Precision Camshafts Ltd Management Discussions

Global Economy

After a modest 3.3% expansion in CY2024, the global economy entered CY2025 on relatively stable footing. However, that sense of balance is quickly unraveling as nations recalibrate their economic strategies in response to intensifying geopolitical frictions and mounting financial headwinds.

In a bold policy pivot, the US has enacted sweeping new tariffs, triggering immediate and robust retaliatory measures from major trade partners. These escalations culminated in the rollout of near-universal tariffs on April 2—catapulting global tariff levels to their highest point in over a century. The abrupt spike has delivered a jarring blow to global growth, stalling momentum across key economies.

The rapid and unpredictable nature of these policy shifts has further amplified economic uncertainty. Traditional forecasting tools are now struggling to capture the volatility, as previously reliable models falter in this fast-changing environment.

Meanwhile, global headline inflation—once expected to cool more decisively—is now projected to decelerate at a slower pace. Inflation is forecast to ease to 4.3% in CY2025 and drop further to 3.6% in CY2026. This adjustment reflects upward revisions for advanced economies, only slightly tempered by downward tweaks in emerging and developing markets.

Concerns are intensifying over growing vulnerabilities in the global financial system, with emerging markets and non-bank financial institutions (NBFIs) under particular strain. A blend of market volatility, overstretched asset valuations, and persistently high corporate debt levels is clouding the financial outlook and challenging investor confidence. Central banks now find themselves walking a tightrope, tasked with reining in inflation while avoiding the spark of financial instability. The stakes are especially high for emerging market economies, which are bearing the brunt of tightening global conditions.

Surging sovereign debt-servicing costs, accelerating capital flight driven by widening interest rate gaps, and weakening currencies are converging to deepen inflationary pressure and expose structural economic weaknesses. These dynamics heighten the risk of sudden investment stoppages and episodes of debt distress.

Without swift multilateral intervention and the deployment of robust, preemptive debt resolution mechanisms, financial strain in these vulnerable economies could rapidly escalate, posing spillover risks to the broader global system.

(Source: https://www.imf.org/en/Publications/ WEO/Issues/2025/04/22/world-economic-outlook-april-2025)

Outlook

Amid mounting global economic headwinds, there lies a pivotal opportunity to build stronger foundations for long-term resilience. The adaptability demonstrated by many economies under stress reveals that recovery is within reach, provided that governments act decisively with coordinated policies and strategic reform.

By collectively fostering a transparent and stable trade environment, accelerating debt resolution efforts, and tackling structural inefficiencies, nations can lay the groundwork for a more balanced and inclusive recovery. Reinforcing this progress requires clarity in monetary policy, agile deployment of macroprudential tools, and the implementation of credible, forward-looking fiscal strategies.

International cooperation will be the linchpin of success. Through aligned policy actions, bold leadership, and a renewed commitment to multilateralism, the global economy can regain its footing, restore critical buffers, and unlock fresh opportunities for sustainable prosperity across regions.

Indias growth rate is reported at 6.5% in FY 2024-25, as per the recent advance estimates of national accounts released by National Statistical Office. This optimistic projection highlights the nations resilience amid global economic uncertainty, supported by sound domestic fundamentals and proactive policy measures. Furthermore, stable consumption patterns, improving labour market dynamics, and macroeconomic stability continue to strengthen Indias growth trajectory, with agriculture and services emerging as key contributors.

As global trade disruptions and tariff shocks loom large in CY2025, India stands out as a symbol of resilience. Fuelled by a reinvigorated manufacturing sector and bold infrastructure upgrades, the Indian economy is radiating energy and forward momentum. Despite domestic consumption making up nearly 70% of GDP—typically a pressure point during inflationary cycles—India has recently outperformed both advanced and emerging peers in maintaining price stability. This achievement reflects a well-calibrated policy mix, disciplined fiscal stewardship, an increasingly agile central bank, and a more robust, evolving financial architecture.

Indias external sector adds another layer of strength. Between April and December 2024, total exports posted a solid 6.0% year-on-year increase, with booming services exports helping India secure the seventh-largest share in global services trade. With import growth kept in check and net exports making a meaningful contribution to real GDP, the trade balance highlights the payoff from sound macroeconomic management—including proactive inflation control, fiscal restraint, and strategic monetary easing.

There is growing confidence that if India can continue scaling up its manufacturing base, it will not only strengthen its own growth trajectory but also create opportunities for international firms to better manage global risk. In many ways, this shift represents a logical extension of Indias early success in IT services—now moving further along the value chain into high-impact manufacturing.

Outlook

India is on track to surpass Japan and emerge as the fourth-largest economy globally in CY2025, a milestone underscoring its growing economic clout. For FY 2025–26, the outlook remains cautiously optimistic as the country navigates a turbulent global backdrop shaped by geopolitical tensions, trade realignments, and persistent commodity price swings.

Domestically, sustaining growth momentum will hinge on reinvigorating private investment, reviving consumer sentiment, and accelerating corporate wage expansion. A rebound in agriculture, easing food inflation, and ongoing macroeconomic stability are expected to fuel a revival in rural demand, which is an essential pillar of inclusive growth.

Looking ahead, Indias ability to unlock medium-term potential will depend on bold structural reforms aimed at enhancing global competitiveness. Streamlining regulations at the grassroots level and fostering a more business-friendly environment will be critical to buffering external shocks and anchoring long-term economic resilience.

The global automotive industry stood at USD 3,564.67 billion in 2023. Further, it is set to advance at a compound annual growth rate of 6.77% from CY2023 to CY2033. By the end of the forecast period, the market is anticipated to touch USD 6,861.45 billion.

Light vehicle sales worldwide stood at 84.0 million units in CY2024, with projections placing CY2025 numbers at 85.1 million units. This reflects a Y-o-Y increase of 1.3%. Regionally, the Asia-Pacific continues to dominate, accounting for nearly half of the global market share. Although Internal Combustion Engine (ICE) vehicles still hold the majority share, the Hybrid Electric Vehicle (HEV) segment is gathering pace and is estimated to grow at a rapid pace of 20–25% between CY2024 and CY2025.

In alignment with global zero-emission targets, Original Equipment Manufacturers (OEMs) are significantly increasing investments in electric vehicle (EV) infrastructure. As a result, over USD 500 billion is set to be invested in EV production capabilities by 2030. Furthermore, by 2025, at least 10 new manufacturing plants from various OEMs are expected to commence operations.

Several automakers are spearheading the shift, establishing new facilities dedicated to next-generation EV models. The cost of lithium-ion batteries, a key component in EVs, is expected to fall below USD 100 per kWh by 2025. This will further improve affordability and speed up adoption. Moreover, OEMs are proactively diversifying and strengthening their battery supply chains to mitigate risks associated with raw material disruptions.

(Source: https://www.marketsandmarkets.com/ Market-Reports/global-automotive-industry-outlook-77960341.html)

Indian Automotive Industry

The Indian automobile industry has long served as a reliable barometer of the nations economic health, given its significant contribution to macroeconomic growth and role in driving technological innovation.

Reflecting this foundation, the Indian passenger car market is set for steady growth, with a projected market size of USD 42.72 billion in CY2025. By CY2029, it is expected to reach USD 53.04 billion, reflecting a compound annual growth rate (CAGR) of 5.56% from CY2025 to CY2029. This upward trajectory is underpinned by a combination of technological innovation, infrastructure development, and shifting consumer preferences.

(Source: https://www.mordorintelligence.com/ industry-reports/india-passenger-car-market-outlook)

The evolving market space is increasingly shaped by the integration of advanced technologies across vehicle segments. Automakers are incorporating innovative features like connected car systems, enhanced safety technologies, and fuel-efficient solutions. The EV segment, in particular, has gained significant traction, supported by substantial improvements in charging infrastructure. Concurrently, leading manufacturers are making substantial investments in research and development (R&D), advancing innovations such as advanced driver assistance systems (ADAS), and connected mobility solutions. Consumer behaviour is also transforming rapidly, with a clear inclination towards premium features and larger vehicles, especially SUVs. In response, the Indian automotive sector has broadened its range, offering a wider variety of vehicles at different price points to meet the needs of a diverse and discerning customer base.

Projections indicate that consumer expenditure on vehicles will reach USD 114.2 million by CY2030, highlighting a robust potential for long-term growth. This shift is further propelled by the launch of new models that prioritise advanced features, improved safety standards, and superior comfort, demonstrating the industrys maturation and the increasing sophistication of consumer preferences.

(Source: https://www.mordorintelligence.com/ industry-reports/india-passenger-car-market-outlook)

Domestic Sales Trend for Automobiles (in Units)

Category	FY 2019-20	FY 2020-21	FY 2021-22	FY 2022-23	FY 2023-24	FY 2024-25
Passenger Vehicles	27,73,519	27,11,457	30,69,523	38,90,114	42,18,746	43,01,848
Commercial Vehicles	7,17,593	5,68,559	7,16,566	9,62,468	9,67,878	9,56,671
Three- Wheelers	6,37,065	2,19,446	2,61,385	4,88,768	6,91,749	7,41,420
Two- Wheelers	1,74,16,432	1,51,20,783	1,35,70,008	1,58,62,087	1,79,74,365	1,96,07,332
Quadricycles	942	(12)	124	725	725	120
Total	2,15,44,609	1,86,20,245	1,76,17,482	2,12,03,437	2,38,52,738	2,56,07,391

Bharat Mobility Global Expo,

The Bharat Mobility Global Expo 2025 emerged as a milestone event for Indias automotive and mobility sector. It highlighted the nations progress in innovation, sustainability, and global industry engagement. Held across Bharat Mandapam, Yashobhoomi Convention Centre, and India Expo Mart in Greater Noida, the event drew close to 1 million visitors, reflecting a significant leap from its maiden 2024 edition.

Inaugurated by Prime Minister Narendra Modi, the expo featured a range of specialised shows including the Auto Expo, Component Expo, Battery Show, Cycle Show, and Construction Equipment Expo. Collectively, they facilitated the launch of an impressive 239 products, underscoring the industrys commitment to electrification, green mobility, and advanced technologies.

A total of 90 new vehicles were unveiled at the Auto Expo Motor Show, many of which focussed on electric and alternative fuel options. The Component Expo highlighted 97 innovations from the supply chain, while the Construction Equipment Expo introduced 24 advanced machines, including those powered by electric or hydrogen energy. In addition, the Bharat Battery Show emphasised energy storage and fast-charging solutions. Furthermore, the Cycle Show introduced micro-mobility innovations like e-scooters and bicycles.

By spotlighting sustainable mobility, emerging technologies, and global collaboration, the Bharat Mobility Global Expo 2025 firmly positioned India as a centre for future-ready transportation solutions.

(Source: https://www.ndtv.com/auto/bharat-mobility-global-expo-2025-concludes-with-239-launches-high-footfall-7546759)

Outlook

Indias automobile industry holds immense potential to emerge as a global hub for design, development, and manufacturing, catering to international markets. This progress rests on key strategic strengths, including skilled labour at competitive costs, strong R&D capabilities, and cost-effective steel production. Moreover, the nations expertise in automotive software and engineering R&D positions it to lead in emerging technologies like zonal architecture and ADAS.

Amid this backdrop, the EV segment, in particular, presents a massive opportunity, with the potential to generate nearly 5 Crore jobs by CY2030. This growth will fuel both direct and indirect employment across skilled and unskilled labour segments, further enhancing the sectors socioeconomic impact.

To fully realise its global ambitions, the Indian automotive industry must enhance operational efficiency across the value chain, upgrade manufacturing capabilities, and transition to sustainable materials in line with evolving international regulations and global climate commitments. Furthermore, the countrys dynamic and well-funded startup ecosystem can play a pivotal role in driving innovation and offering cutting-edge solutions.

The global automotive components market is projected to exceed USD 3,429.54 billion by CY2033, recording a CAGR of 5.73% from CY2023 to CY2033. This solid growth is driven by the increasing global automobile demand, prompting the auto parts industry to innovate, improve efficiency, and deliver superior quality to meet the sectors evolving needs.

Rising urbanisation and accelerated infrastructural development, worldwide, are further fuelling industry expansion. Additionally, the surge in original equipment manufacturers (OEMs) and auto component suppliers, spurred by strong automobile demand, has enabled countries like India to develop significant expertise in vehicle and component manufacturing. This, in turn, has led to a growing international demand for India-made automobiles and parts.

The global market is also benefitting from the increasing need to replace ageing vehicles and the rapid expansion of the automotive aftermarket. Moreover, the rising emphasis on sustainability is encouraging the development and adoption of energy-efficient components and lightweight materials, further accelerating the industrys growth.

(Source: https://www.sphericalinsights.com/ reports/automotive-components-market)

The auto components sector in India has experienced substantial growth, propelled by rising automobile demand from the expanding middle class and growing global exports. This demand surge has drawn both domestic and international players, boosting the nations auto components industrys competitiveness and global presence.

The industry is divided into two main segments:

The organised sector primarily caters to Original Equipment Manufacturers (OEMs) and produces high-value, precision components.

The unorganised sector focusses on low-value parts, mainly serving the aftermarket.

Together, these segments create a dynamic and diverse ecosystem, encompassing entities of all sizes, from large corporations to small and micro enterprises, spread across manufacturing clusters nationwide.

Contributing 2.3% to Indias GDP and providing direct employment to over 1.5 million people, the auto components industry plays a vital role in driving the countrys macroeconomic growth. According to the Automotive Mission Plan (2016–26), the sector is projected to account for 5–7% of Indias GDP by 2026 and generate an additional 3.2 million direct jobs.

As the sector undergoes rapid transformation, auto component manufacturers are prioritising innovation, sustainability, and efficiency. There is a strong focus on developing lightweight materials and adopting eco-friendly production methods. In parallel, the integration of digital technologies, including data analytics, is gaining momentum to optimise operations and enhance product performance.

Looking ahead, the auto components industry will be crucial in shaping Indias future mobility. In this dynamic and competitive market, strategic partnerships with automakers, continued investment in R&D, and adaptability to evolving global regulations will be essential for sustained success.

(Source: https://www.ibef.org/industry/ autocomponents-india)

Camshaft Industry

The global automotive camshaft market was valued at USD 3.07 billion in 2024 and is projected to reach USD 4.17 billion by 2033. This growth represents a CAGR of 3.5% from 2025 to 2033. North America holds a commanding lead, contributing more than 34.2% to the global market share in 2024.

The markets momentum is driven by the following key factors:

Global vehicle production growth

Increased demand for fuel-efficient engines

Advancements in camshaft materials

Enforcement of stricter emission standards

Consumers are also showing a strong preference for high-performance, durable, and cost-effective engine components, all of which boost demand for innovative camshaft technologies.

(Source: https://www.imarcgroup.com/ automotive-camshaft-market)

Technological

Advancements: A Major Growth Driver

One of the primary growth drivers is the evolving automotive space, especially the rising demand for high-performance and eco-friendly vehicles. Automakers are increasingly incorporating advanced camshaft technologies like variable valve timing systems and lightweight materials to enhance engine efficiency, cut emissions, and comply with global regulatory requirements.

In parallel, the worldwide shift towards hybrid and electric vehicles (EVs) is reshaping the camshaft market.

While traditional camshafts are not needed for EVs, the hybrid segment still requires specialised designs for combustion components. As a result, manufacturers are investing in R&D to develop customised camshafts for hybrid powertrains.

India:

A Growing Hub for Automotive Innovation

Growth prospects are particularly strong in developing regions where automotive production is expanding at a rapid pace. Among these, India stands out as a promising hotspot within the Asia-Pacific region. With an estimated CAGR of 5.10% between 2024 and 2034, India is set to outpace numerous other markets, attracting significant interest from global players and investors. Building on this momentum, the country is on track to experience substantial growth in the automotive camshaft sector, fuelled by ongoing advancements in camshaft technology. These innovations are expected to propel demand, as domestic manufacturing scales up and the automotive sector continues to thrive.

Additionally, continuous innovation in engine design is expected to sustain demand for premium-grade, high-durability camshafts that can endure the demands of modern engines. As engine technologies evolve, the need for high-performance and long-lasting components will only increase, especially in price-sensitive and fast-growing regions like India.

(Source: https://www.futuremarketinsights. com/reports/automotive-camshaft-market#:~:text=The%20finished%20camshaft%20 module%20is,to%20translate%20to%20 significant%20volumes.)

The US:

A Key Market Disruptor

The US plays a central role in shaping global camshaft market trends. With a strong automotive sector and a focus on advanced, eco-friendly technologies, the country has become a key disruptor. US-based companies are spearheading innovations in lightweight, high-performance camshaft designs, utilising technologies like variable valve timing to meet fuel efficiency and emission targets.

As the US accelerates its shift towards electric and hybrid vehicles, automakers are prioritising next-generation camshaft solutions for hybrid systems. This transformation, alongside significant investments in R&D and a robust policy push for emission reductions, positions the US as a major influence on the markets future trajectory.

(Source: https://www.imarcgroup.com/ automotive-camshaft-market)

Company Overview

Precision Camshafts Limited (hereafter referred to as ‘PCL or ‘The Company) has established itself as a globally recognised leader in camshaft manufacturing, offering a diverse range of products under one roof. Founded in 1992, the Company has grown into a dominant force in the industry, driven by its commitment to quality, adherence to world-class production standards, and continuous pursuit of improvement.

Built on a solid engineering and R&D base, PCL has broadened its expertise to deliver comprehensive automotive solutions. Through its subsidiaries—Memco Engineering Private Limited, MFT Motoren und Fahrzeugtechnik GmbH, and Emoss Mobile Systems B.V., the Company serves both automotive and non-automotive sectors, providing electric mobility solutions to leading OEMs.

The Company is committed to customer-focussed innovation, swiftly addressing industry demands. PCL also values its employees and actively upholds sustainability and corporate social responsibility, reinforcing its long-term commitment to responsible growth.

PCLs first-ever annual offsite, Lakshya 2030, was held from March 4 to March 8, 2024, across Solapur and Mahabaleshwar. The event aimed to lay the groundwork for the Companys long-term strategic objectives. Initial sessions in Solapur concentrated on strengthening operations and promoting interdepartmental collaboration. These were followed by a move to Mahabaleshwar, where the emphasis shifted to aligning teams and fostering a unified ambition. Collectively, these sessions played a pivotal role in uniting efforts towards a shared future for the Company.

Financial Overview

Standalone and Consolidated

(in Rs. Lakhs)

	Standalone		Consolidated
Particulars	For the Year Ended March 31, 2025	For the Year Ended March 31, 2024	For the Year Ended March 31, 2025	For the Year Ended March 31, 2024
Total Revenue	63,827.31	70,0026.71	89,493.81	1,05,976.30
Total Expense	52,670.94	56,063.45	78,442.48	93,094.37
Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA)	11,156.37	13,963.26	11,051.33	12,881.93
Profit before Tax (PBT) and Exceptional Items	7,159.45	9,950.99	4,826.47	4,187.98
Exceptional Items	(3,508.00)	0.00	3,486.89	1,829.19
PBT	3,651.45	9,950.99	8,313.36	6,017.17
Total Tax Expense	2,915.72	2,110.00	2,902.85	1,981.86
Profit/Loss for the Year	735.73	7,840.99	5,410.50	4,035.31
EPS (Basic) (in Rs.)	0.77	8.25	5.70	4.25
EPS (Diluted)(in Rs.)	0.77	8.25	5.70	4.25

Standalone

In the financial year under review, the Company achieved a standalone revenue of Rs. 63,827.31 Lakhs, compared to Rs. 70,0026.71 Lakhs in 2023-24. The Profit after tax (PAT) for the year amounted to Rs. 735.73 Lakhs, in contrast to Rs. 7,840.99 Lakhs recorded in the previous year.

Consolidated

On a consolidated basis, PCL reported total revenue of Rs. 89,493.81 Lakhs, against Rs. 1,05,976.30 Lakhs in the preceding year. Profit after tax stood at Rs. 5,410.50 Lakhs, compared to

4,035.31 Lakhs recorded in the previous year.

Disclosure of

Accounting Treatment

While preparing its financial statements, the Company followed the prescribed accounting treatment under applicable Accounting Standards. Therefore, the financial statements require no further disclosure or explanation from the management.

Key Financial Ratios on Standalone Basis

Ratio	FY 2024-25	FY 2023-24	% Change	Reasons for Change by 25% or More
Debtors/Trade Receivables Turnover Ratio	4.24	4.75	(10.74)	NA
Creditors/Trade Payables Turnover Ratio	5.00	4.94	1.14	NA
Inventory Turnover Ratio	2.70	2.86	(5.41)	NA
Net Capital Turnover Ratio	1.56	2.07	(24.69)	NA
Return on Investment	7.00	9.00	(17.44)	NA
				The decline in the Debt Service Coverage Ratio during the current year is primarily due to the following:
Debt Service Coverage Ratio/ Interest Coverage Ratio	11.65	36.96	(67.61)	A reduction in earnings before interest, tax, depreciation, and amortisation (EBITDA), driven by lower operational performance; and the impact of exceptional items during the year (refer to Note 26A), while the debt repayment obligations remained unchanged.
Current Ratio	3.58	3.12	14.70	NA
Debt Equity Ratio	0.08	0.07	20.12	NA
Operating Profit Margin	11.00	14.00	(21.00)	NA
Net Profit Ratio	1.00	12.00	(89.66)	A decrease in net profit is majorly driven by lower operational performance and the impact of exceptional items during the year.
				The decline in the Return on Equity (ROE) ratio during the current year is primarily attributable to the following:
Return on Net Worth	0.83	9.17	(90.97)	- A decrease in net profit, driven by lower operational performance and the impact of exceptional items during the year and
				- Although average shareholders equity remained consistent with the previous year, the decline in profitability resulted in a lower return on the equity base

PCL recognises potential risks that could affect both its traditional and modern operations. To manage these effectively, the Board prioritises risk oversight and designs strategic mitigation measures.

A dedicated Risk Management Committee (RMC) strengthens this effort, tasked with identifying and addressing critical risks across the organisation. These risks may span financial, operational, sector-specific, sustainability-related (including ESG), information security, cybersecurity, and other relevant concerns.

Moreover, through proactive risk management, PCL ensures business continuity and the protection of stakeholder interests, reinforcing its commitment to long-term sustainability and resilience.

The Company maintains a comprehensive HR policy covering its code of conduct, working hours, probation guidelines, internal transfers, promotions, and protocols for addressing misconduct. PCL also remains firmly committed to inclusive growth, nurturing a workplace that encourages talent development and cultivates future leaders.

To support both personal and professional advancement, the Company regularly conducts training sessions and seminars to enhance employee skills at all career stages. A strong emphasis is placed on attracting and retaining capable talent, ensuring a productive workplace. Furthermore, the Company upholds a firm commitment to equal opportunities for every employee.

As of March 31, 2025, the Company employed 818 individuals.

Internal Control Systems and Their Adequacy

PCL has established strong internal control systems suited to its scale and operations. These controls, comprising policies and procedures, safeguard assets, detect fraud, maintain accurate accounting records, and enable timely financial reporting. To maintain effectiveness, the system undergoes regular review and updates based on recommendations from the Statutory Auditors, Internal Auditors, and the Independent Audit Committee.

Operating under an SAP environment, PCL ensures end-to-end process control across procurement, manufacturing, and sales. The Company has also implemented additional measures to minimise production waste and increase efficiency.

Key aspects of PCLs internal control framework include:

Audit Committee Oversight:

The Audit Committee, comprising Independent and Executive Directors, regularly reviews audit findings, internal controls, compliance, and accounting policies.

Information Security and IT Upgrades: PCL ensures comprehensive information security and maintains well-regulated supplier and customer management systems for seamless data exchange.

Internal Audit and Compliance:

The internal audit team follows the best governance practices, providing reports on operational efficiency, compliance, and key risks to the Management and Audit Committee.

Confidentiality and Insider Trading Compliance: The Company enforces strict confidentiality of unpublished price-sensitive information, ensuring directors, senior management, auditors, and employees adhere to the Insider Trading Code of Conduct and Disclosure Policies.