Omax Autos Ltd Management Discussions

A. Industry Structure and Developments

The Indian economy continued to demonstrate resilience during FY 2025-26, supported by sustained government spending on infrastructure, a recovery in private capital expenditure, and steady consumption demand. Within the automotive sector, the commercial-vehicle (CV) industry returned to a constructive growth phase, with overall industry volumes expanding approximately 14% year-on-year. This represented a marked improvement from the cyclical softness of the prior year and was driven by a combination of factors: stronger freight activity supported by improving load factors, replacement demand catalysed by emission-norm transitions, and infrastructure-led demand for tippers and construction-segment trucks.

Within the CV segment, the heavy- and medium-duty CV (M&HCV) category - where your Company is most exposed through its supply of frames and long members - grew approximately 20%. The Companys principal customer, Tata Motors, reported strong volume momentum through Q4 FY 2025-26, with industrywide commercial-vehicle wholesales up 25% year-on-year in the final quarter - the highest single-quarter level since Q4 FY 2020-21.

Indias CV industry continues to be characterised by a revenue-led growth dynamic - over the five-year period FY 2020-21 to FY 2024-25, Indian CV revenue compounded at approximately 7% per annum versus a global CV revenue CAGR of approximately 1%. The differential is driven by the structural premiumisation of the Indian CV fleet - the steady mix-shift from light-tonnage to heavier and more content-rich GVW platforms, with richer cab content, advanced safety features, and emission-compliant powertrains. Frame and long-member content rises with platform weight; your Companys exposure to higher-GVW platforms therefore translates a modest unit-volume environment into a meaningful revenue uplift.

B. Opportunities and Threats

Opportunities in the year ahead include the continuing rollout of the Bharat Stage VI Phase II emission norms, which has driven a sustained re-engineering programme across OEM platforms; the gradual electrification of public transport, particularly the bus segment driven by State Transport Undertaking demand and pilot programmes for electric intercity buses; the air-conditioned-cabin mandate for N2/N3 trucks, which is re-engineering the chassis and cabin BOM; and the announced corporate transactions at our principal customers parent group, which over time will reshape the supplier ecosystem and raise the quality bar for tier-1 suppliers - an opportunity for those investing ahead of the curve.

Threats include cost inflation in raw materials, particularly steel; geopolitical and supply-chain disruptions affecting critical bought-out parts; demand cyclicality and order-flow lumpiness inherent to the CV cycle; technological transitions (EV, alternative-fuel, hydrogen-ICE) that may render certain frame architectures obsolete over time; and regulatory transition costs as new emission and safety standards come into force.

C. Segment-wise / Product-wise Performance

Pursuant to Ind AS 108, the Company is engaged in a single business segment - manufacture of sheet metal components, frames, long members and assemblies for automotive and railway customers within India - and accordingly does not have any reportable operating or geographical segments. The Company operates primarily under a single geographic location, i.e. India, and serves a single business segment as set out in Note 43(k) of the financial statements (Segment Reporting). Revenue from a single major customer accounted for ^46,111.30 lakhs of the Companys revenue from operations during the year.

D. Outlook

The outlook for the Indian commercial-vehicle industry in FY 2026-27 carries both tailwinds and meaningful uncertainty. Domestic tailwinds - government infrastructure spending, replacement demand driven by the BS6 Phase II transition, the structural growth in the bus segment, and the gradual electrification of public mobility - remain in place.

Against these, the year ahead opens against a backdrop of significant geopolitical headwinds. The ongoing US - Iran - Israel conflict and the consequent constraints on the Strait of Hormuz - through which a substantial proportion of global oil and key materials transit - have introduced fresh risk to the cost of crude, diesel and other key consumables. Diesel and consumables price increases, if sustained, transmit through to fleet operating economics, and through to end-customer truck buying behaviour. The situation remains fluid, and your Company is in a wait-and-watch posture as to how this plays out - alongside disciplined cost management, working-capital efficiency and capital-allocation prudence.

Operationally, the Company expects to sustain operating margins broadly in line with the FY 2025-26 levels, deploy modest capital expenditure entirely from internal accruals, and continue its policy of meaningful dividend distribution - subject to overall market conditions and the necessary approvals. Operating cash generation, together with our liquid treasury, is expected to comfortably cover all known debt-service obligations and capacity-readiness investments.

E. Risks and Concerns

Key risks identified by your Companys Risk Management Committee, with the corresponding mitigation framework, include the following:

(i) Raw material - pass-through, not a direct risk to the Company. The Companys commercial arrangements with its principal customers operate on a pass-through basis: increases in the price of steel and other principal raw materials are passed on to customers, and decreases are similarly passed back. Raw-material price volatility is therefore not a direct risk to the Companys margin. The indirect channel - where sustained increases in raw material prices translate into higher truck-and-vehicle prices for end customers, and consequently soften end-demand - is monitored as part of the demand-cyclicality risk below.

(ii) Demand cyclicality and end-market risk. The Indian CV cycle is inherently cyclical, and end- demand can be affected by macroeconomic conditions, freight-rate movements, and - in periods such as the current one - by upstream cost transmission into truck prices. The Company manages this through deep customer engagement, multi-product positioning across CV and railway segments, and a prudent capital structure that supports operations through cyclical troughs.

(iii) Customer concentration. A single OEM accounts for the majority of revenue. This is partially mitigated by a long-standing tier-1 relationship, multi-product engagement, and broadening into adjacent segments (railway fabrication, electric commercial vehicles).

(iv) Regulatory transitions such as BS6 Phase II execution, AC-cabin mandates, and ADAS rollout, which may require platform-level redesigns and capacity retooling.

(v) Technological transitions. The long-term shift toward EV, alternative-fuel and hydrogen-ICE platforms creates a risk that certain frame architectures may evolve. The Company invests ahead of these transitions through its quality, process and customer-engagement programmes.

(vi) Geopolitical and supply-chain disruption risk. Conflict in West Asia, constraints on key shipping routes (notably the Strait of Hormuz), and the consequent volatility in oil, diesel and bought-out component costs, are being monitored closely.

The Risk Management Committee reviews the risk register and mitigation actions on a periodic basis.

F. Internal Control Systems and their Adequacy

The Company has adequate internal financial controls commensurate with its size, scale and nature of operations. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting, the safeguarding of assets, the prevention and detection of fraud and errors, the accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The internal financial controls have been tested and reviewed by the Internal Auditors (M/s Neeraj Madan & Associates) and the Statutory Auditors (M/s BGJC & Associates LLP). The Auditors separate report on internal financial controls under Section 143(3)(i) of the Companies Act 2013 forms part of this Annual Report.

G. HR and Industrial Relations

The Company employed 91 permanent employees as on 31 March 2026 across the head office at Gurgaon and the three plant locations. Productivity per employee rose materially through the year as revenue expanded 31%, reflecting the operating leverage from scale, automation and process improvements implemented over the past several years.

Industrial relations during the year remained cordial across all plant locations. The Company continues to invest in workforce safety; every employee on the shop floor is provided with Omax-branded protective equipment including safety helmets, eye protection, dust masks, gloves and full-coverage workwear. Periodic safety drills, behavioural-based safety programmes and structured training are delivered across the plants.

H. Financial Performance Review

Revenue from operations grew approximately 31% year-on-year to ^484.50 crore. EBITDA without other income reached ^49.68 crore (FY 2024-25: ^32.22 crore), an EBITDA margin of 10.25%, expanding 162 basis points year-on-year - the cleanest indicator of operating leverage delivered in the year. With other income, EBITDA reached ^85.18 crore at a margin of 17.6% on total income.

Other income at ^35.50 crore reflects rental income, treasury operations on liquid surplus, and embedded- lease income recognised under Ind AS. Finance costs declined approximately 19% to ^16.44 crore in line with reduced debt; depreciation moderated 10% to ^17.17 crore on PPE retirements during the year. Profit before tax (excluding exceptional items) tripled to ^51.48 crore. After an exceptional impairment of ^2.02 crore, PBT was ^49.46 crore. Tax expense at ^12.42 crore reflected a normalised effective rate of approximately 25%, yielding profit after tax of ^37.04 crore - an increase of 72% year-on-year. Earnings per share rose to ^17.32 from ^10.07.

I. Key Ratios - Year-on-Year Variance Commentary

Pursuant to the Schedule III amendment, the following ratios have moved by more than 25% year-on-year and accordingly require explanation:

Ratio	FY 26	FY 25	Varian ce	Reason for variance
ROCE	16%	8%	+800 bps	Strong growth in PBT (=3x YoY) on operating leverage; reduced borrowings narrowed capital employed
DSCR	2.53x	1.86x	+36%	Higher EBITDA combined with reduced debt- service obligation following deleveraging
Return on Equity	11%	7%	+57%	PAT growth of 72% on a modestly larger equity base

Ratio	FY 26	FY 25	Varian ce	Reason for variance
Inventory Turnover	44.0x	28.2x	+56%	Higher revenue throughput on broadly flat inventory base (improved working-capital efficiency)
Debt- Equity	0.18x	0.27x	-33%	Significant reduction in fund-based debt during the year
Net Profit Margin	8%	6%	+33%	Operating leverage flow-through; lower finance costs
Trade Receivabl e Turnover	50.95 x	104.0 x	-51%	Higher closing trade receivables (year-end timing, broadly in line with revenue scale)

J. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, expectations or projections, including the Companys plans, business strategy, growth and competitive position, are forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply, price conditions in the markets in which the Company operates, changes in government regulations, tax laws and other statutes, raw-material costs, technological transitions, and other incidental factors.