G G Automotive Gears Ltd Management Discussions

A. INDUSTRY OVERVIEW

The industrial gearbox market continues to witness steady growth, driven by the increasing adoption of automation across industries and continuous advancements in gearbox technology. Industrial gearboxes play a critical role in automated systems such as CNC machines, robotic equipment, conveyor systems, and assembly lines, where precision, reliability, and operational efficiency are essential.

In addition, the rising demand for heavy machinery across sectors including construction, mining, and energy is further supporting market expansion. Increased investments in infrastructure development and large-scale public works projects have accelerated the need for robust gearbox solutions in construction equipment such as cranes, elevators, hoists, and material handling systems. These applications require gearboxes capable of delivering high torque, superior durability, and reliable performance under demanding operating conditions.

As industries continue to focus on enhancing productivity, reducing downtime, and improving operational efficiency, the role of industrial gearboxes has become increasingly important.

Overall, the industrys outlook remains positive, supported by sustained industrial automation, expanding infrastructure investments, increasing demand for energy-efficient equipment, and the continued modernization of manufacturing and industrial operations.

B. SEGMENT-WISE OR PRODUCT WISE PERFORMANCE:

Your Company is engaged in the design, manufacture, supply, and servicing of gears, pinions, and gearboxes. During the year under review, the overall market remained largely stable. However, demand continued to shift towards larger-sized gears, driven by the increasing capacity requirements of end-user industries. This trend has been accompanied by the development of larger capital equipment and an increasing emphasis on advanced technologies, energy efficiency, and compact designs. In addition, the Indian market has witnessed sustained growth in the planetary gear segment, reflecting the continued evolution and maturation of the industry.

As of 31 March 2026, the Company operates in a single reportable segment, namely the manufacturing of traction gears and pinions. The financial performance of the Company for the year under review has been discussed separately under the "Financial Performance" section of this Annual Report.

C. DETAILS OF SIGNIFICANT CHANGES

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

Particulars	As on 31.03.2026	As on 31.03.2025	% Change
Debtors Turnover Ratio	2.84	3.61	-21%
Inventory Turnover Ratio	1.71	2.86	-40%
Interest Coverage Ratio	7.55	5.13	47 %
Current Ratio	2.05	1.49	38%
Debt Equity Ratio	0.50	0.53	-5%
Operating Profit Margin (%)	13.98	11.66	20 %
Net Profit Margin (%)	0.10	0.07	37%
Return on Net Worth (%)	19.14	16.50	2 %

D. 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.

E. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY

The Company has established adequate internal control systems commensurate with the size, nature, and complexity of its business operations. These systems are designed to ensure the safeguarding of assets, accuracy and reliability of financial reporting, compliance with applicable laws and regulations, and operational efficiency.

The effectiveness of internal controls is continuously evaluated through internal audits conducted by independent Internal Auditors. The audit findings are reviewed by the Management and the Audit Committee of the Board, and necessary corrective actions are implemented wherever required. The scope of internal audit includes review of accounting controls, statutory and regulatory compliances, operational processes, and evaluation of efficiency and economy in operations.

The Company continues to strengthen its internal control framework to align with evolving business requirements and regulatory expectations.

F. DEVELOPMENT IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT

The Company firmly believes that its employees are its most valuable asset. It continues to foster a professional, performance-oriented, and collaborative work culture supported by progressive human resource practices aligned with its business objectives.

The Company has consistently maintained cordial industrial relations across all levels, resulting in a committed, motivated, and productive workforce.

The number of employees as on 31 March 2026 stood at 326, compared with 298 as on 31 March 2025.

G. 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.

The Company remains committed to strengthening its leadership position in the domestic market while expanding its international presence through strategic partnerships and enhanced customer engagement. Innovation, technological advancement, product development, and operational excellence will continue to be key focus areas.

The Company will also continue to enhance operational efficiencies, maintain financial discipline, optimize working capital, and strengthen cash flow generation to support sustainable growth.