft and Hard Magnets	Light Vehicles, Two Wheelers (Tier 1 largely)	Denso, Sumida, Varroc, Intica, Mitsuba, Lucas TVS and Sona Comstar	1,330
Composites
India	Composite Compounds and Components, Three Wheeler Body Panel Parts, Battery Trays and Covers	Electrical Switchgear, Light Vehicles, Three Wheelers	Lauritz Knudsen, Novatuer, Schneider, Siemens, GE Healthcare, M&M (Three Wheeler EVs)	3,043
Gears
India	Gears & Shafts, Motor shafts, E-Drive Components, Flanges & End Yokes, Clutch Hubs	Light Vehicles, Commercial Vehicles, Tractors, Construction & Earthmoving Equipment	M&M (incl. EVs), Eaton, Caterpillar, American Axles, CNH, Dana, Allison Transmission	3,998
Italy	Gears & Shafts, Sleeves & Hubs, Welded Components	Tractors, Construction & Earthmoving Equipment, Light Vehicles (EVs)	Caterpillar, CNH, Meritor, General Dynamics, Allison Transmission (EV), Axle Tech (EV)	4,392

THE GLOBAL ECONOMY

The tariffs imposed by the United States on some of its trading partners, was the key talking point about the global economy in CY25. But IMFs World Economic Outlook of Jan 26 points that the global economy seems to have shaken off this tariff shock. IMFs latest projections indicate that global growth will hold steady at 3.3% in CY25, an upward revision of 0.2% compared to October estimates, with most of the improvement accounted for by the United States and China. Projections for CY26 and CY27 are also healthy, 3.3% and 3.2% respectively. Global headline inflation is expected to decline from 4.1% in CY25 to 3.8% in CY26 and further to 3.4% in CY27. The report adds the strength of the global economy is due to a confluence of factors, including easing trade tensions, the agility of the private sector in mitigating trade disruptions and the continued surge in investment in the information technology sector-especially in artificial intelligence (ai).

With the largest economy in the world becoming less welcoming, the terms of global trade are changing. Most countries are now negotiating bilateral trade deals with their key trading partners instead of relying on multilateral arrangements. While global trade relations are smoothening, the security situation continues to be uncertain. The last few years have seen multiple wars with those in Ukraine and West Asia being the most protracted. The recent USA-Israel-Iran war can be disruptive for the global oil economy and related products. Tensions exist in almost every other part of the world. A flare up in the geopolitical security situation is changing the global economic scenario. The emerging AI technology has the potential of disrupting many industries with jobs requiring repetitiveness and speed being replaced by AI. Technology developments in the AI space are largely driven by USA and China, and this concentration can be the source of geopolitical tensions in the future.

The Indian economy continues to be better performing than most other large economies. The two outsize influences that affected the Indian economy in CY25 were the punitive tariffs (25-50%) imposed by USA on many Indian business sectors and GST reforms that helped in stimulating demand. The proposed trade deal between USA and India is expected to bring stability to Indias trade relations with an important partner and boost Indian exports to United States. But the deal is subject to many uncertainties. India has signed or is negotiating trade deals and free trade agreements (FTA) with other key trading partners like the European Union, United Kingdom, Australia and others. These deals not only provide a positive atmosphere to trade relations but should be positive for India overall, being especially beneficial for labour intensive industries. GST rates were revised in Sept 25 and there was an immediate positive impact in the third quarter of CY25 and a strong momentum in the fourth quarter. IMF has revised Indias growth estimates for 2025 by 0.7% to 7.3%. While growth is projected to moderate to 6.4% in 2026 and 2027, it remains healthy.

The strong growth performance in India was accompanied by low inflation, while core inflation (Core CPI) hovered around the 4%-mark, overall CPI dipped below 2% in the last few months of the year. RBI has helped by cutting interest rates significantly, infusing liquidity in the system and making borrowing cheaper. The twin achievements of high growth and low inflation augurs well for the future of the Indian economy, subject to a stable geopolitical situation.

Growth in India is largely driven by private consumption and government investment in infrastructure. Private consumption got a helping hand by the income tax rebates announced in last years budget as well as the reduction in GST rates in September. But there are concerns that the private consumption is amplified due to cash transfers by the government to some sections of the population as well as generous consumer lending by the financial sector leading to unsecured household debt shooting up. Thus, there is scepticism about future growth opportunities reflected by the fact that investment by the private sector continues to be weak, in-spite of healthy corporate profits and balance sheets. Even the production linked incentives provided by the government are having a less than desired impact on the manufacturing sector. Job creation is lagging GDP growth and can be detrimental to sustaining private consumption in the future.

Real GDP has been going up for the last few quarters while the nominal GDP has not been growing at the same rate, as the GDP deflator becomes too small on account of falling inflation. A reduction in nominal growth reduces the growth in taxes that help the government sustain investment in infrastructure. Inflation is expected to rise in the next quarters and some may consider that good news. While the probable default mode of the Indian economy is optimism, there remains much to be done.

In Europe, growth is expected to remain steady at 1.4% in 2025, 1.3% in 2026 and at 1.4% in 2027. This represents a welcome stabilisation compared to the subpar (<1%) growth recorded in 2023 and 2024. IMF points out that compared with other regions, the euro area benefits less from the recent technology-driven investment boost.

Also, the lingering effects of the persistent rise in energy prices after Russias invasion of Ukraine will continue to drag on manufacturing, with additional pressure from the real appreciation of the euro relative to currencies of countries exporting similar products.

TRENDS IN THE AUTOMOTIVE INDUSTRY

The global automotive industry continues to be affected by many geopolitical challenges. The tariff policy of the Unites States government has the potential of disrupting component exports from many regions of the world, including India. China is emerging as a technology leader in manufacturing cars, especially in the Electric Vehicles (ev) space. Policy makers in many countries are imposing or contemplating tariffs on Chinese car imports. Regulations in many regions require companies to report their carbon footprints and thus there is a push for localisation - parts being sourced from the same region rather than from far off, local for local. On the other hand, as developed nations seek to meet stringent CO₂ reduction targets, some processes like steel and alu²minium castings are migrating to emerging countries. All the above changes can lead to a reshaping of the global automotive supply chain.

The transition to EVs is happening at a slower pace than anticipated. Users still have concerns around charging infrastructure, range, service, resale value and initial cost of acquisition. Traditional ICE vehicles are facing more stringent pollution norms and penalties. Manufacturing technology is being reshaped by automation, digitalization and artificial intelligence. These technological changes are not only adding layers of uncertainty to the automotive market, but they also require huge investments to be made by firms and governments alike.

The Indian automotive market continues to be healthy in this turbulent scenario. Ownership of cars, scooters and tractors are much below global averages, on a per capita basis. As the Indian economy continues to grow, this ratio will increase and lead to healthy demand for vehicles. The market has also been positively impacted by the optimization in GST that has lowered prices for the retail buyer. India is one of the few regions in the world where both the traditional Internal Combustion Engine (ICE) vehicles and EVs are expected to grow well in the next 3-5 years. IHS, a reputed research agency forecasts that the compounded annual growth rate (CAGR) of light vehicle production in India between 2025-30 will be ~ 5%, much higher than the global average of 1%.

Under the proposed trade deal, as and when it happens. United States proposes to reduce tariffs to 18% and in some cases apply zero tariffs on auto component exports from India. The FTA between India & Europe does not impact the auto industry much. Tariffs on luxury car imports will be reduced but that impacts a very small part of the domestic market. Exports to Europe will also be affected by what EU proposes as regulations on carbon border adjustment mechanism (CBAM), popularly called carbon tax.

The European automotive industry is dealing with uncertainty around transition to EVs and competition from cheaper Chinese cars. It is expected to remain stagnant in the next 2-3 years. Automotive players in Europe have made substantial investments in the last few years to develop new EV platforms and to conform to stricter pollution norms for traditional vehicles. Stagnating revenues coupled with high capital expenditure has meant that many players in the European automotive supply chain are struggling under profit pressure. Some companies are going through restructuring and plant closures to tide over difficulty. In-spite of these challenges, European automakers are expected to make some impressive new platform launches in CY26. This gives some confidence that the market could bounce back once the uncertainty around EV transition and entry of Chinese carmakers smoothens out.

COMPANY STRATEGY

CIE Indias approach has been to attain an optimal balance across growth, investments and returns. The Company pursues a judicious mix of organic and inorganic growth. Organically, the aim is to spend 5-6% of sales as capital expenditure every year. Projects where there is greater visibility and stability in terms of future order projections are prioritized. Mergers & acquisitions are targeted to fill strategic gaps in products, customers, technology or skills portfolio. The Company has a detailed due diligence process to evaluate acquisitions. Our inorganic strategy has to contend with Initial Public Offers (IPO) that are increasingly become attractive for unlisted players in our industry. The Company expects that its mix of organic & inorganic growth strategy will help it grow faster than the market.

The market trends in the two primary geographies that we operate in, India & Europe, are starkly different. The strategy adopted in these two geographies reflects these trends.

We are confident in the medium and long-term potential of the Indian automotive market. We will continue to invest in expanding our production capacity within India to cater to both domestic and export customers. The focus in India is on strengthening our customer portfolio, prioritising high-volume value-added parts and developing a product portfolio for EVs. India is one of the priority global markets identified by our parent CIE Automotive and the Indian operations will continue to be a focus area. The share of the India business in the overall sales of CIE India stood at 65% in CY25.

On the other hand, in Europe we are focused on optimising margins and protecting profitability. We are adapting our manufacturing facilities to evolving volume requirements, while also seeking additional business opportunities as the supply chain consolidates. While the pace of EV adaption in Europe is slower than anticipated, the Company is developing products for the EV platforms being launched.

ELECTRIC VEHICLES

The transition to electric mobility in India is expected to increase much more gradually than in other regions of the globe. It is expected that e4W will increase from 3% in FY25 to 15-20% in FY30, and e2W from 6% in FY25 to 20-25% in FY30. The forecasts for FY30 are a little lower than what was made last year and presented in our annual report. Growth opportunities are thus available in both the traditional ICE and the emerging EV space. In India, EVs provide an additional opportunity for the component industry that supplements the existing demand in the ICE space. This is unlike in other regions, where the rise of EVs is expected to substitute the existing ICE vehicles. The shift to EVs is more an opportunity than a risk for Indian auto component players. Transition to EVs would make engine parts that we supply to ICE vehicles, redundant. The exposure of our India business to ICE engine parts is reasonably small. The penetration of EVs is forecasted to be low in the next few years. It follows that only a very small proportion of our existing sales in India is subject to risk.

Nevertheless, we are focused on developing a strong order book in EVs for the Indian market to take advantage of a newly emerging market segment. Our EV order book in India is spread across all our business verticals for e2W, e3W and e4W segments. We supply steering races to almost all e2W OEMs. In e4W, we have orders for gears, composite battery box parts, stamped parts, cast aluminium parts like bulk heads, inverter housing, starter motor housing & base plates, iron cast parts like battery mounting brackets, forged driveline parts like tulips, tripods, retainers & outer races and magnets for ECM, keyless antenna & EV chargers. The composites business supplies a range of parts for e3W and Battery Housing & Covers for e4W.

The penetration of EVs in the European light vehicle market has been increasing steadily. As reported by European Automobile Manufacturers Association (ACEA), the share of EVs in Europe in CY25 increased to ~16% versus ~13% in CY24. This is lower than what was forecasted earlier. Even then, there is a significant risk posed by electrification to our European operations. The risk is further accentuated by the increasing dominance of Chinese OEMs in Europes EV market. These OEMs have their distinct supply chains and it will require effort for companies like ours to become their suppliers.

We have a large dependency on forged crankshafts in our European business, which are not required in EVs. To offset the potential decrease in crankshaft requirement, our plan is to focus on steel & aluminium parts which will not be affected by transition to EVs, like battery plates, aluminium knuckles and differential crowns. We also have a healthy order book in electric vehicle transmission parts at our Italian Gears plant. While some of these new EV orders have commenced production, many of these have been delayed as the pace of growth of EVs in Europe and US slows down.

Overall, our diversified technology, product and customer portfolio allows us to address the requirements and risks emerging from EV transition in an effective manner. As the supplier ecosystem of EVs is at a nascent stage, EV OEMs are looking to partner with suppliers who have quality and pedigree. We are working with major European and Indian OEMs and Tier 1s in the EV space across vehicle segments.

MARKET TRENDS IN THE DIFFERENT AUTOMOTIVE SEGMENTS

The two key geographies that we operate in are India (~65% of consolidated sales in CY25) and Europe (~35% of consolidated sales). Please note that we have a small unit in Mexico (~S 3 bn), which was earlier reported under India. It is now a subsidiary of CIE Galfor and is reported under Europe CY25 onwards.

INDIA

In India, we supply to a variety of segments - light vehicles (~half of the sales of our India operations), two & three wheelers (~l/4^th to l/5^th), tractors (~l/6^th) and the rest divided among heavy trucks, off highway and nonauto segments. This approximate breakup provides a feel of the weights of different market segments that we serve and not the exact sales that we make in those segments. The reduction in GST levied on the Indian automotive industry in September of last year led to an immediate spurt in automotive sales across segments and we expect this positive momentum to continue in the current year.

Light Vehicles

The Indian light vehicles market has shown significant growth following the pandemic. The highest pre pandemic yearly production was in CY17 of 4.7mn. This was crossed in CY22 when 5.l mn units were produced. The light vehicle continued to grow on this high base both in CY23 (6.5%) & CY24 (3.9%) but the growth rate was declining. The reduction in GST has led to a steep bounce back in growth as can be seen from the performance during the second half of last year.

Exhibit 4 : India - Light Vehicles

(Production mn units)

Period	2025	2024	Change
Full Year	6.12	5.66	8.3%
Oct-Dec	1.59	1.34	19.3%
Jul-Sep	1.52	1.43	6.3%
Apr-Jun	1.41	1.37	3.6%
Jan-Mar	1.60	1.52	4.7%

Source: IHS

Going forward, the growth may moderate from the high of 14.9% achieved in the Q4CY26 quarter but we expect the positive momentum will carry into the current year. The entry level segment has shown growth in the last few months post GST cuts, after recording negative growth

for long. The quantum of future growth in light vehicles category may vary based on whether the recovery in the entry level segment is sustained. IHS in its latest update has estimated that production of light vehicles in India will grow by 7.4% in CY26 and at a compounded annual growth rate (CAGR) of 5.3% during CY25-30. Crisil expects that Battery Electric Vehicle (EVs) penetration will increase from 2.5% in FY25 to 5% in FY26. Many new EV platforms are being launched by automotive companies.

Two Wheelers

The two-wheeler industry has bounced back in the last couple of years after a prolonged slowdown. It is expected that domestic sales in FY26 will match the pre-pandemic FY19 figures. Prices of two wheelers have risen significantly in the last few years. The price increase was due to many factors, the chief among which was increased costs due to the transition to BS VI pollution norms. The reduction in GST has come as a shot in the arm for the industry as it has resulted in two wheelers becoming more affordable. This can be seen in the growth recorded in the Q4CY26 quarter when production grew by 15%. Exports which are roughly a fifth of total production are also projected to grow in double digits due to the improved demand in Africa and Latin America.

Exhibit 5 : India - Two Wheelers

(Production mn units)

Period	2025	2024	Change
Full Year	25.5	23.6	8.1%
Oct-Dec	6.8	5.9	15.0%
Jul-Sep	6.9	6.3	10.6%
Apr-Jun	5.9	5.9	0.7%
Jan-Mar	5.8	5.5	5.8%

Source: SIAM

Crisil forecasts a healthy CAGR of 7-9% between FY26- 30 for domestic two-wheeler sales. Increasing rural penetration and multiple ownership is expected to drive this growth. An important point to be noted is that a major part of this growth will come from Electric Vehicles (EVs) and not from Internal Combustion Engine (ICE) vehicles. ICE 2 wheelers are forecasted to grow at a CAGR of 4-6% and EV 2 Wheelers at 25-30% between FY24-29. EV penetration is thus expected to increase from the current 6% to 20-25% in five years. The EV segment is dominated by scooters, and the increasing electrification would mean that the share of scooters in domestic two-wheeler sales will increase from the current 30% to 40-45% by FY30. This is a trend to be watched as a few OEMs in India have their portfolio skewed towards either scooters or motorcycles.

Tractors

Tractor production in India has hovered around the 1mn mark since CY21, much higher than what it used to be prepandemic. The trend in growth though has been mildly negative (minus 0-3%) over the last three years, albeit on

a high base (source: Tractor Manufacturers Association/ TMA). This trend has changed in CY25, with production growing at 17.2%. The highest growth was achieved in the fourth quarter, like with other segments of the Indian automotive industry. The large bounce back in growth after a few years of mild negative growth, underscores the cyclical nature of the industry.

Exhibit 6 : India - Tractors

(Production mn units)

Period	2025	2024	Change
Full Year	1.15	0.98	17.2%
Oct-Dec	0.29	0.22	31.5%
Jul-Sep	0.32	0.28	14.6%
Apr-Jun	0.29	0.26	12.7%
Jan-Mar	0.24	0.22	11.7%

Source: TMA

The prospects of tractor production in India over the next few years is expected to be good, though there will be phases of cyclical downturn. Crisil expects domestic sales to grow at a CAGR of 5-7% between FY26-30. Domestic demand is sustained by govt. support to the rural sector, much lower tractorisation than the world average, good replacement demand as rural incomes rise and increasing usage of tractors in sectors like construction and mining. India is also emerging to be an export hub for tractors between 30 HP to 75 HP.

Heavy Trucks - Medium & Heavy Commercial Vehicles (MHCV)

Heavy truck production in India grew by 8.4% in CY25 on the back of very high growth in Q4CY25. This was a welcome change from the big drop of 11.8% seen in CY24. Rapid transformation of logistics sector makes it hard to analyse the MHCV demand. Transportation sector is increasingly using higher tonnage trucks, digitization & toll reforms are making trips smoother, overloading norms have been standardised and there is growing competition from railways for the long-distance freight market. IHS has forecast that MHCV production in India would grow by 5.3% in CY26 while it conservatively estimates that the CAGR between CY25-30 will be 1.8%.

Exhibit 7: India - MHCVs

(Production 000 units)

Period	2025	2024	Change
Full Year	401.9	370.8	8.4%
Oct-Dec	111.6	93.0	20.0%
Jul-Sep	87.1	88.6	-1.7%
Apr-Jun	93.3	90.6	2.9%
Jan-Mar	109.9	98.5	11.5%

Source: IHS

EUROPE

In Europe our operations cater majorly to the light vehicle market and also to the heavy trucks, off-highway, farm equipment and tractors market.

Light Vehicles

The European light vehicle production suffered a second successive year of negative growth in CY25. For light vehicles (<3.5T incl. cars, utility vehicles & light commercial vehicles), the data from IHS shows that the production in Europe (excluding Russia) has dropped by a slight 0.5% in CY25 v/s CY24 to 15.67 mn units. There seems to be a confusion in the minds of consumers about the transition that is happening in the industry, as they have postponed purchases and extended their purchase cycles. The market is expected to further decline by 1.6% in CY26 and remain virtually stagnant for the next few years. It is forecast that 15.9 mn units will be produced in CY30 versus 15.7 mn units in CY25.

Exhibit 8 : Europe (w/o Russia) - Light Vehicles

(Production mn units)

Period	2025	2024	Change
Full Year	15.67	15.76	-0.5%
Oct-Dec	3.94	3.91	0.9%
Jul-Sep	3.54	3.40	4.0%
Apr-Jun	4.14	4.15	-0.1%
Jan-Mar	4.05	4.30	-5.8%

Source: IHS

Heavy Trucks - Medium & Heavy Commercial Vehicles (MHCVs)

The European heavy vehicle production made a slight recovery in CY25 recording a drop of -1.6% against a big drop of -24.7% in CY24. The first half of the year was more in line with what happened in CY24 but production grew double digit in H2CY25 to ensure that the year ended on a good note. The momentum in growth is expected to carry on into CY26 with IHS forecasting a growth of 5%. IHS estimates that CY27 and CY28 will also see positive growth.

Exhibit 9 : Europe (w/o Russia) - Heavy Vehicles

(Production 000 units)

Period	2025	2024	Change
Full Year	435.6	442.5	-1.6%
Oct-Dec	116.6	101.4	15.0%
Jul-Sep	104.2	93.9	11.0%
Apr-Jun	110.0	116.7	-5.7%
Jan-Mar	104.8	130.6	-19.8%

Source: IHS

OPERATIONAL PERFORMANCE & STRATEGY INDIA

All segments of the automotive industry, light vehicles, two-wheelers, tractors and heavy trucks, are expected to healthy demand both in the short and medium term as outlined in an earlier section. We continue to expand capacities, develop higher value-added products and improve our technological capabilities to cater to a growing but highly competitive market.

We have identified product categories that will drive growth in each of our business verticals. These have been identified based on whether they cater to high volume platforms or EVs and the level of product complexity. At our Bengaluru Forgings operations for example, we are developing low pressure fabricated fuel rails for petrol & CNG vehicles as well as large fully finished precision forgings for the vehicle drivelines. The Aluminium business is developing competencies for different housings that will be used by e2Ws and e4Ws. The aluminium vertical is also planning to develop capabilities in high tonnage machined castings. The iron castings business is focused on increasing the proportion of machining in its portfolio and is adding capacity & technology for the same. The Stampings business is focusing on high tonnage press panels which may require investment in new press lines. The Gears and Composites verticals are upgrading process technologies to cater to EV requirements, among other projects. In some of the aforementioned projects, we plan to invest in improving our product development capabilities to meet the requirements and in enhancing manufacturing capacities.

The Company took several initiatives to enhance operational performance at the plants. Teams from the parent CIE Automotive provide all help in terms of know-how transfer in these projects. There was a focus on improving overall efficiency through a combination of automation & robotisation, machine upgradation, capacity debottlenecking and yield improvement & waste reduction. Asset optimisation is a continuing process through layout improvement, floor space reduction and plant restructuring. Increasing the usage of renewable energy is a priority. In last years annual report, we had identified the aluminium die casting plants at Sambhaji Nagar and the Hosur plant of the Forgings business as requiring special efforts to improve margins. The aluminium plants were consolidated into more efficient units and the Hosur plants has been restructured. Our EBITDA margins (17.5% in CY25 vs 18.2% in CY24) were impacted by regulatory changes leading to power tariff increase in Maharashtra and the one off cost increase due to change in gratuity rules under the new labour code.

EUROPE

The automotive market in Europe is facing headwinds as explained earlier. Light vehicle sales are stagnating.

EV penetration is happening slower than anticipated and there is a delay at the customer in all our EV related projects. Heavy trucks grew in CY25 and are expected to grow in the next two years too, but these are on a much smaller base - CY25 production was 22% lower compared to CY23.

The Company has taken proactive corrective measures including workforce restructuring to optimize cost in line with the current market situation. Significant restructuring was done in CY25 and this has reduced our reported EBITDA margins (13.3% in CY25 vs 15.7% in CY25). Without these costs, our CY25 EBITDA margin would have been around 15%.

Our European forgings business is one of the major suppliers of crankshafts used in European ICE vehicles. Our plan to mitigate potential loss of crankshaft business due to EV transition is to focus on steel & aluminium parts which will not be affected by transition to EVs, like battery plates, aluminium knuckles and differential crowns. We also aim to maintain our share of business in a declining crankshaft market. Given our status as one of the better crankshaft manufacturers in Europe, we expect that we will continue to remain a supplier of choice even in adverse market conditions.

Our gears business in Italy (Metalcastello) has expertise in high complexity products with low volumes and is very well regarded by our customers. Here, we are trying to diversify our customer & product portfolio by developing EV transmission parts. These new projects continued to be delayed on account of slowing down of growth in EVs in Europe & America.

FINANCIAL PERFORMANCE

The abridged financial performance of the entity for the year ended 31^st December, 2025 and 31^st December, 2024 is presented in Exhibit 10. Information for our Indian and Overseas operations are summarized in Exhibit 11 which provides segment wise results. On Exhibit 11, please note that The Chief Operating Decision Maker (CODM) reviews the groups internal financial information for the purpose of evaluating performance and assignment of the resources. While evaluating performance and basis the current market dynamics, the CODM is evaluating Bill Forge de Mexico, S.A de C.V (Bill forge Mexico) as part of Europe with effect from 1^st January, 2025. Hence, the segment information for the previous reporting periods has been adjusted accordingly to reflect the revised segment structure, to ensure comparability with the current period. This change in reporting segments has no impact on the overall consolidated financial results of the Company as reported previously. Exhibit 12 provides key financial ratios and their explanations.

Exhibit 10: CIE Indias abridged P&L Statement for CY24 & CY25 ( in Rs Mn)

Sr. No. Particulars	Standalone		Consolidated
	Year Ended		Year Ended
	December 25	December 24	December 25	December 24
	Audited	Audited	Audited	Audited
1 Income from operation
(a) Revenue from operations	48,964.02	45,634.70	94,064.74	89,640.67
(b) Other Income	1,925.02	1,728.00	1,012.57	1,396.47
Total Income	50,889.04	47,362.70	95,077.31	91,037.14
2 Expenses
(a) Cost of material consumed	24,530.42	23,223.29	47,241.37	46,470.12
(b) Change of inventories of finished goods and work-in progress	(240.80)	66.52	447.96	234.86
(c) Employee benefit expenses	4,867.53	4,490.54	11,269.91	10,104.73
(d) Finance cost	72.84	116.73	265.16	775.98
(e) Depreciation and amortization expenses	1,517.63	1,436.6	3,580.84	3,306.45
(f) Other Expenses	12,171.11	10,534.89	21,480.80	19,325.24
Total expenses	42,918.73	39,868.57	84,286.04	80,217.38
3 Profit/(loss) from operation share of profits of associates, exceptional items and taxes (1 - 2)	7,970.31	7,494.13	10,791.27	10,819.76
4 Share of profit / (loss) of associates	-	-	23.17	26.97
5 Profit/(Loss) from ordinary activities before exceptional items	7,970.31	7,494.13	10,814.44	10,846.73
6 Profit/(Loss) from ordinary activities before tax	7,970.31	7,494.13	10,814.44	10,846.73
7 Current Tax	1,742.06	1,642.35	2,652.49	2,643.46
8 Deferred Tax (Credit) / Charge	58.98	17.65	(67.76)	0.21
9 Net Profit/(Loss) for the period from continuing operations	6,169.27	5,834.13	8,229.71	8,203.06
10 Profit/ (Loss) from discontinued operations (after tax)	-	-	52.03	72.08
Net Profit/(Loss) after taxes	6,169.27	5,834.13	8,281.74	8,275.14
11 Paid - Up equity share capital (Face value of Rs 10 per equity share)	3,793.62	3,793.62	3,793.62	3,793.62
12 Earnings per share (after extraordinary items) (of Rs 10/- each)
(a) Basic	16.26	15.38	21.83	21.81
(b) Diluted	16.26	15.38	21.83	21.81

Exhibit H : Segment wise results for CY25 (in Rs Mn)

Sr. No. Particulars	Year ended
	31st December 2025	31st December 2024
	Audited	Audited
1 Segment Revenue
a) India	61,430.89	57,542.86
b) Europe	32,641.77	32,144.57
Total	94,072.66	89,687.43
Less: Inter Segment Revenue	7.92	46.76
Net Sales / Income from Operations	94,064.74	89,640.67
Less: from discontinued operations	-	-
Net/Sales income from continuing operations	94,064.74	89,640.67
2 Segment Profit/(Loss) before tax and interest from
a) India	8,230.84	7,971.47
b) Europe	2,900.76	3,723.32
Total	11,131.60	11,694.79
Less: from discontinued operations	52.03	72.08
Profit/ (loss) before tax and interest from Continuing operations	11,079.57	11,622.71
Less:
(i) Un-allocable expenditure	265.14	775.98
(ii) Un-allocable income
Total Profit Before Tax	10,814.43	10,846.73
3 Segment Assets
a) India	66,918.73	63,001.29
b) Europe	40,649.15	34,683.93
Total	1,07,567.88	97,685.22
4 Segment Liabilities
a) India	16,331.64	15,975.62
b) Europe	16,644.85	15,941.76
Total	32,976.49	31,917.38

Exhibit 12: Key Financial Ratios

Ratio	Standalone		Consolidated
	CY-25	CY-24	CY-25	CY-24
(i) Debtors Turnover (Days)	28	35	24	28
(ii) Inventory Turnover (Days)	43	43	51	52
(iii) Interest Coverage Ratio (times)	110	65	42	15
(iv) Current Ratio (times)	2.8	2.6	1.5	1.6
(v) Debt Equity Ratio (times)	-	-	0.05	0.08
(vi) Operating Profit Margin (%)	20.3%	20.8%	16.0%	17.3%
(vii) Net Profit Margin (%)	13.1%	13.4%	9.1%	9.6%
(viii) Return on net worth (%)	10.8%	10.9%	11.1%	12.6%

Debtors Turnover (Days) : Operational improvement and Increased bill discounting in Standalone and increased non recourse factoring in Europe resulted in lower days outstanding for debtors.

Interest Coverage Ratio, Debt Equity: Improvement due to debt reduction through operational cashflows.

Operating Profit Margin and Return on Net Worth (RONW): In Standalone energy cost increase and new labor code impacted margins during the year. Restructuring costs in Italy, Spain and lower sales in Europe, further impacted consolidated margins and RONW.

DIGITALISATION & IT STRATEGY

The Company continues to strengthen its digital and technology capabilities with a focus on system modernization, process standardization, cybersecurity enhancement, and analytics-driven decision-making. The Company achieved a major milestone with the successful go-live of SAP S/4HANA on 1 April 2025 that strengthens the Companys digital backbone and ensures that the ERP can optimally support future business expansion. To strengthen supplier connectivity and improve supply chain efficiency, the Company implemented the Arteria Supplier Portal during the year. As part of the Companys focus on data-driven decisionmaking, multiple Power BI dashboards were deployed across functions, enabling real-time visibility into operational and financial performance. These analytical tools have significantly reduced manual reporting effort and strengthened managerial responsiveness. To reinforce internal controls and compliance requirements, the Company configured SAP Database Audit Logs with monitoring capabilities for sensitive transactions, master data changes, and access to critical tables. Cybersecurity was further strengthened and aligned with global best practice through the deployment of CrowdStrike Managed Detection and Response (MDR) services that provides real-time detection and prevention of malware, ransomware, and zero-day threats along with a 24x7 Security Operations Center (SOC) for monitoring threats.

These advancements are intended to ensure that the digital framework drives future growth, operational excellence, and sustainable value creation in the Company.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS CLIMATE

In alignment with the Companys strategic objectives, CIE India continues to strengthen its people management practices as a key enabler of operational performance and long-term value creation. The Company has established a structured and enabling work environment that promotes career progression, continuous learning, and the development of technical competencies aligned with evolving business requirements.

Our Employee Value Proposition is anchored on four pillars—Care & Wellness, Career Growth and Advancement Opportunities, Respect & Dignity, and a Structured Reward and Recognition framework—aimed at enhancing employee engagement, retention, and overall workforce effectiveness. Employees are continuously working on their career growth plan through "Individual Development Action Plan" (IDAP) with the support of their HODs. One key element of the IDAP program is close collaboration with CIE teams worldwide for continuing training and skill upgradation. To build future leaders the young talent engineers recruited through campus placement go through a structured and specially designed training plan. Several employee-centric policies have been introduced to further strengthen workforce support, enhance employee well-being, and reinforce a positive and inclusive workplace culture. Also, this year Company has placed significant emphasis on succession planning across all locations to ensure leadership continuity and mitigate talent risks.

In furtherance of the Companys Diversity, Equity and Inclusion (DEI) framework, CIE India has taken proactive steps to promote inclusive employment practices. As part of this initiative, transgender persons were employed at the Stampings Nashik location, and persons with disabilities were employed at the Gears and Iron Castings

facility in Pune. CIE India completed an external Human Rights Due Diligence assessment at the Company level in CY25, reinforcing its commitment to respect for human rights across operations.

A portion of our permanent labour workforce in certain locations in India is part of labour unions. We have signed collective bargaining and other agreements with labour unions at several plants where we have agreed to certain guaranteed bonuses, guaranteed wage increases, and wages linked to productivity. We ensure Industrial peace by maintaining harmonious industrial relationship with workmen & unions. We encourage healthy dialogue & institutional ways to resolve conflicts. Communication meetings are conducted for workmen to update them about business results, challenges, achievements etc. Best achievements of workmen are recognised by awards in such communication meetings. In this way we motivate our workmen & ensure to keep their morale high.

HEALTH AND SAFETY

The Company is deeply committed to ensuring the health and safety of all employees and workers at its manufacturing sites, with a goal of achieving zero incidents. Prioritizing health and safety are vital not only for the well-being of employees but also for enhancing operational efficiency.

All plants achieved ISO 45001 and ISO 14001 certifications, demonstrating a commitment to both occupational health and safety and environmental management. A series of external Health, Safety & Environmental (HSE) audits were conducted, including those for electrical safety, chemical safety, fire safety, energy audits, to comply with IS 14489 standards.

The aim is not just to prevent incidents but to foster a safe and healthy work environment across all manufacturing plants and offices. Safety can be ensured if better infrastructure and technology go hand in hand with a robust safety culture. The Company focused on "Project Sanskriti", which is an assessment survey to gauge safety culture. The successful program on 12 Life Saving Rules introduced few years back was reinforced with the addition of an E-module for refresher training. In CY25, 1064 employees took this programme to create sustained awareness of and adherence to safety norms. These initiatives are necessary to advance the Companys position on the safety cultural ladder from reactive to generative.

In terms of employee well-being, the Company implemented a range of health initiatives, including annual health check-ups, yoga sessions, stress management workshops, and a de-addiction program for workers. The overarching focus throughout the year was on continuous training, regular communication, employee recognition, and the active involvement of shop floor employees in safety activities. These efforts were instrumental in working toward the achievement of safety targets and fostering a culture of safety at all levels of the organization.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) APPROACH

The growing expectations of different stakeholders have led to a greater scrutiny of ESG strategy of businesses. Organizations must clearly spell out measurable ESG goals and the initiatives taken to achieve them.

As a subsidiary of CIE Automotive, we were committed to a 5-year Strategic ESG plan, adhering to 79 KPIs across four pillars: CIE Culture, Ethical Commitment, EcoEfficiency, and Active Listening. We are on track on almost all the ESG KPIs. Our long term Science Based Targets Initiative (SBTi) is to achieve Net Zero emission by 2050. Our ESG strategy is aligned with the UNs 17 Sustainable Development Goals.

CIE India plants are adopting the practices aligned with ISO 14001, ISO 45001, ISO 50001 and ISO 20400 sustainable procurement standards, and focusing on renewable energy, material circularity, and responsible resource use. Our supply chain focuses on local sourcing, environmental assessments of identified partners and developing a circular economy.

Mandatory sustainability projects were identified as part of annual goals of management teams. The Company has launched the e-learning programme for employees on ESG practices and how to harmonise them with their day to day work.

Solar roof top capacities were increased at Gears Chakan and Forging Chakan facility. Almost 60% of electricity consumed by our plants in India was sourced from renewables. Water footprint assessment was completed across all plants. Total 9,381 trees were planted within plants and through CSR activities. These efforts reflect CIE Indias commitment to sustainability and ESG goals.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed to conducting its CSR activities in an economically, socially, and environmentally sustainable manner while contributing positively to the communities in which it operates. The CSR Committee of the Board provided strategic guidance and oversight, including approval of projects, allocation of funds, and review of implementation progress. CSR expenditures were incurred in accordance with statutory requirements, and the impact of major initiatives was periodically assessed to enhance effectiveness.

The CSR activities were primarily directed towards areas such as Education & Skills Development, Healthcare & Sanitation, Environment and Rural Development with the objective of creating measurable and lasting social impact. The CSR initiatives were implemented either directly or through eligible implementing partners, ensuring transparency, accountability, and effective monitoring. Special emphasis was placed on projects that promote inclusive growth, address local community needs, and support national development priorities. During the year, the Company has implemented impactful projects in Six states covering large Socio-Economic communities with diversified cultural values.

Going forward, our aim is to deepen CSR engagement by scaling impactful programs, strengthening partnerships, and integrating sustainability considerations into our business strategy. We believe that responsible corporate citizenship not only strengthens stakeholder trust but also contributes to long-term business resilience.

RISK MANAGEMENT

The business manages its unique risk profile through a structured internal risk management framework. Operational management serves as the first line of defence, identifying and reporting risks. The second line are processes and policies that are assessed periodically by the board and its audit & risk management committees. Key processes and policies include internal controls, data security & privacy, statutory compliances, and ethical framework (code of conduct & whistleblower policies). Internal audit functions as the third line, evaluating the effectiveness of the other defences. Senior management periodically reviews and reports on risk practices to the boards risk management and audit committees, which are responsible for overseeing risk identification, assessment, mitigation, and monitoring, ultimately reporting to the board for overall guidance.

The process to identify risks is also defined. Senior executives of CIE Automotive across the globe participate in an annual risk assessment survey to identify key risks associated with the business. This is supplemented by periodic internal assessment at CIE India. Risks are prioritized based on their probability of occurrence as well as their likely impact along three dimensions of economic, organisational and/or reputational.

Some of the key risks identified by CIE Automotive globally for 2026 are as follows:

Geopolitical situation

The United States has adopted a policy of imposing tariffs on trade partners depending on the size of trade deficit with that country. As a response, countries are entering into bilateral trade deals with each other. India has signed or is negotiating trade deals with its key trading partners like United States, European Union, United Kingdom, Australia and others. These trade deals should bring stability in trade relations. Most of these deals are largely enabling more exports of goods and services from India. We will know of their impact once the fine print of these deals and free trade agreements (FTA) is finalised. For example, the United States had imposed a tariff of 25% on Indian goods & services, in some cases a further punitive tariff of 25% was applied. Under the proposed trade deal, United States proposes to reduce tariffs to 18% and in some cases apply zero tariffs. The Supreme Court in a recent ruling has said that the original enhanced tariffs were not legal. It remains to be seen how the issue of US tariffs on Indian exports gets settled. Currently, our Indian business exports 2-3% of its sales to United States out of which <1% were at risk in the short term due to enhanced tariffs. The last few years have also seen multiple wars with those in Ukraine and West Asia being the most protracted. The recent USA-Israel-Iran war has the potential to disrupt the global oil economy. This can have a cascading effect on the world economy and especially on the automotive market if petrol & diesel prices go up. A volatile geopolitical security situation will negatively affect market dynamics. Thus, industry must watch out for geopolitical risks arising out of the dynamic global trade scenario as well as the emerging security threats.

Market trend change

The Company is highly dependent on the performance of the automotive industry in India and Europe. Automotive demand in these two geographies are following very different trajectories. The Indian automotive market continues to grow at a healthy late especially after the GST reforms implemented in Sept 2025. On the other hand, the European automotive industry is plateauing in the face of multiple challenges arising due to the transition to EVs, especially the competition from cheaper imported Chinese EVs. Our corporate strategy must keep pace with the rapidly changing external environment and balance the competing requirements of our two main markets.

Cybersecurity and Data Privacy & Reliability

As the world increasingly becomes more digital, the possibility of cyber-attacks, unauthorised access and damage to our data, networks and programs only increases. The Company has identified gaps in its systems through Vulnerability Assessment & Penetration Testing (VAPT) and is making all efforts to fill up the lacunae. The Company has plans to have ISO 27001 certification by Q1 of 2027. The IT team strives to deploy the best available tools & follows best practices to ensure that the Company can protect itself against cyberattacks. We recognise that cybersecurity initiatives work best when they bring together people, processes and technology to develop multi layered defences to ensure the integrity of systems in an age of rapid digital transformation.

Human Capital

Skilled and motivated teams are essential for company growth, especially amid change and competition in Indias automotive hubs like Pune and Bengaluru. Our HR strategy to address these talent challenges is explained earlier in this management analysis.

Green supply chain

ESG is an important aspect of business and stakeholders expect that companies have a focused approach in this area. The Companys ESG strategy is detailed in an earlier section of this management discussion. The detailed BRSR report also shows the importance that the Company attaches to ESG.

CIE India has specifically identified the following risks in its major geographies:

INDIA

Growth Risk

The Company strives to deliver better than market growth rate in India. For the last few quarters, our Indian business has stayed close to market growth, weighted as per the segments (light vehicles, 2W etc.) we operate in. We are investing in capacity, products & technology for future growth and the implementation of these programs can be a risk factor.

Profitability Risk

Dependency on few key customers can lead to competitive pressures on margins. Our stampings business, for example is majorly dependent on one customer. Some customers are moving towards E-bidding & Reverse Auction as against the existing quotation process. This may lead to further pressure on prices. Increase in power tariffs in Maharashtra where we have many plants is raising our costs.

People Risk

Growth opportunities in the Indian automotive industry are abundant, and this is leading to attrition as also difficulty in finding the right talent for a given job. This is more pronounced in leadership positions on the shop floor. We are mitigating the risk through succession planning and people development programs.

EUROPE

Profitability

Stagnating market in Europe is leading to pressure on profitability. We aim to optimise margins and protect our profitability in our European business. We are adapting our manufacturing facilities to evolving volume requirements, while also seeking additional business opportunities as the supply chain consolidates. We are developing a healthy product portfolio for the EV platforms being launched in Europe.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Management believes that CIE India has effective internal audit and control systems ensuring proper authorization, recording, and reporting of transactions. The adequacy of these systems is tested by regular internal audits and reviews. Details on Corporate Governance practices and statutory compliance are provided in dedicated sections of this Annual Report.

LOOKING AHEAD

The Indian automotive market is expected to grow at a good pace in the near future. The Company is geared up to participate in these emerging opportunities. Our European strategy is focused on navigating a stagnating market that is transforming at the same time. CIE Indias approach has been to attain an optimal balance across growth, investments and returns. The Company expects that its mix of organic & inorganic growth strategy will help it meet the aspirations of all its stakeholders.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ from those express or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.