Munjal Showa Ltd Management Discussions

Industry Structure and Development

The automotive industry in India is one of the largest and fastest-growing automobile markets globally. As of 2026, India has emerged as the worlds third-largest automobile market in terms of sales and the fourth-largest in vehicle production. The industry contributes significantly to the countrys manufacturing output, exports, employment generation, and GDP growth. Driven by rising domestic demand, rapid urbanisation, increasing income levels, strong policy support, and growing investments in electric mobility, the Indian automobile sector continues to be recognised as a major "sunrise industry" with strong longterm growth potential.

As of 2026, Indias automobile industry is valued at over US$250 billion and contributes around 6.8%-7% to the countrys GDP and nearly 8% of total exports. India is the worlds largest manufacturer of two-wheelers and three- wheelers and the third-largest automobile market in terms of sales. The sector has witnessed strong growth in the production of passenger vehicles, commercial vehicles, and electric vehicles. Supported by rising demand, government initiatives, and technological advancements, the Indian automobile industry continues to be one of the fastest- growing sectors of the Indian economy.

Domestic automobiles production: The Indian automobile industry produced a total of 3,47,08,984 vehicles, including Passenger Vehicles, Commercial Vehicles, Three-Wheelers, Two-Wheelers, and Quadricycles, during April 2025 to March 2026, as against 3,10,34,174 units produced during April 2024 to March 2025, registering strong growth in overall vehicle production driven by rising domestic demand and improved market sentiment.

Automobile Domestic Sales Trends

Category	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	27,11,457	30,69,523	38,90,114	42,18,746	43,01,848	46,43,439
Commercial Vehicles	5,68,559	7,16,566	9,62,468	9,67,878	9,56,671	10,79,871
Three Wheelers	2,19,446	2,61,385	4,88,768	6,91,749	7,41,420	8,36,231
Two Wheelers	1,51,20,783	1,35,70,008	1,58,62,087	1,79,74,365	1,96,07,332	2,17,05,974
Quadricycles	12	124	725	725	120	-
Grand Total	1,86,20,233	1,76,17,606	2,12,04,162	2,38,53,463	2,56,07,391	2,82,65,515

Exports:

During April 2025 to March 2026, Passenger Vehicle exports increased from 7,70,364 units to 9,05,487 units, while Commercial Vehicle exports rose from 80,986 units to 95,215 units. Three-Wheeler exports increased from 3,06,914 units to 4,61,487 units and Two-Wheeler exports grew from 41,98,403 units to 51,82,314 units over the corresponding period of the previous year.

While the nation continues to progress towards the vision of Atmanirbhar Bharat, the automotive sector has emerged as a key beneficiary, though certain challenges still persist.

The Government has encouraged Indian auto component manufacturers to enhance localisation levels and strengthen domestic manufacturing capabilities in order to reinforce the overall automotive supply chain.

In the present environment, most automobile manufacturers have expressed their willingness to support the Governments localisation initiative; however, they continue to seek support in areas such as infrastructure development, skilled workforce availability, industry expansion policies, access to advanced technology and global practices, cost competitiveness, and availability of affordable capital. The industry is also witnessing rapid technological transformation, requiring higher investments in research and development. From a trade policy perspective, key concerns for Indian manufacturers include slowdown in investments in the OEM auto sector, import duties on certain auto components, and increasing imports, particularly from ASEAN countries.

Advantages in India

1. Robust Demand

• India continues to remain one of the worlds largest automobile markets, supported by favourable demographics, rising income levels, and increasing urbanisation.

• The Electric Vehicle (EV) segment is expected to witness significant growth, supported by government incentives and increasing consumer adoption.

• The Governments focus on reducing import dependence is creating substantial opportunities for domestic auto component manufacturers.

2. Competitive Advantage

• India offers a manufacturing cost advantage of around 10-25% compared to several developed markets.

• The country has a large pool of skilled and semiskilled manpower supported by a strong technical education ecosystem.

• India remains one of the worlds largest steel producers, providing cost competitiveness in raw material sourcing.

• Strategic geographic proximity to ASEAN countries, Japan, Korea, and Europe enhances Indias position as a preferred global sourcing hub.

3. Export Opportunities

• India exports over 25% of its auto component production.

• In FY25, Indias auto component exports increased from US$ 21.2 billion to approximately US$ 22.9 billion, with the industry continuing to maintain a trade surplus.

• Export growth continues to benefit from rising global sourcing demand and the China+1 manufacturing strategy.

• The industry plans to invest around US$ 7 billion by FY28 towards localisation of advanced technologies including EV components and automatic transmissions.

4. Policy Support

• The Government continues to support the EV ecosystem through schemes such as FAME-II and other incentive programmes.

• 100% Foreign Direct Investment (FDI) continues to be permitted under the automatic route for the auto component sector.

• The Production Linked Incentive (PLI) Scheme for automobiles and auto components is expected to drive significant investments and technological advancement in the sector.

• Initiatives such as Bharat NCAP are expected to increase demand for technologically advanced and safety-oriented automotive components.

Market Size

The Indian auto component industry is broadly classified into organised and unorganised segments. The organised sector primarily caters to Original Equipment Manufacturers (OEMs) and manufactures high-value precision components, whereas the unorganised sector mainly serves the aftermarket with relatively low-value products.

To cater to the rising demand, automobile manufacturers have continued to invest significantly across various segments of the industry in recent years. The automobile sector attracted cumulative Foreign Direct Investment (FDI) equity inflows of around US$ 39.7 billion during April 2000 to December 2025, accounting for a significant share of the total FDI inflows into the country during the period.

Opportunities and Threats

• India continues to strengthen its position as a preferred global sourcing hub for auto components, supported by competitive manufacturing costs, an expanding industrial base, and improving supply chain capabilities.

• The country enjoys a favourable geographical advantage with access to key automotive markets including Europe, the Middle East, and ASEAN countries, thereby enhancing export potential for domestic manufacturers.

• The Automotive Mission Plan 2016-26 has provided strategic direction for the long-term development and competitiveness of the Indian automotive industry.

• Government initiatives such as the National Automotive Testing and R&D Infrastructure Project (NATRiP) and other policy measures continue to support research & development, innovation, and technological advancement in the sector.

• The auto component sector continues to benefit from 100% Foreign Direct Investment (FDI) permitted under the automatic route, encouraging global participation and technology transfer.

• Various policy initiatives aimed at promoting electric mobility, localisation, and advanced manufacturing are expected to create significant long-term growth opportunities for the industry.

At the same time, the automotive industry is undergoing a significant technological transition with increasing focus on electric mobility and sustainable transportation solutions. The gradual shift from internal combustion engine (ICE) vehicles to electric vehicles may impact the demand for certain conventional auto components over the medium to long term, particularly components associated with engine and transmission systems.

In view of the evolving industry landscape, manufacturers, especially small and medium enterprises (SMEs), may be required to undertake substantial investments towards technology upgradation, product diversification, and development of EV-compatible components. The pace of technological transformation, changing regulatory requirements, and evolving customer preferences may continue to pose operational and strategic challenges for industry participants.

Nevertheless, the Indian automotive and auto component industry continues to offer strong long-term growth prospects driven by increasing domestic consumption, export opportunities, favourable policy support, localisation initiatives, and integration with global supply chains.

Government Initiatives

The Government of Indias Automotive Mission Plan

(AMP) 2016-26 has significantly contributed towards the development and growth of the Indian automotive sector by providing a long-term policy roadmap focused on innovation, competitiveness, sustainability, and manufacturing excellence. The Indian automobile industry continues to remain a key contributor to the countrys manufacturing output and economic growth, supported by rising domestic demand, increasing exports, and favourable policy initiatives.

The Government has undertaken several initiatives to accelerate the transition towards clean and sustainable mobility. The Production Linked Incentive (PLI) Scheme for Automobile and Auto Components, with an approved outlay of ?25,938 crore, continues to encourage investments in advanced automotive technologies and domestic manufacturing capabilities. Further, under the Union Budget 2026-27, the allocation for the auto PLI scheme was increased to approximately ?5,940 crore to support localisation, electric mobility, and next-generation automotive manufacturing.

In addition, the PM E-DRIVE Scheme, launched with an outlay of approximately ?10,900 crore, aims to promote electric mobility through incentives for electric two-wheelers, three- wheelers, buses, charging infrastructure, and localisation of EV supply chains. The scheme is expected to provide further impetus to the development of the domestic EV ecosystem and advanced automotive manufacturing in India.

The Automotive Mission Plan (AMP) 2016-26 also envisages enhancing the contribution of the automotive industry to the Indian economy through increased production, employment generation, exports, technology adoption, and improved global competitiveness. Government initiatives such as "Make in India, FAME-II, PM E-DRIVE, Bharat NCAP, and proposed CAFE-III norms are expected to further strengthen the sectors long-term growth prospects.

Achievements

Following are some of the key achievements and developments in the automobile sector during FY 2025-26:

• As per SIAM data, domestic sales of Passenger Vehicles, Commercial Vehicles, Three-Wheelers and Two- Wheelers reached record levels of 46.43 lakh units, 10.80 lakh units, 8.36 lakh units and 217.06 lakh units respectively during FY 2025-26, reflecting strong growth across all major vehicle segments.

• Under the National Automotive Testing and R&D Infrastructure Project (NATRiP), advanced testing, homologation and validation facilities established at centres such as ICAT-Manesar and ARAI-Pune continued to support vehicle safety, emission compliance, research & development, and product testing requirements of the automotive industry.

• The Government continued to strengthen the electric mobility ecosystem through initiatives such as the PM E-DRIVE Scheme, FAME-II and localisation-focused policies aimed at promoting adoption of electric vehicles, development of charging infrastructure, and domestic manufacturing of EV components and advanced automotive technologies.

• Policy measures such as the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components, Bharat NCAP, and various localisation initiatives continued to provide impetus to investments, technological advancement, and sustainable growth within the automotive sector during the year.

Road Ahead

The automotive and auto component industry is expected to continue benefiting from strong policy support, improving domestic demand, increasing localisation, and growing integration with global supply chains. The Governments continued focus on initiatives such as "Make in India", the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components, PM E-DRIVE Scheme, vehicle scrappage policy, and localisation of advanced automotive technologies is expected to strengthen Indias position as a global automotive manufacturing hub.

The industry is also witnessing significant transformation driven by rapid adoption of electric mobility, connected technologies, digitisation, and sustainable manufacturing practices. Increasing demand for electric vehicles, advanced electronics, battery systems, lightweight components, and safety technologies is expected to create new growth opportunities for auto component manufacturers. Industry participants are increasingly focusing on technology upgradation, product diversification, and research & development to align with evolving market requirements.

India continues to emerge as a preferred global sourcing destination under the "China+1" supply chain diversification strategy. According to a joint report by the Automotive

Component Manufacturers Association of India (ACMA) and McKinsey, Indias auto component exports are projected to reach US$ 70-100 billion by FY 2030, underpinned by the countrys growing competitiveness in global supply chains. Export revenues, which stood at US$ 21 billion in 2024, are expected to grow at a CAGR of approximately 30%, with key target markets spanning North America, Europe, and Latin America. Supported by this export-led momentum, Indias overall auto component industry is poised to reach a market size of US$ 200 billion by 2030.

The sector is also expected to witness substantial investments in advanced automotive technologies, EV components, electronics, battery manufacturing, and localisation initiatives over the coming years. Continued collaboration between the Government, industry bodies, OEMs, and component manufacturers is likely to support long-term sustainable growth and improve the global competitiveness of the Indian automotive industry.

Product Wise Performance

All products of the Company come under single primary business segment i.e. Shock Absorber. Its variants are Front Forks, Rear Cushions, Struts and Gas Spring/Rear Door Lifters etc. Therefore, requirement for analyzing segment- wise or product wise performance does not arise.

Outlook

The Indian auto component industry continued to demonstrate resilient growth during FY 2025-26, supported by strong domestic vehicle demand, increasing localisation, rising exports, and sustained policy support. According to the Automotive Component Manufacturers Association of India (ACMA), the industry recorded a turnover of ?6.73 lakh crore (US$ 80.2 billion) in FY 2024-25, registering a growth of 9.6% over the previous year and achieving a CAGR of 14% over FY20-FY25.

The automotive industry is presently undergoing a structural transformation driven by electrification, digitalisation, connected mobility, advanced electronics, and evolving regulatory standards relating to safety and emissions. As the industry gradually transitions towards electric and hybrid mobility solutions, auto component manufacturers are expected to increasingly align their product portfolios with emerging technologies and evolving customer requirements.

The shift towards electric mobility is expected to reduce dependence on certain conventional internal combustion engine (ICE)-related components over the medium to long term, particularly engine and transmission systems. Consequently, manufacturers are accelerating investments in EV-compatible components, battery management systems, power electronics, lightweight materials, telematics, and advanced safety technologies. The industry is also expected to witness consolidation and rationalisation across selected conventional product segments as technology adoption accelerates.

At the same time, rapid advancements in vehicle electrification, autonomous technologies, software integration, and connected vehicle architecture are expected to create significant opportunities for technologically advanced and value-added automotive components. Government initiatives such as the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components, PM E-DRIVE Scheme, Bharat NCAP, vehicle scrappage policy, and localisation programmes are expected to further strengthen the domestic manufacturing ecosystem and support investments in next-generation automotive technologies.

India also continues to strengthen its position within global automotive supply chains under the "China+1" sourcing strategy. During FY 2024-25, auto component exports increased by 8% to US$ 22.9 billion, while the industry reported a trade surplus of US$ 453 million for the second consecutive year, reflecting improving global competitiveness of Indian manufacturers.

Going forward, increasing focus on sustainability, localisation, premiumisation, and advanced mobility solutions is expected to accelerate the adoption of higher- value automotive components and advanced electrical and electronic architectures across vehicle categories. Continuous investment in technology, innovation, research & development, and supply chain resilience will remain critical for long-term growth and competitiveness of the Indian auto component industry.

Risks and Concerns

Risk management continues to remain an integral part of the Companys overall business strategy and governance framework. The Company has established a comprehensive risk management mechanism for identification, assessment, monitoring, and mitigation of strategic, operational, financial, technological, and regulatory risks that may impact its business operations and long-term sustainability. The automotive industry continues to operate in a dynamic environment influenced by changing mobility trends, increasing electrification, and evolving regulatory requirements.

One of the key challenges for the industry continues to be the accelerated transition towards electric mobility and advanced automotive technologies. Increasing adoption of electric vehicles is expected to gradually alter demand patterns for conventional internal combustion engine (ICE)- related components, particularly engine and transmission systems, thereby requiring substantial investments in technology upgradation, product diversification, localisation, and research & development.

The industry also faces risks arising from volatility in raw material prices, supply chain disruptions, semiconductor availability, logistics constraints, fluctuations in foreign exchange rates, inflationary pressures, and rising energy and transportation costs. Further, implementation of stricter emission norms, Bharat NCAP safety regulations, and evolving environmental compliance requirements may lead to higher capital expenditure and operational costs for automotive manufacturers and component suppliers.

To remain future-ready, the industry would continue to focus on the following key areas:

• Investment in advanced technologies, research & development, and product innovation through strategic alliances, technical collaborations, and joint ventures;

• Expansion of EV-compatible product portfolios including electronics, battery systems, lightweight components, telematics, and advanced safety technologies;

• Strengthening localisation and supply chain resilience to reduce dependence on imports and global supply disruptions;

• Skill development initiatives through industry- academia partnerships, training programmes, and workforce reskilling to address evolving technological requirements;

• Enhancing manufacturing flexibility, operational efficiency, quality systems, and digital integration to meet changing customer and regulatory expectations;

• Managing risks associated with changing consumer preferences, financing costs, fuel prices, and overall macroeconomic conditions.

The Company continues to undertake appropriate measures to mitigate the impact of these risks through cost optimisation initiatives, liquidity management, vendor diversification, supply chain monitoring, operational efficiency enhancement, and continuous review of business processes. The Company has a well-defined Risk Management Policy supported by an established governance framework under which risks are periodically reviewed by the management and the Risk Management Committee to strengthen overall business resilience and sustainability.

Internal Control System and its Adequacy

The Company has established adequate internal control systems commensurate with the nature, size, and complexity of its operations. The Company continues to operate on an integrated SAP ERP platform and successfully upgraded to SAP S/4 HANA with effect from January 2026 to enhance operational efficiency, reporting capabilities, and process controls. Financial powers across various management levels are clearly defined through an established delegation matrix. The effectiveness of internal controls is regularly reviewed through internal audits, statutory audits, and management reviews. The Company has appointed an independent firm of Chartered Accountants to conduct internal audits covering internal financial controls, operational processes, GST and TDS compliances, and other risk-based areas. The Internal Auditor reports directly to the Audit Committee, which periodically reviews the adequacy and effectiveness of the internal control environment, audit observations, and implementation status of corrective actions and recommendations.

Discussion on financial performance with respect to operational 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 Act read 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.

The Company has achieved turnover (net of GST) of 1,31,542.15 lakhs as against 1,25,044.73 lakhs during the previous year. The profit before tax was 2,957.75 lakhs as against 3,516.45 lakhs of previous year. The decrease in profit before tax was 15.89 percent and profit after tax was decrease by 23.63 percent at 2,155.15 lakhs as against 2,822.09 lakhs in the previous year.

Key financial Ratios:

Ratio	2025-26	2024-25	Change %	Reason for Variance above 25%
Net capital turnover Ratio	2.81	2.81	0
Net profit Ratio	0.017	0.023	-28	Refer note (i) below
Return on capital employed	4.73	5.27	-10
Debtor Turnover Ratio	6.54	7.12	-8
Inventory Turnover Ratio	16.39	16.66	-2
Interest Coverage Ratio	0.00	0.00	0
Current Ratio	3.72	4.25	-13
Debt to Equity Ratio	0.00	0.00	0
Return on Equity Ratio	0.03	0.04	-25
Trade payables turnover Ratio	7.39	8.28	-11

(i) Net Profit Ratio recorded during the year is lower as compared to the previous year due to decrease in other income.

(ii) Since the Company does not have any outstanding debt/ borrowing as on March 31, 2026 and March 31, 2025, debt equity ratio and debt service coverage ratio are not applicable.

Material Development in Human Resources/Industrial Relations, including number of people employed

The strategic purpose of Human Resources is to be a catalyst and change agent for creating the Human Capital transformation required to ensure sustained business outperformance, while simultaneously addressing the needs of its multiple stakeholders (starting with customers and employees) and strengthening the core values of the Company. In the long run, the ultimate metric for success is continuous improvement in the total factor productivity, while addressing the business imperatives of cash, cost, competence and confidence. The emphasis has been on aligning all the HR levers towards achieving these goals.

Focus continued to be on the Talent Management and Leadership Development processes which included Development Centers, Individual Development Planning, e-learning, up-skilling programs, Leadership Lifecycle programs and Action-Learning Projects etc.

The Companys strength of employees stood at 2299 as on March 31,2026.

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
	Sd/-
	Yogesh Chander Munjal
Place: Gurugram	(Chairman & Managing Director)
Date: May 29, 2026	(DIN 00003491)