Honda India Power Products Ltd Management Discussions

DOMESTIC BUSINESS

GENERATOR

India today is the 4th largest economy in the world and is striving to become 3rd largest economy by 2030. Governments initiative is to promote self-reliance through Atmanirbhar Bharat program with emphasis on boosting domestic production, digitalize the economy and create a world class infrastructure.

Weather related power outages continue to drive demand for generators as backup power sources. At the same time, the use of portable generators for primary applications is increasing-particularly in mobile utility vans and doorstep services such as mobile salons, pet grooming, and food trucks. Additionally, portable generators are being widely adopted for charging drones, which have diverse applications across agriculture and defense fields.

However, generator sales for backup power in small hotels and homestays in Jammu & Kashmir were adversely affected following the unfortunate Pahalgam attacks, which led to a sharp decline in tourist inflow.

Corporate and institutional demand remained subdued this year due to deferment of funds but is expected to recover in this fiscal.

Opportunities

Demand for portable generators, driven by uses such as milking, chilling, and leisure activities like camping, in addition to weather-related disruptions, is expected to remain strong. This is likely to support the company in sustaining its leadership in the portable generator segment, while continuing to deliver reliable power solutions to a broad and diverse customer base across India.

Economic activity and operations, particularly among small and medium sized businesses are picking up, with demand for portable backup power expected to grow steadily.

The Companys promotional efforts, focused on urban, semi-urban, and rural markets, aim to tap into evolving lifestyle and comfort needs, and are expected to support deeper penetration of its efficient and reliable offerings across a wider customer base.

Concerns

Peak power deficit continues to be within acceptable levels, primarily due to adequate power generation. Interim demand for our products in urban areas driven by long-haul power cuts has thus been on reducing trend.

Consumer spending remains low due to higher interest rates.

Outlook

The growing demand for portable power backup solutions and the expanding use of generators across new applications will help your company sustain volumes and strengthen its leadership position in the generator category.

GENERAL PURPOSE ENGINES AND WATER PUMPING SETS

The unseasonal and uneven distribution of the monsoon led to increased water pump sales during FY 2025-26, particularly across eastern, central, and southern markets. However, delays in ongoing state and central government support programs for the farming and fisheries sectors impacted the overall process, especially in terms of the timely release of government funds.

The Company offers a diverse range of water pumps with outlet sizes ranging from 1.5 inches to 4 inches, enabling the Company to provide optimal solutions for farmers dealing with bulky diesel water pumps. Unmatched fuel efficiency, reliability and portability, offered by Honda brand of Water Pumps continues to be preferred choice by our valued customers.

Sales of 2-inch water pumps crossed the milestone of 60,000+ units during the financial year, helping the Company maintain its leadership position in the water pump segment.

Mechanization in the construction segment, particularly for small, portable, and compact machines, witnessed healthy growth driven by the continued focus on overall infrastructure development.

In the previous financial year, the Company launched concrete cutters and plate compactors for the construction industry; concrete cutters offer standardized solution for efficient groove cutting to accommodate thermal expansion in concrete roads while plate compactors help in achieving effective floor compaction for laying strong foundations.

Building on its success in global markets, the Company is actively working to expand its footprint in the construction segment by introducing more engine driven applications. These efforts are aimed at improving construction efficiency and speed, in line with the Governments vision of developing world class infrastructure and sustaining the momentum in one of the worlds fastest growing economies.

The Company has also introduced a backpack sprayer model for applications such as spraying various plant protection liquids in the agriculture segment and equipment washing purposes, along with a crop harvester designed for the quick and efficient harvesting of various crops.

The Company targeted reach in coastal areas and waterways by expanding engine driven long tail boat application for small and medium sized boats navigating the inland waterways and offshore fishing with the introduction of Honda GX powered long tail boat, thereby accelerating shift from manual to mechanized propulsion process.

The Governments planned investments in irrigation and infrastructure projects are expected to drive demand for fuel-based engines. In addition, continued supply chain requirements for agricultural produce and products have sustained the demand for farm operations, supporting products and services.

The Companys demonstration activities, supported by dedicated demonstration vans and manpower deployment for recently launched products in the agriculture and construction segments, have been well received. These initiatives are helping customers realize the benefits of portable and cost effective solutions for timely land preparation, de-weeding, and irrigation needs, while also offering portable, environment friendly, and economical alternatives in the diesel dominated construction machinery segment.

Opportunities

Increasing investments in infrastructure, focusing on timely delivery of projects, remained one of the key factors driving the growth of the construction market in India.

The increasing focus on harnessing available surface water for agricultural irrigation is expected to continue driving demand for portable water pumps in the agriculture segment.

Construction mechanization, through Hondas portable GX engines run applications and farm mechanization products such as engines, water pumps, brush cutters, power tillers and crop harvesters will accelerate shift to mechanization with decreasing farm labour and will fuel the demand of portable machinery. Expected continuity in Government support will provide much needed fillip for our product portfolio and offerings.

Growing awareness to address environmental concerns brings in demand for more fuel-efficient 4 stroke engine powered applications.

Concerns

Subsidy policies of the State and Central Government along with associated operational process remain a concern as they lead to delays timely delivery of goods to the end customers. The Company continues to closely engage with various government stakeholders through its field teams to gain a deeper understanding of the process and contribute to faster implementation of government schemes, thereby supporting farmers in their decision to adopt portable farm solutions for various agricultural activities.

Outlook

The infrastructure sector in India is expected to gain stronger momentum in the coming years, supported by increased investments in national highways, warehousing, airports, and urban and rural housing projects.

The Company is focused on developing a multi-channel structure across various segments to expand its application oriented product and equipment portfolio. Partnerships with small, medium, and specialized players, as well as OEMs, are expected to create a robust ecosystem that enhances cost competitiveness and strengthens application specific product sales and services.

BRUSH CUTTERS

Hondas fuel-efficient and reliable 4-stroke brush cutters are specifically designed to provide optimal solutions for various farm activities such as de-weeding and crop harvesting.

The Company continues to offer its environmentally friendly 4-stroke brush cutter range for routine de-weeding operations and farm and real estate management across all major markets in India.

Its complete portfolio, comprising fixed shaft, flexible shaft, and high-powered variants, provides tailored solutions to meet the needs of professional users.

Your company has also launched a crop harvester machine suitable for the efficient harvesting of fodder crops, specifically to meet a long-standing demand from small and marginal farmers.

Concerns

Subsidy policies of the state and central governments, along with associated operational complexities, are leading to delays in purchases by end customers.

The influx of low cost imported brush cutters, primarily from China, has disrupted pricing in the market. The Company will focus on communicating the advantages of its 4-stroke technology, which delivers significant savings in total cost of operation, while also highlighting product quality through proactive marketing campaigns in key focus markets. This approach is expected to support efforts to stabilize market pricing.

TILLERS

The Companys focus on agricultural mechanization was strongly supported by its expanding range of power tillers.

However, the financial year 2025–26 proved challenging for the overall tiller market due to delays in the implementation of various subsidy schemes by the Central and State Governments, driven by complex disbursement processes, which led to lower end customer purchases. Customers also deferred their purchases in anticipation of scheme releases during the season, which were subsequently delayed.

EXPORT BUSINESS

Overall Export Business was 130% of the plan set at the beginning of the year.

2~3Kva Generator models sales in Canada, USA, Australia, Japan, Europe, and Indonesia was major business driver amongst genset-category.

The Company actively participated in the Ethiopia Trade Expo held at Addis Ababa from 4th to 8th February 2026. The Company showcased its diverse portfolio of power products and suitability for African markets.

Water Pump and Tiller sales are showing increasing acceptability in Asia Oceania Region.

Concerns

Frequent changes in USA import tariffs have impacted the certainty and price competitiveness, potentially influencing demand and order inflows.

Stricter CARB/EPA /CPSC regulations are impacting the prospective sales.

Competition from global players with optimized supply chains, logistic routes, and aggressive pricing remains a key challenge, especially in new and emerging markets where price sensitivity is high.

Outlook

The Company will continue to strengthen engagement with channel partners to expand reach and drive demand for gasoline-fueled Tillers, Engines, and Water Pumps.

FINANCIAL PERFORMANCE

Profit before Tax and Exceptional Items for the year was Rs. 9,559 Lakh as against Rs. 10,770 Lakh in 2024-25.

Key Financial Ratios of the Company which has significant change (i.e. more than 25% change) compared to last year are as follows:

	FY 2025-26	FY 2024-25	Reason for Change
Net Profit Margin (%)	7.42%	10.05	Decrease in net profit margin is due to higher material cost and exceptional item (new direct wage settlement).

The return on net worth during the Financial Year 2025-26 was 6.28% as compared to 9.54% in the Financial Year 2024-25.

For a detailed explanation of change please refer to Note 34 of Notes to Financial Statement.

HUMAN RESOURCES

Human capital remains a critical driver of the Companys long-term value creation and competitive advantage. During the year, the Company continued to strengthen its people practices with a focus on capability building, leadership development, and fostering a high-performance culture aligned with its strategic priorities.

The Company is committed to maintaining a diverse, equitable, and inclusive workplace. Focused initiatives were undertaken to enhance gender diversity, ensure equitable access to opportunities, and promote an inclusive organizational culture across all levels.

The Company continues to review and enhance its HR policies in line with evolving workforce expectations and regulatory requirements. Progressive practices such as hybrid working models, flexible work arrangements, and inclusive leave policies (including paternity leave) have been further strengthened during the year to support employee well-being and work-life integration.

In line with its sustainability agenda, the Company has accelerated its Green HRM initiatives through increased digitalization of HR processes, minimizing paper usage and improving operational efficiency.

Talent management remains a key priority area, with structured interventions in leadership development, succession planning, and capability enhancement. The Company continues to invest in building a future-ready workforce while ensuring strong alignment with business objectives.

The Company maintains a constructive and collaborative industrial relations environment. Regular engagement forums and structured communication channels enable effective dialogue between management and employees, ensuring timely resolution of concerns and alignment on organizational priorities.

Employee health, safety, and well-being continue to be of paramount importance. The Company has strengthened its safety governance framework and continues to promote a culture of safety through training, awareness, and preventive measures.

The Company as on March 31, 2026, had 711 associates.

ESG & Responsible Business

The Companys human capital practices are aligned with its broader ESG framework, with a strong focus on:

Enhancing workforce diversity and inclusion

Ensuring safe and healthy working conditions

Promoting continuous learning and employability

Driving digital and sustainable HR practices

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Companys CSR initiatives are guided by its commitment to inclusive growth and sustainable development. During the year, CSR interventions were undertaken in the areas of education, community development, and environmental sustainability.

The Company remains committed to creating measurable and sustainable social impact through its CSR programmes.

INFORMATION TECHNOLOGY

The Company continues to strengthen its technology and information security framework in response to the evolving digital risk landscape. With increasing cyber threats and regulatory expectations, the focus remains on ensuring data security, operational resilience, and business continuity.

During the year, the Company enhanced its IT governance and cybersecurity posture through:

Strengthening of information security policies and controls

Deployment of advanced monitoring and threat detection systems

Regular vulnerability assessments and risk audits

The Company continues to invest in scalable and secure digital infrastructure to support operational efficiency and business growth.

The Company remains committed to continuous improvement of its IT systems and processes to ensure robust data protection, regulatory compliance, and seamless business operations.