Munjal Auto Industries Ltd Management Discussions

FY26 marked a structural, not merely cyclical, recovery in Indian consumption. Private consumption growth rose to 10.5% in 2025 (from 8% in 2022-24), aided by tax relief, GST cuts, easing inflation and lower rates. Full-year private final consumption expenditure grew 7.7%, with retail inflation averaging just 2.5% over the first ten months of 2025 versus 4.9% a year earlier, boosting purchasing power.

The automobile sector captured this recovery most visibly: FY26 saw record industry-wide sales, with passenger vehicles up 8% to 4.64 million units and two-wheelers up 10.7% to 21.71 million units - the first industry-wide record since FY19.

Two-wheelers, closest to MAILs core business, led the upturn, with retail sales up 13.4% for the year and double-digit growth sustained through January-March 2026, confirming a structural demand shift. Premium motorcycles grew 40.7% and scooters 18.5%, reflecting rising premiumisation. On the passenger vehicle side, mid-size and entry segments gained share-directly supporting demand for MAILs structural and chassis components.

Consumer spending is projected to reach Rs. 31,153 billion by 2027 and Rs.33,178 billion by 2028, giving Munjal Auto a durable tailwind for both existing volumes and new business across vehicle categories.

The Company is targeting a step-up in both top-line and bottom-line performance over the coming years. Toward this, OEM relationships have expanded from two to four, with a long-term supply contract secured with Honda Motorcycle & Scooter India and deeper engagement with Tata Motors Passenger Vehicles. The partnership with Hero MotoCorp remains strong, with consistent quality and reliability delivered across four manufacturing plants.

The Companys broader vision is a diversified engineering business spanning Automotive, Electronics, Aerospace and Defense, underpinned by continued focus on productivity, manufacturing and labour efficiency, quality systems and cost competitiveness.

Total income rose 13.33% to Rs.1,462 crore in FY26 from Rs.1,290 crore in FY25, driven by new business initiatives that are expected to continue contributing to growth.

Profit before tax was Rs.32.28 crore versus Rs.39.11 crore in FY25. Operating profits improved, but the decline reflects a mark-to-market loss on mutual fund investments. The Company also invested in its Sanand facility during the year, which will drive higher revenue from Tata Motors going forward.

Key Financial Ratios (as required under Regulation 34 of the Listing Regulations):

The Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 with respect to the preparation of Ind AS financial statements that give a true and fair view of the Companys financial position, performance, cash flows and changes in equity, prepared in accordance with Ind AS and other applicable accounting principles.

Indutch Composites Technology Private Limited posted a turnover of Rs.857 crore in FY26, reflecting strong execution in the wind energy and advanced composites segments. It expanded mould manufacturing capacity during the year and expects ~20% revenue growth next year, supporting MAILs product diversification strategy.

The Company continues to invest in a workplace built on trust, inclusion, capability building and shared growth. Priorities include building a future-ready workforce through leadership development, internal mobility, succession planning and skills-based training, alongside a growing digital, analytics-led HR ecosystem to improve employee experience and productivity.

The Company maintains an internal control framework suited to the size and complexity of its operations, safeguarding assets and ensuring accurate financial reporting and regulatory compliance. An SAP-based ERP system enforces automated controls and approval workflows, supported by the Companys governance and risk management framework.

An independent firm of Chartered Accountants conducts risk-based internal audits covering key financial, operational and compliance areas; findings and corrective actions are reviewed quarterly by the Audit Committee, which also periodically assesses overall control effectiveness.

The Companys operating environment is shaped by geopolitical developments, trade policy shifts, inflation, commodity price volatility, supply chain disruptions, forex fluctuations, and evolving regulations and customer preferences. A structured risk management framework, with focus on cost optimization, operational efficiency, liquidity management and supply chain resilience, underpins the Companys approach to mitigating these risks and sustaining long-term growth.

This report contains forward-looking statements based on managements current expectations and assumptions. Actual results may differ materially due to factors including raw material price movements, demand shifts, competitive intensity, forex rates, economic and geopolitical conditions, supply chain disruptions, and regulatory or policy changes. The Company undertakes no obligation to update these statements except as required by law.