Menon Bearings Ltd Management Discussions

Management Discussion and Analysis Report (MDAR) for FY 2025-26

1. Indian Economy Overview

Over the past decade, India has continued its upward economic trajectory, strengthening its position among the world?s leading economies, with GDP estimated to cross US$ 4 trillion in FY 2026-27. This sustained growth reflects the country?s resilient macroeconomic framework, supported by strong domestic demand, ongoing structural reforms, and stability amid global uncertainties such as geopolitical shifts, inflationary pressures, and supply chain realignments.

India?s economy is projected to grow in the range of 6.5% to 7.2% in FY 2026-27, maintaining its status as one of the fastest-growing major economies. The manufacturing sector remains a key driver of this expansion, supported by continued government focus on initiatives such as “Make in India”. Additionally, increased capital expenditure, infrastructure development, and emphasis on self-reliance (Atmanirbhar Bharat) are further strengthening industrial growth.

The ongoing push for localization, import substitution, and supply chain diversification presents significant long-term opportunities for domestic auto component manufacturers. In this evolving landscape, companies like Menon Bearings Limited, engaged in the manufacturing of high-quality engine bearings, bushes, thrust washers and allied products for automotive and industrial applications, are well-positioned to benefit from rising demand across both domestic and export markets.

Further, the Company?s subsidiary, Menon Alkop Limited, engaged in the business of aluminium die-casting components, continues to strengthen the Group?s presence in the automotive component sector. With increasing demand for lightweight and precision-engineered components driven by fuel efficiency norms and EV adoption, the aluminium die-casting business is expected to witness strong long-term growth opportunities.

During the financial year under review, the Company continued to demonstrate strong operational performance and resilient growth, supported by improved demand conditions, enhanced manufacturing capabilities, customer diversification, and focus on quality and technological advancement. The Company?s consistent emphasis on operational efficiency, product development, and customer satisfaction has enabled it to achieve one of its best growth performances in recent years.

2. Industry Review

Industry Overview - Auto Component Industry

The Indian auto component industry continued to witness steady growth during FY 2025-26, supported by rising vehicle production, growing exports, increasing localization, and strong domestic automotive demand. The sector manufactures a wide range of products including engine bearings, transmission systems, aluminium die-casting parts, suspension and braking systems, EV components, and precision-engineered products catering to OEMs, aftermarket, and export markets.

The Indian auto component industry is estimated to cross US$ 95-100 billion in turnover during FY 2026-27, supported by robust domestic demand, rising exports, localisation initiatives, and increasing adoption of electric vehicles (EVs). Government support through Production Linked Incentive (PLI) schemes, FAME initiatives, vehicle scrappage policies, infrastructure development, and advanced manufacturing programs has further strengthened the sector?s growth momentum.

Demand for lightweight aluminium components, fuel-efficient systems, BS-VI compliant products, and advanced precision-engineered solutions continued to rise, particularly with stricter emission norms. The aftermarket segment also remained strong due to rising vehicle population and longer ownership cycles.

The impact of global tariff movements and geopolitical uncertainties remained relatively limited on the Indian automotive sector due to localization efforts, GST rationalization, and stronger domestic supply chains. India continued attracting global sourcing opportunities under the “China Plus One” strategy as international OEMs

Automotive & Engineering Sector

The auto component industry, including engine bearings and aluminium die casting parts, continues to grow steadily, driven by strong OEM demand, rising exports, and increasing EV adoption. Growth is further supported by higher vehicle production and robust aftermarket demand.

Engine Bearings:

Demand remains linked to ICE vehicle production, especially in commercial vehicles, tractors, and two- wheelers, along with steady aftermarket demand.

Aluminium Die Casting:

Gaining momentum across both ICE and EV segments due to its lightweight and strength advantages, supporting fuel efficiency and emission reduction.

Engine Bearings

Menon Bearings Limited continues to maintain a strong position as a leading manufacturer of engine bearings serving OEMs, aftermarket, and export markets. While the automotive industry is gradually transitioning towards electric mobility, sustained demand from commercial vehicles, tractors, industrial engines, and gensets continues to provide stable business opportunities for the Company.

Increasing regulatory standards, including BS-VI norms and stringent export requirements, are driving demand for high-quality precision-engineered components, further strengthening the Company?s growth prospects and reinforcing its technological and manufacturing capabilities during FY 2025-26.

Aluminium Die Casting Components

Menon Alkop Limited, the wholly owned subsidiary company, continues to strengthen its presence in the aluminium die-casting segment, catering to the growing demand for lightweight and precision-engineered components. Increasing focus on fuel efficiency, emission reduction, and electric mobility has accelerated the adoption of aluminium components across automotive, EV, and hybrid vehicle platforms.

With strong in-house manufacturing capabilities, technological expertise, and an expanding customer base across OEMs and Tier-1 suppliers, the Company remains well-positioned to capitalize on emerging opportunities in the automotive and engineering sectors during FY 2025-26.

Asbestos free Brake Lining

Menon Brakes Limited is expanding its export footprint and strengthening its domestic aftermarket presence, with a dynamometer installation currently underway to secure railway approvals and OEM orders; following its commissioning, the company expects a significant turnover increase in FY 26-27.

3. Achievements - Menon Bearings Ltd.

Menon Bearings Limited achieved its highest-ever consolidated financial performance during FY 2025-26, with Revenue from Operations reaching Rs. 293.80 crore, EBITDA Rs. 65.21 crore, and Profit After Tax Rs. 38.25 crore.

The Company strengthened its position across OEM, aftermarket, and export segments through continuous technology upgradation, capacity expansion, and product development. During the financial year, the Company expanded production capacities in Bi-Metal and Braking divisions, enhanced export presence across the globe, and continued development of high-value precision-engineered products.

The subsidiary, Menon Alkop Limited, continued to expand its aluminium die-casting capabilities and entered the EV segment through supply of components to global automotive platforms. The Company also strengthened sustainability initiatives through solar power systems, energy-efficient operations, and environment friendly manufacturing processes.

Achievements - Menon Alkop Ltd.

During the financial year under review, the Company has achieved the following:

• Machining Capacity expanded by 40% to cater increased demand for existing as well as new business.

• Introduced high performance and productive processes.

• Utilisation of green energy to 30% extent.

• Achieved sustainability thru implementation of environment, health and safety standards. Achievements Menon Brakes Limited

Menon Brakes Limited has fully deployed a CAPEX of Rs. 0.58 crore in FY26, with an additional Rs. 2.50 crore planned over the next two years, strategically aimed at supporting revenue growth in a highly competitive sector.

Strengths:

• High profile customer base with diversified product distribution.

• Preferred supplier to all current OEMs.

• All manufacturing facilities under one roof.

Opportunities:

• Growing demand for quality product manufacturer have resulted in higher number of RFQs for Menon Alkop Limited.

• Growing Global Automative sector is providing more opportunities.

Threats/Future challenges:

• Volatile raw material situation, particularly metals, poses cost pressure.

• Constantly increasing operational costs needs to be nullified.

4. Segment-wise or Product-wise Performance

Menon Bearings Limited operates across OEM, Aftermarket, and Export segments, supplying products such as engine bearings, bushes, thrust washers, strips, and aluminium die-casting components for various automotive and industrial applications and asbestos free brake pads. The Company continues to maintain a strong presence in the OEM segment by consistently upgrading its manufacturing capabilities, product quality, and technology to meet evolving industry requirements and stricter emission and performance standards.

During FY 2025-26, the automotive sector witnessed moderate growth in passenger vehicles, commercial vehicles, tractors, and export demand, supported by infrastructure development, logistics expansion, replacement demand, and increasing localization initiatives. Growing focus on fuel efficiency, BS-VI compliance, and lightweight engineering solutions also supported demand for precision-engineered auto components.

In line with these industry trends, the Company witnessed improved performance in both OEM and Export segments, while the Aftermarket segment remained stable due to sustained replacement demand and a growing vehicle base. The Company?s continuous focus on technology upgradation, cost optimization, quality enhancement, and customer diversification helped strengthen its market position across domestic as well as international markets.

5. Road Ahead / Future Outlook

The Company remains focused on expanding capacities, strengthening exports, and increasing its presence in high-margin and technology-driven product segments. Planned investments in machining capacity, thrust washer production, and advanced manufacturing capabilities are expected to support future growth.

The Company continues to explore opportunities in precision engineering products, railways, industrial applications, and export markets. Exports are expected to remain a key growth driver, supported by increasing global sourcing opportunities. The Company also aims to leverage its strong OEM relationships, integrated manufacturing capabilities, and diversified product portfolio to achieve sustainable long-term growth.

The rapid transition toward electric mobility is reshaping the industry landscape. While this shift may gradually impact demand for certain traditional components, it is simultaneously creating new opportunities in areas such as aluminium components, EV powertrain systems, and structural applications. Regulatory developments and safety initiatives are also expected to drive demand for technologically advanced and high- performance components.

By the medium to long term, the Indian auto component industry is well-positioned to achieve substantial growth, supported by innovation, sustainability, and deeper integration into global automotive value chains.

The medium to long-term outlook remains positive:

• OEM production is expected to grow with increasing mobility demand and infrastructure-led rural development.

6. Opportunities and Threats

Opportunities

• Growing demand from automotive, commercial vehicle, tractor, industrial engine, and aftermarket segments.

• Rising opportunities in lightweight aluminium components, and precision-engineered products.

• Government support through PLI schemes, FAME initiatives, Make in India, and localization policies.

• Expansion opportunities in railways, defence, oil & gas, industrial applications, and new technology segments.

• Strong growth potential in export markets including USA, Europe, Africa, and other international regions.

• Increasing demand for BS-VI compliant, fuel-efficient, and environmentally friendly components.

• Capacity expansion and development of high-margin, value-added products to support long-term growth.

• Strong OEM relationships, diversified customer base, and integrated manufacturing capabilities.

• Growing replacement demand supported by rising vehicle parc and longer vehicle ownership cycles.

Threats

• Volatility in raw material prices, particularly metals and energy costs.

• Global geopolitical tensions, trade restrictions, and supply chain disruptions.

• Pricing pressure from OEMs and increasing customer expectations for cost optimization.

• Dependence on global economic conditions and international demand trends.

• Rapid technological advancements requiring continuous investments in R&D and manufacturing upgrades

7. Future Challenges

• Technological Adaptation: Keeping pace with rapid advancements in automotive technology, and smart mobility solutions.

• Margin Pressure: Sustaining profitability amid rising raw material costs and competitive pricing in domestic and global markets.

• Capacity & Workforce Management: Efficiently managing expansion plans while ensuring availability of skilled labor and technical expertise.

• Regulatory Compliance: Meeting evolving emission norms, environmental standards, and safety regulations.

• R&D Investment: Continuous investment in research, engineering, and technology for next- generation, high-performance components.

• Aluminium Casting Scale-Up: Expanding aluminium die casting operations without compromising quality, precision, or delivery timelines.

• Talent Retention: Attracting and retaining skilled manpower, especially in Tier-II cities such as Kolhapur, to support growth and innovation initiatives.

8. Risks and Concerns

The Board of Directors continuously monitors both internal and external risks impacting the Company?s operations. Regular impact assessments are conducted, and mitigation strategies are implemented to manage operational, financial, regulatory, and market-related risks. Comprehensive risk reporting ensures timely identification, evaluation, and proactive management, enabling the Company to safeguard growth, profitability, and stakeholder interests.

9. Internal Control Systems and Their Adequacy

Menon Bearings Limited has established a robust internal control and audit framework to ensure reliable financial reporting, safeguard company assets, and promote ethical and fair management practices. The internal control systems are designed to prevent fraud, misuse of resources, and protect shareholders? interests, while ensuring compliance with applicable laws, regulations, and company policies.

The Audit Committee of the Board of Directors, in coordination with Internal and Statutory Auditors, regularly reviews the adequacy and effectiveness of these systems. Based on the Committee?s recommendations, an Annual Audit Plan (AAP) is prepared and periodically reviewed by top management.

Internal audits focus on both compliance and the robustness of business processes. Feedback on nonconformities, along with recommendations for process improvements, is provided directly to top management. Follow-up on audit findings and tracking of process improvements are carried out regularly to ensure continuous enhancement of operational and financial controls.

10. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Financial Performance:

Financial Year	Income (INR in Lakh)
2022	19800.38
2023	21986.34
2024	21442.27
2025	24377.50
2026	30024.35

 

Financial Year	PBT (INR in Lakh)
2022	3235.14
2023	4250.78
2024	3313.92
2025	3384.30
2026	5014.89

 

Financial Year	PAT (INR in Lakh)
2022	2453.38
2023	3260.18
2024	2435.50
2025	2493.45
2026	3825.14

 

Financial Year	EPS ( INR )
2022	4.38
2023	5.82
2024	4.35
2025	4.45
2026	6.83

11. Material Developments in Human Resources / Industrial Relations Front, Including Number of People Employed

Menon Bearings Limited continues to recognize its employees as its greatest strength, fostering a culture of excellence and teamwork through its WE? approach. The Company focuses on aligning individual growth with organizational objectives, ensuring high-quality outcomes for customers and stakeholders.

As of March 31, 2026, the Company employed 219 permanent staff members. Employees across manufacturing and operational functions actively participate in initiatives aimed at improving efficiency, including reducing raw material wastage, optimizing automation and energy consumption, minimizing setup times, enhancing packaging safety, accelerating new product development, and increasing yields. These efforts have contributed positively to both operational performance and profitability.

The Company maintains a strong global presence, operating across the globe, with exports accounting for approximately 35% of production, thereby strengthening brand equity and reinforcing relationships with leading OEMs worldwide.

12. Forward-Looking Statements

Certain statements in this report relating to future growth, expansion plans, business outlook, market opportunities, and financial performance of Menon Bearings Limited are forward-looking statements based on current expectations, assumptions, and industry trends. Actual results may differ materially due to factors such as economic conditions, raw material price fluctuations, regulatory changes, technological developments, foreign exchange movements, geopolitical uncertainties, and changes in market demand. The Company undertakes no obligation to revise or update these statements based on future events or developments.

13. Details of Significant Changes in Key Financial Ratios

Pursuant to the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has disclosed significant changes, if any, in key financial ratios for FY 2025-26 as compared to FY 2024-25. The details of such ratios and explanations for changes exceeding the prescribed threshold are provided in the Financial Statements and related notes forming part of the Annual Report of Menon Bearings Limited:

Ratios	2025-26	2024-25	% change
Debtors Turnover	3.88	4.14	(6.27)
Inventory Turnover	7.84	7.64	2.71
Interest Coverage Ratio	10.87	10.00	8.74
Current Ratio	2.51	2.46	1.79
Debt Equity Ratio	0.25	0.26	(6.60)
Operating Profit Margin (%)	16.70	13.88	20.31
Net Profit Margin (%)	12.74	10.23	24.56

14. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Return on Net Worth in the financial year 2025-26 is 22.25 % as compared to 16.43 % in the immediately preceding financial year 2024-25. During the financial year under review, return on Net Worth increased by 35.37% as compared to the immediately preceding financial year, mainly because of separation of Aluminium Division (Alkop) from Menon Bearings Limited.