Goodyear India Ltd Management Discussions

1. Industry Structure & Developments

The Indian farm tire industry in FY 2025-26 continued to operate in a dynamic market environment influenced by factors such as raw material price volatility, geopolitical uncertainties impacting fuel and logistics costs, monsoon variability, and moderation in rural demand sentiment following the strong growth witnessed in the previous financial year.

Despite these challenges, the industry demonstrated resilience, supported by stable replacement demand, increasing farm mechanization, and continued growth in the tractor population across key agricultural markets. Demand for higher-performance and productivity-oriented farm tires also continued to gain traction during the year.

The industry remained focused on strengthening distribution reach, enhancing product offerings, and improving customer engagement to address evolving market requirements while sustaining long-term growth opportunities in the Indian agricultural sector.

Few notable changes in the Consumer segment Industry are:

1. Rapid "SUV-fication" of the Market: The most dominant trend is the overwhelming consumer preference for SUVs and Crossovers over traditional hatchbacks and sedans. SUVs require larger tyres (typically 16-inch to 19-inch and above). This shift is driving market towards larger tyres which command higher price points and better margins.

2. Emergence of EV segment: As Electric Vehicle (EV) adoption grows in urban hubs, the tyre industry is adapting to the unique requirements of EVswith launch of EV ready tyres offering Low Rolling Resistance to maximize battery range.

3. Premiumization: Urban consumers are increasingly willing to pay a premium for technologically superior products rather than just mileage.

4. Digital Integration: More consumers are researching tyres online, looking at reviews and technical specs before visiting a physical dealer. This has forced manufacturers to strengthen their digital "connect" with the end-user.

5. Sustainability & Circular Economy: With new government regulations and ESG goals, the industry is shifting toward "Green Tyres with usage of Eco-friendly Materials, Increased use of sustainable silica, recycled rubber, and bio-based oils in the manufacturing process.

In Financial Year 2025-26, the Company focused on strengthening its position in target market segments with introduction of a new premium product lineup, supported by the application of technology and analytics to boost both customer engagement and productivity.

2. Strength, Weakness, Opportunities and Threats

Indian tyre Industry is dominated by the Commercial category (Truck & Bus) which contributes more than 50% of the tyre industry revenue. However, the Company has limited presence in the Commercial tyre category which limits its ability for portfolio selling and ability to mitigate risk of the Farm category. Despite these constraints, the outlook of the Company remains positive.

With India accounting for nearly 18% of the global population, the demand for agricultural output continues to rise steadily. The agriculture sector remains a key pillar of the economy, contributing ~18% to GDP and supporting the livelihood of over 50% of the population. Recognizing its strategic importance, the Government continues to prioritize the sector through policy support, higher Minimum Support Prices (MSP), and Direct Benefit Transfer (DBT) initiatives.

For FY 2025-26, the sector outlook remains positive, supported by expectations of a normal monsoon, healthy crop cycles, and improving farm incomes. This environment is accelerating the adoption of advanced farming technologies, mechanization, and productivity-enhancing solutions by farmers.

Over the mid- to long-term horizon (3-5 years), the farm industry is expected to sustain its growth momentum, driven by structural demand, increasing rural prosperity, and continued government focus.

In this backdrop, the Company has continued to strengthen and preserve its leadership position in the Farm business through efficient, competitive, and customer-centric operations.

A decisive market shift toward the Luxury, SUV, and EV segments is poised to catalyze growth within the replacement tire industry. This transition toward larger rim sizes is fundamentally reshaping future demand. In response, the Company is strategically prioritizing these premium segments to drive margin expansion and enhance profitability. By leveraging our technological leadership and high-performance product portfolio, we are successfully differentiating our brand to capture greater market share. Despite intense competition, we remain committed to aggressive growth through channel expansion and tech-enabled service enhancements, backed by a robust pipeline of innovative products tailored for the evolving needs of the SUV and EV markets.

3. Segment-wise/ Product-wise Performance

The Company manufactures and sells automotive tyres viz. farm tyres and commercial truck tyres at its Ballabgarh plant. The Company also markets and sells passenger car tyres which are manufactured by Goodyear South Asia Tyres Private Limited (GSATPL), Aurangabad, in the replacement market. Other products which the Company markets and sells include tubes and flaps.

The sales performance during the year is as follows:

(Rs. in Lakhs)

4. Outlook

A positive outlook is emerging for FY 2026-27, supported by expectations of a normal monsoon, strong rabi crop prospects, higher wheat output compared to last year, and continued government support through increased Minimum Support Prices (MSP) and multiple Direct Benefit Transfer (DBT) schemes. However, risks remain in the form of erratic monsoon patterns, fluctuating reservoir levels, persistent inflationary pressures, and ongoing geopolitical uncertainties, which could impact overall sector sentiment.

The Company has sustained its leadership position in the Farm business through efficient and competitive operations. The Farm OE segment will continue to focus on strengthening customer service and deepening key account relationships. In the Farm Replacement segment, the strategic priority will be on channel expansion, enhanced channel engagement, and driving operational excellence—ensuring the right tyre is available at the right place, at the right time, and at the optimal cost.

Both OE and Replacement channels will be further strengthened through targeted new product launches in emerging segments, aligned with evolving customer needs and demand trends.

The trend toward larger rim specifications is projected to catalyze significant volume growth within the Consumer Replacement segment. This evolution reflects a fundamental shift in market dynamics, as consumers increasingly prioritize SUVs, EVs, and luxury models. Driven by rising disposable incomes, these segments are gaining traction due to their superior cabin space, enhanced safety profiles, and—in the case of EVs—environmental sustainability.

Recognizing this significant opportunity, the Company will continue its unwavering commitment to introduce new consumer centric innovative products, improve service through technological advancements, and streamline its distribution network.

5. Risks and Concerns

• Slower Than Expected Growth: While India is still a fastgrowing economy, forecasts for FY25 have been revised downwards by some institutions, reflecting a potential slowdown in urban demand and the impact of global uncertainties.

• Persistent Core Inflation: Although headline inflation has eased, core inflation remains sticky, indicating underlying price pressures that could necessitate careful monetary management by the Reserve Bank of India

• Unemployment and Underemployment: Creating sufficient quality jobs for Indias large and growing workforce remains a significant challenge.

• Fiscal Constraints: While the government is focused on infrastructure spending, high levels of government debt and potential impacts on revenue from tax exemptions could limit future fiscal space.

• Global Economic Uncertainty: Factors like geopolitical tensions, potential shifts in US trade policy, and volatile commodity prices (especially oil, of which India is a major importer) pose external risks.

• Trade and Tariff Issues: Rising trade tensions and potential reciprocal tariffs from major trading partners like the US could negatively impact Indias export growth.

• Climate Impact on Agriculture: Adverse weather conditions and heatwaves could affect agricultural output, impacting rural incomes and potentially fueling food inflation.

• Financial Sector Vulnerabilities: While the situation has stabilized, potential for renewed stress in the financial sector, including the risk of rising interest rates impacting borrowers, remains a concern.

• Raw Material Price Volatility: Natural rubber and crude oil derivatives constitute a significant portion of tyre production costs. Fluctuations in these prices can severely impact profitability.

6. Internal Control Systems and Adequacy

The Company has a proper and adequate system of internal control including internal financial controls. The Company has an Audit Committee headed by a Non-Executive Independent Director, inter-alia, to oversee the Companys financial reporting process, disclosure of financial information, and reviewing the performance of statutory and internal auditors with management. The internal control system, including internal financial controls of the Company, is monitored by an independent internal audit team, which encompasses examination/periodic reviews to ascertain adequacy of internal controls and compliance to the Companys policies. Weaknesses noted, if any, along with agreed upon action plans are shared with the Audit Committee, which is designed to ensure orderly and efficient conduct of the business and effectiveness of the internal control system.

The audit function also looks into preventive controls, investigations, as well as other areas requiring mandatory review as per applicable laws. The powers of the Audit Committee, inter-alia, include seeking information from any employee, obtaining outside legal or other professional advice, and investigating any activity of the Company within the Committees term of reference. The internal audit department shares regular updates regarding the work that is done, coverage, weaknesses noted and other relevant issues with appropriate management levels including Audit Committee. Observations/ weaknesses noted from time to time are suitably acted upon and followed up at different levels of management. The internal control is supplemented by an extensive program of audits and periodic review by the management.

7. Discussion on Financial Performance with respect to Operational Performance

The details of the financial performance of the Company are reflected in the Balance Sheet, Statement of Profit & Loss and other Financial Statements, appearing separately. Highlights are provided below:

(Rs. in Lakhs)

The financial performance of the Company has been further explained in the Boards Report of the Company for the Financial Year 2025-26 appearing separately.

The financial statements have been prepared in accordance with the requirement of the Act, and applicable accounting standards issued by the Institute of Chartered Accountant of India.

8. Human Resources

Industrial Relations

During the year under review, the Company continued to maintain harmonious and stable industrial relations across its operations, supported by sustained and constructive engagement with employees.

The Company remained focused on capability building through the implementation of structured learning and development programs covering critical areas such as ethics and compliance, workplace discipline, safety, and environmental sustainability. These initiatives were aimed at strengthening functional and behavioral competencies while reinforcing a culture of accountability and responsible conduct.

Employee engagement continued to be a key priority. The Company undertook several initiatives to strengthen communication and foster inclusivity, including skip-level meetings, structured interactions between new employees and senior leadership, and observance of cultural events and organizational milestones. These initiatives contributed to enhancing employee connect and sustaining a positive work environment.

The Companys rewards and recognition framework continued to play a pivotal role in acknowledging individual and team contributions. The framework is designed to promote meritocracy, encourage high performance, and align employee efforts with organizational objectives.

9. Details of significant changes in key financial ratios along with detailed explanations thereof, include:

10. Cautionary Statement

Certain statements in the Management Discussion and Analysis report may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements reflect the Companys current views regarding the industry, future expectations, objectives, and forecasts. However, actual results may differ materially from those expressed or implied due to various risks and uncertainties.

Factors that may cause such differences include, but are not limited to, disruptions in supply and demand arising from geopolitical tensions or other unforeseen events, fluctuations in input prices and availability, persistent fuel inflation, changes in Government policies, tax laws, judicial or regulatory decisions, industrial relations issues, global economic conditions, and potential restrictions in certain geographies.