Machino Plastics Ltd Management Discussions

ECONOMY OVERVIEW

The Indian automobile industry has historically been a good indicator of technological advancement and expansion in the economy. India is the worlds third-largest automobile market after China and the USA and also recently became the third- largest automobile producer in the world after China and USA. 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.

Indias auto industry recorded its highest-ever sales with passenger vehicle sale of 46.43 lakh units in FY 2025-26, registering a growth of 7.9% over the previous financial year. Passenger Vehicles (PVs) emerged as the strongest-performing segment, achieving their highest-ever domestic sales during FY 2025-26. This robust performance was supported by improved affordability following the GST rate reduction, enhanced purchasing power from the personal income, tax relief & lowering financing cost due to successive repo-rate cuts by the RBI.

India also continues to strengthen its position as a prominent global automobile exporter, with strong export growth expectations in the near future. Several policy initiatives by the Government of India, including the Automotive Mission Plan 2026, the vehicle scrappage policy, and the Production Linked Incentive (PLI) scheme, are expected to further enhance the competitiveness of the Indian automobile sector and position the country as a global leader in both two-wheeler and four- wheeler manufacturing.

Moreover, additional government initiatives such as the battery-swapping policy, expansion of the Indian National Highways network, and the adoption of advanced automotive technologies have provided a further boost to the industry. These include the introduction of alternate fuel systems like compressed natural gas (CNG), Bharat Stage VI-compliant flex-fuel engines, electronic control units (ECUs) for enhanced safety, advanced driver assistance systems (ADAS), and e-quadricycles under the PLI framework. Collectively, these measures have attracted fresh investments and reinforced long-term growth prospects for Indias automobile industry

Company Structure & Development

The Company expanded its business by strengthening its manufacturing footprint with the commencement of operations at the Prahladpur, Kharkhoda plant and the Pithampur plant transitioned from being used solely as a warehouse to a combined manufacturing and warehousing facility towards the end of the financial year. The Company currently operates multiple plants and warehouses across Gurugram, Manesar, Kharkhoda and Pithampur. The new plant of Kharkhoda will provide capacity enhancement to meet the requirements of Maruti Suzukis new manufacturing plant at IMT Kharkhoda.

The Company manufactures the plastic injection moulded automotive components i.e. bumpers, instrument panels, grills etc. as original equipment and for the spare parts market, primarily for Maruti Suzuki India Limited (MSIL) at three of its manufacturing locations in Gurugram, Manesar & Kharkhoda in the state of Haryana.

The company has put up tool room manufacturing for mould manufacturing, repairs and their refurbishment facilities in Manesar, Haryana for captive use and to service its customer in a cost-efficient manner. The company has received positive response from the market.

The company has been dealing in all size plastics automotive components. The company has 63 nos. injection molding machines, sizes ranging from 100 Ton to 3150 Ton clamping force. The company also provides job work facilities for Industrial Products like pallets, garbage bins etc. The company also manufactures moulds for in house requirements and others like MSIL, Daikin, VECV etc.

Opportunities & Threats

Indias growing market has already attracted all major automotive companies to start operations within the country. India is expected to be one of the major auto hubs in the world soon. India could be a leader in shared mobility by 2030, providing opportunities for electric and automated self-driving vehicles.

The principal customer of the company is Maruti Suzuki India Limited (MSIL), and the companys growth currently depends mainly on the growth of MSIL. However, the company does not have a plant in Gujarat to cater to Suzuki Motor Gujarat (which has now been amalgamated with MSIL).

MSIL continues to be the leader in the Indian car market and has closed the financial year 2025-26 with domestic sales of 18,61,704 units, exports of 4,47,774 units, and total sales of 24,22,713 units. Marutis total sales in 2025-26 represent a growth of 8.4% over the total sales in 2024-25.

Your company is actively working towards expanding its operations to other customers.

The range of machines, from small to large sizes, helps your company cater to all types of customers part requirements. Moreover, the machines are versatile and can process virtually all types of polymers, and can produce not only automotive but also other plastic goods by changing moulds. Thus, your company has immense capability to keep pace with the growing and diverse requirements of MSIL, and it also has the potential for other business opportunities besides automotive.

The possible threats to the company can be:

• Fluctuating Market conditions

• Geopolitical tensions affecting oil supply and its prices

• Uncertain Monsoon Impacting Market Growth

• Technological Disruptions

• Reduction in market share of main customer

• Rising Competitions and main customer policy of in house production of Bumpers and IP

• Volatility in fuel prices

• Sustainability Targets Influence Policies/ Government Policies

• Limited Geographical presence at main customer all plant locations

Segment-wise or Product-wise Performance

Currently. your company operates in a two segment and is engaged in the manufacturing of injection moulded plastic components and moulds/dies, and is trying to diversify its product range and the industries it caters to. Your company now also has capabilities in moulding smaller and intricate functional and aesthetic parts for automotive and other industries.

Your company has also received tooling business from customers other than MSIL and is making efforts to explore alternate business opportunities in mould making as well as in the replacement market.

Indian economic review

Amidst the global energy crisis and continued supply-chain disruptions, the automotive industry players are exploring options to reshape the sector. By adopting cloud computing and electric vehicle technologies, the industry is rapidly entering a transformational phase with the primary aim of offering consumers a value-added experience. The Financial Year 2025-26 automobile sales data shows record high sales in a financial year after seven years. The strong contributors to this growth have been the positive sentiments created through GST 2.0 reforms and multiple Repo Rate cuts during the year.

• India contributes 7.1% to global GDP through its automotive sector and ranks 3rd in global vehicle production.

• Despite a strong manufacturing base, India holds only 3% share in globally traded auto components, highlighting a vast scope for expansion.

• The Vision 2030 roadmap aims to scale up production and employment.

• Government schemes like FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicle), PM E-Drive (PM Electric Drive Revolution in Innovative Vehicle Enhancement), and PLI have mobilized over ?66,000 crore to support EVs and localization.

• With targeted reforms and integration into global value chains (GVC), India can increase its global component trade share from 3% to 8% by 2030.

Electric mobility was a major highlight during the year, with the EV registrations increasing by nearly 80% compared to last year. Government support, particularly the reduction of GST on electric vehicles from 12% to 5%, along with growing consumer awareness and improved charging infrastructure, supported adoption across both four- and two-wheeler segments. Building on this momentum, India is on track to become the largest EV market by 2030, with a total investment opportunity of more than US $200 billion over the next 8-10 years.

With demand remaining buoyant in the passenger vehicle segment despite rising commodity prices, automobile manufacturers are increasingly embracing new technologies, especially in electric mobility, which is expected to witness multiple new launches in the coming years. Overall, the Indian automotive industry reflects Indias growth potential, driven by strong policy support, technological transformation, and evolving consumer demand.

Y-O-Y growth of the Indian economy

Financial year	FY 20-21	FY 21-22	FY 22-23	FY 23-24	FY 24-25	2025-26
GDP Growth (%)	(5.83)	9.05	7	6.9	6.4	7.4

Outlook

The 2025 automobile industry is characterized by a "wait-and-see" approach to electrification and the continued rise of software-defined vehicles (SDVs).

The automotive outlook study estimates that global new vehicle sales rose by 3.4% in 2025 to about 91.7 million units, but momentum is easing as global economic growth slows. The S&P Global Economics teams forecast projects global GDP growth of 2.7% for 2026, slightly lower than in 2025. The automotive industry growth is influenced by several factors, including the adoption of electric vehicles, the development and manufacturing of long-range batteries, the installation of fast and ultra- fast charging infrastructure, the introduction of autonomous vehicles, and the deployment of 5G connectivity. In addition, the automotive industry overview also covers several significant variables that have contributed to the significant expansion of the used automobile (or pre-owned car) market in recent years.

The automotive industry is currently under constant pressure to adapt to changes driven by technological advancements and evolving end-user preferences. Adoption of the latest trends for customers is the foremost agenda of the OEMs and EV solution providing companies. The study also focuses on the rising demand for electric vehicles, advancements in autonomous vehicles, 5G connectivity, smart and automated manufacturing, shared mobility, and online sales of vehicles in the automotive industry that is shaping the future of the market.

To achieve zero-emission targets, the OEMs have planned to invest over USD 500 billion by 2030 for EV production facilities. Moreover, OEMs have attempted to regulate the EV battery supply chain to further reduce costs related to raw materials, manufacturing, and battery maintenance.

Key Trends in Automotive Sector:

Dynamic policy environment

• Sustainability focus with norms like Extended Producer Responsibility (EPR), Real Driving Emissions (RDE) norms, Green cess, and BS-VII emission norms

• Increased safety norms such as Electronic Stability Control (ESC), Driver Monitoring System (DMS), Advanced Emergency Braking Systems (AEBS), pedestrian safety norms, ADAS standards, and mandatory airbags

• Increased comfort standards in Heavy and Medium Trucks by equipping them with AC cabins

• Evolving Tariff and FTA structures will have supply chain and export implications Decarbonisation/circular economy - New-age powertrains and materials

• Increased focus on battery recycling, "Second-life" battery usage & reducing the carbon footprint of manufacturing

• Increased CNG penetrations in passenger vehicles and SCVs

• Growing focus on hydrogen internal combustion engine - intermediate commercial Vehicles (ICVs) and MHCVs

• Sustainable and lightweight materials for refurbishment, reuse and recycle

• in telematics - solutions for higher uptime, driving pattern analysis, safety etc

A.I Integration: Artificial intelligence is being used extensively in both the manufacturing process & the vehicles own system

Electric Vehicle (EV) Acceleration

• Volatility in fuel prices and long-term supply uncertainty supporting shift towards EVs

• Rising environmental awareness and concern over air pollution encouraging cleaner mobility choices

• Expansion of public and highway charging infrastructure improving convenience and usability

• Government incentives, subsidies and stricter emission norms supporting EV growth

• Increasing localisation of EV supply chains and component sourcing

• Increasing availability of EV models across vehicle segments

Consumer sentiment: Consumers are demanding improved charging infrastructure and greater affordability for electric vehicles

Indian Automobile Sector

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 expects growth to continue across all vehicle categories in 2026-27, building on the strong domestic momentum from the latter half of 2025-26.

The brief of industry Production, Sales and Export Trend in the year 2025-26 are as follows:

Automobile Production Trends:

Automobile production grew from 3,10,36,476 units in 2024-25 to 3,47,08,984 units in 2025-26, registering an 11.83% increase. Passenger vehicles recorded a steady growth of 9.44%, while commercial vehicles expanded by a strong 13.06%. The "Others" segment continued to dominate volumes, growing by 12.27% and contributing significantly to the overall increase.

Automobile Domestic Sales Trends:

Domestic automobile sales rose from 2,56,09,399 units in 2024-25 to 2,82,65,519 units in 2025-26, reflecting a 10.37% growth. Passenger vehicle sales grew moderately by 7.94%, while commercial vehicles saw a strong rise of 12.64%. The"Others" category remained the largest segment, with a healthy growth of 10.78%, supporting overall sales expansion.

The automotive industry in India is set to expand at a compound annual growth rate (CAGR) of 11.3% till 2027. This growth will most likely occur due to factors such as rising disposable income, wide availability of credit and financing options, and population growth. Furthermore, with the growth of the passenger transport sector and the rise in demand for commercial vehicles, the potential for future growth of Indias automotive sector is very strong.

The future growth expected in the domestic automobile industry will give a fillip to the auto component sector. The Indian automobile industry as a whole offers great potential considering the low penetration along with rising income levels and a rapidly growing middle class. These factors will drive a boost in demand for passenger cars and two wheelers. With the automobile industry fast growing in terms of volume and number of players, your company foresees a bright future.

However, uncertainties arising from the West Asia conflict, particularly in crude oil and commodity prices, higher exchange rates and disruptions in shipping routes, remains a concern for the auto sector. A stable geopolitical environment will help build confidence in the industry, which can in turn drive further growth in the auto industrys performance in 2026-27.

The Manesar Plant and the new manufacturing plant in Kharkhoda of the company are now the focus areas for future growth of the company.

Risks & Concerns

One major concern is the increasing cost of raw materials such as steel, aluminum, lithium, cobalt, and nickel, which directly impacts vehicle manufacturing costs and profitability. Supply chain disruptions caused by geopolitical conflicts, trade restrictions, and transportation delays continue to create uncertainty for automakers across the world. The industry is also facing strict environmental and emission regulations imposed by governments, forcing companies to invest heavily in cleaner technologies, battery recycling systems, and sustainable manufacturing practices.

In addition, Financial pressures are also increasing because automobile companies must spend billions on research, innovation, and EV infrastructure while dealing with inflation, high interest rates, and fluctuating consumer demand. Rising vehicle prices, expensive financing, and higher insurance costs may reduce affordability for customers, especially in developing markets. Furthermore, intense competition from new entrants and low-cost global manufacturers, particularly Chinese EV brands, is putting pressure on traditional automakers to reduce costs and improve innovation. Overall, the automobile industry in 2025- 26 is experiencing a period of rapid transformation where managing risks, ensuring sustainability, and adapting to changing market conditions are critical for long-term success.

Though India rides on some inherent strengths, the following risk factors exist that auto component manufacturers may have to counter:

1. Supply Chain Disruptions

One of the biggest challenges is supply chain disruption, especially shortages of semiconductors, batteries, and raw materials such as lithium and cobalt that are essential for electric vehicles (EVs).

Rising geopolitical tensions and trade restrictions are also increasing manufacturing costs and delivery delays.

2. Cybersecurity Threats: cybersecurity has become a major concern because modern vehicles are highly connected through software, internet systems, and autonomous driving technologies, making them vulnerable to hacking, data theft, and ransomware attacks.

3. EV Market Uncertainty

Electric vehicle adoption continues, but growth has slowed in several markets due to High EV prices, Limited charging infrastructure, Reduced government subsidies, Consumer hesitation over battery life and resale value Slower-than- expected demand.

4. Autonomous Vehicle Safety and Liability

Self-driving and AI-assisted systems are growing quickly, but concerns remain about Road safety, Sensor failures. AI decision-making, Legal liability in accidents, Ethical concerns

5. Environmental and Regulatory Challenges

The automobile industry in 2025-26 faces significant environmental and regulatory challenges as governments worldwide introduce stricter emission norms, fuel efficiency standards, and sustainability regulations. Automakers are under pressure to reduce carbon emissions, invest in cleaner technologies, and adopt eco-friendly manufacturing practices. In addition, rules related to battery recycling, waste management, and EV production are increasing compliance costs and operational complexity for automobile companies.

6. Logistics costs

India has a significant disadvantage compared to other Southeast Asian countries, with logistics costs approximately 1.5 times higher than in China. This disadvantage is amplified by a greater distance to key markets such as the European Union and North America, compared to Vietnam and Thailand.

The overall trend is challenging, but remaining competitive in this changing scenario will be the toughest task. The combination of low manufacturing costs along with quality systems would give companies an edge in terms of pricing and quality. Expansion and diversification will help them break into new markets. It would be imperative for these companies, which are largely based on traditional management practices, to adopt technology in a significant way. The SMEs can exploit these opportunities through joint ventures, collaboration and technical tie-ups. Knowledge, specialization, innovation and networking will determine the success of SMEs in this globally competitive environment.

Your company is power, manpower and capital-intensive business. Power is obtained from Maruti from its co-shared power plant, which runs on gas, as well as from DHBVN Ltd and DG sets. The increase in per-unit cost of power supply will materially affect the cost of production. The company has installed 1,350 kW solar power plants at its Manesar and Gurgaon plants, which is likely to generate 15 lakh units per year. This will help in managing power costs.

Your company has availed the net metering facility from UHBVN/DHBVNL/HVPNL for both the Gurugram and Manesar plants of the company, which in turn will help save energy bills.

Risk Management Report

Your Company believes that the periodic review of various risks that have a bearing on business and operations is vital to proactively manage uncertainty and changes in the internal and external environment, so that it can limit negative impacts and capitalize on opportunities.

Risk management framework enables a systematic approach to risk identification, leveraging any opportunities and provides strategies to manage, transfer, avoid or minimize the impact of risks, and helps ensure sustainable business growth with stability of the Companys affairs and operations.

Keeping the above in view, your Companys risk management is embedded in the business processes. As a part of the review of business and operations, your Board with the help of management, periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation processes. However, there are certain risks which cannot be avoided, but the impact can only be minimized.

The risks and concerns associated with each segment of your Companys business are discussed while reviewing the segment- wise Management Discussion and Analysis. The other risks that the management reviews includes:

a) Industry and service risks: This includes economic risks like demand and supply chain, profitability and gestation period, etc.; service risks such as infrastructural facilities; market risks such as consumer preferences and distribution channels, etc.; business dynamics such as inflation/deflation, etc.; and competition risks such as cost-effectiveness.

b) Management and operational risks: This includes risks to property; clear and well-defined work processes; changes in technology/ upgradation; R&D risks; agency network risks; personnel and labour turnover risks; environmental and pollution control regulations; and locational benefits near metros.

c) Market risks: This includes raw material rates; quantities, quality, suppliers, lead time, interest rate and forex risk.

d) Political risks: This includes elections; war risks; country/area risks; insurance risks such as fire, strikes, riots and civil commotion, marine risks, cargo risks, etc.; and fiscal/monetary policy risks including taxation risk.

e) Credit risks: This includes creditworthiness; risks in settlement of dues by clients; and provisions for doubtful and bad debts.

f) Liquidity risks: This includes risks such as financial solvency and liquidity; borrowing limits; delays; cash/reserve management risks; and tax risks.

g) Disaster risks: This includes natural calamities such as fires, floods, earthquakes, etc.; man-made risk factors arising under the Factories Act, Mines Act, etc.; and risk of failure of effective disaster management plans formulated by the Company.

h) System risks: This includes system capacity and system reliability risks; obsolescence risk; data integrity risk; and coordination and interface risk.

i) Legal risks: This includes contract risks; contractual liabilities; fraud; judicial risks; and insurance risks.

j) Government policies: This includes exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits, etc.

k) Financial risk: This includes risks associated with fluctuations in foreign currency rates, import duties and taxes, fluctuations in the price of various inputs including raw material supplies, and underutilized capacity.

Your Company reviews forward exchange contracts/ derivative contracts to analyze foreign exchange exposure. Both operational and financial risks are constantly assessed, and adequate steps are taken from time to time to successfully mitigate them.

Financial Performance

Revenue from operations of your company has increased by 26.60% from Rs. 38,874.34 lacs in 2024-25 to Rs.49,215.62 lacs in

2025-26. Your Company has earned a Profit Before Tax of Rs. 263.63 Lacs as compared to profit of Rs 1,120.50 lacs in the last year.

Company earned a cash profit of Rs 1,788.74 lacs as compared to Rs. 2,127.39 lacs in 2024-25.

Ratios

The following are analytical ratios for the year ended March 31,2026 and March 31,2025

Particulars	Numerator	Denominator	For the year ended March 31, 2026	For the year ended March 31, 2025	Variance
Current Ratio	Current assets	Current liabilities	0.77	0.79	-3.10%
Debt Equity Ratio6	Total debt1	Shareholders equity	1.78	2.83	-36.94%
Debt Service Coverage Ratio7	Earnings available for debt service2	Debt service3	0.827	1.346	-38.59%
Return on Equity8	Net profit after taxes	Average shareholders equity	1.32%	14.50%	-90.89%
Inventory Turnover Ratio	Revenue	Average inventory	9.50	9.35	1.61%
Trade receivable Turnover Ratio	Revenue	Average trade receivable	5.70	6.31	-9.66%
Trade payable Turnover Ratio	Purchases4	Average trade payables	5.01	5.85	-14.33%
Net Profit Ratio9	Net profit	Revenue	0.27%	2.20%	-87.79%
Return on Capital employed10	Earnings before interest and taxes	Capital employed5	5.08%	9.28%	-45.26%
Return on Investment11	Earnings before interest and taxes	Average total assets	4.69%	8.29%	-43.49%

1. Long term borrowings + Short term borrowings

2. Net Profit after taxes + Non-cash operating expenses + Interest + other adjustments like loss or gain on sale of Fixed assets etc.

3. Interest + Lease payments for the current year + Repayments of long-term borrowings

4. Purchase of raw material + stores and spares including repair & maintenance + packaging

5. Total equity + Lease liabilities + Total borrowings + Deferred tax liability - Intangible assets

Reasons for variations

6. Debt-Equity Ratio decreased during the year mainly due to significant increase in shareholders equity on account of revaluation surplus and retained earnings, resulting in improvement in the overall capital structure despite increase in borrowings for expansion activities.

7. Debt Service Coverage Ratio decreased mainly due to higher debt servicing obligations, including increased principal repayment and finance cost during the year, resulting in lower debt servicing coverage.

8. Return on Equity decreased during the year mainly due to lower profit after tax during the year and significant increase in shareholders equity on account of revaluation surplus and retained earnings.

9. Net Profit Ratio decreased during the year mainly due to increased finance costs, depreciation, employee benefit expenses, and other operational expenses, which resulted in lower profitability despite growth in revenue from operations.

10. Return on Capital Employed decreased during the year mainly due to substantial increase in capital employed on account of addition in property, plant and equipment and higher borrowings for expansion/project activities, while the corresponding returns from such investments are yet to be fully realized.

11. Return on Investment decreased during the year mainly due to lower profitability during the year despite significant investments made towards expansion and capital expenditure, the benefits of which may accrue in future periods.

Internal Financial Control System and their adequacy

The Companys internal audit system has been continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. Your company has adequate internal control systems commensurate with its size and operations. The company regularly gets its accounts audited by internal auditor.

Further internal audit has been outsourced to M/s Goel Garg & Co., Chartered Accountants. The Audit covers all the areas e.g. Finance, HR, Purchase, Statutory Compliance etc. and regular audits are conducted by the internal auditors.

Further, the Audit Committee reviews reports presented by the internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions wherever necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively. Based on its evaluation (as provided under section 177 of the Companies Act, 2013 and Regulation 18 of SEBI Listing Regulations, the Audit Committee has concluded that as of 31st March, 2026, the Internal Financial Controls were adequate and operating effectively.

M/S. KMGS & Associates Chartered Accountants, the Statutory Auditors of the Company audited the financial statements included in this Annual Report and issued a report on the internal controls over financial reporting (as defined in Section 143 of the Companies Act, 2013).

Contingent liabilities and commitments (to the extent not provided for):

(i) Contingent liabilities - NIL

(ii) Guarantees

In respect of outstanding bank guarantees: ? 272.30 lakh (Previous year ? 747.77 lakh)

(iii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for:

Machinery / spare parts of machinery (net of advances): ?19.77 lakh (Previous year ? 1,306.69 lakh, approximately payable equivalent to USD 86,390 and JPY 5,42,55,000)

Factory building: ? 23.37 lakh (Previous year ? 529.69 lakh)

Human Resources/Industrial Resources

The Company believes that the quality of its employees is the key to its success. In view of this, it is committed to equipping them with skills, enabling them to evolve with technological advancements.

During the year, various initiatives have been taken by the Company to improve the performance and productivity levels in various departments of the company. The company has its own in-house technical centre in the plant to train new recruits before placement, which helps in the optimum utilization of resources as well as maintaining quality standards. It also undertakes and implements various HR initiatives and activities, including employee welfare, special rewards, performance review system and various employee motivation activities.

Health, Safety and Environment remain our top priority. Periodic audits are carried out both internally as well as through external agencies to identify gaps and define action items for continuous improvement, ensuring a safe workplace for employees.

The company has already undertaken KAIZEN with an aim to become a world-class company. Your company has also adopted a suggestions scheme, which is increasing employees participation in management of the company.

Cautionary Statement

Management Discussion and Analysis Report may contain forward-looking statements. Actual results may differ materially from those expressed or implied, depending upon global and Indian regulations, tax regimes, and economic developments within India and overseas.