Pritika Auto Industries Ltd Management Discussions

Forward looking statement

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to “we", “us", “our", “the Company", “Pritika " are to Pritika Auto Industries Ltd.

ECONOMIC OVERVIEW

Indian Economy Outlook

Indias economic performance in FY25 has demonstrated resilience amid global uncertainties, with real GDP growth estimated between 6.3% and 6.5%. This steady growth trajectory is underpinned by robust domestic demand, strategic public investments, and a rebound in key sectors.

Deloittes May 2025 outlook projects Indias GDP growth in the range of 6.3% to 6.5% for FY25, with expectations of 6.5% to 6.7% for FY26. This optimistic forecast is attributed to tax incentives boosting consumer spending and strong domestic demand. However, potential headwinds include global trade uncertainties and the impact of international tariff regimes.

EYs assessment aligns with this outlook, projecting Indias real GDP growth at 6.4% for FY25 and 6.5% for FY26. The firm emphasizes the importance of well-calibrated fiscal strategies that support human capital development while maintaining fiscal prudence to enhance long-term growth prospects.

On the supply side, the agriculture sector is projected to grow by 3.8%, bolstered by favorable monsoon conditions and enhanced productivity in horticulture, livestock, and fisheries. The industrial sector is expected to expand by 6.2%, supported by growth in construction activities and utilities. The services sector continues to be a significant contributor, maintaining its upward trajectory.

Inflationary pressures have moderated, with retail headline inflation softening to 4.9% during April- December 2024. The Reserve Bank of India anticipates aligning consumer price inflation with the target of around 4% in FY26. Fiscal indicators remain robust, evidenced by an 8.2% growth in capital expenditure between July and November 2024. Additionally, gross FDI inflows increased by 17.9% year-on-year, reaching USD 55.6 billion in the first eight months of FY25. Foreign exchange reserves stood at USD 640.3 billion as of December 2024, sufficient to cover 10.9 months of imports and approximately 90% of external debt.

Looking ahead, Indias economic prospects remain favorable, supported by structural reforms, infrastructure development, and a focus on self-reliance. The governments commitment to enhancing the manufacturing sector and fostering innovation positions the country for sustained growth, with aspirations to ascend to the position of the worlds third-largest economy in the coming years.

Source - HREF="https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-outlook.html">https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-outlook.html

HREF="https://www.pib.gov.in/PressReleasePage.aspx?PRID=2113316">https://www.pib.gov.in/PressReleasePage.aspx?PRID=2113316

HREF="https://www.ey.com/en_in/services/tax/india-economic-pulse">https://www.ev.com/en in/services/tax/india-economic-pulse

Indian Auto-Components Industry

The automotive components industry experienced a 11% YoY growth, reaching Rs. 3.32 lakh crore (US$ 38.4 billion) in the first half of FY25.

India has become the fastest-growing economy in the world in recent years. This fast growth, coupled with rising incomes, a boost in infrastructure spending and increased manufacturing incentives, has accelerated the automobile industry. The two-wheeler segment dominated the automobile industry because of the Indian middle class, with automobile sales standing at 23.85 million units in FY24.

Significant demand for automobiles also led to the emergence of more original equipment and auto components manufacturers. As a result, India developed expertise in automobiles and auto components, which helped boost international demand for Indian automobiles and auto components. Hence, the Indian automobile industry has a considerable impact on the auto component industry.

In 2024, India produced 100,000 electric cars and 900,000 electric two-wheelers. However, Internal Combustion Engine (ICE) vehicles still dominate with 20 million two-wheelers and 5 million cars produced.

Indias auto component industry is an important sector driving macroeconomic growth and employment. The industry comprises players of all sizes, from large corporations to micro entities, spread across clusters throughout the country. The auto components industry accounted for 2.3% of Indias GDP and provided direct employment to more than 1.5 million people. By 2026, the automobile component sector will contribute 5-7% of Indias GDP.

Robust growth

Export growth

Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2 million by 2026.

The industry is a leader in exports and provides jobs to over 3.7 crore people. In FY24, the export value of auto components/parts was estimated at US$ 21.2 billion. North America, which accounts for 33% of total exports, increased by 5%, while Europe and Asia, which account for 32% and 24% of total exports, increased by 12% and growth for Asia remained flat, respectively. The key export items included drive transmission and steering, engine components, body/chassis, suspension and braking etc.

Domestic and exports markets hold huge potential

Market potential balanced across product types

Indian Agricultural Tractor Market

The Indian agricultural tractor market is a large and growing sector, driven by the countrys predominantly agrarian economy and increasing mechanization of farming practices. The market is expected to reach a value of USD 15.3 billion by 2034, with a compound annual growth rate (CAGR) of 7.0%. Key factors contributing to this growth include government initiatives to boost agricultural productivity, rising rural incomes, and the increasing use of tractors for non-agricultural purposes like construction and transport.

The market is dominated by Indian OEMs like Mahindra & Mahindra Limited, TAFE, International Tractors Ltd (Sonalika), and Escorts Limited. International players like Deere & Company and CNH also have a notable presence. Government initiatives, including subsidies and support for farm mechanization, contribute to market growth.

The industry is witnessing a remarkable technological revolution, particularly in the realm of sustainable and smart farming solutions. In January 2024, Tractors and Farm Equipment Limited (TAFE) marked a significant milestone by introducing electric tractors equipped with auto-steer and advanced farm management systems. This innovation reflects the industrys commitment to environmental sustainability and technological advancement. Similarly, in February 2024, Sonalika Tractors launched a new range of 10 H.P. advanced heavy-duty tractors under the "Tiger" series, featuring cutting-edge technologies like CRDS and HDM+ engines, demonstrating the industrys focus on innovation and efficiency.

The industry is experiencing significant capital investments in manufacturing infrastructure, reflecting confidence in the markets growth potential. Major manufacturers are expanding their production facilities to meet the growing demand and incorporate advanced manufacturing technologies. In March 2024, Sonalika Tractors invested in two new plants in Hoshiarpur, Punjab, including a tractor assembly facility and a high- pressure foundry plant. Similarly, Escorts Kubota Ltd announced plans to invest approximately Rs 4,500 crore in a new manufacturing plant in Rajasthan, aiming to double their domestic tractor production capacity to 3.4 lakh units annually. These investments underscore the industrys commitment to enhancing production capabilities and maintaining technological leadership in the global market. Source: HREF="https://www.mordorintelligence.com/industry-reports/india-agricultural-tractor-machinery-market">https://www.mordorintelligence.com/industry-reports/india-agricultural-tractor-machinery-market

Source :https://www.mordorintelligence.com/industrv-reports/india-agricultural-tractor-machinerv-market

Segment Analysis: Engine Power

30-50 HP Segment in India Agricultural Tractors Market

The 30-50 HP segment dominates the India Agricultural Tractors market, commanding approximately 86% market share in 2024, while also being the fastest-growing segment with a projected growth rate of around 7% during 20242029. This segments prominence can be attributed to its optimal balance of power and cost-effectiveness for Indian farming conditions. With the average size of household ownership decreasing and farm holdings seeing a downward trend, these compact tractors prove viable and efficient for small farm holdings while being key to increasing productivity. The segments growth is further supported by continuous product innovations from major manufacturers. For instance, in November 2022, VST Tillers Tractors Ltd and Zetor Tractors launched new tractor models with 40 & 50 HP engine capacities, addressing the specific needs of Indian farmers. The low cost of these tractors compared to higher horsepower variants, coupled with their fuel efficiency and versatility in handling various agricultural tasks, makes them particularly attractive to small and marginal farmers who constitute the majority of Indias farming community.

Remaining Segments in Engine Power Segmentation

The other segments in the market include Under 30 HP, 51-80 HP, and Above 80 HP tractors, each serving specific agricultural needs. The Under 30 HP segment caters to small-scale farming operations and specialized applications like horticulture and gardening, offering compact and manoeuvrable solutions for smaller land holdings. The 51-80 HP segment serves medium to large-scale farming operations, providing enhanced power for heavy-duty agricultural tasks and specialized farming applications. The Above 80 HP segment, while representing a smaller portion of the market, plays a crucial role in large-scale commercial farming operations and specialized agricultural applications requiring significant power output. These segments complement each other by addressing diverse farming requirements across different land holding sizes and agricultural applications throughout India.

Segment Analysis: Drive Type

Two Wheel Drive Segment in India Agricultural Tractors Market

The Two Wheel Drive segment dominates the India Agricultural Tractors market, holding approximately 86% market share in 2024. These tractors are predominantly used in dry farming conditions where fields are not excessively muddy, sloped, or wet, making them ideal for operations like sowing seeds, spraying fertilizers and pesticides, and topping pastures. Two-wheel drive tractors have gained significant popularity among small and marginal farmers due to their cost-effectiveness, affordability, and improved maneuverability. These tractors are particularly efficient in fuel consumption, typically using between 2 to 5 Liters per hour depending on engine size and working conditions. Major manufacturers like Sonalika, Mahindra and Mahindra, John Deere, Swaraj, and Eicher have strengthened their market position by offering innovative two-wheel drive tractors that cater specifically to the Indian agricultural landscape. The segments dominance is further reinforced by these tractors ability to handle basic farming activities effectively while maintaining lower operational costs compared to their four-wheel counterparts.

Four Wheel Drive Segment in India Agricultural Tractors Market

The Four-Wheel Drive segment is emerging as the fastest-growing category in the India Agricultural Tractors market, projected to grow at approximately 7% CAGR from 2024 to 2029. These tractors are specifically engineered for challenging terrains and demonstrate superior performance in harsh, wet, and muddy farmland conditions. The segments growth is driven by their versatility in performing multiple agricultural tasks beyond basic farming activities, including crop protection, loading, and construction work, thereby reducing the need for additional equipment purchases. Four-wheel drive tractors are particularly valued for their ability to efficiently operate several heavy-duty implements like cultivators and loaders, contributing to increased overall productivity while maintaining quality standards. Major manufacturers are actively investing in research and development to enhance these tractors capabilities, as evidenced by John Deeres launch of the 5045 D PowerPro 4WD in 2023, which specifically addresses the needs of Indian farmers by improving agricultural efficiency and reducing labor requirements.

Segment Analysis: Application

Row Crop Tractor Segment in India Agricultural Tractors Market

The Row Crop Tractor segment dominates the India Agricultural Tractors Market, holding approximately 34% market share in 2024. These agricultural tractor machineries are specifically tailored to grow crops that meet all agricultural demands, such as plowing, harrowing, levelling, pulling seed drills, weed control, and running various machines like water pumps and belt pulley threshers. The segments prominence is driven by the increasing unavailability of farm laborers and growing mechanization of agriculture. Row- crop tractors are provided with replaceable driving wheels of different tread widths and have high ground clearance to prevent crop damage. The increasing demand for power, precision, handling, and efficiency has shaped the development of the row crop tractor segment in India. Major players in the market are investing heavily in R&D work to develop innovative equipment and maintain a strong market foothold, with several new models being introduced featuring advanced technologies like integrated car-like headlamps, compact packaging with underhood mufflers, stylish SMC bonnets, and digital clusters. Additionally, the segment is projected to grow at the fastest rate of approximately 7% during 2024-2029, driven by these tractors versatility as all-rounders and their effectiveness as substitutes for manual labor.

Remaining Segments in Application Segmentation

The other segments in the India Agricultural Tractors market include Orchard Tractors and Other Applications. Orchard tractors are specifically designed for creating and maintaining lawns, gardens, fruit crops, vines, and specialized agricultural operations. These utility tractors are light and compact, with a small turning radius drive that provides better traction for operation across terrains. The Other Applications segment encompasses utility tractors, which are general-purpose machines used for various agricultural operations, including small- and medium-sized farms and specialty agricultural industries such as dairy and livestock. These tractors are designed for tasks such as plowing and driving other types of equipment through their drives, offering features like compact design, user-friendly interfaces, and limited space requirements. Both segments contribute significantly to the markets diversity by catering to specific agricultural needs and operational requirements across different farming applications.

Source: https://www.mordorintelligence.com/industrv-reports/india-agricultural-tractor-machinerv- market

About Pritika Auto Industries Ltd.

Pritika Auto Industries Ltd. is a flagship company of the Pritika Group of Industries which was set up in 1974 by Mr. Raminder S. Nibber, manufacturing small forgings. Over the last five decades and under Mr. Nibbers visionary leadership, the Company has established itself as a robust and reliable brand in its market, specializing in machined castings and automotive components. A quality driven organization, Pritika produces world class components from modern facilities. Pritika has manufacturing facilities situated at Derabassi, Hoshiarpur and Mohali (Punjab), and Tahliwal (Himachal Pradesh) with a total capacity of over 75,000 metric tons per annum (MTPA).

Catering primarily to tractors and commercial vehicles, Pritika focuses on expanding and diversifying its product portfolio. The Company manufactures a wide range of products such as axle housings, wheel housings, hydraulic lift housings, end cover, plate differential carrier, brake housings, cylinder blocks, and crank cases, among others. Pritika is one of the biggest component suppliers in the tractor segment of the automobile industry in India and supplies to OEMs like M&M, Swaraj Engines Ltd, TAFE, Escorts, SML Isuzu, TMTL, Ashok Leyland, New Holland Tractors India Ltd., Brakes India etc. The Companys vision is to provide products which meet customers quality requirement constantly at competitive prices.

CONSOLIDATED FINANCIAL OVERVIEW -

The consolidated performance of the Company for the financial year ended March 31, 2025, is as follows:

•Production volumes for FY25 was at 40,286 tons, as against 36,772 tons in FY24, YoY growth of 9.56%

•Net Revenue for the year ended was Rs. 356.89 crore in FY25, as against Rs. 342.09 crore in FY24

•EBITDA (Earnings before interest, tax, depreciation & amortization and excluding other income) was at Rs. 57.15 crore in FY25 as against Rs. 52.48 crore in FY24, YoY growth of 8.90%.

•Profit after Tax was at Rs. 23.90 crore in FY25, while Basic EPS stood at Rs. 1.03 in FY25.

RESOURCES AND LIQUIDITY

As on March 31, 2025, the consolidated net worth stood at Rs. 256.66 crore and the consolidated debt was at Rs. 169.32 crore.

The net debt to equity ratio of the Company stood at 0.66 as on March 31, 2025.

BUSINESS PERFORMANCE

Pritika registered growth of 4.32% in revenue clocking a turnover of Rs.356.89 cr in FY25. The Company produced 40,286 tons of machined casting during the year. About 92-93% of the revenue was contributed by the tractor components segment while the rest was from the commercial vehicle segment. With capacity in place, Pritika is focusing on higher production and better utilization in future, based on a good order book. The Company is also adding high-value products and trying to improve operational efficiencies, while expanding export revenues.

The Company is dealing in single segment i.e. manufacturing of Automotive Components / parts.

DEVELOPMENTS IN BUSINESSES DURING THE YEAR:

During the year, Company commenced commercial production of a range of critical tractor components, including hydraulic lift housings, axle housings, differential assemblies, and various structural and precision-engineered parts, for leading global and domestic OEMs. In addition, we secured multiple longterm contracts with leading industry players, including major orders from a prominent tractor manufacturer and various component-specific projects. These orders, secured from multiple prominent tractor manufacturers, reflect long-term engagements and span across a multi-year horizon. The contracts offer strong revenue visibility and reinforce the Companys position as a trusted supplier of high-quality components to the agricultural equipment sector. The ramp-up in production for these projects marks a strategic milestone in broadening our OEM customer base and enhancing our footprint in the tractor component market.

KEY FINANCIAL RATIOS:

EBITDA margin and PAT Margins improved 67 bps and 177 bps, respectively, as compared to immediately previous year ended 31^st March 2024.

Return on Networth has decreased to 6.05% in FY2025.

There were no significant change i.e. 25% or more in the key Financial Ratio except the following:

Particulars	Year ended 31.03.205	Year ended 31.03.2024	Change
Net Profit Margin %	4.97%	3.93%	26.49%

The change in the above ratio is due to profit on sale of investment in equity shares.

RISKS AND CONCERNS

The company encounters various risks, both internal and external, as it conducts its daily operations and works towards its long-term goals. A comprehensive policy is developed, and dedicated risk workshops are conducted for each business vertical and key support functions. These workshops focus on identifying, assessing, analyzing, and either accepting or mitigating risks to a level deemed acceptable within the organizations risk appetite. The risk policy undergoes periodic reviews to ensure its effectiveness and relevance.

The Company faces the following Risks and Concerns:

Economy and Market Risk

The Companys expansion is closely tied to the cyclical nature of the agricultural and automotive sectors. The fluctuations in the Indian commercial vehicle and tractor industries directly influence the demand for associated components. Given the significant impact of the automotive sector on economic growth, any downturn in the overall economy would have repercussions on the commercial vehicle industry.

Credit Risk

Pritika has established a credit policy to handle its credit exposure, including procedures for credit limit requests and approvals. The company conducts thorough research on clients financial health and project potential. It diligently follows up with clients to ensure payments are made according to schedule. The company has optimized its processes to create a targeted and proactive receivables management system, ensuring collections are received on time.

Interest Rate Risk

The company has effectively handled its debt-equity ratio by employing a combination of loans and internal cash flows. It has also efficiently managed its working capital to maximize cost optimization in terms of overall interest expenses.

Contractual Risk

Pritika adheres to a rigorous procedure for assessing the legal risks associated with contracts and determining its legal obligations according to relevant contract laws. It meticulously evaluates worst-case scenarios and, as a strategic measure with input from advisors, incorporates stringent terms to limit liabilities to the fullest extent feasible.

Competition Risk

As is typical across industries, growth prospects bring about increased competition. We encounter competition at various levels, including from domestic and multinational firms. Pritika has established distinct advantages in project execution, quality, and timely delivery, making it resilient against competitive pressures. Additionally, the company maintains a competitive edge through ongoing investments in technology and employee development. Our robust and enduring client base, consisting of both large and mid-sized enterprises, contributes to a healthy order backlog and shields the company from this risk. We also mitigate this risk through our focus on infrastructure quality, customer-centric approach, and innovative solutions tailored to customer needs, supported by competitive pricing and an assertive marketing strategy. Our disciplined project management practices, along with prudent financial and human resource management and cost control measures, further strengthen our resilience against competitive challenges. Therefore, we anticipate minimal impact from this risk.

Input Cost Risk

Changes in raw material prices, power costs, and other input expenses could impact our profitability and cost efficiency. These risks, particularly those related to raw material pricing and power availability, are potentially significant and require vigilant monitoring.

OPPORTUNITIES

•Rising Agricultural Sector Growth

•Strong Order Book from OEMs

•Supportive Government Policies for Agriculture

•Expanding Commercial Vehicle Market

•Export Potential & Global OEM Partnerships

•Rural Growth and Agri Mechanization

•Backward Integration & Cost Efficiency

•Utilization of Tractors Beyond Agriculture

•Investment Opportunities and Increased FDI

THREATS

•Competitive pressure from both local and global competitors

•Economic volatility and regulatory shifts affecting market demand and profitability

•Technological progress potentially rendering current products outdated

•Vulnerability of the agricultural sector to adverse weather conditions and monsoons

•Fluctuating labor and raw material expenses posing risks

•Challenges in attracting and retaining skilled workforce

•Potential slowdown across the agricultural industry

INTERNAL CONTROL SYSTEMS AND ADEQUACY

For the purposes of effective internal financial control, Pritika has adopted various policies and procedures to ensure orderly and efficient conduct of its business, including adherence to companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.

There has not been any significant change in such control systems. The control systems are reviewed by the management regularly. The same are also reviewed by the Statutory Auditors and Internal Auditors from time to time. Additionally, the Company has adopted various policies and procedures to safeguard its interest. These policies and procedures are reviewed from time to time. A proper reporting mechanism has been implemented in the organization for reporting any deviation from the policies and procedures. Compliance audit is conducted from time to time by external agencies on various areas of operations.

HUMAN RESOURCES

Pritika has Human Relations and Industrial Relations policies in force. These are reviewed and updated regularly in line with the Companys strategic plans. The human relations team continually conducts training programs for talent development. The Company aims to develop the potential of every individual associated with it as a part of its business goal. Pritika leverages a mix of experienced as well as young talent to drive growth.

The company values its human resources as the principal drivers of change. The Company focuses on providing individual development and growth in a work culture that encourages team work and high performance.

As on March 31, 2025, the Company had a workforce of 1449 (permanent and contractual).

OUTLOOK

Pritika Auto Industries remains strong, underpinned by robust order inflows, strategic client additions, and long-term business visibility. During FY25, the Company secured multiple large-scale, multi-year contracts from leading domestic and global tractor OEMs. These wins reinforce Pritikas position as a key supplier in the high-volume agricultural equipment segment and significantly enhance its order book resilience.

Company achieved record dispatch volumes and commenced commercial production of several high-value components, including axle housings, hydraulic cylinders, and intermediate housings. Capital raised through warrant conversions and preferential issues has strengthened the balance sheet, supported capacity expansion, and will fund future growth initiatives.

Looking ahead to FY26, Pritika Auto is well-positioned to capitalize on favorable industry trends, including sustained rural infrastructure development, increasing farm mechanization, and policy support under the Make-in-India initiative. Expansion into high-potential sectors such as Railways and Defence, along with the development of value-added, heavy-duty components, is expected to drive revenue diversification and margin enhancement. Company is targeting 15-20% revenue growth, supported by strong OEM demand, increasing capacity utilization, and new product additions.

Operational efficiency, backward integration, and cost optimization will continue to be focus areas to maintain profitability amid potential raw material volatility. While cyclical risks in the tractor and commercial vehicle sectors persist, a diversified client base and long-term contracts offer a strong cushion.

With a clear roadmap, modernized infrastructure, and a committed leadership team, Pritika Auto Industries is poised to deliver steady volume growth, improved operating performance, and long-term value creation for all stakeholders.