PPAP Automotive Ltd Management Discussions

Global Economy Overview

Geopolitical risks intensified during FY26, with heightened tensions in the Middle East, including developments involving Iran, increasing concerns over disruptions to crude oil supplies and key shipping routes. Such developments contributed to volatility in global energy and increased the risk of inflationary pressures. Prolonged disruptions to major trade routes also resulted in higher freight costs, extended lead times and supply-chain uncertainties for businesses dependent on international sourcing and logistics. The global trade environment also remained challenging amid continued uncertainty in US-China trade relations. Changes in tariff policies, export controls continued to influence global supply chains.

Thus companies continued to focus on localisation, supplier diversification, inventory management and operational efficiencies to mitigate disruptions and maintain competitiveness.

Indian Economy Overview

India remained one of the worlds fastest-growing major economies in FY26, supported by strong domestic demand. The manufacturing sector remained resilient, backed by healthy demand, expanding production, and strong business confidence, while inflation stayed under control and lower interest rates supported consumption and investment. India also strengthened its position as a global manufacturing and investment hub, with higher FDI inflows, growing exports, and continued investments in advanced manufacturing, electronics, clean energy, and digital infrastructure. Government initiatives such as GST 2.0, the Production-Linked Incentive (PLI) scheme, infrastructure investments and digitalisation further strengthened the countrys long-term growth trajectory. Despite global uncertainties, Indias strong domestic market and policy stability continue to support its long-term growth outlook.

Automobile Industry Overview

Indias automobile industry achieved record sales in FY26, driven by supportive government measures, including GST reforms, repo rate cuts and revised income tax slabs, which improved affordability and consumer sentiment. According to SIAM, passenger vehicle sales grew 8% to 4.64 million units, commercial vehicles 12.6% to 1.08 million units, three-wheelers 12.8% to 0.84 million units and two-wheelers 10.7% to 21.71 million units. Vehicle exports also reached a record 6.65 million units, up 24% year-on-year.

The strong performance across segments reflects improving economic activity, robust consumer demand and continued investments by OEMs. This is expected to support demand for automotive components and related industries. Favourable demographics, rising vehicle ownership and continued growth in domestic manufacturing support a positive long-term outlook for the industry. However, geopolitical uncertainties, supply chain disruptions, commodity price volatility and evolving regulatory requirements remain key risks that could impact business performance.

Indian Auto Ancillary Industry Overview

Indias auto component industry continued to grow strongly in FY26, supported by robust domestic demand, rising exports, favourable government policies and technological advancements. The sector is expected to grow at a 7-8% CAGR between FY25 and FY30.

Growth is being driven by key trends such as electrification, smartification, premiumization and localization. Government initiatives including the PLI Scheme, Make in India, FAME and PM E-Drive are accelerating EV adoption and domestic manufacturing of advanced automotive components. Demand is increasingly shifting towards high-value products such as battery systems, electric powertrains.

The industry is also benefiting from a growing aftermarket and rising premium vehicle penetration. Supported by strong manufacturing capabilities, policy support and export opportunities, the sector remains well positioned for sustainable long-term growth.

Group Overview

FY26 marked a significant milestone in the evolution of our organization with the formal establishment of the AJAY Group as the umbrella identity for all Group companies and businesses. The creation of the AJAY Group reflects a unified vision, strengthens the Groups collective brand identity and reinforces its commitment to strength & resilience, courage & determination, moral & inner victory, leadership & confidence, victory through perseverance.

At the heart of the Group is PPAP Automotive Limited, the flagship company with over four decades of experience in engineering and manufacturing. Over the years, there has been evolution from a manufacturer of automotive sealing systems into a diversified enterprise with capabilities spanning automotive components, aftermarket solutions, industrial products, precision tooling and energy storage systems. Leveraging its core strengths in plastic extrusion, plastic injection molding, rubber processing and advanced manufacturing technologies, the Group serves a broad range of mobility and industrial markets while maintaining a balanced and diversified business portfolio.

The divestment of PPAP stake in PPAP Tokai India Rubber Private Limited was also completed during the year, unlocking capital, enhancing financial flexibility and enabling greater focus on strategic growth opportunities across its core businesses.

The Group currently has five companies, each addressing a distinct segment of the mobility and industrial value chain:

• PPAP Automotive Limited - The flagship company of the Group and a leading manufacturer of automotive sealing systems, injection-molded plastic components and engineered polymer products for passenger vehicle OEMs. The business serves both internal combustion engine (ICE) and electric vehicle (EV) platforms, leveraging its expertise

in plastic extrusion, injection molding and advanced manufacturing to supply critical components to leading automotive manufacturers.

• ELPIS Automotives Private Limited - The Groups aftermarket business focused on the distribution of spare parts, service parts, accessories and vehicle care products. Through a growing nationwide distribution network and a diversified product portfolio, ELPIS enables the Group to participate in the high-growth automotive replacement market while strengthening customer engagement beyond OEM channels.

• Avinya Industrial Products Limited - Established to extend the Groups core competencies beyond automotive applications, Avinya serves industrial and export markets through engineered plastic and rubber-based products. The business focuses on developing new customer segments and applications, supporting revenue diversification and reducing dependence on the automotive sector.

• Meraki Precision Tool Engineering Limited - The Groups tooling and engineering platform, specializing in the design and manufacture of high-precision injection moulds for automotive, consumer durables and industrial applications. Meraki plays a critical role in supporting new product development, enhancing manufacturing capabilities and building a scalable, engineering-led business with opportunities across both domestic and international markets. To sharpen strategic focus and unlock future growth potential, PPAP has proposed transferring its tooling business to Meraki Precision Tool Engineering Limited, a dedicated wholly owned subsidiary.

• Avinya Batteries Limited - The Group has established a presence in energy storage through Avinya Batteries, which develops lithium-ion battery pack solutions for mobility and energy storage applications. Going forward, the integration of the battery business with PPAP Automotive is expected to create stronger operational synergies and support the Groups participation in Indias evolving electric mobility ecosystem.

Supported by 7 manufacturing facilities, diversified customer relationships, strong engineering capabilities and a growing product portfolio, the AJAY Group is focused on building scalable businesses, improving operational efficiency and creating longterm value across its stakeholder ecosystem.

Automotive Parts Business

The Automotive Parts Business remains the cornerstone of PPAP Automotive Limited and continues to be the largest contributor to the Groups revenue. The Company is a leading manufacturer of automotive body sealing systems, injection-molded plastic components and engineered polymer products, catering to leading passenger vehicle OEMs across India. Leveraging its expertise in plastic extrusion, plastic injection molding and advanced manufacturing technologies, PPAP supplies critical vehicle components that are compatible with both internal combustion engine (ICE) and electric vehicle (EV) platforms, making its product portfolio largely engine-agnostic and future-ready.

The Company operates a strategically located manufacturing network across Noida & Greater Noida (Uttar Pradesh), Pathredi (Rajasthan), Village Ukhlod Viramgam & Sanand (Gujarat) and Vallam Vadagal (Tamil Nadu), Chakan (Maharashtra) enabling close proximity to major automotive production hubs.

FY26 Performance

• Secured new business wins worth approximately 840 crore across both EV and ICE vehicle platforms.

• Successfully started new projects Tata Motors Sierra, MSIL E Vitara & Victoris, Renault-Nissan Duster.

• Expanded business across a diversified customer base, including Maruti Suzuki, Tata Motors, Honda and other leading OEMs, while successfully onboarding Mahindra & Mahindra as a direct OEM customer and CIE Golde as a direct Tier-I customer.

• Maintained a strong operating scale with daily dispatches exceeding 2.3 lakh parts, serving over 50 customers through a portfolio of 3000+ SKUs.

Outlook & Strategic Focus

• Re-layout of the Pathredi, Gujarat, and Chennai manufacturing facilities to enhance operational efficiency, optimize production flow, improve capacity utilization and set up solar plant for energy efficiency.

• Commissioning of the new EPDM extrusion line and second mixing line at the new Chennai facility to strengthen manufacturing capabilities and support future business growth.

• Development and successful launch readiness of key customer programs, including Tata Motors, Mahindra, Honda, and Maruti Suzuki.

• Expansion of the manufacturing footprint through the establishment of new facilities at Sambhaji Nagar and Chakan, Pune, to support capacity growth and customer proximity.

• Expansion of the product portfolio through the introduction of value-added components, enabling higher customer value and increased content per vehicle.

Aftermarket Business

Aftermarket operations are conducted through ELPIS Automotives Private Limited, wholly owned subsidiary of PPAP which serves both B2B and B2C customers through a diversified portfolio of automotive replacement parts, service components, accessories and vehicle care products. The business is well positioned to benefit from Indias growing vehicle parc, rising average vehicle age and increasing demand for quality aftermarket solutions. ELPIS offers a comprehensive range of engineering plastic components, rubber sealing systems, service parts, vehicle accessories and car care products, while continuously expanding its portfolio with value-added offerings to strengthen customer engagement. The Company is also enhancing its omnichannel presence through digital commerce platforms and direct-to- customer initiatives.

FY26 Performance

• Delivered robust growth of 36% year-on-year, making it one of the fastest-growing business segments within the Group

• Expanded distribution reach to 146 distributors across multiple geographies, strengthening market penetration and product availability

• Maintained a diversified product portfolio comprising 1,264 SKUs across spare parts, service parts and accessories categories

• Continued expansion of value-added offerings including automotive accessories, perfumes and car care products, enhancing customer engagement and wallet share

• Strengthened brand visibility and customer engagement through participation in leading industry conclaves and trade exhibitions, including Auto Mechanika Shanghai 2025, Auto Mechanika Dubai 2025, ACMA Auto Mechanika New Delhi, and the Auto Technicia Aftermarket Exhibition, showcasing the Companys capabilities and expanding its market outreach.

Outlook & Strategic Focus

• Scaling up the Aftermarket business with an objective to increase its contribution to more than 10% of the Groups revenues over the next 2-3 financial years.

• Building a pan-India distribution network supported by regional warehouses.

• Target direct exports to Middle East, Africa, and South Asia.

• Focus on brand equity, premium offerings, and tech-enabled distribution with tag line "Sustainable & Reliable Products.

Commercial Tooling Business

PPAPs tooling business is a strategic engineering vertical focused on the design, development and manufacturing of high-precision plastic injection Molds for automotive and industrial applications. Commercialized in 2019, the business provides end-to-end tooling solutions spanning product design, mold manufacturing, validation and production support.

To strengthen its focus and unlock future growth opportunities, the Company has proposed transferring the tooling business into a dedicated wholly owned subsidiary, Meraki Precision Tool Engineering Limited, during FY27, subject to the necessary statutory and regulatory approvals.

The Greater Noida facility is equipped with advanced design, machining and validation capabilities to manufacture precision Molds for Automotive, Electrical, White Goods and other industrial sectors. Its capabilities include multi-cavity Molds, gas-assisted Molds, hot runner systems, 2K moulding and over-moulding, enabling the business to meet the stringent quality and delivery requirements of OEMs and Tier-1 suppliers.

FY26 Performance

• Revenue from the tooling business grew by 8.77% year-on- year.

• Capacity utilization improved to over 90%, reflecting higher operational efficiency.

• Successfully developed and delivered 148 precision molds across automotive and industrial applications.

• Maintained a robust order pipeline across automotive and non-automotive sectors, supporting future growth.

Outlook & Strategic Focus

• Maintaining a strong order pipeline to provide sustained revenue visibility and support long-term growth.

• Strategic focus on expanding export capabilities and tapping global tooling demand.

• Continued investments in high-speed machining, automation, and advanced CAD/CAM systems to enhance precision and productivity.

• Focus on complex and high-value moulds (multi-cavity, 2K, and over-molding) to improve margins.

• Strengthening OEM and Tier-1 partnerships while improving operational efficiency and capacity utilization.

Industrial Product Business

The Industrial Products Business represents strategic diversification beyond the automotive sector, leveraging its expertise in plastic extrusion, rubber extrusion and injection moulding to serve a wide range of industrial applications. Operating under Avinya Industrial Products, the business focuses on expanding the Groups presence in non-automotive markets through its engineering and manufacturing capabilities.

The division manufactures a diversified portfolio of engineered plastic and rubber products for industries such as infrastructure, renewable energy, construction, electrical equipment and consumer appliances. Its offerings include pail containers, paint dispensers and buckets, components for solar panel cleaning robots, AHU systems, modern bath fittings, white goods and other application-specific products.

It has a facility in Surajpur, Uttar Pradesh. The business leverages PPAPs precision engineering, tooling expertise and manufacturing infrastructure to expand its presence across industrial and export markets while creating a more diversified revenue base.

FY26 Performance

• Revenue from the Industrial Products Business grew by 40.42% year-on-year.

• Expanded the customer base in the Injection Molding business by onboarding Epack Durable Limited and PG Electroplast Limited as new customers, strengthening the Companys presence in the segment.

• Strengthened the Companys international footprint by onboarding Mikano International Ltd. as a new export customer.

• Established a facility at Greater Noida to enhance customer proximity, improve delivery responsiveness, and strengthen operational efficiency.

Outlook & Strategic Focus

• Prioritize the top three high-performing market segments to maximize growth and resource efficiency.

• Focus on applications with strong repeat business potential and higher profit margins.

• Build a high-quality sales pipeline.

• Accelerate deal closures through focused customer engagement and streamlined execution.

• Improve conversion rates and enhancing customer retention.

Battery and Energy Storage Business

The Battery and Energy Storage Business operates through Avinya Batteries Limited, which develops and manufactures lithium-ion battery pack solutions for mobility and stationary energy storage applications. Its product portfolio includes pouch, cylindrical and prismatic cell-based battery packs for solar energy systems, telecom infrastructure, Energy Storage Systems (ESS), inverters and UPS solutions.

It is proposed to merge Avinya Batteries Limited with PPAP Automotive Limited, subject to the receipt of the requisite statutory and regulatory approvals. The proposed merger is expected to create operational synergies, optimize resource utilization and enable a more focused approach towards customers through the delivery of integrated services by a single consolidated entity. The consolidation is also expected to strengthen organizational capabilities and leadership by pooling financial and human resources, facilitate centralized management of funds and enhance treasury efficiency, thereby creating a stronger platform to support the Companys future growth opportunities.

During FY26, the business made encouraging progress towards a turnaround by improving operational efficiency, customer engagement and business scalability, while strengthening its presence across mobility and energy storage applications.

FY26 Performance

• Revenue from the battery business increased by 2.31x over FY25, reflecting improving business momentum.

• Strengthened focus on stationary storage segment, with increased traction in solar, Inverter & ESS markets.

• Mass production of E3W batteries started through contract manufacturing.

• Enhanced product reliability and performance through continuous R&D and quality improvements in battery pack design and BMS integration.

• Continued efforts towards reducing operational losses and moving towards financial stability.

Outlook & Strategic Focus

• Achieve profitability by focusing on high-value and premium customers.

• Strengthening its market presence in Inverter and solar ESS segments.

• Enhance operational efficiency through better capacity utilization and process improvements.

• Drive growth through Prismatic line capacity expansion.

• Continue investing in innovation, product development, and customer-centric solutions.

Overall Outlook

PPAP is entering its next phase of growth with a stronger business portfolio, a simplified Group structure and an expanding presence across both automotive and non-automotive markets. While the Automotive Parts business will continue to be the Companys core growth engine, increasing contributions from the aftermarket, tooling, industrial products and battery businesses are expected to create a more diversified and resilient revenue base. At the same time, the transition towards electric mobility, increasing vehicle technology content and rising demand for premium automotive components are expected to create new opportunities for long-term value creation.

The Companys strategic focus remains on strengthening customer relationships, expanding its product portfolio, improving operational efficiency and leveraging its engineering capabilities to address emerging mobility trends. Backed by a healthy order pipeline, diversified manufacturing footprint and continued investments in technology and innovation, PPAP is well positioned to enhance its competitive strength and deliver sustainable growth in the years ahead.

Financial Performance-standalone

• Revenue remained stable during FY26, registering a marginal decline of 0.3% compared with FY25, demonstrating the Companys resilience amid the prevailing business environment.

• Gross margins improved to 44.38% in FY26 from 42.8% in FY25, indicating better product mix and raw material cost efficiencies.

• PAT increased to 33.40 crore in FY26 from 14.09 crore in FY25, primarily driven by the Companys transition out of the Joint Venture structure, which contributed to improved profitability during the year.

Note: Significant changes in key financial ratios along with explanation forms part of note no. 46 of the standalone financial statement.

Opportunities and Threats

i. Electric Vehicle (EV) Adoption

Accelerating EV penetration creates opportunities for lightweight plastic components, sealing solutions, battery- related products, and new product development. Government incentives and investments in charging infrastructure are expected to support long-term growth.

ii. Shift Towards Premiumisation

Growing consumer preference for premium vehicle features is increasing demand for high-quality plastic, sealing, and aesthetic components. PPAPs technical capabilities position it well to benefit from this trend.

iii. Technology and Product Innovation

Adoption of advanced materials, automation, and precision manufacturing can enhance competitiveness and enable development of higher-value products.

iv. Automotive Industry Cyclicality

Demand for automotive components remains closely linked to vehicle production volumes, which can be affected by economic slowdowns and consumer sentiment.

v. Supply Chain Disruptions

Geopolitical developments, logistics constraints and global trade uncertainties may affect production schedules and costs. Risks and Challenges

The Company operates in an increasingly complex business environment that requires continuous focus on operational efficiency, quality, cost competitiveness, and regulatory compliance. As a preferred supplier to leading automotive OEMs, maintaining stringent quality standards, timely delivery, and cost optimization remains critical to sustaining long-term customer relationships.

The Company is exposed to risks arising from fluctuations in raw material prices and inflationary pressures, which may impact profitability. In addition, increasing customer expectations for cost reduction and product development necessitate ongoing investments in manufacturing excellence, automation, and process improvements.

The automotive component industry is also witnessing heightened compliance requirements relating to environmental, social, governance (ESG), safety, and sustainability standards. Adapting to evolving regulations while maintaining operational efficiency presents an ongoing challenge.

Further, attracting, developing, and retaining skilled talent, safeguarding information systems against cybersecurity risks, and ensuring business continuity across manufacturing operations remain key focus areas. The Company continues to strengthen its risk management framework and internal controls to effectively identify, monitor, and mitigate these risks.

Internal Control System and their adequacy The Company has a robust internal control framework, designed to ensure the orderly and efficient conduct of its business operations, safeguard its assets, prevent and detect frauds and errors, ensure accuracy and completeness of accounting records, and facilitate timely preparation of financial information.

The internal control systems are aligned with statutory requirements as well as industry best practices. These systems are continuously reviewed and monitored by the management, and their effectiveness is periodically evaluated by the Internal Auditor, which reports directly to the Audit Committee of the Board. The Audit Committee reviews the internal audit findings, monitors the implementation of audit recommendations, and ensures that corrective actions are taken promptly to strengthen the control environment.

The internal control framework is adequate and effective in mitigating operational, compliance, and financial risks, thereby supporting the achievement of the Companys objectives.

Human Resource

Our people remain the cornerstone of our success, and we continue to foster a high-performance culture built on the pillars of Learning, Collaboration, and Continuous Improvement. As on 31^st March 2026, PPAP had a permanent workforce of 1,736 employees across its operations.

During FY26, the Human Resources function undertook several strategic initiatives aimed at strengthening organizational capabilities, enhancing employee experience, and building a future-ready workforce. Key initiatives undertaken during the year include.

• The recruitment framework was further strengthened through the onboarding of specialized hiring agencies, centralized recruitment processes through HROne and adherence to defined Turnaround Time (TAT) benchmarks.

• A comprehensive campus recruitment drive was conducted for the induction of Graduate Engineer Trainees (GETs), Senior Graduate Engineer Trainees (S-GETs), and Management Trainees across various locations of the Company, strengthening the Companys talent pipeline.

• A standardized induction programme was implemented across all locations to ensure a consistent and engaging onboarding experience for new employees.

• The Department Buddy initiative was introduced to facilitate smoother integration of new employees, accelerate their learning curve, and enable faster assimilation into the organization.

• A structured training and development framework was established for GETs, S-GETs, and Management Trainees, supported by rotational learning plans, periodic evaluations, and monthly governance through A3-based learning assessments.

• The Company initiated the implementation of a Learning Management System (LMS), representing a significant step towards creating a digitally enabled and scalable learning ecosystem.

• The Performance Management System was successfully digitized through the HROne platform, enabling process automation, improved transparency, and real-time performance tracking. Further, standardized organization structures and reporting frameworks were implemented across the Group to enhance governance, organizational visibility, and operational alignment.

Going forward, the Companys HR strategy will continue to focus on Digital Transformation, Capability Building, Leadership Development, and Strengthening Talent Pipelines. These initiatives will play a pivotal role in supporting PPAPs long-term growth objectives while fostering a culture of excellence and creating sustainable value for all stakeholders.

Safety, Health, and Environment

At PPAP, sustainability and responsible business practices are integral to the way we operate, guiding our efforts to create long-term value while protecting the environment and ensuring the safety and well-being of our employees. We recognise our responsibility as a manufacturing organisation to minimise our environmental footprint, conserve natural resources and provide a safe and healthy workplace across our operations.

Our approach is centred on continual improvement, regulatory compliance and efficient resource management. We remain committed to complying with all applicable environmental, health and safety laws, regulations and statutory requirements, while continuously strengthening our practices beyond compliance. Our key focus areas include improving energy and water efficiency, reducing waste, increasing the use of renewable energy, promoting responsible consumption of resources and enhancing occupational health and safety.

During FY26, we continued to undertake several initiatives to improve our environmental performance and resource efficiency. As part of our RE100 roadmap, solar power installations have been planned across various locations. Upon implementation, the availability of green power is expected to increase from approximately 6% to 28%, marking a significant step towards increasing the share of renewable energy in our operations and reducing dependence on conventional energy sources.

Water conservation and responsible water management also remain key priorities. A new Sewage Treatment Plant (STP) was commissioned at Pathredi, Rajasthan location, strengthening our water management and reuse practices and enabling more efficient utilisation of water resources.

On the product sustainability front, Life Cycle Assessment (LCA) verification has been completed for one Hyundai component, providing insights into its environmental impact across its life cycle. LCA verification for additional components is currently underway, which will further support our efforts to integrate sustainability considerations into product development and manufacturing.

Our commitment to responsible operations is further reinforced through adherence to internationally recognised management system standards, including:

• IATF 16949:2016 - Automotive Quality Management System, supporting consistent product quality and customer satisfaction;

• ISO 14001:2015 - Environmental Management System, supporting effective environmental management and compliance;

• ISO 45001:2018 - Occupational Health and Safety Management System, promoting a safe and healthy workplace; and

• ISO 50001:2018 - Energy Management System, driving continual improvement in energy performance and efficiency.

These management systems are subject to regular audits and validation by accredited independent certification bodies, reinforcing our commitment to quality, environmental protection, workplace safety, energy conservation and continual improvement. Looking ahead, we will continue to advance our sustainability agenda through greater adoption of renewable energy, enhanced water conservation and reuse, improved energy efficiency and broader integration of sustainability considerations across our operations and products. We are also planning to pursue ISO 37001 certification for Anti-Bribery Management Systems, reinforcing our commitment to ethical business conduct and responsible governance.

Through these initiatives, PPAP remains focused on balancing business growth with environmental stewardship, workplace safety and responsible resource utilisation, while creating sustainable long-term value for our stakeholders.

Cautionary Statement

Statements in the management discussion & analysis report describing the Companys objectives, expectations or forecasts may be forward looking within the meaning of applicable laws. Actual results may differ materially from those expressed in the statement. Crucial factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices, raw material availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.