G S Auto International Ltd Management Discussions

Overview

G.S. Auto International Limited (GSAIL) is a leading auto component manufacturing company in India, mainly for commercial vehicle industry, catering to all the three verticals of auto component industry in India. The Company manufactures heavy and light automotive products in two units situated at Ludhiana (Punjab) and Jamshedpur (Jharkhand). GS International is one of the trusted brands in the automotive suspension industry, supplying to almost all the major Original Equipment Manufacturers and after sales market through its pan India network of Distributors/Dealers and retailers.

GSAIL is one of Indias foremost and most trusted manufacturers of auto components, catering to a diverse range of industries. At the core GSAIL success is its unparalleled focus on innovation, quality, and sustainability. The Company operates state-of-the-art manufacturing facilities equipped with heat treatment furnaces and stringent quality control systems to ensure that every product meets industry standards. With strong engineering capabilities, GSAIL continuously explores new avenues for technological advancements, improvement in process efficiencies, and product enhancements to meet the ever-evolving demands of the automotive sector. The Company has built long-standing relationships with customers by providing value-driven solutions and consistent product reliability.

GSAIL has continually evolved, integrating cutting-edge technology, advanced manufacturing processes, and a customer-centric approach to solidify its leadership position in the automotive suspension industry. With a legacy spanning several decades, GSAIL has established itself as a preferred partner for leading automotive OEMs, off-highway vehicle manufacturers, and the aftermarket sector. The Company specialises in the production of a wide array of high-quality products in automotive suspension industry.

The Company is extremely competitive in the market place due to its consistent quality and supply commitments with strong logistics with backing of strong team. The company has strong R&D and quality control department for continuous improvement in quality of products and developing new range of products according to market needs and introduction of different kind of new commercial vehicles in the market. The company is always looking forward to meet the new quality standards set up by the Original Equipment Manufacturers (OEMs) and committed to maintain and increase its domestic market share by offering wide range of products at competitive rates and adding new customers.

Global economy

The Global Economic growth is projected to steady at 3.1% in 2026, reflecting increasing pressure from geopolitical conflicts, particularly in the Middle East, alongside broad supply-side disruptions. Growth in advanced economies-primary export and design hubs for the automotive sector-will remain subdued, with the United States expanding by 2%, the Euro area growing by 1.1%, and Japan recording a modest growth of 0.7%. Conversely, emerging market and developing economies are projected to expand by 3.9%, outperforming advanced economies despite weathering higher energy and food prices.

Amidst this backdrop, India continues to stand out globally, with growth projected at 6.5%. This expansion is robustly supported by strong domestic auto demand, aggressive public infrastructure investment, and favorable growth carry-over, cementing its position as the fastest-growing major economy globally.

Global inflation is projected at 4.4% due to energy, logistics, and commodity price shocks, alongside persistent services sector inflation; consistent with this, the OECD projects G20 inflation at 4.0% in 2026. For the auto-component industry, these shocks manifest as volatile outbound freight rates, fluctuating input steel scrap costs, and delayed maritime export shipping lines. As a result, central bank monetary easing is expected to be slower and more cautious, while fiscal policy remains constrained by elevated public debt levels and rising defense, energy security, and climate transition spending. Leading advisory frameworks, including EY-Parthenon, advise manufacturing businesses to actively prepare for structural volatility by strengthening scenario-based planning, supply chain resilience, absolute cost discipline, and GenAI-led factory productivity initiatives to sustain operational resilience and bottom-line profitability through 2026.

Indian Economy

Indias economy demonstrated strong resilience and continuity of growth during FY 2025-26 despite a challenging global backdrop marked by geopolitical tensions and commodity price volatility. According to the International Monetary Fund (IMF), Indias real GDP growth for 2026 is projected at 6.5%, maintaining its position as the fastest-growing major economy globally, even as global growth moderated to about 3.1%. In nominal terms, Indias GDP is estimated at approximately USD 4.1 - 4.2 trillion. Movements in global GDP rankings largely reflect exchange rate effects and statistical revisions, rather than any weakening of domestic growth fundamentals.

Economic expansion in FY26 was supported by diversified and structurally improving growth drivers such as:

-Robust Private Consumption: Led by sustained urban demand and a gradual improvement in rural incomes, translating directly into heightened off-take for agricultural equipment and replacement market auto components.

-Strong Public Capital Expenditure: Particularly in infrastructure, transport, power, and logistics, which directly stimulated long-haul Commercial Vehicle (CV) fleet operations and increased demand for heavy-duty suspension parts.

-Resilient Services Sector Performance: Driven by IT, business services, and financial services exports.

-Manufacturing Investment Momentum: Aided by policy initiatives such as Production-Linked Incentive (PLI) schemes and supply chain diversification, which incentivized local sourcing.

Domestic inflation remained moderate and well-anchored. As per MoSPI, headline CPI inflation stood at 3.40% in March 2026, comfortably within the RBIs target band of 2-6%. Food inflation was 3.87%, while housing inflation remained subdued at 2.11%. However, specific inflation and cost drivers directly affected the automotive manufacturing sector, including:

-Elevated Energy Prices: Increasing foundry melting costs, factory power overheads, and outward logistics costs.

-Volatility in Metals and Commodities: Directly impacting the procurement baseline of steel scrap, pig iron, aluminium, and non-ferrous inputs crucial for forging and casting.

-Selective Food Price Pressures: Marginally affecting labor costs through localized rural inflation trends.

-High Precious Metal Prices: Influencing speciality automotive component, electronics, and EV sub-assembly inputs.

Manufacturing activity continued to expand, albeit at a measured pace. The HSBC India Manufacturing PMI, compiled by S&P Global, stood at 53.9 in March 2026 (down from 56.9 in February), marking a continuous expansion firmly above the structural threshold of 50. This healthy moderation reflected higher input costs, global maritime supply chain disruptions, and geopolitical uncertainty, even as year-on-year manufacturing output remained strongly positive.

Industry Overview:

The Indian automotive industry demonstrated strong volume growth of 11.8% in FY2026, reinforcing its position as the worlds third-largest automobile market. Growth was driven by robust domestic demand, rising exports, policy-led electrification, and a well-established manufacturing ecosystem. Exports also recorded healthy growth, driven by buoyant demand for cars, two-wheelers and commercial vehicles across Africa, Latin America, the Middle-East and ASEAN regions. Commercial vehicles (CVs) recorded steady growth, led by improved freight activity and favorable policy measures, including the reduction in GST rates. Demand remained strong for higher tonnage vehicles, driven by enhanced road infrastructure and logistics efficiency. Continued thrust on infrastructure development, easing inflationary pressures, and supportive fiscal measures are expected to sustain automotive demand. As global mobility shifts towards safer and sustainable solutions, Indias automotive industry is investing in innovative, future-ready technologies, expanding its role in the nations economic growth.

The Indian automotive industry is expected to witness moderate growth of 3-6% in FY2027, reflecting a normalization in demand across segments. Growth will be supported by steady traction in passenger vehicles, recovery in two-wheelers, and stable demand in commercial vehicles, driven by overall economic activity, industrial expansion, and infrastructure-led development. However, a sharp rise in diesel price might adversely impact the CV growth outlook. The shift towards alternative fuel vehicles, including CNG, hybrids, and electric vehicles, is expected to continue, supported by regulatory measures and evolving consumer preferences. The governments continued focus on infrastructure development, manufacturing, and policy support is expected to remain a key growth enabler. Increased allocation of 12.2 lakh crore in the Union Budget 2026-27, particularly towards roads, logistics, transportation, and improving rural conditions, is anticipated to support demand and strengthen the industry outlook. Aligned with the Viksit Bharat vision and building on ongoing reforms, the Union Budget 2026-27 outlines measures to propel Indias automotive sector.

About the Company/Outlook:

Your Company is dealing in manufacturing of auto components for commercial vehicles only. The manufacturing activity is categorized into three types of auto components, namely: Casting Components, machined Auto Components and Forged Auto Components. The Company is supplying almost all its products in each of three verticals of automobile industry namely Original Equipment Manufacturers (OEM), After Sales Market (Replacement Market) and Exports Market. The company is registered as Medium Manufacturing units vide Regn. No. UDYAM-PB-12-0003474 under MSME Act 2020.

The Company has in house Foundry Plant with more than ten thousand tons capacity furnace(s) melting 900 kgs metal along with Automatic (DISA) & Arpa moulding lines, Linear Moulding Machines & Mould Making Machines. As a manufacturing Company, over the years we have multiplied capacities, built up technologies and invested in equipment that place us in a unique league.

At "GSAIL", the focus is on achieving best possible quality through stringent control on repeatability of manufacturing process. All manufacturing processes for processing of Alloy Steel Components i.e. annealing, bar drawing, hot forging, cold forging, precision machining, heat treatment an induction hardening are available under one roof and are made to perform and deliver products of highest quality acceptable to valuable customers.

The Company has second manufacturing unit in Jamshedpur region (Jharkhand), for the manufacture of spheroidal graphite cast iron (SGI) components with an annual capacity of 12000 liquid metals per annum.

GSAIL is one of Indias foremost and most trusted manufacturers of automotive Casting Components, machined Auto Components and Forged Auto Component .GSAIL has continually evolved, integrating cutting-edge technology, advanced manufacturing processes, and a customer-centric approach to solidify its leadership position in wide array of high-quality products in automotive suspension industry.

With a legacy spanning several decades, GSAIL has established itself as a preferred partner for leading automotive OEMs, off-highway vehicle manufacturers, and the aftermarket sector. At the core of GSAIL success is its unparalleled focus on innovation, quality, and sustainability. With strong engineering capabilities, GSAIL continuously explores new avenues for technological advancements, improvement in process efficiencies, and product enhancements to meet the ever-evolving demands of the automotive sector. The Company has built long-standing relationships with customers by providing value-driven solutions, customised engineering services, and consistent product reliability. Through strategic collaborations, supply chain efficiencies, and a commitment to operational excellence, GSAIL remains ahead of industry trends and market dynamics.

Opportunities:

-Next-Generation Powertrains: Manufacturing of spare parts for next-generation technologies like Electric, Autonomous, Hydrogen Fuel Cell, and alternative fuel-enabled vehicles (CNG, LNG, Ethanol) to drive component innovation.

-Global Supply Integration: Market diversification and localization by global OEMs, facilitating greater integration of Indian component manufacturers into international supply matrices.

Threats:

-Complexities in handling Customer Relationship Management;

-Rapid Technological evolution leading to product obsolescence & Technology disruption, requiring continuous investment in the R&D & upskilling;

-Increased Collaborations between Local & Foreign Players, making pressure/ barrier on domestic OEMs;

-Rising Competition from global OEMs & International Equipment Manufacturers (IEMs) setting up local Manufacturing units;

-Rising geopolitical tensions, disruptions in top world economic order and the potential reintroduction or increase of tariffs in international markets may impact cost structures, export competitiveness and increased competition in domestic markets

Governmental Initiatives:

The automotive sector in Financial Year 2025-26 was driven by structural government reforms aimed at boosting local manufacturing and self-reliance. The Union Budget 2025-26 eliminated Basic Customs Duty (BCD) on core minerals like copper, zinc, and lead, while granting tariff exemptions to critical capital goods. This fiscal relief was paired with Social Welfare Surcharge waivers that successfully lowered input costs across the domestic metal-forging and component landscape. Simultaneously, the Ministry of Heavy Industries accelerated the 25,938 crore Auto PLI scheme with a 2,818.85 crore budgetary allocation, strictly enforcing a 50% Domestic Value Addition threshold. This rule forced original equipment manufacturers to heavily localize their supply chains. Furthermore, the 10,900 crore PM E-DRIVE scheme entered its core phase, deploying a ? 500 crore allocation specifically for heavy commercial trucks via an e-voucher program tied to vehicle scraping certificates. Together, these policies under the Critical Mineral Mission and Clean Tech programs shielded component makers from global supply chain risks and boosted demand in the commercial vehicle market.

Human Resource Development:

Serving for "GSAIL" means being associated with a well-established name in the industry of Indian Automotive Suspension and fastening component industry. HRD emphasizes on employees as valuable resources, human values and internal processes in the organization.

The Company focuses on creation of conducive environment where performance is rewarded, individuals are respected and employees get opportunities to realise their potential. Human Resources devote their efforts, skills, competencies to grow the organizations in achieving its objectives and goals effectively. The Company is highly committed for welfare, job satisfaction, job security, work motivation of the employees for improving employees overall quality of work life, sense of belongingness.

The Company is strong believer of Workers calibre, commitment and inherent strength. The company reckons team work , leadership quality of employees and encouraging them to discover and realize their true potential. We have a strong team of 700 young dedicated skilled and unskilled workers who work in close co-operation with each other.

Our vision is the promotion of Personal Development of workforce as well as Organizational Development. By identifying, developing and nurturing quality talent at every stage of the employee lifecycle, we are empowering them to become future ready and build rewarding careers. Besides being a Technical brand, the Company is of the opinion that women build an inspiring culture by bringing in healthy competition, fostering teamwork and thereby helping the Company in its growth. In order to encourage such positive work environment, the Company breaks any gender disparity and creates the atmosphere, which is contributive to female employees.

Industrial Relations:

The total numbers of permanent employees on the roll of the Company were more than 614 during the year ended March 31, 2026. Your Company had maintained its excellent industrial relations records of not losing even a single day due to industrial action since its inception. There has been cordial and harmonious relations between employee and employer.

Risk and Concerns:

The Company has effective Risk Management System meticulously monitoring both internal and external factors for potential threats. Proper identification, comprehensive communication, documentation, analysis, assessment, treatment and mitigation measures of associated Risks, form part of whole Risk Management System. Team Participation, Periodical Reporting and repetitive S.W.O.T. analysis enables the company to prepare for mitigating various potential risks.. The Company is committed to maintain business ethics and the risk management strategy to protect the company from unforeseen threats to protect the Companys Assets and Sustain business growth and ensuring compliance with applicable legal and regulatory requirements.

The Management in consultation with different functional heads and experts forms principles and policies for overall risk management to carries out Companys Risk Management process.

Companys Financial Performance and Operational Performance

During the year under review, the Company recorded steadiness in overall performance and efficiency in all fields. The turnover of the company increased marginally as compared to previous year and profitability improved substantially due to improvement in production-mix, employee productivity, cost saving measures in material procurement and overhead expenses as compared to the previous years performance. Your Company has registered increase in revenue from operations of Rs. 15043.41 lakhs as compared to Rs.14516.07 lakhs in the previous year. During the year, your Company has earned profit before depreciation & amortization and Interest & Taxes (PBDIT) of Rs. 1155.75 lakhs (Previous year Rs.1048.17 lakhs), Profit after provision for depreciation & amortization (PBIT) of Rs. 770.55 lakhs (Previous year Rs. 654.53 lakhs), Profit before tax (PBT) of Rs. 386.68 lakhs (Previous year Rs.239.26 lakhs) and Profit after Tax (PAT) of Rs. 340.17 lakhs (Previous year Rs. 141.75 lakhs). The total comprehensive income for the year was Rs.391.94 lakhs (Previous year Rs 122.80 Lakhs).

During the year, the company performed better by synchronizing its inputs, products mix and aligning sales policies and products pricing. The management and entire team continuously put its best efforts for improving the performance of the company. There was better management for procurement of Raw materials and other consumables and improvement in different processes. The Company attained its determined periodical targets for sales and production. The company was able to decrease in Interest & Financial expenses due to decrease in long term debts.

Internal Control Systems and their adequacy:

GSAIL is an organization for principles and complying with all the internal control requirements. The effective internal control system is needed for maintaining efficient daily operations. The Company has developed a structured approach to financial reporting across various transactions, operational efficiency, asset protection, and adherence to relevant laws and regulations. Internal audit is a continuous process and providing a base for evaluating the effectiveness of internal control systems. Our internal controls are appropriately designed to ensure the reliability and accuracy of financial and other records necessary for the preparation of financial information and related data. Internal Auditor reports are r e v i e w e d d u r i n g A u d i t C o m m i t t e e m e e t i n g s . Recommendations for improving internal controls are proposed and carefully considered. The overall objective is to achieve continuous improvement in the Companys internal controls and systems.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS-

Please refer to Note no 57 of the Financial Statements.

Cautionary Statement:

Certain Statements in this Management Discussion and Analysis describing your Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations; broadly based on certain assumptions. Forward-looking statements are based on certain assumptions and expected future events. The Company does not assure that of practicality and likelihood of these assumptions and expectations. Actual results may differ substantially or materially from those expressed or implied. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Important developments that could affect your Companys operations including raw material availability and prices, demand and pricing by the companys major customers, changes in the government regulations, tax regimes, economic development, labour relations, exchange rate fluctuations, interest rate and other incidents factors.