Munjal Auto Industries Ltd Management Discussions

OUTLOOK

(i) Global Economy Overview

In Financial Year 2025, the global economy experienced moderated growth, influenced by persistent inflationary pressures, tight monetary policies in developed markets and geopolitical uncertainties. These factors contributed to cautious consumer spending and disrupted global trade flows. Amid trade uncertainties, the global growth is expected to drop from 2.7% in 2024 to 2.3% in 2025.

The US economy has been resilient, driven by strong growth in the services sector, a robust labour market, and high real wages. Europe, including the UK, has faced softer growth dueto the war in Ukraine, high energy prices, and slowdowns in

manufacturing and services. Chinas growth was weaker than expected, with a slowdown in the real estate sector and industrial activity. The Asia-Pacific region is projected to be the fastest- growing.

The automotive industry faced significant challenges amid these macro economic headwinds. High interest rates and tighter credit conditions in key markets, such as the US and Europe, dampened consumer demand, particularly in the mass market segment.

(ii) Indian Economy Overview

Indian Real GDP or GDP at Constant Prices is estimated to attain a level of RS 178 lakh crore in FY 2025, against the First Revised Estimate of GDP for the year FY 2024 of RS 167.50 lakh crore.

The total expenditure that the government is expected to spend ir FY26 is RS 50.65 lakh crore. Compared to the last financial year this number has increased by 7.4%.

Real GDP has been estimated to grow by 6.5% in FY 25. Nomina GDP is expected to witness a growth rate of 9.9% in FY 25. Both the growth rates are revised upward from their respective Firs Advance Estimates.

(iii) The Auto Industry

Amid a robust economic expansion, the Indian Automobile industry exhibited a commendable performance, witnessing e domestic industry growth of 7.3% during the last fiscal year Data from the Society for Indian Automobile Manufacturers (SIAM) reveals that total vehicle sales, encompassing al categories, touched 25.60 million units, increased from 23.8f million units in the previous fiscal year.

India accomplished a significant milestone, with the sale of 1 lakh electric vehicles (EVs) in FY25. According to NITI Aayog and the Rocky Mountain Institute (RMI), Indias EV finance industry is likely to reach US$50 billion (RS 3.7 lakh crore) by 2030.

The Indian 2W industry has continued its progress and is inching closer to the pre-pandemic level with back-to-back double-digit growth. This progress has come with newer trends. First, the progress of electrification of vehicles is no longer seen as an existential threat to the IC engine. It is becoming more evident that it will coexist as another category of vehicles. Second the industry is progressing towards higher cc value added products.

(iv) Your Company

During the financial year our company started operations at its new manufacturing facility at Sanand close to Tata Motors. This

facility, other than adding to the top line and bottom line, will help us diversify from our primary customer. Over the year we have increased our business with Tata Motors three folds. With this new facility, there is still a long way to go.

Besides, the company is also diversifying into the electronics space working on developing products for railways and defence.

The overall operations are going steady. We are focusing on increasing efficiencies with the use of newer technologies.

COMPANYS FINANCIAL PERFORMANCE

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including

other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Actread with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India. The financials have been prepared considering the above requirements of applicable laws.

During FY 2024-25, total income of the Company was RS1290 Crores as compared to RS1360 Crores in FY 2023-24, showing drop of about 5.15%. This drop is primarily due to the increase in input costs and reduction in other income.

Profit before tax and Profit after tax were RS39.11 Crores and RS30.71 Crores respectively for the FY 2024-25 as against RS62.23 Crores and RS39.47 Crores respectively in FY 2023-24. This is mainly due to reduction in other income.

(i) Key Financial Ratios

As required under Regulation 34 of the Listing Regulations, details of changes are:

DEVELOPMENTS AT OUR SUBSIDIARY

In the past year, our subsidiary Indutch Composites crossed RS800 cr. Turnover. In the past 6 years, the company has grown tenfold.

Today it is a well-respected name in the wind energy and composite industry at large. Other than working with giants in the wind industry like Enercon, Vestas, Suzlon, GE, the company is also working with L&T, Godrej, Tata for defence, aerospace and allied sectors.

Indutch is now expanding its manufacturing footprint and is poised foi further growth.

HUMAN RESOURSE DEVELOPMENT

The Company has always considered its employees an importan stakeholder for its success, raising employeesRSinvolvement in the decision-making process and grooming them for leadership positions has been an ongoing process.

Our focusis on talent development, ensuring continuous learning and growth opportunities for employees. We invest in their development and overall satisfaction while encouraging innovation and collaboration. We focus on the promotion of green practices, and responsible corporate citizenship.

By focusing on finding new talent through internal talent development initiatives, the Company is embracing multi-generational diversity in its recruitment process. Leveraging this distinctive strength, it aims toknowledge enhancing and skill upgradation mechanisms. We aim to achieve our three main goals-Learning, diversity and development.

Our company maintains a steadfast commitment to further enhancing our learning through training programs, integrating partnerships with expert. This entails nurturing an innovative mindset among employees and providing opportunities for continuous growth and skill development.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

We have a robust internal control system directly corresponding to our size and operating structure. The Internal Control System is integrated with our financial and operating systems which directs us in a more effective manner. Our Company has deployed an Enterprise Resource Planning (“ERP”) system based on SAP platform enabling a high degree of system-based checks and controls ensuring protection of its assets and interests. The governance risk and compliance framework further ensure that internal controls are effective and complied with.

Our Company has appointed the reputed firm, Chartered Accountants for internal audit functions consisting of experienced and professionally qualified team.

The audit findings and managements resolution plans are reported on a quarterly basis to the Audit Committee by the internal auditor. The internal auditor of our Company also reports to the Audit Committee in respect of adequacy of internal control systems and weaknesses, if any. Most importantly, the senior management sets the tone at the top for no tolerance for non-compliance and promotes a culture of continuous innovation and improvement. Management supports independent and objective internal auditing and the implementation of internal audit recommendations.

Furthermore, the statutory auditor reports on the adequacy and effectiveness of the internal financial controls in respect of financial reporting.

Consolidation in the distribution landscape is likely as independent dealers are disappearing, wholesalers and company- owned networks are growing.

In a rapidly rising raw material cost scenario, the Company may be unable to pass on cost escalations to consumers in India in a timely fashion due to intense competition and

RISK AND CONCERNS

There are possible risks on the horizon, both global and domestic. In India, the strong economic recovery could be hampered by the continued Russia-Ukraine conflict and the emergence of new variants of the virus. The effects of any significant economic disruption could have a cascading effect through both demand and supply channels. If supply chains get hit and inflation starts rising, purchasing power and demand will be constricted. Covid continues to be a cause of concern owing to the emergence of new variants which could cause hardship for the population and disrupt the progress.

The Company is taking all necessary measures in terms of mitigating the impact of challenges being resilient to sail through the current situation. It is focused on controlling the fixed costs, maintaining liquidity and closely monitoring the supply chain to ensure that the manufacturing facility operate smoothly.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the markets, exchange rate variations, global economic, social & demographic factors, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.

For and on behalf of the Board of Directors Munjal Auto Industries Limited

Sudhir Kumar Munjal

Date : May 28, 2025 Chairman & Managing Director

Place : Gurugram DIN : 00084080