NDR Auto Components Ltd Management Discussions

OUTLOOK

As per the world economic outlook by IMF, the outlook for the global economy remains positive as the global GDP is anticipated to increase by 3.3% in CY 2025. In addition to this, the emerging market and developing economies are anticipated to grow by 4.3% whereas, the advanced economies will grow by 1.9% in CY 2025. This growth in the global economies is anticipated to be supported by growth in economic activities due to a decline in the global inflation level.

In addition to this, the Indian economy is anticipated to retain its position as the fastest-growing major economy in FY 2025-26. The tax relief initiated in the Union Budget 2025-26 is expected to play a significant role in shaping the economic growth.

The global automotive industry is currently experiencing a period of significant transformation and growth, with various factors influencing its overall outlook. While the industry is facing challenges like supply chain disruptions and economic uncertainties, it is also benefiting from technological advancements and increasing consumer demand for electric vehicles and luxury cars.

All segments of Indian auto industry are expected to continue with the growth momentum in financial year 2025-26, building on the robust performance of recent years due to stable macroeconomic conditions, proactive Government policies and infrastructure spending by the government. Auto sector demand is expected specially in rural and semi urban regions which would be a tailwind for auto sector demand.

Overall, the Automobile industry will closely monitor macroeconomic factors and global geopolitics, which will determine the key demand conditions and supply chain dynamics going forward.

INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian automobile industry is segmented into various categories including passenger vehicles, commercial vehicles, two-wheelers, and three-wheelers. Passenger vehicles consist of cars, utility vehicles, and vans, while commercial vehicles include trucks, buses, and other utility vehicles.

The Indian automotive industry is poised for substantial growth, with projections indicating a significant increase in value and production. While the passenger vehicle segment may experience a moderate growth rate due to high base effects, the overall industry is expected to grow, driven by factors like rising income, urbanization, and government initiatives. The industry is also witnessing a shift towards sustainable mobility, with the rise of electric vehicles and government support for electrification.

Electric vehicle (EV) adoption is expected to accelerate, driven by advancements in battery technology and affordability, and a growing focus on sustainable mobility. The governments push for sustainable mobility and increasing consumer demand for EVs are expected to drive significant growth in EV segment. The need for robust infrastructure, including charging stations for EVs and improved road networks, is crucial for supporting industry growth.

India is emerging as a major player in global light vehicle production and a potential export hub, particularly for mature markets. The industry is embracing innovation and technological advancements, including in areas like autonomous driving and connected mobility.

Also, the industry is increasingly focused on sustainability and reducing emissions, aligning with global environmental concerns. OPPORTUNITIES AND THREATS

The automotive sector is one of the most important and rapidly developing sectors in the economy. The automotive industry has had a lasting impact on society, starting as a steam-powered carriage and continuing through the new age of electric and autonomous automobiles. Technologies has changed the way we travel, live, and work, bringing people and places closer together than before.

The use of electric cars (EVs) is anticipated to rise as a result of growing environmental concerns and governmental efforts to minimise carbon emissions. Optimization of fuel-driven combustion engines and cost efficiency programs are excellent opportunities for the automobile market. Emerging markets will be the primary growth drivers for a long time to come, and hence fuel-efficient cars are the need of the hour. The increased availability of data and information, shift in consumer demand, and expanded regulatory requirements for safety and fuel economy will fuel the growth of this industry.

There are ample opportunities for growth, particularly in the electric vehicle segment, where the government is offering incentives and subsidies to promote adoption. Over the next decade, this will lead to newer verticals and opportunities for auto component manufacturers.

The growth in the automotive industry may get affected due to global trade war related uncertainty, stock market volatility and high retail inventory. Increasing competition and a more aware and demanding consumer, among others, are some of the problems that

car manufacturers are facing today and in the near future.

SEGMENT WISE/ PRODUCT WISE PERFORMANCE

The Company is currently operating primarily under single business segment manufacturing seat frames and seat trims for passenger Cars as well as Utility Vehicles.

RISK AND CONCERNS

The Company is exposed to external and internal risks associated with the business.

BUSINESS RISK

The operations of the Company are directly dependent on the growth of the Indian automotive industry.

FINANCIAL RISK

Any disruption of supply chain, availability of raw material could potentially impact the financial position and earnings of the Company. Both the operational and financial risks are constantly assessed, and adequate steps are taken from time to time to mitigate them successfully.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls to ensure that transactions are properly authorized, recorded, and reported, apart from safeguarding its assets. The internal control system is supplemented by well-documented policies, guidelines and procedures and reviews carried out by the Companys internal audit function, which submits reports periodically to the Management and the Audit Committee of the Board.

Your Company has a favourable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity.

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has complied with all the provisions of the accounting standards in accordance with Section 133 of the Companies Act, 2013.

HUMAN RESOURCES/ INDUSTRIAL RELATIONS

Your Company believes that employees are key for our success, have immense knowledge and power of innovation. Your Company aims to create an environment where every employee can contribute to the companys performance, excel and grow in their respective jobs. Our focus is to recruit employees with right skills and talent, raise competency through training and development, recognize and reward leadership and performance. Several measures are implemented to retain the talent within the organization. At each location, the work force goes through a mandatory training plan including the vision, mission and company values which forms a base for treating everybody with dignity and respect. To further strengthen and motivate our employees, several initiatives are taken on a continuous basis to foster teamwork, trust and communication across the organization. Employees are encouraged to have a passion for excellence and focus on the customer with a performance goal of doing things right first time and every time. Your Company provides challenging and fulfilling opportunities to maximize employee potential so that every employee excels and grows along with Companys growth.

Your Company ensures quality at our suppliers and service providers by horizontal deployment of learnings and training at our supplier partners.

In addition to timely delivery and quality, your Companys utmost focus is on safety of its workforce.

Health, Safety and Environment remains our top priority. Periodic audits are carried out both internally as well as through external agencies to identify gaps and to define action items for continuous improvement, ensuring a safe workplace for employees. Total number of permanent employees on the rolls of Company as on 31st March, 2025 is 255.

FINANCIAL PERFORMANCE

The financial statements of the Company in accordance with the requirements of applicable corporate laws of India. The management of your Company accepts the integrity and objectivity of these financial statements as well as the various estimates and judgments used therein.

The details of the financial performance of the Company are appearing in the Balance Sheet, Profit & Loss Account and other financial statements forming part of this Annual report. For financial highlights please refer heading FINANCIAL RESULTS of Boards Report.

KEY FINANCIAL RATIOS

Changes in key financial ratios are as under:

*Earnings before interest, depreciation, tax and amortization (EBIDTA) has been considered for coverage ratio.

"Operating profit is earning before interest and tax (EBIT)

DISCLAIMER

Statements in this Report, particularly those which relate to Management Discussion and Analysis as explained in the Corporate Governance Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.