G G Automotive Gears Ltd Management Discussions

A. INDUSTRY OVERVIEW

The industrial gearbox market is seeing consistent expansion, fueled by the rising use of automation in various sectors and ongoing technological improvements in gearbox design and efficiency. Gearboxes are essential elements in automated systems like CNC machinery, robotic systems, conveyor belts, and assembly lines, where accuracy, efficiency, and dependability are crucial.

Moreover, the increasing need for heavy machinery in multiple sectors, especially in construction, mining, and energy, is propelling market growth even further. The demand for infrastructure advancement and extensive public works initiatives is increasing the requirement for strong industrial gearbox drives in construction machinery, such as cranes, lifts, hoists, and other material handling equipment. In these high-stress, high-demand settings, gearboxes are required to provide outstanding durability and performance.

As businesses aim for greater operational efficiency and output, the importance of industrial gearboxes becomes increasingly significant.

Overall, the growing automation of industrial processes and the heightened demand for energy efficiency will keep fueling the need for gearboxes, and the industrys prospects stay encouraging.

C. SEGMENT-WISE OR PRODUCT WISE PERFORMANCE:

Your Company is in the business of design, manufacture, supply and servicing of Gears and Pinions & Gear boxes. The market this year has been largely static. The market for Gear is trending towards higher sizes due to larger capacities being planned by the various users. Accompanying these trends is the scale-up in capital equipment sizes. Newer technologies, energy efficiency and space reduction are emerging as key drivers in the Gear industry. India, in recent years, is witnessing a growth in the planetary Gear segment signaling a maturing of the market.

As on 31.03.2025 your Company operates only in single segment i.e. Manufacturing of traction gears and pinions. Financial Performance of the Company during under review is refereed under the heading “Financial Performance” in this Annual Report.

D. DETAILS OF SIGNIFICANT CHANGES

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Financial Ratios:

Particulars	As on 31.03.2025	As on 31.03.2024
Debtors Turnover Ratio	3.61	4.93
Inventory Turnover Ratio	2.86	3.48
Interest Coverage Ratio*	5.13	3.86
Current Ratio	1.49	1.25
Debt Equity Ratio	0.53	0.86
Operating Profit Margin (%)	11.66	8.96
Net Profit Margin (%)	0.07	0.05
Return on Net Worth (%)	16.50	13.95

E. RISK AND CONCERNS

The Company could be susceptible to strategy, innovation and business or product portfolio related risks if there is any significant and unfavourable shift in industry trends, customer preferences or returns on R&D investments. Company does have the benefit of being very well entrenched with many of its customers, involved in their critical and strategic initiatives. Therefore, client concentration related risks are mitigated to that extent.

Risks emanating from changes in the global markets such as the recent financial meltdown, regulatory or political changes and alterations in the competitive landscape could affect the Companys operations and outlook. Any adverse movements in economic cycles in the Companys target markets and volatility in foreign currency exchange rates could have a negative impact on the Companys performance. This risk is mitigated to some extent due to the Companys presence in multiple and diverse markets. The Company also takes necessary steps such as forex hedging to mitigate exchange rate risks.

Company operates in a highly competitive industry, replete with multiple competitors majorly in India. Shifts in clients and prospective clients dispositions could affect its business. While the Company has strong domain expertise, robust delivery capabilities and significant project experience, there is no guarantee that it will always get the better of competition.

The Companys operating performance is subject to risks associated with factors that may be beyond its control, such as the termination or modification of contracts and non-fulfilment of contractual obligations by clients due to their own financial difficulties or changed priorities or other reasons. Company does have mechanism in place to try and prevent such situations as well as taking insurance cover as necessary.

F. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY

The Company has mechanisms in place to establish and maintain adequate internal controls over all operational and financial functions. The Company intends to undertake further measures as necessary in line with its intent to adhere to procedures, guidelines and regulations as applicable in a transparent manner. Internal Controls are continuously evaluated by the Internal Auditors and Management. Findings from internal audits are reviewed by the Management and the Audit Committee. The corrective actions and controls have been put in place wherever necessary. Scope of work of Internal Auditors covers review of controls on accounting, statutory and other compliances and operational areas in addition to reviews relating to efficiency and economy in operations.

G. DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL FRONT

The Company has a strong committed work force nurtured and backed up by its professional culture coupled with innovative HR process aimed at strategic alignment with the business objectives. It has been the tradition of the Company to maintain excellent industrial relations at all levels. This has ensured that we have a committed and dedicated workforce with a high level of enthusiasm.

The number of employees as on March 31, 2025 was 326 as against 298 as on March 31, 2024.

H. STRATEGIC OUTLOOK

While the global macroeconomic landscape poses some challenges, the Indian economy continues to demonstrate resilience and is expected to lead global growth. A stable government, growth focused policy and steady domestic demand combine to create a conducive environment for investments.

Company will remain committed to maintaining its leadership position in the domestic market, while at the same time expanding its global presence through strategic partnerships. The focus on innovation remains unwavering. The company will also continue to drive operational efficiencies and strive to maintain its strong cash flow generation and financial discipline.

With a robust order book, diversified sector presence, and a culture of excellence, Company is well positioned to deliver sustained and profitable growth, thereby creating long-term value for its stakeholders.