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 expansion continued in 2024 in steady pace, despite lingering geopolitical tensions, geo-economic fragmentation, heightened trade protections, rising policy uncertainty & elevated public debt. The accountable reasons included softening of Commodity Prices, easing Supply Conditions & the lagged impact of Monetary Tightening in 2022.

The World Economic Outlook (WEO) of International Monetary Fund (IMF) estimated the steady global growth at similar rate of 3.3% in CY 2025 as witnessed in CY 2024. Whereas Organization for Economic Cooperation and Development (OECD) projected global growth at diminishing rates @ 3.1% and 3.0% in CY 2025 and CY 2026, respectively, on the basis of Structural Challenges like weak investment, slow productivity growth and high debt levels. Moreover, the pace of economic activity was impacted by moderation in economic growth in some Asian and European economies, protracted geopolitical tensions and sluggish recovery in Chinas consumption demand and property market.

High frequency commodity price data for June indicate a sharp pick-up in Crude Oil prices from their end-May 2025 levels on account of escalating geopolitical tensions between Russia and Ukraine, as well as intensifying conflict between Israel and Iran, whereas Global crude oil prices have exhibited a declining trend during the F.Y. 2024-25.

Disinflationary path is expected to continue, but at a slower pace. The global inflation eased to 5.7% in CY 2024 from 6.6% in CY 2023, and this global disinflation will continue, with deteriorated inflation rates to 4.2 per cent in CY 2025 and to 3.5 per cent in CY 2026.

Geopolitical factors, including the ongoing Russia-Ukraine conflict, disruptions in the Red Sea, persistent supply chain issues, and trade tensions between major economic powers, continued to present challenges to global economic stability in 2024. Despite these obstacles, the United States economy showed resilience, achieving 2.8% growth driven by a robust labour market and moderating inflation. The Eurozone, however, experienced slower growth at 0.9%, including a slight contraction in Germany. Emerging markets, particularly in Asia, maintained stronger growth momentum, reaching 5.3% overall, fueled by investments in technology and infrastructure. Chinas economy grew by 5.0%, supported by government policies and a recovering property sector. The U.S. economy outperformed expectations, while the UK and Europe, particularly Germany, faced a slowdown that brought down overall GDP rates and narrowly avoided recession. On a positive note, India continued to excel, but China encountered challenges due to slowdown in its property sector.

The global economy is projected to sustain a consistent growth pattern, with anticipated expansion rates of 2.8% and 3.0% in 2025 and 2026, respectively. Growth in the U.S. is expected to fall to 1.8% in 2025 and 1.7% in 2026, driven by shifts in labour market dynamics and a reduction in consumer spending. The Eurozone is forecast to experience a fall, with GDP of 0.8% in 2025 and then recovering to 1.2% in 2026, supported by increased consumer expenditure and reduced inflation. Overall growth in developed economies is expected to stabilise at around 1.4% in 2025 and then rise to 1.5% in 2026. Although global disinflation continues, certain regions are experiencing stagnation due to persistently high inflation rates. Global inflation is forecast to decrease to 4.4% in 2025 and 3.5% in 2026, with developed economies expected to achieve their targets before others.

Indian Economy

Inspite of backdrop of a steady global growth amidst multiple headwinds, the Indian economy exhibited resilience during 2024-25 and is poised to sustain its position as the fastest growing major economy during 2025-26, supported by pickup in private consumption, healthy balance sheets of banks and corporates, easing financial conditions and the governments continued thrust on capital expenditure. This sustained momentum is a reflection of the nations sound economic foundations, supportive government policies, an expanding services sector, and strong domestic demand, all of which contribute to increased confidence in Indias long-term growth potential.

Government reforms, substantial investments in both physical and digital infrastructure, and initiatives like ‘Make in India and the Production-Linked Incentive (PLI) scheme have played a crucial role in improving the countrys growth path and encouraging self-sufficiency.

Real GDP arose by 6.5% in F.Y. 2024-25 as compared to the growth rate of 9.2% in FY 2023-24.

Inflation almost achieved its planned targets during 2024-25, by easing input cost pressures, proactive supply management measures by the government and continuing transmission of past monetary policy actions. It moderated to an average of 4.60 per cent during 2024-25 from 5.40 per cent in the previous year, largely driven by a moderation in core (CPI excluding food and fuel) inflation to 3.50 per cent and deflation in fuel at 2.50 per cent. This uptick inflation was observed across both goods and services in the second half of the year.

Assuming a normal monsoon, CPI inflation for F.Y. 2025-26 is projected at 4.0 per cent.

The production linked incentive (PLI) scheme is helping to steer growth across several key manufacturing industries and placing the country as a part of the global value chain through production and exports and generation of job opportunities (direct & indirect). The government has launched the second edition of the PLI scheme for specialty steel in January 2025, targeted beneficiary of increased use of data and technology in credit decisions should be the MSME sector.

The Government of India and Reserve Bank prioritised on increasing the availability of credit to the MSMEs. The inclusion of Goods and Services Tax Network (GSTN) as a financial information provider under the account aggregator framework is expected to give further impetus to cash flow based lending to MSMEs. Increasing the flow of credit to the MSMEs has been a policy priority of the Reserve Bank and the Government of India. SCBs outstanding credit to the MSMEs increased by 14.8 per cent (y-o-y) during 2024-25. Micro, small and medium enterprises (MSMEs) are playing significant role in providing employment opportunities in both manufacturing and services sectors.

Various Government initiatives viz. ongoing PLI scheme, N a t i o n a l M a n u f a c t u r i n g M i s s i o n a n d P r a d h a n MantriAwasYojana (PMAY) to promote economic development and improve ease of doing business for MSMEs, are expected to bring better synergies between the organised manufacturing sector and MSMEs.

Indias economy is projected to expand by 6.2% in the FY 2025-26. By 2030, India is expected to become the worlds third-largest economy, propelled by infrastructure investment, private capital expenditure, and the expansion of financial services. Continuous reforms are anticipated to underpin this long-term growth.

Industry Overview:

The overall Indian Automobile Segment displayed resilience during the F.Y. 2024-25, whereas the Commercial Vehicle segment stayed nearly stagnant in FY 2024-25 and showed petty downfall by 1.20% (retail) against FY 2023-24; however, last quarter of FY 2024-25 posted a growth of 1.5%. The overall trucks segment witnessed a slight de-growth. The expanding highways and expressway network are playing crucial roles in reducing logistics costs, enhancing regional connectivity, which is auguring well with the performance of this segment. The infrastructure development passaged by sales of buses for inter-city travels and focus on mass-mobility in intra-city routes has also aided this segment. Exports of Commercial Vehicles boosted by 23% in FY 2024-25 as compared to previous year with exports of 0.81 Lakh units. Passenger vehicles have experienced consistent growth in production, sales, and exports.

Tractor sales registered a strong growth in April, 2025, although with a weekend momentum. Good agricultural performance boosted rural demand as seen from its proximate indicators, viz., sales of tractors and other commercial vehicles, and volume growth of fast-moving consumer goods (FMCG) companies in rural areas. Meanwhile, the growing demand for EVs has led to a 20% increase in EV sales over the previous year, accounting for nearly 2.5% of the 4.3 million cars sold in 2024.

Urban demand after remaining the driver of post pandemic consumption, lost pace as reflected in indicators such as consumer non-durables, retail passenger vehicle sales and FMCG volumes in urban areas. Retail volumes in the light commercial vehicle (LCV) segment in March 2025 increased by 5.6% on a YoY basis, and by 14.5% on a sequential basis, reflecting a demand recovery for the segment. The LCV (trucks) wholesale volumes are likely to register a limited 3-5% YoY growth in FY2026, signaling a potential recovery after a small decline in FY25.

The commercial vehicle sector is anticipated to experience a rebound, supported by increased infrastructure investments and economic activities. Government initiatives aimed at boosting infrastructure development are expected to stimulate demand for commercial vehicles, particularly in construction and logistics sectors.

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) &Arpamoulding 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 spherodial 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:

• Manufacturing of Spare Parts for Next generation technologies like Electric, Autonomous Vehicles and Hydrogen Fuel cell vehicles, Flexible fuel vehicles (FFVs) and Alternative fuel-enabled vehicles like CNG, LNG, Ethanol, gasoline etc., to reduce emission and component innovation (FCV);

• Diversification/Expanding Markets in Modern Product range, with the help of Localisation by Global Players may lead to greater integration of Indian Component Manufacturer in Global Supply Chains;

• Robust Demand of Mechanisation in Farm Equipment Sector due to prevalent scarcity of Labour;

• Continuous Assistance/Support from Government by way of Schemes/ Incentives;

• With the increased focus on development of Infrastructure including Highways & Electric mobility, Growth in CV & Mass Transportation segment;

• Anticipated Capacity expansion by OEMs, expected to drive demand for high performance auto components.

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:

India is positioning itself as a critical link in global supply chains, encouraging local sourcing and manufacturing. It is also becoming a global SaaS innovation hub, especially in generative AI.

The Government is strengthening e-vehicle ecosystem by supporting and promoting e-Vehicle as a Manufacturing Destination by manufacturing of Next generation technologies like Electric and Hydrogen Fuel cell vehicles.

The Government is extending Continuous Assistance by way of Production Linked Incentive (PLI) Scheme for Automobile, Auto components, ACC (Advanced Chemistry Cells) and semiconductors to overcome the cost disabilities of the industry for manufacture of Advanced Automotive Technology products in India and Industrial development. It is actively pursuing large-scale adoption of Electric Vehicles (EV) market, products and technology.

Efforts were strengthened to clean transportation system through PM Electric Drive Revolution in Innovative Vehicle Enhancement (E-DRIVE) scheme, focusing on green mobility and development of electric vehicle (EV) manufacturing ecosystem.

Proactive government policies also present unparalleled opportunities for investment in sunrise sectors such as renewable energy, electric vehicles (Evs), adoption of e-buses for public transport network etc. The Indian governments commitment to sustainable mobility was evident in the Union Budget 2025-26, which introduced several measures to support the automotive sector. Key among these was the proposed elimination of basic customs duty on 35 capital goods required for EV battery manufacturing, aiming to lower production costs and boost domestic manufacturing, thus making electric vehicles more affordable.

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 700 during the year ended March 31, 2025. 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 was little lower as compared to previous year but there was improvement in production-mix, employee productivity and profitability due to cost saving measures in material procurement and overhead expenses as compared to the previous years performance. Your Company has registered slight decrease in revenue from operations of Rs. 14516.07 lakhs as compared to Rs.15070.31 lakhs in the previous year. During the year, your Company has earned profit before depreciation & amortization and Interest & Taxes (PBDIT) of Rs. 1048.17 lakhs (Previous year Rs.962.45 lakhs), Profit after provision for depreciation & amortization (PBIT) of Rs. 654.53 lakhs (Previous year Rs. 576.37 lakhs), Profit before tax (PBT) of Rs. 239.26 lakhs (Previous year Rs.100.66 lakhs) and Profit after Tax (PAT) of Rs. 141.75 lakhs (Previous year Rs. 69.08 lakhs). The total comprehensive income for the year was Rs.122.80 lakhs (Previous year Rs 65.88 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 increase in profitability inspite of little dip in turnover. 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.