OBSC Perfection Ltd Management Discussions

This chapter on Managements Discussion and Analysis (MD&A) is to provide the stakeholders with a greater understanding of the Companys business, the Companys business strategy and performance, as well as how it manages risk and capital. The following management discussion and analysis is intended to help the reader to understand the results of operation, financial conditions of OBSC Perfection Limited.

1. Industry Structure and Developments

Global Economy

The global economy is doing better than expected as the year began, showing signs of growth based on various key indicators. However, high levels of debt and ongoing geopolitical conflicts pose risks to global growth and inflation in the medium term. Although the US economy has remained resilient, higher-than- anticipated inflation has delayed interest rate cuts by the Federal Reserve. Meanwhile, the economies in the UK and Europe remain weak. Concerns about a potential real estate bubble in China could further hinder economic recovery. For many developing countries, the medium-term outlook has worsened due to slowing growth, sluggish global trade, and tighter financial conditions. Fluctuations in crude oil prices and ongoing shipping issues in the Red Sea could further complicate global supply chains and drive up inflation. The Middle East is also facing economic pressure due to the conflict in Israel; any escalation could have broader economic implications for the region. Structural reforms are essential for boosting growth in the Middle East, especially by diversifying into clean energy and other industries beyond oil. Despite these challenges, India is poised to become the third-largest economy by 2027, surpassing Japan and Germany. It is also the fastest-growing large economy, supported by a young population, strengthening institutions, and effective governance.

Indian Economy

The financial year 2024-25 has presented a mix of opportunities and challenges. On one hand, domestic economic activity has shown resilience due to strong local demand; on the other hand, global geopolitical uncertainties have affected inflation, interest rates, and supply chains. Despite these global challenges, the Indian economy has displayed strength, achieving a growth rate of 6.5% for FY 2024-25, driven primarily by government infrastructure investments. Improved manufacturing output, a thriving auto and real estate sector, healthy corporate finances, strong credit growth, increased tax revenues, and manageable inflation levels are all contributing to Indias economic growth. We expect this positive momentum to continue next fiscal year, supported by strong domestic demand, easing inflation, targeted government spending, and a robust manufacturing sector. While private sector capital spending has been cautious in FY 2024-25, it is projected to pick up next year, driven by global supply chain diversification and the governments Production Linked Incentive (PLI) scheme aimed at boosting manufacturing industries. Nevertheless, challenges such as geopolitical tensions, fluctuations in international financial markets, trade disruptions, and extreme weather events could pose risks to this otherwise optimistic outlook. With its structural reforms and improving infrastructure—both physical and digital—India is well positioned to navigate these challenges and emerge stronger.

Automobile Industry

Global Automobile Industry

The global automotive market, valued at USD 29.09 billion in 2025, is projected to grow to approximately USD 42.86 billion by 2032, reflecting a compound annual growth rate (CAGR) of 4.4%. The Asia-Pacific region leads with a market size of USD 12.52 billion, driven by rising demands for high engine performance and increasing disposable incomes. Europe and North America also contribute significantly, with growth fuelled by advanced technologies and improved facilities. Despite challenges like geopolitical tensions impacting the supply chain and increasing costs, the industry remains resilient, buoyed by technological advancements and heightened demand for high-end vehicle features.

However, the status quo is being challenged and the industry faces massive ongoing transformations, such as the shift from internal combustion engines to electrified powertrains and a shift in focus from hardware to differentiation through software. This dynamic has allowed new entrants in Europe and abroad— especially in China, the largest automotive market in the world to disrupt the market and win market share. In 2025, China surpassed Germany in light-vehicle exports for the first time, with exports of about 3.0 million vehicles, in contrast to Germanys 2.6 million. These transformative forces overlap with a challenging macroeconomic environment in Europe, including rising energy costs, inflation, and geopolitical tensions. All of these factors have greatly affected the European auto industry and make navigating the sectors transformation challenging. A prosperous future for the European automotive industry will therefore depend on how well and quickly it responds and how European stakeholders can shape the necessary conditions for future success.

The European automobile sector remains a dynamic and influential market, characterized by strong growth in electric mobility and stringent regulatory standards. Both two-wheelers and four-wheelers are witnessing significant transformations driven by technological innovation and environmental policies. Companies operating in this sector must navigate regulatory challenges while leveraging opportunities for growth in sustainable and advanced mobility solutions.

Automobile Industry in India

Historically, the Indian automobile industry has been a strong indicator of the economys health, playing a significant role in both economic growth and technological progress. The two-wheeler segment leads the market in volume due to the growing middle class and a young population. Additionally, increasing interest from companies in rural markets has further boosted the sector. Rising demand in the logistics and passenger transport sectors is also driving growth in commercial vehicles. Future market expansion is expected to be fuelled by trends like vehicle electrification, particularly among three-wheelers and compact passenger cars.

India holds a strong position in the global market for heavy vehicles, being the largest producer of tractors, the second-largest manufacturer of buses, and the third-largest producer of heavy trucks. In January 2025 alone, passenger vehicle sales reached 393,074 units, marking a 14% growth compared to January 2024, the highest monthly sales recorded. Additionally, India achieved a milestone with the sale of 1,325,112 electric vehicles (EVs) in FY24 (up to January 2025). India has a strong market in terms of domestic demand and exports. In April, 2025, the total production of passenger vehicles, three-wheelers, two-wheelers, and quadricycles was 23,58,041 units. The Indian EV market is expected to reach US$ 7.09 billion (Rs. 50,000 crore) by 2025, and according to NITI Aayog, the EV financing sector is projected to grow to US$ 50 billion (Rs. 3.7 lakh crore) by 2030. A report by the India Energy Storage Alliance anticipates that the EV market will grow at a CAGR of 36% until 2026, while the EV battery market is projected to expand at a CAGR of 30% during the same period.

To meet rising demand, several automakers have made significant investments across various industry segments in recent months. The automobile sector has attracted cumulative foreign direct investment (FDI) inflows of about $35.65 billion from April 2000 to December 2024. The Government of India supports foreign investment in this sector and allows 100% FDI through the automatic route. In January 2025, the Ministry of Heavy Industries extended the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by an additional year, making it applicable for five consecutive financial years until March 31, 2028.

The automobile industry relies on several factors, such as access to skilled labour at competitive costs, strong R&D capabilities, and affordable steel production. The sector offers significant investment opportunities and creates both direct and indirect jobs for skilled and unskilled workers. The electric vehicle industry alone is expected to generate 50 million jobs by 2030. To address the industrys needs, the Ministry of Heavy Industries has extended the PLI Scheme for Automobile and Auto Components for one more year, offering incentives for achieving sales targets over five consecutive financial years from 202425 to 2027-28, with incentive payments made in the following financial year.

Auto Components Industry in India Overview

In recent years, India has emerged as the fastest-growing economy in the world. This rapid growth, along with rising incomes, increased infrastructure spending, and better manufacturing incentives, has greatly boosted the automobile industry. The two-wheeler segment has been particularly strong, driven by the growing middle class, with total automobile sales reaching 19.72 million units from April to January in FY25

As demand for vehicles has increased, more manufacturers of original equipment and auto components have entered the market. Consequently, India has developed significant expertise in both vehicles and their parts, resulting in heightened international demand for these products. Therefore, the Indian automobile sector plays a crucial role in the success of the auto components industry.

Industry Impact

Indias auto component industry is a key player in promoting economic growth and generating jobs. It consists of businesses of all sizes, from large corporations to small enterprises, spread across various regions of the country. This sector represents 2.3% of Indias GDP and employs over 1.5 million people. By 2026, its expected that the auto component sector will contribute between 5-7% to Indias GDP.

Indias auto components industrys market share has significantly expanded, led by increasing demand for automobiles by the growing middle class and exports globally. The automobile component industry turnover stood at Rs. 2.9 lakh crore (US$ 36.1 billion) in H1 2024-25 the industry had revenue growth of 12.6% as compared to H1 2022-23. Domestic OEM supplies contributed 66% to the industrys turnover, and exports (22.3%) in FY23. The component sales to OEMs in the domestic market grew by 13.9% to US$ 30.57 billion (Rs. 2.54 lakh crore). In H1 2024-25, exports of auto components grew by 2.7% to Rs. 85,870 crores (US$ 10.4 billion).

Investment Landscape

The Indian automobile sector has seen significant investments from both domestic and international manufacturers, with a foreign direct investment (FDI) inflow of US$ 35.65 billion from April to December 2024, accounting for approximately 5.35% of total FDI inflows into India during this period.

The Indian government is committed to promoting electric vehicles (EVs) and aims for 30% of all vehicles to be electric by 2030. In the latest budget, customs duty exemptions were announced for importing machinery and goods necessary for manufacturing lithium-ion batteries, typically used in EVs.

Future Prospects

The Bharat New Car Assessment Program (BNCAP) aims to enhance the auto component sectors value chain by encouraging the production of advanced components and fostering innovation and global standards. As the world transitions towards electric, electronic, and hybrid vehicles—which are seen as safer and more efficient— new opportunities for the transportation industry are emerging. The next decade is set to bring more options and growth prospects for auto component manufacturers. To help with these changes, the Indian government is providing various production incentives and investing heavily in EV infrastructure.

Manufacturers are now focusing on sustainable solutions, lightweight materials, and efficient production processes to meet the automotive sectors evolving needs. There is also an increasing emphasis on digitalization and data analytics to optimize operations and improve product performance. As the automotive sector continues to evolve, the auto components industry will be vital in shaping the future of mobility. Success in this competitive market will depend on strong collaboration with automakers, investment in research and development, and adaptation to changing regulations.

2. Opportunities and Threats Opportunities

• Fuel-Efficient Vehicles: Improved fuel combustion engines and cost-efficiency programs present great opportunities, especially in emerging markets where demand for fuel-efficient cars remains strong.

• New Industries: Diversification from pure-play automotive components manufacturer to precision metal components manufacturer supplying various non-automotive industry is leading to higher customer traction, better order inflows, mitigating sectoral risk.

• Market Expansion: Expanding into new regions is expected to significantly increase vehicle demand. Threats:

• Intense Competition: The automobile industry has many players, leading to fierce competition where companies compete heavily for market share, making it difficult for new businesses to enter the market.

• Slow Economy: Economic issues like uncertainty, recessions, and unemployment can negatively impact the automobile industry for a long time.

3. Performance overview

The Company is engaged in manufacturing of Precision Metal Components meant for various industries, including automotive, defense, marine, renewables and telecom. The company has structured its operations into single operating segment with geographic distribution, the chief operating decision maker identified India and outside India as two geographical segments.

Sr No	Particulars	FY 2024-25 (In Rs.)	FY 2023-24 (In Rs.)
A)	Sales within India	114,08,48,305	95,58,39,802.93
B)	Sales Outside India	28,70,44,396.13	19,44,63,338.73
(A+B)	Grand Total	142,78,92,701.69	115,03,03,141.66

4. Outlook

a) Market Growth Potential

The outlook for the automobile parts manufacturing sector remains positive, driven by the following macro and industry-specific factors:

• Rising vehicle population across emerging markets continues to increase demand for components.

• Aging vehicles in both developed and developing regions contribute to higher demand.

• Global shift towards electric vehicles (EVs) is creating new component categories (e.g., battery management systems, e-motors, inverters), opening up new manufacturing opportunities.

b) Evolving Customer Preferences

• Customers are becoming more quality-conscious.

• Faster delivery expectations are encouraging companies to invest in supply chain and logistics capabilities.

c) Technology and Innovation Focus

• Transition to BS VI / Euro 6 norms and future emissions standards is driving product innovation.

• Smart and connected vehicles are boosting demand for electronic components and sensors.

• Investment in R&D for lightweight materials, sustainable manufacturing, and longer-lasting parts is critical.

d) Government Support and Policies

• Government initiatives such as Make in India and Production-Linked Incentive (PLI) schemes offer significant benefits to local manufacturers.

• Increased localization requirements by OEMs are creating more business for domestic component suppliers.

• Regulatory support for EV ecosystem development is expected to further fuel component demand.

e) . Export Growth Opportunities

• India and other developing nations are becoming key manufacturing hubs for global auto parts due to: o Cost competitiveness

o Skilled labour

o Growing bilateral trade agreements

• There is strong export demand from regions such as Africa, the Middle East, Eastern Europe, and Southeast Asia.

f) Industry Consolidation & Partnerships

• OEMs and Tier-1 suppliers are increasingly seeking strategic partnerships and JVs for technology sharing and market expansion.

• Mergers & acquisitions in the component manufacturing space are expected to rise to gain scale, technology, and market access.

g) . Challenges to Watch

• Volatility in raw material prices (steel, aluminium, plastics).

• Continuous need for capital investment in automation, quality upgrades, and regulatory compliance.

• Managing supply chain risks in a globalized and increasingly uncertain trade environment.

h) Strategic Outlook for the Company

To remain competitive and capture future growth, our focus would be on:

• Diversifying industries from currently dominated automotive to other newer industries such as Defence, Aerospace.

• Continue to focus on increasing exports sales.

• Expanding product portfolio, including EV and hybrid-compatible components.

• Investing in automation and smart manufacturing (Industry 4.0).

• Building strong relationships with OEMs and Tier-1 players.

• Company is working towards getting additional portfolio including forging, stampings and eventually into sub-assemblies

5 Risk and Concerns

a) Raw Material Price Volatility

• Parts manufacturing relies heavily on raw materials like steel, aluminium, rubber, and plastics.

• Fluctuating global commodity prices can significantly impact production costs and margins.

• Companies may face difficulties in passing cost increases to customers due to pricing contracts or market competitiveness.

b) Dependence on Automotive Industry Cycles

• Demand is closely tied to overall automotive industry health.

• Any slowdown in vehicle production (due to economic downturns or policy changes,) directly affects project commencement.

• Heavy dependency on a few OEM clients can expose the business to customer concentration risk.

c) Exchange Rate Fluctuations

• Export-oriented manufacturers are exposed to foreign exchange risks, which can affect profitability if not adequately hedged.

• Import dependency for machinery or raw materials also exposes the business to currency volatility.

d) Cybersecurity and IT Infrastructure Risks

• Increasing digitalization (ERP, online ordering, supplier portals) exposes the company to cyber threats and data breaches.

• Inadequate cybersecurity infrastructure can lead to theft of designs, production data, or customer information.

6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has devised systems, policies, and procedures/ frameworks which are currently operational within the Company for ensuring the orderly and efficient conduct of its business, which includes adherence to policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. In line with the best practices, the Audit & Risk Management Committee and the Board reviews these internal control systems to ensure they remain effective and are achieving their intended purpose. Where weaknesses, if any, are identified as a result of the reviews, new procedures are put in place to strengthen controls. These controls are in turn reviewed at regular intervals. The systems/frameworks include proper delegation of authority, operating philosophies, policies and procedures, effective IT systems aligned to business requirements, an internal audit framework an ethics framework, a risk management framework, and adequate segregation of duties to ensure an acceptable level of risk. The Code covers transparency in financial reports, ethical conduct, compliant to regulations, disagreement of interest review, and reporting of matters. All audit cognitions and subsequent steps thereon are trailed for determination by the Internal Audit part and reported to the Audit Committee.

7. Discussion on financial performance with Respect to operational performance

OBSC Perfection Limited is a leading automotive components supplier in India and is recognized Globally. We supply auto parts as a Tier 1 provider to major Original Equipment Manufacturers (OEMs) and key system manufacturers worldwide, with a strong presence in Europe, Asia-Pacific, and North America.

In the FY 2024-25, we achieved a total revenue of Rs 142.78 Crore. This includes Rs28.70 Crore from exports, Rs 114.08 Crore from domestic sales, Exports accounted for 20.10% of total sales, while domestic sales made up 79.90%. Compared to the previous year, our revenue increased by 24.13 %, EBITDA 24.25 % rose by and Profit Before Tax grew by 25.58 %.

OBSC Perfection Ltd takes pride in having a dedicated customer base that values our commitment as a reliable supplier, known for concurrent engineering and value engineering capabilities. We consistently deliver high-quality products with 100% on-time deliveries. We hold a strong position in the competitive market, and our product range is tailored for this specific niche. We are committed to improving our market presence through technological upgrades, skill development, quality enhancement, and human resources improvement to meet the challenges of future mobility, including e-mobility solutions.

8. Material Developments in Human resources /Industrial Relations front including number of people employed

a) Human Resources Development

During the year, the company continued to prioritize talent development, employee engagement, and skills enhancement as key components of its human capital strategy. Various training programs were conducted focusing on:

• Technical skill development

• Quality and safety protocols

• Lean manufacturing principles

• Soft skills and leadership training for supervisory and managerial staff

In line with the companys shift toward automation and digitalization, targeted upskilling programs were implemented for machine operators and maintenance staff to align with Industry 4.0 requirements.

b) . Workforce Size

As of 31 st March, 2025 the company employed:

• Permanent Employees: 103

• Contractual/Temporary Workers: 809

• Total Workforce: 912

c) Employee Welfare Initiatives

• The company enhanced its employee welfare schemes, including health check-ups, insurance coverage, subsidized canteen facilities, and employee transportation.

• Employee satisfaction surveys and feedback mechanisms were introduced to improve workplace conditions and gather actionable insights.

d) Industrial Relations

Industrial relations during the year remained cordial and stable. The company maintains an open and constructive dialogue with workers unions and employee representatives.

• No major industrial disputes or work stoppages were reported during the year.

• Wage settlements and labour agreements were renewed successfully where applicable, ensuring continuity of operations and employee satisfaction.

e) Health, Safety, and Environment (HSE)

• The company reinforced its commitment to a safe working environment through regular safety drills, compliance audits, and PPE training.

• Focus was also placed on creating awareness about occupational health hazards and preventive care, especially in production-intensive units.

f) Future Outlook

In the coming year, the company aims to:

• Expand its digital HR capabilities, including the implementation of HRMS platforms.

• Recruit specialized talent in areas such as automation, electric vehicle (EV) components, and supply chain management.

• Continue to foster a high-performance, inclusive, and learning-oriented workplace culture.

i) Details of significant changes (i.e. Change of 25 % or More as compared to the immediately previous financial year) in key financial ratios along with detailed explanation including

Ratio	Particulars	As on 31 st March 2025	As on 31 st March 2024
A) Debtor Turnover Ratio	a) Average Trade Receivable	28,23,19,195	18,55,51,871
Variance- -1.14	b) Turnover	1,42,78,92,702	1,15,03,03,142
Reason for Changes more than 25%: NA	(a/b)	5.06 %	6.20 %
B) Inventory Turnover Ratio	a) Average Inventory	20,79,61,952	10,83,98,475
		1,42,78,92,702	1,15,03,03,142
	b) Turnover
Variance- -3.74 Reason for Changes more than 25%: Increasing sales leading to requirement of holding higher inventory.	(a/b)	6.87 %	10.61 %
C) Interest Coverage Ratio	a) EBIT	23,75,70,290	19,11,95,426
	b) Interest expenses	3,12,22,605	2,68,87,751
Variance- 0.49% Reason for Changes more than 25%: NA	(a/b)	7.60 %	7.11 %
D) Current Ratio	a) Current assets	84,79,29,150	42,49,85,936
	b) current Liabilities	33,60,61,019	29,22,25,591
Variance- 1.07 Reason for Changes more than 25%: Increased inventory figures led to higher current assets.	(a/b)	2.52 %	1.45 %
	a) Debts	26,97,35,761	41,47,25,247
E) Debt Equity Ratio	b) Equity	1,03,99,04,555	30,07,10,441
	(a/b)	0.26 %	1.38 %
Variance- -1.12
Reason for Changes more than 25%: With IPO funds infusion and partial debt repayments during the year, debt- equity ratio has come down significantly.
f) Operative Profit Margin (%)	a) EBIT	23,75,70,290	19,11,95,426
	b) Turnover	1,42,78,92,702	1,15,03,03,142
Variance-0	(a/b)	0.16 %	0.16 %
Reason for Changes more than 25%: NA

	By order of the Board of Directors
	OBSC PERFECTION LIMITED
	(Formerly known as OBSC Perfection Private Limited)
	Sd/-	Sd/-
	ASHA NARANG	SAKSHAM LEEKHA
Place: Delhi	Chairperson and Non-Executive Director	Managing Director
Date: 29.08.2025	DIN: 00296714	DIN: 07389575