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 financial statements are prepared as per the IND AS guidelines and comply with the Accounting Standards notified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015. The management of Pritika Auto Industries Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements, reflect in a true and fair manner, the state of affairs and profit for the year.

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 FY26 (2025-26) has been characterised by exceptional momentum, with real GDP growth of 7.4% — the highest projection for the fiscal year in recent years, and the fourth consecutive year in which India has retained its position as the fastest-growing major economy globally. The First Advance Estimates published by the Ministry of Statistics and Programme Implementation (MoSPI) confirmed real GDP growth at 7.4% and Gross Value Added (GVA) growth at 7.3% for FY26, underpinned by a combination of structural reforms, improved domestic demand, and supportive monetary conditions.

Inflation management emerged as a defining achievement of FY26. The Consumer Price Index (CPI) averaged approximately 2.1% for the full year — the lowest since the CPI series began — and remained within the Reserve Bank of Indias (RBI) prescribed tolerance band of 4% ? 2% throughout the year. This benign inflation trajectory was driven by sharp moderation in food prices, supported by a record kharif and rabi output, easing global commodity prices, and the positive downstream impact of GST rationalisation. The RBI responded with a cumulative 100 basis point reduction in the repo rate between April and December 2025, bringing the rate to 5.25%, injecting durable liquidity and easing financial conditions to support credit flow and investment activity.

The governments fiscal strategy was equally supportive. The Union Budget 2025-26 continued the capital expenditure-led growth push, with infrastructure spending including roads, railways, and urban development — providing a powerful multiplier for manufacturing and industrial activity. The Make-in-India initiative, the Production-Linked Incentive (PLI) schemes across 14 key sectors, and the Automotive Mission Plan 2047 collectively reinforced Indias manufacturing competitiveness.

International agencies echoed the optimism: the World Bank projected Indias growth at 6.5% for 2026; the IMF raised its FY26 projection to 6.6% under its Article IV consultation baseline assumptions; the Asian Development Bank revised its forecast to 7.2% for FY26; and Fitch lifted its FY26 projection to 7.4%, citing stronger consumer demand. The OECD and S&P respectively projected growth of 6.7% and 6.5% for FY26. The RBIs Monetary Policy Committee revised its FY26 GDP forecast upward to 7.3%, reflecting stronger-than-anticipated H1 performance.

Looking ahead, Indias structural foundations remain compelling. A young and growing workforce, the acceleration of digital public infrastructure, deepening financial inclusion, and the governments sustained commitment to infrastructure investment collectively position India as a premier destination for global capital and manufacturing activity.

Sources: Economic Survey FY2025-26 (PIB); RBI Monetary Policy Committee Reports, November-December 2025; IMF Article IV Consultation, November 2025; IMF WEO Update, July 2025; Spaisa FY26 Economic Report Card; MoSPI First Advance Estimates FY26.

URLs: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2220800   https://www.imf.org/en/News/Articles/2025/11/24/pr-25392-india-imf-executive-board-concludes-2025-article-iv-consultation   https://www.spaisa.com/blog/india-fy26-economic-report-gdp-rbi-inflation-fii-outflows

India Auto-Components Industry

Indias automotive components industry sustained its structural growth trajectory through FY25 and into FY26, reinforcing its position as a globally competitive manufacturing hub.

The industry is on track toward its ambitious target of USD 200 billion by 2030, as projected by McKinsey in its seminal report "Shaping the Future of Indias Auto Component Industry." The automotive components industry recorded aggregate turnover of Rs. 6,73,000 crore (USD 80.20 billion) in FY25. Domestic OEM supplies constituted approximately 66.2% of total turnover, with exports accounting for 22.3% and aftermarket contributing 11.5%.

(Charts showing Aggregate Turnover and Share in Turnover)

Source: https://www.ibef.org/download/1779081030_Auto-Components-February-2026.pdf

Export Growth

Indias auto component exports demonstrated strong growth momentum, rising 8% to Rs. 1,95,726 crore (USD 22.90 billion) in FY25, up from Rs. 1,81,196 crore (USD 21.20 billion) in FY24 — a CAGR of 9% since FY16. North America remained the largest export destination at 32% of total exports, recording 8.4% growth in FY25.

Asia (26% share) registered the strongest regional growth at 15.1%, while Europe (30% share) witnessed a marginal 2.1% decline. Major export categories included drive transmission and steering systems, engine components, suspension and braking parts, and body/chassis components.

(Charts showing Value of Auto Component Export and Share of Export by Geography)

Source: https://www.ibef.org/download/1779081030_Auto-Components-February-2026.pdf

McKinsey projects Indias auto component exports to reach USD 70–100 billion by FY30, driven by rising demand for electric vehicle (EV) technologies and global supply chain diversification. Indian SMEs are estimated to capture USD 20–30 billion of this export opportunity by leveraging cost advantages and improving quality standards. Indias share in the US auto component import market stands at 27%, followed by Germany at 8% and Turkey at 5%.

Aftermarket Growth

The domestic aftermarket segment maintained its healthy trajectory, reaching Rs. 99,948 crore (USD 11.77 billion) in FY25 — a 6% CAGR since FY16. The segment is projected to grow at 6% CAGR to reach USD 16 billion by 2030. The Passenger Vehicle and Commercial Vehicle segments are expected to account for USD 5 billion each, the 2-Wheeler and 3-Wheeler segment for USD 4 billion, and the tractor segment for USD 2 billion by 2030. Indias total vehicle part stood at approximately 333 million units in FY25 and is projected to reach 430–435 million units by 2030, structurally supporting aftermarket demand.

(Chart showing Value of Aftermarket Turnover)

Source: https://www.ibef.org/download/1779081030_Auto-Components-February-2026.pdf

Domestic and Export Market Potential

Indias auto component domestic market is projected to grow from USD 80.20 billion in FY25 to USD 100 billion by FY30. The export market is targeted to reach USD 30 billion by FY26 (from USD 22.9 billion in FY25), and USD 70–100 billion by FY30. Both domestic and export markets demonstrate broadly similar product-type distribution: engine and exhaust components (26% domestic / 19% export), suspension and braking (15% domestic / 11% export), body/chassis/BiW (14% domestic / 11% export), and drive transmission and steering (13% domestic / 34% export). Electrical and electronics components are emerging as a high-growth segment, driven by EV penetration.

(Charts showing Domestic Market Potential and Export Market Potential)

Source: https://www.ibef.org/download/1779081030_Auto-Components-February-2026.pdf

Shares in production and supply

(Charts showing Domestic Market Share by Segment and Auto Component Supply by OEMs)

- In FY26 (April-September), domestic sales stood at 1,02,36,639 units for two-wheelers, 20,51,082 units for passenger vehicles, 4,63,502 units for commercial vehicles, and 3,94,450 units for three-wheelers.

- In FY26 (April-September), the total production of Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers and Quadricycle was 1,65,34,997 units.

Note: * - Until September 2025 Source: ACMA, SIAM

Competitive Advantages and Policy Tailwinds

Indias manufacturing cost base remains competitive, with production costs 10–25% lower than comparable operations in Europe and Latin America. India is the worlds second-largest steel producer, providing inherent cost advantages to auto component manufacturers. The PLI Scheme for the Automobile and Auto Components sector, with a budgetary outlay of Rs. 25,938 crore (USD 3.03 billion) from FY23 to FY27, is catalysing fresh investments and driving supply chain localisation. The Union Budget 2025-26 announced duty exemptions on lithium-ion battery scrap and essential minerals, along with the addition of 35 capital goods for EV production to the exemption list, enhancing domestic production economics. The India-UK Comprehensive Economic and Trade Agreement (CETA) provides duty-free access to 99% of Indias exports to the UK, opening significant new avenues for Indian auto component manufacturers, particularly SMEs and MSMEs.

In FY26 (April–September 2025), the total production of Passenger Vehicles, Commercial Vehicles, Three-Wheelers, Two-Wheelers, and Quadricycles reached 1,65,34,997 units. Domestic sales in H1 FY26 stood at 1,02,36,639 units for two-wheelers, 20,51,082 units for passenger vehicles, 4,63,502 units for commercial vehicles, and 3,94,450 units for three-wheelers. The industry FDI inflow in the automotive sector stood at Rs. 2,59,753.31 crore (USD 39.14 billion) between April 2000 and June 2026 — representing 5% of total FDI inflows into India during the same period.

Sources: ACMA Annual Report FY25; IBEF Auto Components Report, November 2025; SIAM FY26 data; PIB; McKinsey "Shaping the Future of Indias Auto Component Industry".

URLs: https://www.ibef.org/industry/autocomponents-india  https://acma.in   https://www.siam.in

INDIAN AGRICULTURAL TRACTOR MARKET

Market Size and Growth Projections

According to Mordor Intelligence, the India Agricultural Tractor Market is estimated at USD 7.92 billion in 2025 and is forecast to reach USD 10.95 billion by 2030, advancing at a CAGR of 6.70% during the forecast period 2025–2030. This growth trajectory is underpinned by direct-benefit transfer programmes, emission compliance milestones, and state-backed mechanisation funds that collectively shape OEM procurement cycles. Expanding solar pump coverage, the rapid digitalisation of used-equipment platforms under the Digital Agriculture Mission, and the progressive adoption of precision agriculture are systematically widening the customer base.

(Chart showing India Agricultural Tractor Market Size in USD Billion)

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

On the retail volume front, FY26 delivered a landmark result: domestic tractor retail sales crossed the 10-lakh unit milestone for the first time in history, reaching 10,50,077 units — an 18.95% increase over 8,82,825 units in FY25, as per FADA data. This made tractors the fastest-growing vehicle category in India in FY26, outpacing both two-wheelers and passenger vehicles. Farm mechanisation penetration in India currently stands at approximately 40–45%, compared to 57% in China, 75% in Brazil, and 95% in the USA — indicating substantial headroom for further penetration growth over the long term. Government initiatives including the Sub-Mission on Agricultural Mechanisation (SMAM), state-level subsidies, and flagship schemes such as PM-KISAN — which provides direct income support to farmers — continue to act as powerful structural tailwinds.

Source: Mordor Intelligence, India Agricultural Tractor Market Report (2025–2030).

URL: https://www.mordorintelligence.com/industry-reports/india-agricultural-tractor-market

Market Dynamics

The Indian tractor market is dominated by domestic OEMs including Mahindra & Mahindra Limited, TAFE (Tractors and Farm Equipment Limited), International Tractors Ltd. (Sonalika), and Escorts Kubota Limited. International players such as Deere & Company and CNH Industrial also maintain a significant presence. The industry is witnessing a remarkable technological revolution, particularly in sustainable and smart farming solutions.

Segment Analysis: Engine Power

As per Mordor Intelligence and corroborated by recent industry datasets, the 31–50 HP engine category continues to dominate the Indian agricultural tractor market in FY2025–26, accounting for ~45–47% of total industry volumes, with no structural shift from prior years. Tractors in this segment offer the most efficient power-to-cost ratio, strong fuel economy, and compatibility across a wide range of implements. Their versatility makes them suitable across diverse cropping patterns.

The 51–80 HP segment is emerging as the fastest-growing category, with an estimated CAGR of ~8–10% through 2030, driven by increasing farm mechanisation, land aggregation in certain regions, and rising demand for higher horsepower tractors for heavy-duty tillage, haulage, and multi-implement operations. Growth is also supported by expanding use cases beyond agriculture, including construction and rural logistics

The below-30 HP and above-80 HP segments remain niche, catering to horticulture/smallholder applications and large-scale commercial farming or infrastructure-linked usage, respectively, and together account for a relatively smaller share of the market.

Pritika Auto Industries component portfolio is primarily aligned with the 31–80 HP range, positioning the Company strategically within both the largest demand segment and the fastest-growing horsepower category, thereby ensuring strong linkage to industry volume growth and structural mechanization trends.

Segment Analysis: Drive Type

The Two-Wheel Drive (2WD) segment retains dominance with approximately 86% market share in 2024, preferred for its cost-effectiveness, fuel efficiency, and maneuverability in standard agricultural conditions. The Four-Wheel Drive (4WD) segment is the fastest-growing category, projected at approximately 7% CAGR from 2024 to 2029. 4WD tractors are designed for challenging terrains and heavy-duty applications, with rising demand driven by their versatility in construction, loading, and multi-task farming operations.

Segment Analysis: Application

The Row Crop Tractor segment leads with approximately 34% market share in 2024, projected to grow at 7% during 2024–2029. These tractors are tailored for mechanised row crop cultivation — plowing, harvesting, levelling, seed drilling, and weed control — addressing the twin imperatives of rising labour costs and agricultural mechanisation. The Orchard Tractor and Other Applications segments, encompassing utility tractors for dairy, livestock, and specialty agriculture, further diversify the overall market opportunity. The NITI Aayogs 2025 agriculture roadmap noted that 70–80% of marginal and small farmers still lack tractors or power tillers, reinforcing the long runway for row-crop tractor adoption.

Growth Outlook

Looking forward, the Indian tractor market is well-positioned to deliver sustainable growth driven by multiple structural factors: continued rural income improvement, expansion of the SMAM and PM-KISAN schemes, increasing farm mechanisation penetration (estimated at 47% currently vs. 70%+ in China), non-farm usage of tractors in infrastructure and construction, and the progressive electrification of the tractor fleet. India is also emerging as a significant tractor exporter, particularly to developing markets in Africa, Southeast Asia, and South America, extending the addressable market for domestic component manufacturers like Pritika Auto Industries.

Sources: Mordor Intelligence India Agricultural Tractor Market Report 2024-2029; TMA India Monthly Reports; ACMA; Industry news sources.

URL for current tractor industry statistics: https://www.mordorintelligence.com/industry-reports/india-agricultural-tractor-machinery-market

https://www.tmaindia.in/consolidated-monthly-reports-2021.php

About Pritika Auto Industries Ltd.

Pritika Auto Industries Ltd. is a flagship company of the Pritika Group of Industries which was set up in 1973 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 72,000 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, Mahindra, TMTL, Ashok Leyland, CNH Industrial India Pvt. Ltd., Brakes India etc. The Companys vision is to provide products which meet customers quality requirement constantly at competitive prices.

CONSOLIDATED FINANCIAL PERFORMANCE

The consolidated performance of the Company for the financial year ended March 31, 2026, is as follows:

- Production volumes for FY26 was at 52,620 tons, as against 40,286 tons in FY25, YoY growth of 30.62%

- Net Revenue for the year ended was Rs. 482.95 crore in FY26, as against Rs. 356.89 crore in FY25

- EBITDA (Earnings before interest, tax, depreciation & amortization and excluding other income) was at Rs. 71.03 crore in FY26 as against Rs. 57.15 crore in FY25, YoY growth of 24.30%.

- Profit after Tax was at Rs. 23.20 crore in FY26, while Basic EPS stood at Rs. 1.26 in FY26

KEY FINANCIAL HIGHLIGHTS — FY2025-26 VS FY2024-25

Parameter	FY2025-26	FY2024-25
Net Revenue (Rs. Crore)	482.95	356.89
Revenue Growth (YoY %)	35.32%	4.32%
EBITDA (Rs. Crore)	71.03	57.15
EBITDA Margin (%)	14.71%	16.02%
Profit After Tax (Rs. Crore)	23.20	23.90
PAT Margin (%)	4.80%	6.70%
Basic EPS (Rs.)	1.26	1.03
Production Volumes (Metric Tons)	52,620	40,286
Net Worth (Rs. Crore)	274.13	256.66
Total Debt (Rs. Crore)	194.11	169.32
Net Debt-to-Equity Ratio	0.71	0.66

RESOURCES AND LIQUIDITY

As on March 31, 2026, the consolidated net worth stood at Rs. 274.13 crore and the consolidated debt was at Rs. 194.11 crore.

The net debt to equity ratio of the Company stood at 0.41 as on March 31, 2026.

BUSINESS PERFORMANCE

Pritika registered growth of 35.32% in revenue clocking a turnover of Rs. 482.95 Cr. in FY26. The Company produced 52,620 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/ Material handling 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 BUSINESS DURING THE YEAR

During FY26, the Company delivered a resilient financial and operational performance despite a challenging demand environment in certain end-user industries. Revenue growth was supported by increased business from existing OEM customers, deeper penetration into export markets, and a continued focus on value-added precision-engineered components. The Company maintained its emphasis on operational excellence through process improvements, automation initiatives, and enhanced manufacturing efficiencies, enabling it to meet evolving customer requirements while maintaining high standards of quality and delivery performance.

During the year, the Company further strengthened its strategic positioning by expanding its presence in high-growth sectors such as Defence, Railways, Aerospace, and Industrial Engineering. The Company secured new business opportunities across these segments and continued to broaden its product portfolio through the development of complex machined castings, precision components, and specialized assemblies for domestic and international customers. In addition, investments in technology, quality systems, and manufacturing capabilities supported the Companys transition towards higher-value products with improved realization potential and stronger customer stickiness.

The Company also remained focused on long-term capacity creation and market diversification initiatives. Continued investments in infrastructure, tooling, and product development, coupled with an expanding customer base and increasing contribution from strategic sectors, have strengthened the Companys competitive position. These initiatives are expected to enhance revenue visibility, improve business resilience, and support sustainable growth over the medium to long term while creating a more diversified and value-accretive business portfolio.

KEY FINANCIAL RATIOS:

The Key financial ratios based on Standalone financial statements ended March 31, 2026 and in compliance with SEBI Listing Regulations are as follows:

Ratio	FY 2025-26	FY 2024-25	% Change	Reason
Net Profit Margin (%)	3.33%	4.97%	33.16%	Due to decrease in margin and profit
Debtors Turnover (times)	13.47	8.99	49.82%	Due to realization from Debtors on time
Net Capital Turnover Ratio	7.00	4.45	57.27%	Increase in turnover
Return on Equity = Net Profit / Net Worth (%)	4.74%	6.05%	21.71%	Due to decrease in margin and profit

RISKS AND CONCERNS

Pritika Auto Industries operates within a dynamic business environment where diverse risk factors — internal and external — can impact its financial condition, results of operations, and strategic objectives. The Company has established a comprehensive risk management framework, with dedicated risk identification workshops conducted for each business vertical and key support function. These workshops focus on the identification, assessment, analysis, and mitigation of risks to within the organisations defined risk appetite. The risk policy is subject to periodic review to ensure continued relevance and effectiveness.

The Company encounters the following principal risks in its day-to-day operations and strategic pursuits:

1. Cyclicality and Sector Concentration Risk

Pritikas revenues are substantially concentrated in the tractor components segment, which is inherently exposed to the cyclical dynamics of the Indian agricultural sector. Seasonal patterns in agricultural output, fluctuations in rural income, monsoon variability, and the state of the agricultural equipment investment cycle can cause significant year-to-year demand volatility. Any sustained industry-wide demand contraction — whether driven by subdued rural sentiment, adverse weather, or commodity price weakness — could reduce OEM production volumes and adversely affect Pritikas order execution and revenue. The Company is addressing this risk through deliberate diversification into commercial vehicle components, Railway applications, and Defence, thereby reducing its dependence on a single segment over the medium term.

2. Credit and Counterparty Risk

The Company extends credit to OEM customers and maintains receivable balances in the normal course of business. Delays or defaults in receivables collection could affect cash flows and working capital efficiency. Pritika has established a structured credit policy with clearly defined procedures for credit limit requests, approvals, and periodic review of customer financial health. The significant improvement in debtor days from 56.8 days in FY24 to 38.1 days in FY25 reflects the success of this proactive receivables management framework. Notwithstanding, credit risk from concentrated OEM relationships and unforeseen customer liquidity challenges remains a consideration.

3. Interest Rate and Financial Market Risk

The Company carries term loan and working capital debt on its balance sheet, exposing it to fluctuations in interest rates. Changes in the RBIs monetary policy stance — including unexpected tightening cycles — could increase borrowing costs and compress net profit margins. The Company has managed its debt-equity ratio prudently, with the consolidated net debt-to-equity ratio at 0.41 as of March 31, 2026, reflecting disciplined leverage management. The ongoing deleveraging trajectory and utilisation of internal cash flows to service obligations reduce the Companys sensitivity to interest rate movements.

4. Contractual and Legal Risk

Long-term supply contracts with OEMs may contain volume commitment clauses, quality penalty provisions, or pricing adjustment mechanisms that could create contractual obligations in the event of production disruptions, quality deviations, or supply chain failures. Pritika adheres to a rigorous legal risk assessment procedure, evaluates worst-case scenarios with the guidance of legal advisors, and incorporates contractual terms designed to appropriately limit liability. Nonetheless, the evolving complexity of multi-year, multi-OEM contractual arrangements introduces a degree of legal and operational risk that requires ongoing management.

5. Competitive Landscape Risk

Indias auto component sector continues to attract new entrants — both domestic players scaling up and international Tier-I suppliers seeking to establish Indian manufacturing bases — intensifying competitive pressure on pricing, technology, and quality. Global auto component giants with superior capital, technology, and scale could challenge the Company in its core product segments. Pritikas differentiation rests on its five-decade legacy of manufacturing excellence, deep customer relationships built over multiple product cycles, competitive cost structure, and proven quality compliance. Ongoing investments in technology upgradation, workforce capability development, and operational efficiency are essential to maintaining this competitive edge.

6. Input Cost and Supply Chain Risk

Raw material costs — particularly ferrous metals, scrap, and pig iron — constitute a significant proportion of the Companys cost of production. Volatility in commodity prices, global supply chain disruptions, or logistics constraints could adversely affect input cost economics and pressure EBITDA margins. Additionally, power costs represent a significant operating expense; any increase in electricity tariffs or power availability constraints at manufacturing locations could impact profitability. The Company monitors these risks closely and deploys procurement hedging strategies, vendor diversification, and operational efficiency initiatives to manage input cost exposure.

7. Technological Disruption and EV Transition Risk

The global automotive industry is undergoing a fundamental structural transition toward electric and hybrid propulsion systems. While the full electrification of tractors in India is at an early stage — with ICE vehicles continuing to dominate the market — the progressive adoption of electric tractors and hybrid commercial vehicles could alter the demand profile for certain traditional components manufactured by the Company. Pritika is proactively addressing this emerging risk by evaluating the adaptation of its precision machining capabilities toward EV-compatible components and exploring product development for battery enclosures, motor housings, and EV drive chain components.

OPPORTUNITIES

1. Indias Agricultural Mechanisation Wave

With Indias farm mechanisation penetration estimated at approximately 47% against Chinas 70%+ and global averages significantly higher, there exists a substantial structural opportunity for continued tractor adoption. Government initiatives including the Sub-Mission on Agricultural Mechanisation (SMAM), PM-KISAN, and state-level subsidy programmes will continue to drive demand for agricultural equipment and, consequently, tractor components. Pritika, as a leading supplier of precision machined tractor components, is strategically positioned to benefit from this multi-decade mechanisation story.

2. Expansion of High-Value Product Portfolio

The Companys deliberate strategy to enrich its product portfolio with higher-value, higher-complexity components — hydraulic cylinders, advanced axle assemblies, differential housings, and precision sub-assemblies — presents a significant opportunity to improve revenue realisation per metric ton of production and expand EBITDA margins. As OEMs increasingly seek to outsource more complex components to trusted, quality-certified suppliers, Pritikas investment in machining precision and quality systems positions it to capture this value-added opportunity.

3. Railways and Defence Sector Entry

The Government of Indias sustained capital expenditure commitment to the railway sector — with Rs. 2.52 lakh crore allocated in the Union Budget 2025-26 for railway infrastructure — and the indigenisation imperative under the Defence Acquisition Procedure (DAP) and Aatmanirbhar Bharat present compelling new markets for precision machined components. Pritikas expertise in casting, machining, and sub-assembly is directly transferable to Railway and Defence applications, and the Company has explicitly prioritised these sectors for customer acquisition and revenue diversification during FY26.

4. Export Opportunities and Global Supply Chain Realignment

Indias auto component industry is projected to increase exports to USD 70–100 billion by FY30, driven by global supply chain diversification, EV adoption trends, and cost-competitiveness. The India-UK Comprehensive Economic and Trade Agreement (CETA) provides duty-free access to 99% of Indian exports to the UK, directly benefiting auto component manufacturers. Indian SMEs and mid-cap players stand to capture USD 20–30 billion of the USD 70–100 billion export opportunity. Pritikas compliance with international quality standards and experience in supplying global OEM brands (New Holland Tractors India, SML Mahindra, TMTL) provides a credible foundation for expanding export revenues.

5. PLI Scheme and Policy Tailwinds

The Production-Linked Incentive (PLI) Scheme for the Automobile and Auto Components sector, with a budgetary outlay of Rs. 25,938 crore (USD 3.03 billion), continues to catalyse investment in advanced automotive technologies and supply chain localisation. While Pritikas primary operations are in traditional precision machined castings, the PLI-driven expansion of OEM production capacity in India creates significant downstream demand for the Companys components. Additionally, the governments FAME-II incentives, SMAM subsidies, and Make-in-India support for automotive manufacturing create a highly enabling policy environment.

6. Backward Integration and Cost Competitiveness

Opportunities exist for Pritika to further deepen backward integration — particularly in castings and raw material processing — to reduce input cost dependency, improve quality control, and enhance margins. With India being the worlds second-largest steel producer, the availability of competitively priced ferrous materials provides a structural advantage. Investments in energy efficiency, captive renewable power, and process automation represent additional levers to reduce the unit cost of production and improve competitive pricing capability.

7. Rural Infrastructure and Non-Farm Tractor Usage

The increasing utilisation of tractors in non-farm applications — including rural road construction, materials haulage, and infrastructure development — expands the effective addressable market for tractor components beyond pure agricultural applications. Government investment in rural infrastructure under schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY) and rural electrification programmes is expected to further stimulate non-farm tractor demand, providing incremental growth visibility for Pritikas component portfolio.

THREATS

- Intensifying competition from both well-capitalized domestic manufacturers and global Tier-I auto component suppliers with superior scale, technology, and financial resources, potentially exerting downward pressure on pricing and margins.

- Macroeconomic volatility ? including potential global growth slowdowns, inflationary commodity cycles, currency depreciation, and geopolitical disruptions to global trade ? could adversely affect OEM production volumes, input costs, and export realization.

- Rapid technological change in the automotive industry, particularly the accelerating global transition to electric vehicles and electric tractors, could render certain traditional component designs obsolete and require significant R&D investment to adapt product offerings.

- Inherent vulnerability of the agricultural sector to unpredictable weather events, deficient or delayed monsoons, and climate change impacts, which could reduce farm income, suppress tractor demand, and adversely affect OEM order volumes.

- Sustained volatility in ferrous raw material prices (scrap, pig iron, alloys) and energy costs (power and fuel), which constitute major cost components and could compress margins in periods of commodity price spikes.

- Challenges in attracting, developing, and retaining skilled technical workforce ? including precision machinists, quality engineers, and industrial technologists ? particularly in competition with larger, better-resourced employers in automotive manufacturing clusters.

- Potential cyclical slowdown in the Indian agricultural equipment and tractor industry ? driven by rural credit constraints, adverse monsoon outcomes, farm income pressure, or weakened agricultural commodity prices ? which could reduce OEM production schedules and order placement.

- Regulatory and compliance risks arising from evolving environmental norms, emission standards, and product quality requirements that may necessitate capital expenditure on plant upgrades or process modifications.

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, 2026, the Company had a workforce of 1528. (Permanent and contractual).

OUTLOOK

Pritika Auto Industries enters FY27 from a position of demonstrated strength — underpinned by robust order inflows, successful commercial production ramp-up of multiple high-value component lines, a significantly strengthened balance sheet, and deepening relationships with Indias leading tractor and commercial vehicle OEMs.

The structural growth drivers that underpin Pritikas long-term thesis remain firmly intact. Indias agricultural mechanisation story continues to unfold, with tractor penetration still well below the levels seen in comparably developed agricultural economies. Rising rural incomes, continued government support for farm mechanization, expanding non-farm tractor applications, and the progressive electrification of the tractor fleet each contribute to a multi-decade addressable market opportunity. The Companys position as one of Indias largest precision machined casting manufacturers for the tractor segment — with a diversified OEM customer base spanning Mahindra & Mahindra, TAFE, Escorts Kubota, Swaraj Engines, New Holland Tractors India, and others — provides the scale, customer breadth, and technical credibility necessary to sustain leadership.

The strategic pivot toward Railways and Defence represents a meaningful incremental growth opportunity. The governments historically high railway capital expenditure commitments, combined with the Make-in-India and Aatmanirbhar Bharat mandates driving defence indigenization, create a favorable environment for Pritika to leverage its precision machining and casting capabilities in these new sectors. Initial customer engagements in these domains are expected to translate into revenue contributions in the near to medium term.

The focus on operational efficiency, backward integration, and energy cost management will be sustained as key levers to protect and expand EBITDA margins despite potential raw material cost variability.

For FY27 and beyond, Pritika Auto Industries is committed to delivering sustainable, high-quality earnings growth, driven by volume expansion across existing and new product categories, geographic diversification of revenue streams through export participation, and continued deepening of OEM relationships. With a clear strategic roadmap, a motivated and experienced leadership team, and modernized manufacturing infrastructure across its four plant locations, the Company is well positioned to generate long-term value for all stakeholders — investors, customers, employees, and the communities it operates in.

While cyclical risks inherent to the tractor and commercial vehicle sectors remain ever-present, the Companys diversified client base, long-term contractual revenue visibility, and expanding product portfolio collectively provide a robust buffer. Management will continue to prioritize disciplined capital allocation, balance sheet prudence, and strategic agility in navigating the evolving competitive and macroeconomic landscape.

For and on behalf of the Board of Directors

Sd/-

Harpreet Singh Nibber

Chairman & Managing Director

DIN: 00239042

Date: 18th August, 2026

Place: Mohali