IST Ltd Management Discussions

a) Global economic view and outlook

After a succession of adverse shocks in the recent years, the global economy is facing another substantial headwind, with increased trade tension and heighted policy uncertainty. This is contributing to a deterioration in prospects across most of the worlds economies. The ongoing trade tensions as a result of US tariffs and potential retaliatory response by its trading partners, which have led to uncertain global economic growth forecasts compared with the previous year. The world economy is also expected to experience elevated market uncertainties due to the volatile geopolitical conditions and macroeconomic conditions, such as impacts from the Middle East conflicts, the prolonged Ukraine-Russia war and potential inflationary effects arising from tariffs and international trade and supply chain disruptions. Growth continue weakening with lower rate at 2.3 percent in 2025 which is weakest performance in the past 17 years and far below the 10 years average of 3.1 percent. It is expected to marginally improves to 2.5 percent in 2025-26. Global trade has fallen from an average of 5.1 percent in the 2000s to 4.6 percent in the 2010s to 2.6 percent in the present decade. Weighted Global headline inflation generally remains elevated at 2.9 percent, majorly influenced by trade restrictions and is expected to remain in higher trajectory. (Source: https://worldbank.org) According to the ‘Global Trade Update released by UNCTADs in March, 2025, the value of global merchandise trade hits a record $33 trillion, growing at 3.7 percent. Most region except Europe and Central Asia experienced positive growth. The trade in services maintained growth at 9% during the year 2024 adding $700 billion (nearly 60% of the total growth). However, growth in both sectors slowed in the second half of 2024, with services growing just 1% and goods less than 0.5% in the fourth quarter. Trade has remained stable in 2025 but uncertainty looms due to mounting geo-economic tensions, protectionist policies and trade disputes. Recent shipping trends also suggest a slowdown. Falling freight indices indicating weaker industrial activity, particularly in supply chain-dependent sectors. (Source: https://unctad.org) According to ‘World Economic Outlook released by International Monetary Fund (IMF), July25 edition, the Global growth is projected at 3.0 percent in 2025 and 3.1 percent in 2026. Global headline inflation is expected to fall to 4.2 percent in 2025 and 3.6 percent in 2026. Inflation is expected to remain above target in the US subdued in other large economies. Geopolitical tension could disrupt global supply chains and could push commodity prices up. Larger fiscal deficits or increased risk aversion could raise long-term interest rates and tighten global financial conditions. On the upside, global growth could be lifted if trade negotiations lead to a predictable framework and to a decline in tariffs. Policies need to bring confidence, predictability, and sustainability by calming tensions, preserving price and financial stability, restoring fiscal buffers, and implementing much-needed structural reforms

(Source: IMF World Economic Outlook – July 2025) b) Indian Economy

India continue to be one of the fastest-growing major economy in the world with steady economic growth rate outpacing other major global economies. Projected with an overall GDP growth of 6.20 to 6.8 percent for the year 2025, it is expected to surpass Japan to become the forth largest economy by the end of this year. The Private final consumption grew at 7.2% which is well ahead of the overall GDP growth. Strong domestic demand, policy reforms, and strategic initiatives like "Aatmanirbhar Bharat" (self-reliant India) are key drivers to Indias success. The current account deficit has also shrunk, indicating improved external trade health. Exports have significantly increased over the past decade, particularly in engineering goods, electronics, and pharmaceuticals. Cumulative FDI inflows have reached a trillion US dollars, with a notable increase in equity inflows in the first nine months of 2025. These are the few key indicators depicting Indias economic growth. The Indian economy is expected to close 2025 on a stronger note with Industrial sector estimated to grow by 6.2 per cent in 2024-25. Strong growth rates in construction activities and electricity, gas, water supply and other utility services are expected to support industrial expansion. Growth in the Services sector is expected to remain robust at 7.2 per cent, driven by healthy activity in financial, real estate, professional services, public administration, defense, and other services. The overall the economic performance in India is encouraging with all sector baring few outperforming forecast of Economic Survey 2024. (Source: Economic Survey 2024-25) c) Industry Review

Your Company is engaged in the following business streams: a) Manufacturing of Auto Components b) Development and operating IT/ITES SEZ

With India becoming one of the fastest-growing economy in the world, the automobile Industry in India is witnessing higher pace in growth. India has become third largest Automobile market in the world. Growing working population coupled with expanding middle class and rising income remains the key driver for the robust demand. Boost in infrastructure spending coupled with various government incentive schemes has accelerated automobile industry. With the growth in the Automobile Industry, the Auto Component Industry is also witnessing a steep growth ahead and is expected to attract Rs. 25 to 30 thousand Crores for capacity expansion in the year to come following an estimated investment of Rs. 15-20 thousand crores in the 2024-25.

The automobile component industry turnover stood at Rs. 6.14 lakh crore (US$ 74.1 billion) during FY24, registering a revenue growth of 9.8% as compared to FY23. Domestic OEM supplies contributed ~54% to the industrys turnover, followed by domestic aftermarket (~10%) and exports (~18%), in FY24. The component sales to OEMs in the domestic market grew by 8.9% to Rs. 5.18 lakh crore (US$ 62.4 billion). The aftermarket for auto components grew by 10.0% during FY24 reaching Rs. 9.38 lakh crore (US$ 11.3 billion). Over FY16 to FY24, the automotive components industry registered a CAGR of 8.63%, reaching US$ 74.1 billion in FY24. The auto components industry accounted for 2.3% of Indias GDP and provided direct employment to more than 1.5 million people. By 2026, the automobile component sector will contribute 5-7% of Indias GDP. The Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2 million by 2026. The industry experienced a 11% YoY growth, reaching Rs. 3.32 lakh crore (US$ 38.4 billion) in the first half of FY25.

Significant demand for automobiles also led to the emergence of more original equipment and auto components manufacturers. As a result, India developed expertise in automobiles and auto components, which helped boost international demand for Indian automobiles and auto components. India is emerging as a global hub for auto component sourcing is around 25% of its capacity production is exported. The auto component export has risen from Rs. 63,181 Crores (US$ 7.4 billion) in 2020-21 to Rs. 1,09,286 crores (US$ 12.8 billion) in 2023-24 with is a sharp surge of around 73%. The auto component export is expected to reach US$ 80 billion by 2026. Indias auto component industry aims for Rs. 8,42,500 crores (US$ 100 billion) in exports within 7-8 years, driven by significant recovery and growth strategies. (Source: www.ibef.org; ACMA)

India is the topmost offshoring destination for IT companies across the world. The Indian IT industry now has global presence with delivery centers across the globe. IT & BPM industry is well diversified across verticals such as BFSI, telecom and retail. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Driven by rapid digitization and the IT industrys timely transition to remote working environments that helped to keep up the industrys growth intact.

With economies across the globe showing signs of stability and improved economic activities, the technology spending worldwide registered significant growth of 10.8 percent in the year 2024. Indian IT sector also witnessed the industry strengthening its position as the global technology and innovation hub. This is reflected in the fact that despite uncertainties due to elections in several countries, the industry is expected to witness resilient growth in FY25 with revenue (including hardware) estimated to reach $283 billion (5.1% y-o-y growth), an addition of nearly $14 billion over last year. Exports are expected to cross the $200 billion mark growing 4.6% y-o-y to $224 billion. Domestic technology sector is trailing towards the $60 billion mark, growing at 7.0% y-o-y to reach $58.2 billion.

The Indian IT industrys revenue touched US$ 227 billion in 2021-22, a 15.5% YoY growth and was estimated to have touched US$ 245 billion in 2022-23. The Indian IT industry is likely to hit the US$ 350 billion mark by 2026 and contribute 10% towards the countrys gross domestic product. By 2025, the Indian software product industry is projected to hit Rs. 8,62,000 crore (US$ 100 billion) as companies seek to expand globally. Indias IT and business services market is projected to reach Rs. 1,71,796 crore (US$ 19.93 billion) by 2025. The IT spending in India is estimated to record a double-digit growth of 11.1% in 2024, totaling Rs. 11,89,560 crore US$ 138.6 billion up from Rs. 10,74,914 crore (US$ 124.7 billion) last year.

With improving market conditions, the industrys net hiring this year increased to 126K employees, taking the total employee base to 5.80 Million (2.2% y-o-y growth). Indias abundant skilled workforce and favorable business environment have driven global firms to actively establish and expand their global capability center (GCC) operations. Notably, office leasing by GCCs surged to an impressive 29.2 million sq. ft. in 2024, marking a 29% year-over-year expansion. Bengaluru and Hyderabad stood at the forefront of this growth, solidifying their positions as preeminent destinations for multinational corporations. (Source NASSCOM) d) Opportunities and Threat and Future Outlook Auto Component Industry

The core business of your company is the manufacturing of High Precision Components for Auto Industry. Over the last few years, the Auto Component Industry has seen a rapid growth driven by strong growth in the domestic market and increasing exports. Despite geopolitical disorder, supply chain disruption and other challenges, the Automobile sector remained stable backed by demand, both domestic and international, Government initiatives and policies, infrastructure development initiatives, upgradation of technology etc. With governments Make in India campaign and ease of doing business initiative, India has become favorable destination for various Global players.

The rapid globalization is opening up newer avenues for the industry, especially while it makes a shift towards alternate source of fuel like Compressed Natural Gas (CNG), electric, electronic and hybrid cars are also being promoted worldwide. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers and the industry would need to adapt to the change via systematic research and development, continual technology upgradation etc. The Indian auto-components industry is set to become the third largest in the world by 2025. This brings in tremendous opportunities to the industry both in the domestic as well as Overseas Markets.

The rapid growth in the Industry also brings in stiff competition both from the domestic and International manufacturers who have the potential for the large scale production and give price competition. New technology coming-in through the global players and large domestic companies, makes the environment challenging for smaller size companies. Further, tightening money supply, volatility in the price of raw materials and other inputs, currency fluctuations, stringent emission norms are other major threats faced by the Industry.

Disturbance in Europe due to ongoing Russia-Ukraine war, Palestine conflict, supply chain disruption to the Sector at large. Despite all odds the auto component sector in India set to grow at a faster pace in the coming years. Due to leveraging cost advantages and quality standards, the industry has the potential to serve as a key sourcing hub for global automakers Although the uncertainty prevails in the short term, the sector is optimistic in the medium and long term and the prospects are encouraging for the Indian Automobile Component Segment.

Large number of Skilled, English Speaking workforce, cost effectiveness and favorable time zone are few of the strengths of Indias IT / ITES sector. Increased economic activities globally, companies in US, Europe and other developed economies are opening up opportunities for the IT Industry in India. Leveraging new digital economy technologies such as Artificial Intelligence (AI), machine learning, and blockchain are few of the new opportunities. Expanding services in cloud computing is a significant growth area. Expansion of the digital economy and e-commerce presents vast opportunities for growth. Recent regulatory flexibility allowing a hybrid work model for SEZ units can help reduce operational costs and real estate expenses. This also increases employee flexibility and morale. With all these positive attributes, India has the potential to become global leader in the digital economy through the development of new products and services.

As US is one the major market for Indian IT Industry, any policy change with respect to out-sourcing of work by the US government may adversely affect the IT industry in India. Current adverse situation in Europe due to ongoing Ukraine crisis may impact the IT sector in India. Indias IT/ITES industry faces growing competition from rival hubs in countries like the Philippines and China, which may offer even lower costs. Since SEZ companies are heavily export-dependent, any economic slowdown in key global markets, like the U.S. or Europe, can significantly impact their revenue and growth. e) Operational Performance

Companys primary business segment is manufacturing of High Precision Components for auto and consumer industry. During the year under review, the gross revenue stood at Rs. 6,277.23.00 Lacs and profit after tax stood at Rs. 3,346.115 Lacs. The earning per share was at Rs. 28.69 per share.

The wholly owned subsidiary of the Company engaged in Development and operations of IT & ITES SEZ continue to have good performance. The gross revenue of Rs. 15,974.57 Lacs and the net profit after tax was Rs. 10,614.06 Lacs. The earning per share was at Rs. 10,614.06 per share. f) Risk and Concerns and its Management

Stiff competition both from domestic and overseas auto component manufactures, uncertainty arising from currency volatility, rise in input cost, low-priced imports and counterfeit auto parts available at cheap price are some of the external risks associated with the business. Operational risks like shortage of power which leads to increase in cost of production. Continues upgradation of technology due to existence major international players, rapid technological advancements are few major concern for the business. In addition, the growth of the Company is dependent on the automobile sector which makes the market uncertain at times. General economic conditions also effect the performance of the Company. Change in regulatory environment always and government policy may also impact the Industry.

The industry efforts to mitigate the above risks along with policy measures of the government would determine the impact of the above risks on the industry going forward.

Risk Management is a process of identifying the risks, analysis of its effect on the business operations of the Company, measures to be taken to mitigate such risks. As a business enterprise, the Company is exposed to various risks, some of which are identifiable and can be mitigated through defined Internal Control Mechanism. However, there are certain risks which cannot be predicated and are unascertainable at a given point of time. These can be mitigated through the experience inherited by the Company and its management over the period. The Company has inherent system for identifying and mitigating the Risk associated. The senior management meets periodically to discuss various operational matters and risks involved therein.

Internal Control Systems inherent in the Company are adequate and commensurate with the size and nature of the business. The inherent systems ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorised, recorded and reported correctly, financial and other data are reliable for preparing financial information and other data and for maintaining accountability of assets. The ever improving Internal Control Systems are well complemented with the internal audit system, documented policies, guidelines and procedures and are reviewed by the management on regular basis. This ensures timely detection of any irregularities and early remedial steps being taken by the Company. h) Human Resource

The Company believes that the Human Resources are one of its biggest assets and strives to achieve maximum employee satisfaction. It is believed that the health, safety and security of everyone who works for the Company is critical to the success of the business operations. Constant Human Resource training and development is important for the growth of the Company. Employees relations continue to be harmonious and positive. i) Cautionary Statement

Certain representations and statements made under the ‘Management Discussion and Analysis are based on the Companys views about the industry, present market conditions, expectations / predictions, objectives, etc. and may be forward looking statement within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied in these statements. Your Companys operations may, inter-alia, be affected by the supply and demand situations, input prices and availability, changes in government regulations, tax laws, government or court decisions and other factors such as industry relations and economic developments etc. in the Country. The Investors should bear the above in mind.