Force Motors Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian automobile industry had a remarkable year in FY 2025-26. Commercial vehicle sales grew by 12.6% to 10,79,871 units, crossing the one-million mark for the first time. This is an important milestone and reflects the growing scale of the Indian economy, the increasing need for mobility and the considerable progress made by the Indian automotive industry over the years. The rationalisation of GST rates during the year also provided an impetus to demand across several vehicle categories, improving affordability for customers.

At the same time, the automobile industry is passing through a period of significant technological change. There is considerable emphasis on electrification, alternative fuels and cleaner technologies. However, experience increasingly shows that there cannot be one technology or one solution for every application. The manner in which a vehicle is used, how far it runs, where it operates, the load it carries and whether charging or refuelling infrastructure is available- will determine which technology is most suitable.

This is particularly relevant in the commercial vehicle business. While the penetration of electric vehicles in the overall commercial vehicle industry remains at an evolving stage, electric mobility is finding increasing relevance in specific applications, particularly last-mile mobility and operations involving defined routes and predictable running. Some applications are well suited to electric mobility, especially where vehicles operate over defined routes and cover higher daily mileages. In other applications, however, conventional and alternative fuel drivelines will continue to have relevance. The transition, therefore, is likely to take place at different speeds across different segments.

The Companys approach has been to remain prepared for this changing environment without assuming that one technology will replace all others. Along with continued development of efficient ICE and CNG drivelines, the Company has also developed electric mobility solutions. The emphasis remains on understanding the actual requirements of customers and developing products that are appropriate for their particular applications.

Another encouraging development is the growing capability of the Indian automobile industry itself. Indian manufacturers today have the experience, engineering competence and manufacturing scale to develop products that are increasingly competitive, modern and attractive. The next opportunity is to build on these strengths and expand Indias presence in global markets. Indias increasing engagement with global markets and its efforts to strengthen trade and economic relationships with major economies, including the European Union, are creating a more favourable environment for Indian manufacturers to expand their international presence. For companies with established global partnerships and manufacturing relationships, particularly in Europe, these developments can further strengthen opportunities for deeper engagement with international markets.

For this to happen, however, Indian manufacturing must continue to become more competitive. Simplification of regulations, ease of establishing and expanding manufacturing facilities, efficient infrastructure and a stable policy environment can enable industry to invest with greater confidence and build for the long term.

The Indian automobile industry today has the capability and ambition to increase its global footprint significantly. The challenge, as always, will be to continue investing in technology and manufacturing while remaining competitive. For Force Motors, the focus will remain on building capabilities patiently, developing products that meet changing customer requirements and strengthening its position in the markets it chooses to serve.

Operational Performance: The number of vehicles sold during the financial year under report was 37,619 compared to 32,068 vehicles sold in the previous financial year. During the year under report, the Company achieved a top line of 9,05,654 lacs as compared to 8,07,123 lacs for the previous financial year. The sales turnover stood at 8,97,967 lacs compared to the previous years turnover of 8,00,692 lacs.

Financial Performance: As stated above, the Company sold 37,619 vehicles during the Financial Year 2025-26 compared to 32,068 vehicles in the previous Financial Year 2024-25. The Profit before Depreciation, Exceptional Items and Taxes, from operations for the year under report was 1,58,984 lacs as compared to 1,12,291 lacs for the previous financial year. The Net Profit after Depreciation, Exceptional Items and Taxes was 1,21,126 lacs for the current financial year as compared to 79,997 lacs for the previous financial year. The Reserves and Surplus of the Company for the current financial year stood at 4,21,359 lacs as compared to 3,04,894 lacs for the previous financial year.

Key Financial Ratios: In accordance with the LODR Regulations, the following are the key financial ratios along with the explanation where changes are more than 25%, as compared to previous financial year.

Outlook on the business of the Company is covered in the Boards Report.

The Company is a Subsidiary of Jaya Hind Industries Private Limited, which holds 57.38% stake in the Company.

The Company is a Holding Company of Tempo Finance (West) Private Limited, and holds 66.43% stake in that Subsidiary Company.

The Company has a joint venture with Rolls Royce Solutions GmbH, a Company of the Rolls Royce Group. The Company holds 51% stake in Force MTU Power Systems Private Limited (‘FMTU) by virtue of which FMTU has become a Subsidiary of the Company.

Further, after the closure of financial year the Company has acquired 100% shareholding of VTPL, by virtue of which VTPL has become a Wholly-Owned Subsidiary of the Company.

The opportunities for the Indian automobile industry remain substantial. Better roads, growing economic activity and increasing travel are creating opportunities across tour and travel, employee transportation, school transport and other specialised mobility applications. Customers are also increasingly looking for better comfort, quality and features, creating opportunities for more differentiated and premium mobility solutions.

Indias passenger carrier market is expected to grow at an annual rate of 8-9% YOY for the next few years, supported by fundamental changes in market dynamics. With GDP growth expected to be around 7% YOY, rising per capita income provides substantial growth potential for Indias passenger carrier market. At Force Motors, this opportunity is significant, as the end-segments served by the Company, such as education, hospitality, tourism and healthcare, are expected to grow 1.5 to 2 times over the next five years. This will significantly boost demand for Force Motors vehicle offerings.

Indias demographic dividend and infrastructure investments in highways are expected to support the growth of the passenger carrier market, with significant expansion in the last-mile connectivity segment served by Force Motors. Also, the growth of Global Capability Centres in India significantly increases the demand for premium mobility, wherein the Company is well positioned with its Urbania offering. Lastly, with EV penetration in medium to heavy passenger carriers still at an early stage of 2-3%, the segment offers substantial growth potential. Government-led EV initiatives and the ongoing shift toward sustainable transportation create a favourable environment for expansion.

At the same time, recent geopolitical developments have reminded us how quickly events far beyond Indias borders can affect domestic industry. Disruptions in the availability of energy and other essential inputs, rising commodity prices and disturbances to shipping and supply chains can impact both production and costs.

The transition towards cleaner mobility will also continue, although the pace will differ across vehicle categories and applications. The challenge for manufacturers will be to remain prepared for these changes, while continuing to offer products that are practical, reliable and economically viable for customers.

The Companys internal control procedures are adequate to ensure compliance with various policies, practices and statutes in keeping with the organisations pace of growth and increasing complexity of operations.

The Company maintains system of multi-level internal controls which provides reasonable assurance regarding Effectiveness and Efficiency of Operations, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

During the year under review, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Company has continued its programme for training and skill development in its plants, for employees at various levels, who are provided training both in hard and soft skills. A large number of executives in the Sales & Marketing arm of the Company and in our dealer, network spread all over India, are also provided continuous upgradation, training in selling skills, product familiarisation, customer service aspects - in a well-structured and extensive programme. The Company had 4,832 employees as on March 31, 2026.

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be forward looking statements. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, amongst others, economic conditions affecting demand / supply and price conditions in the markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.