GNA Axles Ltd Management Discussions

Indian Economy

The Indian economy growth in the year 2024-25 is estimated at around 6.2% and is expected to grow at the same pace in the current financial year 2025-26 and thus will continue to maintain a solid lead over its global and regional peers. The overall outlook remain positive and strong and its signals signals not only the strength of Indias macroeconomic fundamentals but also its capacity to sustain momentum in a complex international environment. Despite global uncertainties and downward revisions in growth forecasts for other large economies, India is set to maintain its leadership in global economic growth. Supported by strong fundamentals and strategic government initiatives, the country is well-positioned to navigate the challenges ahead.

With reforms in infrastructure, innovation, and financial inclusion, India continues to enhance its role as a key driver of global economic activity. The IMFs projections reaffirm

Indias resilience, further solidifying its importance in shaping the global economic future. The only caution being the trade tariffs which can play a spoil sport as they may lead to a slowdown in the bigger economies.

Industry Overview

GNA Axles Limited is preferred OEM supplier for manufacture and supply of Rear Axle Shafts, Spindles and Drive Shafts for Tractors and Commercial Vehicles. The business of the Company is dependent on the fortunes of the Tractor and Commercial vehicle industry. During the year under review the tractor industry showed a growth of around 6.50% as per Tractor Manufacturers Association and was able to produce tractors in excess of ten Lacs tractors. and the same is expected to continue in the current year also. The Company was able to increase its volume in Off Highway segment by around 3%. The Indian CV industry ended the 2024-25 on a flat note showing a decrease of around 3% with overall CV sales at around 10.33 Lacs units against 10.68 Lacs units in 2023-24 as per SIAM. In the Export markets, the Company was able to increase its market share and was able to post a volume growth of around 13.50% in 2024-25.

Business Overview

The Brief Summary of the operational and financial performance of the Company is given below:-

Product Wise Volume Distribution No. of Pcs in Lacs

	2024-25		2023-24
Product Types	Domestic	Exports	Domestic	Exports
Rear Axle Shafts	21.37	17.45	21.51	16.19
Spindles	3.30	7.75	4.70	5.84
Drive Shafts	1.81	1.46	1.42	1.44
Total	26.48	26.66	27.63	23.47
Segment wise distribution			No. Of Pcs in Lacs
	2024-25		2023-24
Segments	Domestic	Exports	Domestic	Exports
Off Highway	17.73	3.42	17.37	2.99
CV	8.75	23.25	10.26	20.48
Total	26.48	26.67	27.63	23.48

Amount ( in Cr)

Geography-wise Revenue from operations
	2024-25	2023-24
Exports	840.36	776.20
Domestic	672.05	714.34
Total	1,512.41	1,490.54

Amount ( in Cr)

Financial Highlights	2024-25	2023-24
Total operating Revenue	1,539.74	1,506.26
Profit Before Depreciation, Interest and Tax	213.22	199.72
Financial Costs	11.86	11.54
Depreciation	57.10	53.34

Amount ( in Cr)

Financial Highlights	2024-25	2023-24
Profit before Tax	144.27	134.84
Tax Expense	37.15	34.82
Profit after tax	107.12	100.02
Earnings Per Share
- Basic	24.95	23.30
- Diluted	24.95	23.30

Key Financial Ratios

The Company has identified the following ratios as key financial ratios :

Particulars	2024-25	2023-24	Explanation for Significant Change
1 Debtors Turnover Ratio (Times)	2.50	2.63	-
2 Inventory Turnover Ratio (Times)	7.73	7.72	-
3 Debt Service Coverage Ratio	6.55:1	4.60:1 -
4 Current Ratio (Times)	2.50	2.16:1	-
5 Debt Equity Ratio (Times)	0.29	0.27:1	-
6 Return on Capital Employed (%)	13.62%	14.65% -
7 Net Profit Margin (%)	7.08%	6.71%	-
8 Return on Equity (%)	11.90%	12.47% -

Market and Business outlook

With promising GDP growth outlook, incentives from government to improve productivity in both manufacturing and agriculture sectors, and continuing focus on infra, demand for CVs and Tractors is expected to improve from here and we remain optimistic about domestic demand while keeping a close watch on geopolitical developments, interest rates, fuel prices and inflation. We will continue to deliver strong EBITDA performance and our focus on net cash will continue. The demand from the overseas markets will now be depending upon the tariff escalations, the geopolitical situations around the world. The North America remains the biggest export market for the Company, any negative development on the tariff front in USA can have an impact on the performance of the Company. A lot remains uncertain for the Company that whether the duties will be imposed and if imposed at what rate on a permanent basis.

Opportunities and Threats

It is expected that India will grow faster and ahead of the other economies of the World in the current decade which will give rise to new and manifold opportunities. The improvement in the demand from Tractors and CV segments will aid the Company in increasing its revenue and market share. The Auto component Industry is going to be a big beneficiary of India being made a global hub of

Automobile and Auto Component manufacturing and the China plus 1 policy. India will be witnessing robust demand for auto components amid ongoing shift in global supply chain coupled with cost-effective manufacturing base keeps costs lower by 10-25% relative to operations in Europe and Latin America. Any adverse development on the tariff front in the USA can have an adverse impact on the demand of Commercial Vehicles in USA and that in turn can impact the demand for the Companys products.

Human Resources

The Company believes that human resources is the strong foundation for creating endless possibilities for its business. Our employees are our prime assets and are instrumental and vital to our success. We nurture our people by investing in their empowerment through learning and development, wellness and safety besides providing contemporary workplace facilities. 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. We are committed to create a professional culture which enables our employees to grow in their career alongwith the growth of the organisation. We continue to step up efforts to accelerate our value-based growth strategy and the overall development of our employees and continue to engage them in various initiatives of development and learning opportunities, reward and recognition and their career growth. Richer collaborations and stronger teamwork have accelerated our pursuit of excellence. The Company employed 1,537 employees on its rolls as at the end of the financial year 2024-25.

Quality, Efficiency &

During the year under review, we undertook various measures to reflect our strong endeavour towards quality commitment, efficiency and

- In-house execution of manufacturing processes to monitor product quality, control production costs and maintain delivery schedules

- Improving forging efficiency to increase capacity utilisation

- Better relations with vendors for achieving quality, costs and delivery objectives with the help of regular vendor Audits

- Centralised approach towards sourcing and vendor management ensuring economies of scale in raw material procurement, especially steel

- Special focus on products packaging to meet customers requirements. Due consideration given to the mode of transportation and destination, ensuring timely deliveries

Technology and Automation

Technology define ones competitive edge in the market.

The Company realises that and has been investing in systemstechnological upgradation and also fine-tuning and processes to ensure that those are in sync with the technology platforms. Thus, helping us provide a variety of customer specifications. The forging facilities are supported by robots. We intend to invest in automation for most stages of production process. This will help ensure optimal use of resources, reduction of industrial risk to human workers, economies of scale and significantly higher accuracy in the overall manufacturing and design of products.

Internal Control System

The Company has devised and designed proper and adequate Internal Control Systems which are commensurate with its size and nature of operations and ensures that it is. integrated with our financial and operating systems which directs in a more effective manner. These controls have been designed in such a way so as to provide assurances regarding the maintenance of proper financial records, protection of the assets of the Company, and also ensures monitoring of the operations of the Company. The Internal Audit function of the Company reviews the Compliance of the established designs of Internal Control and the shortfalls and discrepancies, if any, are looked upon into and tracked for closure. The summary of the Internal Audit findings and status of implementation of action plans for risk mitigation, are submitted to the Audit Committee every quarter for review, and concerns around residual risks if any, are presented to the Board.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include global economy, political stability, stock performance on stock markets, changes in Government regulations, tax regimes, economic developments and other incidental factors. Except as required by law, the Company does not undertake to update any forward looking statements to reflect future events or circumstances. Investors are advised to exercise due care and caution while interpreting these statements.