Kalyani Commercials Ltd Management Discussions

At Kalyani Commercials Limited, we constantly strive to trade products and technology-led services that enable our customers and stakeholders to Rise. By focusing on customer requirement, delivering accessible technology, innovating and enhancing people capabilities, we continue to drive growth in the domestic market.

INDUSTRY OVERVIEW

India emerged as the fastest-growing major economy globally during FY 2024 25, with an estimated real GDP growth of 6.5%. This robust performance was primarily driven by strong momentum in the construction, trade, and financial services sectors. Looking ahead, the Indian economy is projected to sustain its growth trajectory, with a real GDP growth forecast of 6.5% for FY 2025 26. Rural demand is expected to remain resilient, supported by favorable agricultural output. Additionally, improved business sentiment and higher capacity utilization are anticipated to catalyse increased investments in the manufacturing sector. However, global economic uncertainties pose a potential risk to the overall outlook. India continues to present a compelling long-term growth opportunity, underpinned by strong macroeconomic fundamentals and a large domestic market.

OUR INDUSTRY SEGMENT

The Indian automobile industry has historically been a good indicator of how well the economy is doing, as the automobile sector plays a key role in both macroeconomic expansion and technological advancement. The two-wheelers segment dominates the market in terms of volume, owing to a growing middle class and a huge percentage of Indias population being young. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector. The rising logistics and passenger transportation industries are driving up demand for commercial vehicles. Future market growth is anticipated to be fueled by new trends including the electrification of vehicles, particularly three-wheelers and small passenger automobiles.

India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. Indias annual production of automobiles in FY24 was 25.9 million vehicles. India has a strong market in terms of domestic demand and exports. In April 2025, the total production of passenger vehicles*, three-wheelers, two-wheelers, and quadricycles was 23,58,041 units.

Indian Automobile Sector

The Indian auto industry recognizes the importance of reducing dependence on imported oil, enhancing road safety and most importantly, ensuring clean air. Over the years, the industry has made significant investments in indigenization of technologies in the conventional vehicles space e.g. meeting BS-VI in 3 years. In FY 2024- 25, the industry has implemented BS6.2 emission norms in India. The Government has notified Electric vehicle technology and Hydrogen fuel cell technology as advanced automotive technology under PLI (Production Linked Incentive) scheme and has approved E-Vehicle policy to promote India as a manufacturing destination for e-vehicles. This will provide Indian consumers with access to latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition amongst EV players leading to high production volumes, economies of scale, lower production cost, a reduction in our crude oil imports, and hence lower trade deficit and positive impact on environment.

Indian Automobile Sector in Financial Year 2024-25

In FY23, total automobile exports from India stood at 47,61,487. This sectors share of the national GDP increased from 2.77% in 1992-1993 to around 7.1% presently. It employs about 19 million people directly and indirectly. India is also a prominent auto exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India such as the Automotive Mission Plan 2026, scrappage policy, and production-linked incentive scheme in the Indian market are expected to make India one of the global leaders in the two-wheeler and four-wheeler market by 2022.

Over ten years between FY 2013-14 and FY 2023-24, the Utility Vehicle (UV) segment has been a key driver of Passenger Vehicle (PV) growth. FY2014-24: UV grew at CAGR 17% vs PV which grew at CAGR 5.4%. UV, as share of PV, has increased from 21% in FY 2013-14 to 59.7% in FY2023-24 and 60%-65% of total PV sales in FY 2024-25.

The long-term growth outlook for the Indian Auto Industry is positive, driven by robust economic growth outlook, focused Government policies with vision for 2047, Governments focus on road and infrastructure development, increasing income levels, current low levels of vehicle penetration, rapid urbanization and a large, young and aspiring population.

BUSINESS

The Company is engaged in business of trading of automobiles, motorcars, lorries, buses, vans, motorcycles, cycle-cars, motor, scooters carriages and vehicles of all descriptions, whether propelled or assisted by means of petrol, diesel, spirit, steam, gas and other components and spare-part of such vehicles of Heavy Commercial Vehicles, Three Wheelers and servicing (Dealership of Bajaj and TATA), Petroleum Product Dealership.

OPPORTUNITIES AND THREATS

India being one of the largest automobile markets in the world, has a bright future because of several factors like rapid urbanization, Car buyers getting younger, growing middle class, overall growth of other industries, infrastructure development and the improved road infrastructure. This along with rising disposable income, aspirations for a better lifestyle and a slew of new product launches lined up by companies would aid overall increase in sales volumes. The Company, with its wide portfolio is expected to benefit from the same. Further, per capital penetration at around eighteen cars per thousand is among lowest in the world. This growing consumerism is expected to lead to an increase in car penetration.

The Indian automotive industry continues to be recognized as a sunrise sector and a champion industry, owing to its significant contribution to the national economy. In FY 2024 25, the sector contributed around 7.1% to Indias GDP and nearly 49% of the countrys manufacturing GDP, further strengthening its position as a key growth driver. Passenger Vehicles achieved another record milestone with sales of 4.3 million units, reflecting a growth of 2% over the previous year, supported by strong demand in the Utility Vehicle segment, higher disposable incomes, easy credit availability, and a steady stream of new launches. Commercial Vehicles, however, reported a marginal decline of 1.2% in domestic retail sales, although exports grew by a robust 23% to 0.81 lakh units, highlighting Indias growing role as a manufacturing hub. The Three-Wheeler segment witnessed healthy momentum with total sales of 7.41 lakh units, compared to 6.94 lakh units in FY 2023 24, led by passenger three-wheelers which grew by 8.6% and e-rickshaw sales which surged by nearly 60%. The industry also benefitted from the easing of the global semiconductor shortage, with supply improving to nearly 85 90% of requirements, enabling smoother production schedules compared to the disruption seen in earlier years. Overall, FY 2024 25 marked another year of resilience and growth for the Indian automobile sector, underscoring its critical role in driving Indias economic progress and its steady transition towards cleaner and advanced mobility solutions.

Threats

The industry company faces several challenges that could potentially impact its growth and profitability. Intense competition within the industry from established players and new entrants poses a risk to market share and revenue. Economic volatility and shifting consumer preferences may affect consumer spending patterns and demand for automobiles. Regulatory changes could lead to increased compliance costs and impact product offerings. Supply chain disruptions, cybersecurity risks, and technological advancements by competitors pose additional threats. Geopolitical uncertainties, environmental concerns, and the potential for health crises also add to the risk landscape. Your Company recognizes these threats and is committed to implementing proactive measures to mitigate their impact and ensure sustainable success in this dynamic market. In response to the various threats faced by our esteemed automobile industry company, we have devised a comprehensive set of proactive solutions. Embracing innovation and adaptability, we are determined to safeguard our growth and profitability while addressing potential challenges. To stay ahead in the competitive landscape, we will focus on innovative product development, investing in cutting-edge research and development to introduce vehicles that align with shifting consumer preferences. Through strategic pricing and targeted marketing campaigns, we aim to enhance our market presence and engage our customers effectively.

In anticipation of potential health crises and geopolitical challenges, we will develop comprehensive risk management strategies and contingency plans. By preparing for various scenarios, we aim to navigate uncertainties effectively.

In conclusion, these solutions reflect our unwavering commitment to resilience, sustainability, and customer-centricity. As we implement these measures, Your Company is confident in its ability to thrive in the ever-changing automotive landscape, ensuring a prosperous and transformative future for our company.

OUTLOOK AND FUTURE PROSPECTS

India has consolidated its position as one of the fastest-growing automobile markets and is expected to remain the third-largest Passenger Vehicle market globally in FY 2024 25, supported by sustained consumer demand, rising incomes, and strong preference for Utility Vehicles. According to SIAM, the industry recorded moderate, single-digit growth in Passenger Vehicle sales during the year, achieving an all-time high of 4.3 million units. The Indian automotive sector continues to demonstrate immense potential and is projected to generate annual revenues in the range of US$ 251 283 billion by 2026, driven by robust domestic consumption, export opportunities, and adoption of advanced technologies. While global uncertainties and supply chain disruptions continue to pose short-term challenges, the industry has shown resilience, with recovery trends similar to those witnessed in other large markets. Increased urbanization and localized transport policies have further accelerated opportunities for Mobility-as-a-Service (MaaS), particularly in metro cities. Electric vehicles (EVs) are gaining significant traction in this shared mobility space, supported by favorable government incentives and ecosystem development. Companies such as Tata Motors Limited (TML) have been at the forefront of this transformation, entering into multiple strategic partnerships to strengthen their presence in the EV and new mobility solutions segment. Overall, FY 2024 25 has reinforced Indias emergence as a global automotive hub, with the sector steadily transitioning towards sustainable, technology- driven, and future-ready mobility.

RISKS & CONCERNS

The Companys business continues to be exposed to various internal and external risks; accordingly, robust systems, processes, and review mechanisms have been instituted to actively monitor, manage, and mitigate such risks. In FY 2024 25, the automotive sector faced challenges from economic fluctuations, inflationary pressures, evolving regulatory requirements, and supply chain disruptions linked to global geopolitical developments. These risks had the potential to affect consumer sentiment, reduce credit availability, and moderate vehicle demand. However, the industry effectively countered these headwinds through strong risk management practices, technology adoption, and policy support. The implementation of Bharat NCAP (BNCAP) norms, the Governments sustained thrust on Electric Vehicle (EV) adoption, and the incentives under the Production Linked Incentive (PLI) scheme created a more favorable environment for long- term growth. Despite near-term pressures, the Indian automotive sector in FY 2024 25 reinforced its resilience, adaptability, and growth trajectory, supported by innovation, sustainability initiatives, and strategic collaborations. With these enablers, the industry is well- positioned to continue its transformation, strengthen Indias status as a global automotive hub, and c ontribute significantly to the nations economic development and technological advancement.

HUMAN RESOURCES

The Company has put in the best efforts to provide a safe and conducive working environment and is committed to ensuring highest standards of safety in the workplace. We believe that safe work practices lead to better performance, motivated work force and higher productivity.

The Companys relations with the employees continued to be cordial.

FINANCIAL RESULTS

The Financial performance of the Company for the Financial Year ended 31^st March, 2025 is summarized below: -

(In INR Lakhs Rupees, except EPS)

Particulars	For the year ended 31.03.2025	For the year ended 31.03.2023
Total Revenue & Other	38,883.43	27,923.16
Income
Total Expenses	38,547.41	27,596.06
Profit Before Tax &	336.02	327.10
Extraordinary Item
Extraordinary Item	0.00	0.00
Tax Expenses
Current Tax
- Deferred Tax
Liability (Net)	1.38	85.50
- Income Tax Earlier
Year	11.29	4.86
Profit / Loss For The Year	233.25	236.33
After Tax
Share of Profit or loss from	-	-
associate
Total Other	7.37	(15.99)
Comprehensive Income /
Total Comprehensive	240.63	220.35
Income / Loss
Other Comprehensive
Income attributable to
a) Parent
b) Non-Controlling	-	-
Interest
	-	-
Earnings Per Share (EPS)
a) Basic	23.33	23.63
b) Diluted
	23.33	23.63

SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

The company operates in two segments. Hence segment wise performance is discussed as follows:

Primary Segment: Business Segment

Based on the guiding principles given in “Ind Accounting Standard 108 Operating segment” notified under Companies (Accounting standard) Rules 2006, the Companys operating business are organized and managed separately according to the nature of product of Trading and Services provided.

The Two identified reportable segments. One is Automobile segment in which trading of vehicle and servicing and other which includes retail outlet of petroleum products (BPCL).

Secondary Segment: Geographical segment

The analysis of Geographical segment is based on the geographical location i.e. domestic and overseas markets of the customers,

Secondary Segment Reporting (By Geographical segment)

The following is the distributions of the companys consolidated revenue from operation (net) by Geographical markets, regardless of where the goods were produced:

(Rs. In Lacs)

Particulars	2024-25	2023-24
Revenue from Domestic Market	38730.46	27795.47
Revenue from Overseas Market	0.00	0.00
Total	38730.46	27795.47
Geographical segment wise receivables:
Particulars	2024-25	2023-24
Receivables from Domestic Market	2941.53	1884.02
Receivables from Overseas Market	0.00	0.00
Total	2941.53	1884.02
Geographical segment wise Fixed Assets:
Particulars	2024-25	2023-24
In India	221.20	237.53
Outside India	0.00	0.00
Total	221.20	237.53

Segment accounting polices:

In addition to the significant accounting policies applicable to the business segment, the accounting policies in relation to segment accounting are as under:

i) Segment revenue & expenses:

Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. All other segment revenue and expenses are directly attributable to the segments.

ii) Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, receivables, inventories and fixed assets, net of allowance and provisions, which are reported as direct off sets in the balance sheet. Segment Liabilities include all operating Liabilities and consist principally of trade payables & accrued liabilities. Segment assets and liabilities do not include deferred income taxes except in the division of Commercial Vehicle. While most of the assets/liabilities can be directly attributed to individual segments, the carrying amount of certain assets/liabilities pertaining to two more segments are allocated to the segments on a reasonable basis.

iii) Inter segment sales:

Inter segment sales between operating segments are accounted for at market price. These transactions are eliminated in consolidation. The main division is Ganganagar Motors (A division of Commercials Vehicles) and funds provided by the Ganganagar Motors to other division and interests on such balances are not charged.

Other segment having revenue from sale of external customers in excess of 10% of total revenue of all segments is shown separately and others are shown in other segment.

iv) Information about business segments:

For the year ending as on 31^st March, 2025.

(Rs. In Lacs)

Particulars	Automobile	Others		Total
	Curr.	Prev.	Curr.	Prev.	Curr.	Prev.
	Year	Year	Year	Year	Year	Year
Segment Revenue :
External sales/income (Net)	38071.29	27070.53	659.17	724.94	38730.46	33198.48
Other receipt	152.96	125.69	0.00	2.00	152.96	25.32
Total Revenue	38224.25	27196.22	659.17	726.94	38883.42	33223.81
Segment Results:
Segments results	817.40	711.36	6.61	-9.51	824.01	701.85
Operation profit before Interest	817.40	711.36	6.61	-9.51	824.01	701.85
Financial exp.	(487.83)	(374.94)	(0.16)	(0.18)	(487.99)	(374.76)
Exceptional Item	0.00	0.00			0.00	0.00
Income tax current/Earlier Year	(101.39)	(90.36)	0.00	0.00	(101.39)	(90.36)
Deferred tax expenses	(1.37)	(0.41)	0.00	0.00	(1.37)	(0.41)
OCI (Net)	7.37	-15.98	0.00	0.00	7.37	-15.98
Net Profit	234.18	246.02	6.45	-9.69	240.63	236.33
Other Information:
Segment Assets	7521.07	4623.34	169.98	154.01	7691.05	4777.35
Total Assets	7521.07	4623.34	169.98	154.01	7691.05	4775.35
Segments Liabilities:
Share Capital	100.00	100.00	0.00	0.00	100.00	100.00
Reserve & Surplus	1745.24	1511.05	149.06	142.62	1894.30	1653.67
Secured & Unsecured Loan
(including current maturity)	5186.10	2348.96	0.00	0.00	5186.10	2348.96
Segment liabilities	510.21	663.23	0.44	11.39	510.65	674.62
Total Equity/ Liabilities	7541.55	4621.34	149.50	154.01	7691.05	4777.25
Capital Expenditure	1.14	11.65	0.00	0.00	1.14	11.65
Depreciation	28.29	45.92	0.00	0.00	28.29	45.92

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUENCY

Your Company has an effective system of accounting and administrative controls supported by an internal audit system with proper and adequate system of internal check and controls to ensure safety and proper recording of all assets of the Company and their proper and authorized utilization.

As part of the effort to evaluate the effectiveness of the internal control systems, your Companys internal audit department reviews all the control measures on a periodic basis and recommends improvements, wherever appropriate. The internal audit department is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the, an Information Security Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and accounting related areas, apart from security related measures.

DETAIL OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIO

Sr. No. Ratio	Numerator	Denomina tor	2025	2024	% of Variance	Reason for Variance Due to higher
1 Debt Equity Ratio	Debt consisting of borrowings Profit for the year less	Total Equity	2.60	1.34	94.14%	availment of limits at the end of year
2 Return on Equity Ratio	Preference dividend (if any)	Average equity	12.45%	17.19%	-27.58%
Trade Payable	Cost of Purchase = Opening Inventory+ purchases-	Average				Due to higher availment of limits and decrease in
3 Turnover Ratio Net Capital Turnover	Closing Inventory Revenue from	trade payable Working	143.83	15.34	837.73%	creditors in current year
4 Ratio	operations	Capital	25.33	22.33	13.45%

CAUTIONARY STATEMENT

This report describing the Companies activities, projections about future estimates, assumptions with regard to global economic conditions, government policies, etc. may contain “forward looking statements” based on the information available with the company. Forward-looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the companys operations are affected by the many external and internal factors, which are beyond the control of the management.

Hence the company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.