Federal-Mogul Goetze (India) Ltd Management Discussions

(a) I n d u s t r y s t r u c t u r e s a n d developments

Automotive industry is perceived as one of the key sectors of the economy. Indias automotive industry is on the growth path. Due to its strong forward and backward linkages with several key segments of the economy, automotive industry has a strong multiplier effect and acts as one of the drivers of economic growth.

The auto industry is highly competitive, consisting of organized as well as unorganized sectors and is highly fragmented with a significant number of small and medium-sized companies because of which the business rules are changing to meet the tough competition prevailing in the industry. Innovation, technological upgradation, and cost saving hold the key to success to meet the expectations of the exigent competitive circumstances. However, the Indian auto component industry has been navigating through a period of challenges. During the financial year 2024-25, the industry produced a total of 31,034,174 vehicles including Passenger Vehicles, Commercial Vehicles, Three-Wheelers, Two-Wheelers, and Quadricycles as against production of 28,439,036 vehicles in the financial year 2023-24, registering an aggregate growth of 9.1 percent.

The automotive industry continued its growth during the financial year 2024-25. The domestic sale of Passenger Vehicles improved by 2.0 percent and Export volumes growth by 14.6% during the financial year 2024-25 over the same period last year. The overall Commercial Vehicles segment domestic sales decline by (1.2) percent whereas export volumes growth by 23 percent in financial year 2024-25 as compared to Heavy Commercial Vehicle (M&HCVs) witness flat growth and Light Commercial Vehicle segment decline (2.0) percent, during financial year 2025 over the same period last year.

During the financial year 2024-25, Two-Wheelers domestic sale registered a growth of 9.1 percent and export volumes growth by 21.4 percent over the last financial year. Within the Two-Wheelers segment, domestic sale of scooters and motorcycles witnessed a growth of 17.4 and 5.1 percent respectively, while sale of Mopeds grew by 4 percent as compared to the last year.

The domestic CV volumes had gained traction during the first half of financial year 2024-25 due to healthy infrastructure spending aided by the allocation for capital spending in Union Budget 2024-25 and focus on the replacement of old vehicles under the green mobility. However, due to high base effect coupled with perceived slowdown in infrastructure activities ahead of the General elections 2024, resulted in subdued volumes for CV Industry.

In financial year 2024-25 growth was driven by mix of factors including enhanced model of availability, new product introductions, positive market, rural market recovery and overcoming challenges such as supply constraints of chips etc. PV segment saw demand shift towards SUV segment, that holds 65% market share which significantly contributed to the success.

Industrys increasing focus is now being put on vehicles operating with alternate fuels. Automobile Companies are pressing the accelerator on cars powered by CNG, Hybrid, Batteries and the new age hydrogen fuel cells.

The Parent Company continues to support the Company with its technological expertise. With widely r e c o g n i z e d b r a n d s , s u p e r i o r technology, strong distribution network and a committed team of employees, the Company is well positioned to take advantage of the opportunities and withstand the market challenges. The Company strives to create sustainable profitable growth by using superior technology and maintaining product quality and offering wide range of products at prices, which will give it a competitive edge in the market.

Major regulatory interventions, such as the accelerated transition to CAF? III, StageV, alternate fuel, adoption of electric vehicles, safety rules, scrappage policy and stringent vehicle standards are leading to a shift in vehicle technology. This is creating significant challenges, and your Company perceives these challenges as potential opportunities.

Your Company competes with many independent manufacturers and distributors of component parts. Management continues to develop and execute initiatives to meet the challenges of the industry and to achieve its strategy for sustainable global profitable growth.

There are limited sets of customers in our business. Since, the competition is intense, we compete with suppliers both in the organized as well as unorganized segments. Technological edge, specialization, innovation and networking shall determine the success of the Company in this competitive environment. Further, the policies of the Government play a vital role in the development of the automobile sector. Your Company has been employing the practices to proactively map the impact of its activities on its performance and p r o f i t a b i l i t y f r o m e c o n o m i c environment and social perspectives.

(c) Segment wise or product wise performance

The Company deals principally in only one segment i.e., automotive components. Therefore, segment-wise performance is not applicable. The Company is inter-alia engaged in the manufacturing and sale of Pistons, Piston Rings, Pins, Valve Seats and guides. The geographical information in respect of revenue from customer is given below: (Rs. in lakhs)

Though the financial year 2025-26 started on an optimistic note, auto industry continues to keep a close watch on geo-political developments, global tariff impact, fuel prices and inflation. Supply chain of parts continues to be an area of concern. The Financial Year 2025-26 is expected to witness moderate growth in single digit owing to the high base effect of previous year, inflationary pressures, routine price hikes and regulatory changes. The Company is expecting a year of consolidation for the Indian auto industry with an overall single digit growth over the previous year that should auger well for the Company.

The Indian Auto Industry is poised for growth amidst a mix of optimism and challenges. Manufacturers are gearing up with better supply chains and an array of models to meet diverse consumer demands. Economic growth favorable government policies and an anticipated good monsoon is expected to fuel demand, especially in rural areas and the commercial vehicle sector, which is closely linked to infrastructure projects and economic activity, including the automobile sector.

Multiple Government reforms continue to boost the auto sector such as, production incentive scheme (PLI), vehicle scrappage policy, which aim to reduce the number of old and defective vehicles, bringing down vehicular air pollutants, improving road and vehicular safety, all these interventions will have significant long-term perspective.

However, the auto sector is still grappling with fluctuating raw material prices of steel, aluminum, copper, precious metals and increasing fuel prices which are likely to impact the growth and fuel mix aspect of the automobile sector. Thus, this year is likely to be a challenging year for the auto component industry.

The Company will endeavor to revitalize in near future as demand for vehicles witnesses further growth. To remain competitive in the challenging and d e m a n d i n g e n v i r o n m e n t , t h e benchmark needs to be kept high in anticipation of the stated and unstated needs of customers and markets.

The Company operates in an environment, which is affected by various risks, some of which are controllable while some are outside the control of the Company. However, the Company has been taking appropriate measures to mitigate these risks on a continuous basis. Some of the risks that are potentially significant in nature and need careful monitoring are listed hereunder:

Macro Indicators: The Indian economy has been performing well despite global challenges. The war in Ukraine, Israel-Hamas and its global implications will continue to have an impact on India. It has led to increase in crude oil, cooking oil and commodity prices, which has in turn led to high inflation. Further, global tariff war, potential stock market turbulence and weaker SIP return could erode disposable income. the on-going geopolitical conflicts could possibly affect the auto industry in the medium and short-term.

Raw material prices: Our profitability and cost effectiveness may be affected due to rise in the prices of raw materials and other inputs.

Foreign Currency Risks: Exchange rate fluctuations may have an adverse impact on the Company.

Technical Intensive Industry: The automobile industry is a technical intensive industry and thus faced with a constant demand for new designs, knowledge of nascent technology to meet market requirements.

Increasing competition: Increasing competition in the auto equipment sector, may put some pressure on the market share.

The Company has an Audit Committee h e a d e d b y a n o n - e x e c u t i v e Independent Director, inter-alia, to oversee the Companys financial reporting process, disclosure of financial information, performance of statutory and internal auditors, functions, internal control systems, related party transactions, investigation relating to suspected fraud or failure of internal audit control, to name a few, as well as other areas requiring mandatory review as per provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with the stock exchanges. The powers of the Audit Committee, inter-alia, include seeking information from any employee, directing the Companys internal Audit function, obtaining outside legal or other professional advice and investigating any activity of the Company within the Committees terms of reference.

The Company has a well-defined internal control system, which aims at protection of Companys resources, efficiency of operations, compliances with the legal obligations and Companys policies and procedures.

The required information forms part of the Boards Report and the members may refer the same.

The key financial ratios are given as below: and functional areas continued to remain a priority and internal trainers capability building was done through ‘Train the Trainer programs to drive this agenda.

Training and development have always been our priority.

The total number of permanent salaried employees is 460 hourly permanent is 2,474 as on March 31, 2025.