JTEKT India Ltd Management Discussions

ECONOMIC SCENARIO

Global economic scenario

The world economy entered 2026 stronger than many had anticipated. Activity demonstrated considerable resilience sustained by strong investment in artificial intelligence, supportive financial conditions and easing trade tensions. Global growth prospects appeared poised for a significant upward revision.

The start of the conflict in West Asia in February 2026 has become a dominant force shaping the global economic outlook. Disruptions to shipments through the Strait of Hormuz, together with damage to energy infrastructure, have triggered a sharp rise in energy prices and increased the cost of fertilisers and other critical industrial inputs. Higher costs are feeding into inflation pressures, weakening confidence, and weighing on household demand and business activity.

Assuming that energy prices gradually ease from mid-2026 onward, broadly in line with current futures market expectations, global economic growth is projected to slow from 3.4% in 2025 to 2.8% in 2026 before recovering to 3.1% in 2027. Annual consumer price inflation in the G20 countries is expected to rise to 4.0% in 2026 from 3.4% in 2025, before easing to 3.1% in 2027 as energy and food price pressures gradually fade. However, the longer the disruptions last, the larger the economic and social costs become. Should the disruptions persist well into 2027, global growth is expected to slow significantly, to just 2.1% in 2026 and 1.8% in 2027, potentially pushing some economies into or close to recession.

Across major economies, GDP growth in the United States is projected at 2.0% in 2026 before moderating to 1.8% in 2027; growth in the Euro Area is expected to be 0.8% in 2026 and 1.2% in 2027; and Chinas growth is projected to ease to 4.5% in 2026 and 4.3% in 2027.

(Source: OECD Economic Outlook, Volume 2026 Issue 1)

Indian economic scenario

The growth rate of Real GDP during 2025-26 is estimated atfi7.7% as compared to 7.1% in 2024-25. Nominal GDP or GDP at Current Prices is estimated to attain a level of INR 346.36 lakh crore in the year 2025-26, against INR 318.07 lakh crore in 2024-25, showing a growth rate of 8.9%. The primary sector has observed a 3.2% growth rate mainly driven by the performance of the agriculture and fishery sectors. The secondary and tertiary sectors have boosted the performance of the economy by registering growth rates of 8.8% and 9.3% respectively, at constant prices. Manufacturing, Trade, Repair, Hotels, Transport, and Communication & Services related to Broadcasting, Storage and Financial, Real Estate & Professional Services sectors have attained double-digit growth at both Constant and Current Prices in FY 2025-26. The GDP growth of 7.7% in FY 2025-26 and 7.8% in Q4 of FY 2025-26 were driven by strong investment, sustained farm production, and the expansion of the construction and tertiary sectors, which together generated robust demand, offsetting the adverse impact of the conflict in West Asia, and underscoring the inherent strength of the Indian economy.

(Source: Ministry of Statistics and Programme Implementation (MoSPI) Press Note dated June 5, 2026)

Looking ahead, elevated energy and other commodity prices coupled with continued supply disruptions are likely to affect economic activity. While import diversification in affected commodities has helped in improving supply, it comes at a higher cost. The full impact, however, will depend on the duration of the conflict, the time taken for the normalisation of supply chains and the burden-sharing approach among stakeholders. The southwest monsoon is expected to be defficient, with implications for agricultural activity and rural demand. Furthermore, sustained momentum in services, the continuing impact of GST rationalisation, and broadly stable employment conditions should continue to support urban consumption. Strong capacity utilisation, sustained credit flows from banking and non-banking sources, and the governments capex are expected to support investment activity. While weak global demand and elevated freight and insurance costs are headwinds for merchandise exports, services exports are expected to remain steady.

Taking all these factors into consideration, real GDP growth for 2026-27 has been projected at 6.6 per cent. Prolonged global supply chain disruptions, heightened volatility in global financial markets, and weather-related shocks continue to pose downside risks to the domestic growth outlook.

(Source: Monetary Policy Statement, 2026-27 by RBI dated June 5, 2026)

INDUSTRY

Global Auto Scenario

Global vehicle production finished 2025 slightly stronger than expected at 92.9 million units, up 3.7% over 2024 and approaching the peak of 95 million units in 2017.

With global light vehicle sales demand projected to remain fiat in 2026, global vehicle production is forecast to edge down to 92.6 million units, a 0.4% y/y decline that reflects maturing markets and evolving regional dynamics.

This anticipated dip in output reflects broader patterns within the automotive industry outlook, as maturing markets and shifting regional dynamics continue to shape manufacturing strategies.

North America: North Americas 2025 light vehicle production fell 1% y/y to 15.3 million units and is forecast to decline by about 3,30,000 units in 2026 to 15 million. Despite import tariffs, some automakers plan to increase certain vehicle imports at the expense of domestic production, while muted demand adds to this overall decline.

Mainland China: Chinas 2025 production outlook is now expected to reach 32.9 million units, up 10% y/y. In 2026, output is projected to decline 1.4% to 32.5 million units as new energy vehicle (NEV) tax cut incentives are reduced and some PHEVs lose eligibility.

Strong export growth continues to offset domestic headwinds-an automotive industry market trend that illustrates the rising influence of Chinese automakers and Chinese car brands in global vehicle production.

Western/Central Europe: Production remained relatively stable in 2025 at 14.1 million units (down 2,50,000 units) despite weak domestic demand and slower-than-expected vehicle electrification uptake. The automotive industry outlook sees production falling by another 0.9% in 2026 to 14 million units.

Japan: Output is projected at about 8 million units for 2025 (up 1.3% y/y) and is expected to stay flat in 2026 at about 7.93 million. A weaker Yen and sourcing shifts for key models continue to boost hybrid exports, particularly for Toyota.

South Korea: Production is stable at 4 million units for 2025, following the resolution of industrial disputes and strong exports to Europe. In 2026, output is expected to decrease to 3.91 million units, reflecting softer domestic demand and program timing changes.

(Source: S&P Global Five Projections for the 2026 Automotive Industry Outlook dated January 30, 2026)

Indian Scenario

The Indian automobile industry recorded its strongest performance in seven years during FY 2025-26, with total domestic wholesales rising 10.4% to 2.83 crore units and exports growing by 24% to 66.47 lakh units. This robust growth was supported by GST 2.0 rate rationalisation, multiple repo-rate cuts by RBI, personal income tax relief, improved consumer sentiment, and continued focus on sustainable mobility. For the first time since FY 2018-19, every vehicle category - Passenger Vehicles (PVs), Commercial Vehicles (CVs), Two-Wheelers (2Ws), and Three-Wheelers (3Ws) - posted their highest-ever annual sales. PV sales reached a record 46.43 lakh units (7.9% growth), 2W sales grew by 10.7% to 2.17 crore units (surpassing the previous peak of FY 2018-19), 3W sales rose by 12.8% to 8.36 lakh units, and CV sales grew by 12.6% to 10.80 lakh units, recovering strongly from the previous years decline.

Indias electric vehicle (EV) market delivered another strong year in FY 2025-26, with total registrations going past 25 lakh units, a 24% year-on-year increase. Moreover, EV penetration reached around 8.5% of total registrations, up from 7.7% in the previous financial year. While this indicates that EV adoption continues to strengthen, the market still remains behind the governments long-term target of 30% EV penetration by 2030. Electric Passenger Vehicle registrations surged by over 80%, while electric two-wheelers and electric three-wheelers continued to drive volume, with two-wheelers alone accounting for nearly 58% of total EV sales. Government schemes such as PM E-DRIVE and PM e-Sewa, the rollout of GST 2.0, the expansion of public charging infrastructure (crossing 27,000 stations by March 2026), new model launches by manufacturers, and growing consumer preference for cleaner mobility, all contributed to this momentum. Additionally, anticipated rising fuel prices have continued to encourage many consumers to shift towards electric vehicles, further supporting the industrys green transition.

Source: https://www.outlookbusiness.com/ industry/automobile-wholesales-in-india-clock-record-283-crore-units-in-fy26-siam https://www.siam.in/news-&-updates/ press-releases/auto-industry-performance-of-q4-jan--march-2026-fy-2025-26/605 https://jmkresearch.com/indias- ev-penetration-reached-8-5-in-fy2025-26/

Production

The industry produced a total of 3,47,08,984 vehicles, including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers, and Quadricycles from April 2025 to March 2026, as against 3,10,34,174 units from April 2024 to March 2025.

Domestic Sales

The Passenger Vehicle segment clocked its highest-ever sales of 46.43 lakh units in FY 2025-26, posting a growth of 7.9%, as compared to the previous financial year.

Three Wheelers also posted their highest-ever sales in FY 2025-26 of 8.36 lakh units, thus registering a growth of 12.8%, as compared to FY 2024-25.

For the FY 2025-26 period, the Two-Wheeler segment posted its highest-ever sales of 2.17 crore units, with a growth of 10.7%, crossing the previous peak achieved in FY 2018-19.

The Commercial Vehicle segment also posted its highest-ever sales in FY 2025-26 with 10.80 lakh units, with a growth of 12.6%, compared to FY 2024-25.

(Source: https://www.siam.in/statistics)

Exports

The Passenger Vehicles segment achieved its highest-ever exports of 9.05 lakh units in 2025-26 registering a growth of 17.5% over FY 2024-25. The demand had been steady across most markets, including in West Asia, Africa and Latin America, last year. Three Wheelers grew by 50.1% in FY 2025-26, compared to last year, with exports of around 4.61 lakh units. Increased exports to Sri Lanka and African nations have contributed to this growth. Two Wheelers also recorded their highest-ever exports in the financial year with 51.8 lakh units in 2025-26 with a growth of 23.4% over 2024-25. A wider product range and recognition of Indian two-wheeler brands and their robust quality are increasing acceptance globally. In the Commercial Vehicle segment fi0.95 lakh units were exported in FY 2025-26 with a growth of 17.4% over 2024-25. Neighboring countries and West Asia have been the steady markets for commercial vehicles.

(Source: https://www.siam.in)

OUTLOOK

FY 2025-26 has been a landmark year for the Indian automobile industry, supported by a series of structural policy reforms that have strengthened demand fundamentals and significantly boosted consumer confidence. Therefore, the industry is optimistic and expecting growth to continue in all vehicle categories in 2026-27, continuing the strong domestic momentum from the latter half of 2025-26.

However, uncertainties arising from the West Asia conflict, particularly rising crude oil and commodity prices, higher exchange rates and disruptions in shipping routes- remain a concern for the auto sector. A stable geopolitical environment will help build the confidence of the industry, which can, in turn, drive further growth.

The Indian EV market is well-positioned to reach afi9.5% to 10%fipenetration rate in FY 2026-27. This milestone is highly achievable, considering that thefiPM E-DRIVE deadlinesfifor electric two-wheelers and three-wheelers (L3 category) have been extended to July 31, 2026 and March 31, 2028, respectively. Ultimately, reaching the double-digit figure will depend on continued progress in charging networks, deeper domestic localization, and continued improvements in financing and new vehicle models. https://www.siam.in/news-&-updates/press-releases/auto-industry-performance-of-q4-jan--march-2026-fy-2025-26/605 https://jmkresearch.com/indias-ev-penetration-reached-8-5-in-fy2025-26/

OPERATIONAL PERFORMANCE AND FINANCIAL REVIEW

Financial Review

INR/Mn.

	2025-26	2024-25
Net Income from Operation	26,452	23,807
Other Operating Income	204	186
Total Revenue	26,656	23,993
Raw Material	19,383	17,404
StafiCost	2,719	2,471
Other Expenditure	2,548	2,271
EBIDTA	2,005	1,848
Other Income	249	97
Depreciation and Amortisation	994	826
EBIT	1,260	1,119
Finance Charges	149	103
PBT before Exceptional Items	1,111	1,016
Exceptional Items	60	-7
PBT	1,051	1,023
Tax	282	271
PAT	769	753
Other Comprehensive Income	-3	-18
Total Comprehensive Income	765	735
Profit attributable to Owner	765	735
Capital Expenditure	4,441	3,742
EPS	2.84	2.90
D/E Ratio	0.29	0.18

Ratio Analysis

For the financial year, PBT margins declined from 4.23% in FY 2024-25 to 4.16% in FY 2025-26. There were several factors that resulted in the decline in margins, including high tariffs on exports to the US resulting in a loss of export sales as well as the payment of additional customs duties on exports, a change in the product mix mainly due to a 33% drop in sales to Honda, an increase in power costs due to an increase in the power tariff and one-time rights issue expenses. The Return on Equity ratio declined from 8.85% last year to 7.44% in the current year. Further, the Return on Capital Employed ratio declined from 10.88% last year to 7.87% in the current year.

For FY 2024-25, the Company incurred a total capex of INR 4,441 million, primarily towards expanding production capacity and the construction of new factory infrastructure in Gujarat. Due to the increase in capex, borrowings from the banking system increased from INR 1,532 million as of the end of March 2025 to a level of INR 3,373 million as of the end of March 2026. This resulted in an increase in the debt-to-equity ratio from 0.18 times last year to 0.29 times in the current year. Further, the Debt Service Coverage Ratio reduced from 4.32 times last year to 2.97 times in the current year.

There has been no significant change in other financial ratios, including the current ratio, inventory turnover, trade receivable turnover and trade payable turnover ratios.

A detailed ratio analysis along with the reasons for the changes is included in Note no. 46 of the financial statements.

TECHNICAL CAPABILITY / RESEARCH & DEVELOPMENT

The Company remains firmly committed to its mission of contributing to society and the environment through the development of high-quality steering and driveline products, with a strong emphasis on safety, quality, reliability, and environmental compliance. It continues to focus on achieving First-Time-Right designs while reducing development time and cost through structured technical training and robust process standardization to enhance consistency and traceability.

Front-loading activities are being strengthened through early-stage technical engagement and alignment with customers on next-generation product requirements, enabling improved requirement clarity, early risk identification, and optimized design concepts. This approach facilitates the early introduction of next-generation products, supporting faster concept validation, improved design maturity, and alignment with evolving market and regulatory expectations. Simultaneous engineering practices are further reinforcing cross-functional integration and execution efficiency.

In line with its digital transformation journey, the Company is leveraging simulation-driven engineering, including Noise & Vibration Hazards and system-level analysis, to reduce development cycle time by enabling early validation, minimizing reliance on physical prototypes, and accelerating design convergence. Targeted investments in driveline testing infrastructure, along with strengthened Electrical & Electronics (E&E) capabilities through structured training, are improving validation coverage and enabling localized end-to-end development.

The JTEKT India Technical Center continues to drive cost optimization, application-specific development, and supplier localization, thereby enhancing agility and overall competitiveness.

MANUFACTURING RATIONALIZATIONS

To sustain speed, flexibility, and cost competitiveness, the Company has prioritized manufacturing rationalization as a key enabler of operational excellence and a critical pillar of its long-term growth strategy.

In FY 2025-26, we successfully completed seven manufacturing rationalization projects involving strategic consolidation, product line transfers, and layout optimization. An additional five projects are currently underway, of which three are targeted for completion within FY 2026-27. These initiatives are being executed in close coordination with customers to ensure seamless transitions and minimal operational disruption.

Recognizing the need to support future growth in the western region and strengthen alignment with key customers, JTEKT India has announced the establishment of a new state-of-the-art manufacturing facility in Gujarat. The new plant will enhance customer proximity and responsiveness through localized production and the transfer of select product lines from northern India, resulting in improved lead times and reduced logistics costs.

Through these collective efforts, JTEKT India has achieved:

Faster capacity ramp-up to meet evolving market demand

Improved operational efficiency and higher resource utilization

An optimized manufacturing footprint across India

RECOGNITION

TKML - Quality Month Award

The JTEKT Chennai Unit was honored by Toyota Kirloskar Motor (TKML) for the successful implementation of Quality Excellence activities during the Quality Month program (Sep-Nov 2025). We were selected for this recognition based on strong execution at the Gemba level and audit evaluation.

TRENTON PRESSING: Best Overall Supplier for 2025 Award

The Company received the Best Overall Supplier for 2025 award from Trenton Pressing - US, recognizing our overall performance and commitment to customer expectations.

TKML - Zero PPM F26

TKML conferred the Zero PPM award for achieving the target of zero customer complaints (0 defects per million parts supplied) during Apr 2025 to Mar 2026. The award reflects our high level of process stability, quality assurance, and strict adherence to customer requirements.

Tamil Nadu Government Safety Award:

The JTEKT Chennai Unit has been honored with the 2nd Prize in the Engineering (Automobile) category by the Government of Tamil Nadu. This recognition was awarded among 53,800 registered companies across 10 industrial categories, highlighting and honouring our strong commitment to safety standards and practices.

This transformation journey is not solely about operational efficiency-it is about building future readiness. By integrating manufacturing rationalization with our growth strategy, we are creating a stronger, more resilient, and sustainable foundation for JTEKT India to emerge as a best-in-class automotive components manufacturer.

To further mitigate supply chain risks and strengthen competitiveness, JTEKT India is also expanding its capabilities through the development of a state-of-the-art precision warm forging facility for complex CV Joint products.

HUMAN RESOURCES

At JTEKT, we believe that when we care for our people, they drive our success. Our Human Resources strategy is built on this foundation-creating a work environment where individuals feel valued, supported, and empowered to grow.

Our People, Our Priority

With a diverse workforce of over 3,825 employees across locations, we recognize our people as our greatest asset. We are committed to nurturing a healthy, inclusive, and future-ready workforce, supporting employees throughout their journey with JTEKT.

Well-being at the Core

We place holistic well-being at the heart of our employee experience:

Health and wellness programs, including comprehensive medical coverage and preventive care initiatives.

Work-life balance support through flexible and inclusive policies.

Employee engagement activities that build a sense of belonging, community, and camaraderie.

Management Open Sessions were conducted, fostering direct engagement with top leadership.

Skip-level meetings were held year-round to drive engagement.

Stay interviews were conducted to strengthen engagement and retain existing talent.

New Joiners Meets and Mentor-Mentee sessions helped new joiners feel confident, connected, and supported from day one.

Performance with Purpose

We foster a high-performance culture through transparent goal setting aligned with individual strengths & business priorities, performance-based appraisals that reward meaningful contributions and continuous feedback to support growth and development.

Investing in Growth and Learning

We believe in growing careers from within. Our focus on upskilling, internal mobility, and leadership development helps employees realize their potential:

110+ training sessions conducted in FY 2025-2026

98% workforce coverage across technical, functional, and behavioral areas

Hands-on DOJO programs for shop floor readiness

A dynamic E-Learning platform with 45+ modules and 7,600+ sessions for self-paced learning

Byte E-Learning modules were developed to enable quick, impactful, and continuous skill development

Welcoming Fresh Talent

To keep our organization agile and future-ready, we engaged and groomed young professionals through structured campus recruitment. In FY 2025-2026, we also onboarded about 12 Graduate Engineer Trainees/Management Trainees (GETs/ MTs) and 191 Diploma Engineer Trainees (DETs).

Career Growth from Within

We provide strong career paths, especially for Trainees and ofi-roll associates. About 57 internal roles were filled through elevation from the Trainee and ofi-roll categories in FY 2025-2026.

PURCHASING

Strengthening the supply chain is our main objective at JTEKT Purchasing to ensure quality products are delivered at the right time and the right price. To stay competitive in the market and in order to meet customers expectations, we are continuously working on improvement activities in response to market conditions. Below are some key initiatives taken during the last year:

1. Started conducting Cybersecurity Survey with all key suppliers, evaluating their current status and guiding them on counter measures to avoid any cyber attacks to safeguard our suppliers and avoid any supply risks.

2. As part of our Emission CO2improvement initiatives, we have started monitoring of Suppliers CO2 Emission data on a half-yearly basis.

3. To de-risk our supply chain, we have started a Supplier Improvement Drive for small and medium-scale suppliers to support them in improving their efficiency and VA/VE activities. This has helped our suppliers to enhance their skills, productivity and efficiency improvement.

4. JTEKT has been conducting Vendors Meets on a regular basis to communicate about our growth plan, new initiatives taken by the Company and our expectations from the Vendor Partners. In these meets, Vendor Partners are awarded and recognised for their fine performances, which, in turn, helps boost their morale and also motivates other business partners.

SAFETY, SECURITY & SUSTAINABILITY

At JTEKT, Safety & Sustainability are fundamental to our operational excellence and long-term competitiveness. As we continue expanding operations, strengthening production capabilities, and preparing for future growth, we remain committed to building safe, resilient, and sustainable workplaces aligned with global standards and stakeholder expectations.

Our safety philosophy is strongly driven by our CARE Culture, Behaviour-Based Safety, and purposeful two-way communication, enabling employees at every level to actively participate in building a proactive and accountable safety culture.

Employee Safety: Building a Culture of CARE & Accountability

At JTEKT, safety is built through leadership discipline, employee involvement, and collective accountability.

Key focus areas include:

Continuous safety awareness programs, mock drills, and competency development

Strengthening shop-floor safety through RED machine identification and converting them to green

Focus on employee well-being in existing and newly added production lines by the TAIWA (structured dialogue) activity.

Strict adherence to supplier safety management and safe work permit systems for expanding operations

Reinforcement of a No Compromise culture towards unsafe acts and unsafe conditions

Safety & Operational Reliability

With the ongoing capacity expansion and new facility development, JTEKT India continues to strengthen process safety systems to ensure operational continuity and risk reduction. Our focus areas include:

Regular Hazard Identification and Risk Assessment

Standardized SOPs and emergency preparedness systems across plants

Fire prevention and emergency response enhancement at all facilities

Preventive maintenance and equipment reliability improvements

Incident learning, near-miss reporting, and root-cause-based corrective actions

Continued compliance with ISO 45001:2018 requirements and safety regulations

Physical Security: Safeguarding People and Assets

With an increasing footprint, we have reinforced security controls at all locations:

Access Control and Surveillance: Use of RFID-enabled entry systems, 24x7 CCTV surveillance, and security patrols

Incident Management System: Timely reporting and resolution of any safety/ environment incidents or near-miss observations, enabling a proactive response

Sustainability: Driving Responsible Growth

Sustainability remains a key business driver at JTEKT as we work toward long-term environmental commitments and carbon neutrality goals. Focus areas include:

Reduction in CO_emissions, water consumption and waste across all plants

Energy efficiency improvements through advanced utilities and monitoring systems

Rainwater harvesting, water recycling, and ETP/STP optimization initiatives

Strengthening Green Procurement and supplier ESG engagement

Continued compliance with ISO 14001:2015 requirements and environmental regulations.

INFORMATION TECHNOLOGY

During the financial year, the Company continued its focus on digital transformation, cybersecurity enhancement, and process automation initiatives aimed at improving operational efficiency, business visibility, and governance across manufacturing and support functions. The following key initiatives were undertaken during the year:

eGL Board implementation on production lines: eGL Boards were implemented on production lines to provide real-time visibility of Safety, Bakido, manpower planning, 4M data, and energy consumption. The system enhances shop floor monitoring and supports proactive operational management.

Low-code application development:

JTEKT India expanded the use of Oracle APEX and Power Apps for the rapid development of internal applications. The initiative supported process automation, paperless operations, real-time reporting, and reduced dependency on external vendors.

Automation of PDI (Pre-Dispatch Inspection): PDI automation was implemented to digitize inspection activities before dispatch, improving accuracy, traceability, and real-time visibility while reducing manual recording.

Automation of gate entry and material receipt through Kanban:

A paperless Kanban-based system was implemented for gate entry and material receipt to improve material tracking, reduce manual intervention, and enhance logistics and warehouse efficiency.

Cybersecurity enhancement initiatives for suppliers: Cybersecurity surveys and assessments were conducted for critical suppliers to strengthen supply chain resilience and improve alignment with JTEKT cybersecurity standards.

Cybersecurity awareness improvement among users: Regular awareness programs and phishing simulation exercises were conducted to improve cybersecurity awareness among employees and reduce the risk of cyber incidents caused by user negligence.

ISO / IEC 27001 certification achievement: The Company has been awarded ISO 27001 certification by the certification body of TÜV SÜD America for the Companys Information Security Management System. The certification demonstrates the organizations commitment toward information security governance and data protection.

RISKS AND CONCERNS

The Company understands that effective risk management is critical in meeting its objectives and achieving sustainable growth. Risk management policies have been designed in a manner that the Company can respond swiftly and implement the necessary mitigation actions. In compliance with prudential norms, we have constituted a Risk Management Committee and developed a risk management framework. The objective is to ensure sustainable business growth and promote a proactive approach to reporting, evaluating and mitigating risks associated with the business.

The Committee reviews the framework periodically in view of the dynamic business environment. This risk management policy has helped enhance process robustness, ensuring that strategic & operational risks are addressed effectively.

The Companys strategic & operational risks are broadly classified into the following four major categories:

Economic risks: Refer to risks resulting from the economic and political scenario in the country.

Operational risks: Refer to the risks that are inherent to the business and include manufacturing and distribution operations.

Financial risks: Refer to the risks that result from fiuctuations in the currency market and interest rate.

Human resource risks: Refer to the risks of losing out on a skilled workforce due to competition.

The Committee recognizes that risk management is an integral part of good management practices. Thus, it has made risk management an essential element in achieving business goals and deriving benefits from market opportunities. While the Company cannot completely rule out the possibility of a negative impact owing to risks, we continue to take cautious steps to mitigate risks.

INTERNAL CONTROL AND ADEQUACY

The Audit Committee monitors the adequacy and effectiveness of the Companys internal control framework. Internal control systems are supported through management reviews and verification by internal and statutory auditors.

Internal Audit Plans are aligned with the objectives of the Companys business and the same are approved by the Audit Committee to ensure the adequacy & effectiveness of the Companys Internal Control framework.

Internal Audit Reports are reviewed by the Audit Committee on a quarterly basis to ensure that the Company maintains a robust internal control system commensurate with the size and nature of its operations.

ADOPTION OF GREEN TECHNOLOGY

The Company made further efforts toward harnessing solar energy for generating electricity for our manufacturing units. Currently, our seven manufacturing locations have solar power generating facilities, and the total solar power generating capacity stands at 5,156 KWp. The Company has plans to further increase the capacity in the coming years. In addition to this, all other energy-saving efforts such as the adoption of energy-efficient fixtures and equipment, zero water discharge through water recycling, etc. continue to receive the focus of the management. This transition to cleaner and more efficient energy will significantly reduce our carbon footprint and improve air quality. Our dedication to sustainable practices and green technologies reflects our long-term vision for a more sustainable future.

CORPORATE SOCIAL RESPONSIBILITY

The Company considers corporate social responsibility (CSR) as a fundamental aspect of its business philosophy. The Companys commitment to CSR reflects its focus on creating a meaningful impact in the communities it serves. The Companys CSR initiatives, approved by its CSR Committee, focus on key areas such as healthcare, education, environmental sustainability, promoting rural sports and rural development. The Companys efforts are not only aimed at fulfilling regulatory requirements but also at fostering inclusive growth and sustainable development.

The Company focuses on directly implementing these projects in local areas after a detailed assessment of the requirements of the community with the objective of deriving maximum benefit from these activities and ensuring that these CSR projects achieve and attain the norm of sustainability._

Skill Development

During the financial year 2025-26, one of the Companys key CSR initiatives was the establishment of a Skill Development Centre aimed at enhancing the practical capabilities of diploma engineering students. This initiative was undertaken in partnership with the Government Polytechnic College, Junagadh, Gujarat- a premier state-government technical institution in Gujarat affiliated with the Gujarat Technological University (GTU) and approved by AICTE. Recognizing the growing need for industry-aligned technical skills in the automotive sector, the Company collaborated with the college to design and implement a customized training curriculum.

The Skill Development Centre will provide hands-on training, equipping students with practical knowledge and exposure to industry best practices. This initiative will significantly contribute in the direction of enhancing technical skills, improving employability, increasing creativity and greater competence among participating students.

Education

During FY 2025-26, the Company collaborated with the Government Primary School in Jalisana, Gujarat, to support the establishment of a fully equipped computer lab by providing 12 computer systems and related infrastructure like tables and chairs. Furthermore, the Company contributed towards the construction of the school building by Gakko Bunka Education Society.

The Company also enhanced the infrastructure at the Government Industrial Training Institute (ITI), Rewari, Haryana by setting up a conference room for the placement cell and installing air conditioners in the library. In addition, the Company provided water coolers, RO systems, an off-grid solar power system, constructed washrooms, installed storage racks and safety railings at various educational institutions, including Government Primary School - Rathiwas, Government High School -Rathiwas, Government Primary School -Jaurasi, and Government Senior Secondary School - Jaurasi.

To support student development, the Company collaborated with Monk.e.Wise, an institution focused on student wellness to conduct an English-speaking and communication skills programme at S.D. Modern Senior Secondary School, which received strong student participation and highly positive feedback. The Company also funded the salary of a computer teacher at the Government Senior Secondary School in Banipur village. Additionally, the Company extended further infrastructural and educational support to several institutions, including S.D. Modern Senior Secondary School in Gurugram, Captain Chandan Lal Special School for the Blind in Gurugram and Government Girls Higher Secondary School in Orikkai, Kancheepuram (Chennai).

The Company had set up a library at the Government Senior Secondary School in Bithwana village in FY 2023-24. The Company also hired a librarian to effectively run the library. Last year, the Company organized a book reading competition for students, encouraging them to read and summarize the books they had chosen. Approximately 30 students participated in the competition and were rewarded in recognition of their enthusiasm and efforts. To motivate the students, our Independent Director, Ms. Deepika Gera, visited the library and interacted with the students.

Community Development

Additionally, under its CSR initiatives for FY 2025-26, the Company developed a new library in Malpura Village by procuring books, racks, reading tables, chairs and other necessary furniture to create a dedicated reading and study space. This facility provides free access to books and a supportive learning environment for more than 700 students, helping them improve their academic performance, encouraging a zeal for higher education, strengthening language and communication skills, promoting self-learning and ensuring equal educational opportunities for rural children.

Health and well-being

During the year, the Company supported the Vivekanand Arogya Kendra by providing important medical equipment - the Stryker 1688 AIM 4K Camera Control Unit. This contribution will help the center to expand into cardiac care by setting up a modern Cardiac Centre with advanced diagnostic and treatment facilities. Once completed, the hospital will be able to provide complete heart-care services, including emergency treatments and minor surgeries. The new equipment also improves lighting and image quality during procedures, as its Auto Light technology adjusts lighting automatically, reducing the need for manual adjustments during surgery.

The Company also supported infrastructure development at the Maternity Ward, Community Health Centre, Bawal, by providing interlocking tiles around the ward area and carrying out soil-filling work to ensure a hygienic and safe environment.

Furthermore, the Company contributed equipment necessary for the kitchen at the Anganwadi Centre, Malpura village, ensuring access to clean, safe and hygienic food for children and stafi, thereby improving overall nutrition and health standards.

Training to promote Rural Sports

To support activities at the Hockey Ground located at Sector-6, Gurugram, the Company provided hockey players with complete field kits, shoes, goalkeeper equipment and other essential training resources. In addition, the Company arranged coaching support to train a dedicated batch of 25 students between the ages of 11 and 13 preparing them to participate in Under-14 hockey tournaments at the state and national levels. This initiative aims to promote sporting skills, build confidence and create opportunities for rural children to progress in competitive sports.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the automobile sector, significant changes in the political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labour relations, and interest costs.