Samvardhana Motherson International Ltd Management Discussions

The MD&A section is designed to provide our stakeholders with a deeper understanding of our business operations, 3inancial results, and the broader economic and industry context in which we operate. We aim to provide transparent and insightful commentary that addresses the interests of our investors, employees, customers, and the wider community.

Global and Indian economic outlook.

Global economic outlook – 2025: Stability amid complexity

According to the IMFs World Economic Outlook (April 2025), global GDP growth is projected to moderate to 2.8% in 2025, down from the earlier estimate of 3.3%- and signi€icantly below the pre-pandemic average of 3.7% (2000–2019). The global economy having seasoned through years of unprecedented disruptions started to show resilience and signs of stabilisation in 2024, however, this is now being tested by signi€icant shift in the global policies and framework with the following factors;

• Evolving trade dynamics and high tari" levels across geographies • Heightened geopolitical tension and con€lict across Ukraine-Russia, the Middle East etc.

• Interest rates remained high with rate cuts now coming into e"ect • Core in€lation remains at elevated levels re€lecting service driven pressures

There are some upsides with cooling of trade tensions and ongoing negotiations on new trade agreements to further curb uncertainty and limit trade disruptions and improve consumer con€idence.

Growth in the US is expected to be slow due to evolving trade dynamics and tari" related front-loading and uncertainty around changing policies. Despite these headwinds the market remains resilient. The Eurozone is experiencing slow but stable growth with the ongoing trade and policy ambiguity. Germany, the largest economy remains particularly exposed coupled with elevated energy costs is now pivoting from €iscal restraint to expansionary policy.

The global economy stands at a critical in€lection point, with policymakers navigating the dual challenge of maintaining domestic stability while strengthening multilateral cooperation. Central banks across major economies continue to calibrate monetary policy in response to persistent core in€lation, driven by structural pressures in services and labour markets, despite easing headline in€lation. Therefore, policymakers are proceeding cautiously toward potential easing to mitigate downside risks, build resilience, and address long-standing global imbalances.

Indias economic outlook – 2025: Enduring momentum and growing con•idence

India continues to stand out as one of the worlds most dynamic and resilient economies in 2025. According to the IMF, India is projected to grow at 6.2%1 through 2025, while estimates from the Reserve Bank of India remain slightly more optimistic, pegging it to 6.5%. Despite a slight downward revision due to trade and geopolitical tensions, the country remains largely insulated and sustained performance reinforces Indias position and growing strategic importance on the global economic stage.

The economy bene•its from a sound macroeconomic framework, prudent •iscal management, and a favourable demographic pro•ile. Growth is supported by strong domestic consumption, sustained infrastructure investments, and a thriving services sector. Public capital expenditure particularly in infrastructure, and digital

Indias strong fundamentals and manufacturing momentum continue to support long-term growth.

connectivity continues to create a multiplier e ect across industries supported by increased investment activity and higher capacity utilisation. Indias manufacturing sector has emerged as a key growth engine, supported by targeted government incentives such as the Production Linked Incentive (PLI) schemes. With global companies looking to diversify supply chains, India is increasingly positioning itself as a competitive manufacturing hub. The sector is witnessing expansion across various key industries supported by improved logistics, skilled labour and stable policies.

Further digital transformation remains a powerful catalyst with expanding digital infrastructure and widespread adoption of technology such as uni•ied payment interface (UPI) are improving e†iciencies across formal and informal sectors.

While global headwinds persist, including geopolitical tensions and global business volatility, India remains largely insulated due to its strong economic fundamentals.

Evolving input-cost landscape

Following a brief period of stability in FY2023-24, FY2024-25 saw a renewed surge in global commodity prices—most notably for copper and aluminium – driven by a combination of supply constraints, accelerated infrastructure spending across multiple economies, and stronger-than-anticipated industrial demand, particularly from China and Southeast Asia. Copper prices, in particular, have seen a signi icant in uptick due to increased usage in electric vehicles (EVs), renewable energy, and grid expansion projects.

Aluminium, another key input for our product portfolio, U is also witnessing price volatility due to disruptions in global mining and re ining operations, as well as ongoing demand from sectors focused on lightweighting and sustainability. In response, we are actively working with our customers to implement cost pass-through mechanisms and improve our procurement strategies. We are also exploring supply chain diversi ication and product-level engineering optimisation to mitigate the impact of cost pressures.

Energy prices and sustainability transition

Energy markets have entered a phase of structural transition rather than temporary volatility. While the sharp spikes seen in 2022 have moderated, energy prices remain elevated, especially in regions like Europe where natural gas and electricity markets are still adjusting to shifts away from Russian supply. This has prompted a broader industry-wide focus on energy e‹iciency, contract restructuring, and power purchase agreements with renewable sources. Our facilities continue to invest in energy-saving initiatives—ranging from advanced process control systems to renewable energy sourcing—aimed at reducing both operational costs and carbon footprint. These e•orts are increasingly aligned with the decarbonisation goals of our customers and are becoming integral to long-term competitiveness and ESG performance.

In3lation and interest rates across key regions

In FY25, in lation remained relatively stable across key economies. The European Union recorded in lation at 2.3% in Q4 FY2024-25, slightly down from 2.6% in Q4 FY2023-24. The United States also saw a moderate decline – from 3.3% to 2.7% – while India experienced a more signi icant drop in in lation, from 5.0% to 3.7%, re lecting improved supply conditions and monetary discipline.

Interest rate trends diverged across regions. In India, rates remained relatively stable moving from 6.5% in Q4 FY2023-24 to 6.3% in Q4 FY2024-25, reinforcing the Reserve Banks focus on in lation anchoring and currency management. The U.S. eased rates from 5.4% to 4.5%, potentially to balance growth concerns. Meanwhile, the European Union moved more decisively, reducing rates from 4.5% to 2.7%, indicating a shift toward monetary easing in the face of slowing demand.

For the automotive industry, this environment o•ers both opportunities and constraints. In India, falling in lation supports cost stability and consumer con idence, but high borrowing costs could restrain retail inancing – particularly for price-sensitive segments like two-wheelers and entry-level passenger vehicles. In the EU, lower interest rates may stimulate vehicle purchases, though the subdued in lation points to broader demand-side softness. Overall, while in lationary pressures have abated, high or diverging interest rate regimes remain a critical factor in luencing investment decisions, inancing strategies, and consumer behaviour across global automotive markets.

Supply chain resilience and logistics volatility

Global supply chains continued to stabilise through 2024, with notable improvements in material availability, logistics lead times, and production alignment across the automotive sector. However, new forms of fragility have emerged. Maritime insecurity in the Red Sea, regional con•licts, and volatile fuel costs led to a sharp but temporary spike in freight rates early in FY2024-25 – nearly doubling from late FY2023-24 levels, reaching around USD 6,000 per 40-foot container. These rates subsequently declined and remained relatively stable before easing further toward the end of the period. Despite these pressures, the industry has shown remarkable resilience. Supply chain strategies have matured signi•icantly, with companies adopting dual-sourcing, regional supplier networks, and predictive planning tools. In our own operations, we have strengthened supplier diversi•ication, optimised inventory buˆers, and deployed multi-modal transport solutions to ensure delivery reliability and continuity of supply.

Normalisation of semiconductor supply

The acute global semiconductor shortage that once severely constrained vehicle production has largely normalised during FY2024- 25. Foundry capacity expansions, diversi•ied sourcing strategies, and improved inventory management across OEMs and Tier-1 suppliers have led to more predictable supply. While some mismatch between demand and availability remains—particularly for advanced chips used in premium models and EVs—the broader impact on our operations has signi•icantly reduced. We continue to maintain close coordination with key suppliers to ensure visibility and responsiveness across our value chain, particularly as the electronic content in vehicles continues to rise.

Climate policy and regulatory shifts

A notable emerging theme is the growing in•luence of climate-related policies and sustainability regulations on the automotive sector. Several regions have introduced stricter emissions norms, localisation mandates, and

We stay resilient by adapting to change and staying aligned with customer needs.

green manufacturing incentives, aˆecting everything from production processes to product design. For component manufacturers like us, this means adjusting to evolving customer requirements for lighter, more e•icient, and recyclable parts, while also aligning with mandatory ESG disclosures and compliance standards across markets. This trend is reshaping procurement strategies, capital allocation, and long-term planning, and is likely to become an even more de•ining aspect of the business environment over the next few years.

Labour and talent pressures

Labour markets remain tight in several key regions, including North America and Europe, where skilled workforce availability and wage in•lation continue to pose challenges. Additionally, rising expectations around workplace safety, automation integration, and •lexible employment models are reshaping workforce strategies. We are responding through targeted hiring, skill development programmes, and the gradual introduction of automation in areas prone to labour shortages or ine•iciencies.

Conclusion

As we move through 2025, the broader business environment continues to be shaped by a delicate balance of economic normalisation and structural transformation. Geopolitical tensions and elevated input costs remain key risks, but improved supply chain agility, digitisation, and increased operational resilience across the industry are helping companies adapt. We remain focused on disciplined cost management, proactive customer engagement, and operational agility to navigate this evolving landscape.